[Federal Register Volume 86, Number 181 (Wednesday, September 22, 2021)]
[Proposed Rules]
[Pages 52792-52815]
[FR Doc No: 2021-20095]

Vol. 86

Wednesday,

No. 181

September 22, 2021

Part III

 Department of Homeland Security

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Coast Guard

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33 CFR Part 187

Uniform Certificate of Title Act for Vessels; Proposed Rule

Federal Register / Vol. 86 , No. 181 / Wednesday, September 22, 2021
/ Proposed Rules

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 187

[Docket No. USCG-2018-0160]
RIN 1625-AC28

Uniform Certificate of Title Act for Vessels

AGENCY: Coast Guard, DHS.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Coast Guard proposes changes to its regulations for
certifying a State's titling system for undocumented vessels to
increase States' participation in the Vessel Identification System
(VIS). The proposed changes would allow States that have adopted the
recommendations of the model Uniform Certificate of Title Act for
Vessels to certify their titling provisions with the Coast Guard. Once
certified and participating in the VIS, a State is able to confer
preferred mortgage status on financial instruments that apply to
undocumented vessels, which benefits the owners of those vessels. While
many of the proposed changes to the certification guidelines relate to
the technical requirements of recording and maintaining titling
documentation, the most significant change would be to implement a
system of ``branding'' (permanently marking) titles for vessels that
have sustained structural damage. This would help prevent a process
known as ``title washing,'' where severe vessel damage is concealed by
transferring the title to a different State.

DATES: Comments and related material must be received by the Coast
Guard on or before November 22, 2021. Comments sent to the Office of
Management and Budget (OMB) on collection of information must reach OMB
on or before November 22, 2021.

ADDRESSES: You may submit comments identified by docket number USCG-
2018-0160 using the Federal eRulemaking Portal at https://www.regulations.gov. See the ``Public Participation and Request for
Comments'' portion of the SUPPLEMENTARY INFORMATION section for further
instructions on submitting comments.
    Collection of information. Submit comments on the collection of
information discussed in section VI.D of this preamble both to the
Coast Guard's online docket and to the Office of Information and
Regulatory Affairs (OIRA) in the White House Office of Management and
Budget (OMB) using their website www.reginfo.gov/public/do/PRAMain.
Comments sent to OIRA on collection of information must reach OMB on or
before the comment due date listed on their website.

FOR FURTHER INFORMATION CONTACT:  For information about this document
call or email W. Vann Burgess, Boating Safety Division, Program
Management and Operations Branch (CG-BSX-21), Coast Guard; telephone
202-372-1071, email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Table of Contents for Preamble

I. Public Participation and Request for Comments
II. Abbreviations
III. Basis and Purpose
IV. Background
    A. Current 33 CFR part 187, subpart D
    B. UCOTA-V
V. Discussion of Proposed Rule
VI. Regulatory Analyses
    A. Regulatory Planning and Review
    B. Small Entities
    C. Assistance for Small Entities
    D. Collection of Information
    E. Federalism
    F. Unfunded Mandates Reform Act
    G. Taking of Private Property
    H. Civil Justice Reform
    I. Protection of Children
    J. Tribal Governments
    K. Energy Effects
    L. Technical Standards
    M. Environment

I. Public Participation and Request for Comments

    The Coast Guard views public participation as essential to
effective rulemaking, and will consider all comments and material
received during the comment period. Your comment can help shape the
outcome of this rulemaking. If you submit a comment, please include the
docket number for this rulemaking, indicate the specific section of
this document to which each comment applies, and provide a reason for
each suggestion or recommendation.
    We encourage you to submit comments through the Federal eRulemaking
Portal at https://www.regulations.gov. If you cannot submit your
material by using https://www.regulations.gov, contact the person in
the FOR FURTHER INFORMATION CONTACT section of this proposed rule for
alternate instructions. Documents mentioned in this proposed rule, and
all public comments, will be available in our online docket at https://www.regulations.gov, and can be viewed by following that website's
instructions. Additionally, if you visit the online docket and sign up
for email alerts, you will be notified when comments are posted or a
final rule is published.
    We accept anonymous comments. All comments received will be posted
without change to https://www.regulations.gov and will include any
personal information you have provided. For more about privacy and
submissions in response to this document, see the Department of
Homeland Security's eRulemaking System of Records notice (85 FR 14226,
March 11, 2020).
    We do not plan to hold a public meeting, but will consider doing so
if public comments indicate a meeting would be helpful. We would issue
a separate Federal Register notice to announce the date, time, and
location of such a meeting.

II. Abbreviations

BLA Boating Law Administrator
BSX U.S. Coast Guard's Office of Auxiliary and Boating Safety
CFR Code of Federal Regulations
DHS Department of Homeland Security
DOT Department of Transportation
FR Federal Register
MOA Memorandum of Agreements
NCCUSL National Conference of Commissioners on Uniform State Laws
NBSAC National Boating Safety Advisory Council
NASBLA National Association of State Boating Law Administrators
NPRM Notice of proposed rulemaking
OMB Office of Management and Budget
PRA Paperwork Reduction Act of 1995
RA Regulatory Analysis
RFA Regulatory Flexibility Act of 1980
Sec.  Section
UCC Uniform Commercial Code
UCOTA-V Uniform Certificate of Title Act for Vessels
U.S.C. United States Code
VIS Vessel Identification System

III. Basis and Purpose

    The purpose of this rulemaking is to revise Coast Guard guidelines
for State vessel titling systems so that they align with the Uniform
Certificate of Title Act for Vessels (UCOTA-V). As discussed in more
detail below, we expect that aligning Coast Guard guidelines with
UCOTA-V would increase States' participation in the Vessel
Identification System (VIS), thereby benefitting the owners of
undocumented vessels by providing them access to preferred mortgages.
    The legal basis for this rulemaking is Title 46 of the United
States Code (U.S.C.), sections 2103, 12501(a), and 31322(d). Section
2103 authorizes the Secretary of the department in which the Coast
Guard is operating to issue regulations to carry out the provisions of
Subtitle II, Vessels and Seamen, of Title 46 of the U.S.C., in which
Section 12501(a) appears. Section 12501(a) requires the Secretary to
establish a VIS

relating to, among other things, the ownership of vessels titled under
the law of a State. Finally, section 31322(d) allows a mortgage that is
filed, or ``perfected'' under State law, to be deemed ``a preferred
mortgage'' if the Secretary certifies that the State titling system
complies with the guidelines set forth in 46 U.S.C. 13107. The
Secretary's authority under these statutes has been delegated to the
Coast Guard in Department of Homeland Security (DHS) Delegation No.
0170.1(II) (92.a) and (92.h). Pursuant to that authority, the Coast
Guard has promulgated regulations governing the certification of State
laws to determine eligibility for preferred mortgages.

IV. Background

A. Current 33 CFR Part 187, Subpart D

    A mixture of both Federal and State laws govern the titling of
vessels in the United States.\1\ ``Documented'' vessels are typically
larger commercial vessels documented with the Coast Guard National
Vessel Documentation Center. Over 99 percent of vessels in the United
States are not required to be documented and are considered
``undocumented,'' which the Coast Guard is not required to document.
The registration and titling of these vessels falls under State law.
State law governing the titling of vessels varies considerably from
State to State, and many States do not have a certificate of title law
for vessels.
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    \1\ As used throughout this notice of proposed rulemaking
(NPRM), ``State'' means any of the 56 jurisdictions (50 States, the
District of Columbia, American Samoa, Guam, the Northern Mariana
Islands, Puerto Rico, and the U.S. Virgin Islands) that administer
Coast Guard-approved recreational vessel numbering systems.
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    While the Federal Government does not title undocumented vessels,
it does have an interest in certain aspects of policy that would
ordinarily be covered by State titling requirements. Specifically, the
Coast Guard has an interest in information about vessels and their
owners for both law enforcement and maritime domain awareness purposes.
For these reasons, pursuant to statute, the Coast Guard created the
VIS, which is a centralized database of information relating to these
subjects.\2\ However, the VIS relies on information generated by States
through their titling and other recordation processes for information
about undocumented vessels. Currently, only 38 States participate in
the information exchange aspects of the VIS. Because participation in
the VIS is voluntary and entirely at the States' discretion, Congress
created an incentive for States to provide the requisite information,
in the form of eligibility for preferred mortgages.
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    \2\ See 46 U.S.C. 12501.
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    Under maritime law, a preferred mortgage is a mortgage that is
filed--or perfected--in compliance with certain statutory requirements
that are set forth in 46 U.S.C. 31321. A preferred mortgage creates a
lien against the mortgaged vessel in the amount of the mortgage
indebtedness (46 U.S.C. 31322 and 31325). A preferred mortgage is a
perfected lien that has priority over certain other maritime liens and
all non-maritime liens in an in rem admiralty foreclosure (46 U.S.C.
31326).\3\ Acquiring a preferred mortgage is beneficial to the owners
of vessels, because a preferred mortgage generally has a substantially
lower interest rate than a mortgage secured by a non-perfected lien.
While documented vessels are eligible for a preferred mortgage,
undocumented vessels can receive such a mortgage only if the State in
which it is titled satisfies the applicable Federal requirements and
receives approval from the Coast Guard.\4\
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    \3\ A perfected lien is generally a lien that has been filed
with the appropriate filing agent in order to make the securing
interest in a collateral asset binding. See 46 U.S.C. 31321.
    \4\ See 46 U.S.C. 31322(d).
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    To encourage States to participate in and share information with
the VIS, the Coast Guard requires certification before maritime liens
can be perfected. The guidelines that cover what a State must do to
have its titling laws certified by the Coast Guard are located in Title
33 of the Code of Federal Regulations (CFR), part 187, and specifically
in subpart D--State Vessel Titling Systems. In addition to the specific
titling requirements, subpart D contains a requirement that the State
must ``comply with the VIS participation requirements of Sec.  187.11
and subpart C of this part and make vessel information it collects
available to VIS.'' \5\
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    \5\ See 33 CFR 187.301 and 33 CFR 187.201.
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    Despite the incentive of being able to provide owners of
undocumented vessels access to preferred mortgages, currently no States
have titling laws that comply with the Coast Guard guidelines in
subpart D. This is because of a conflict between the guidelines in
subpart D and provisions of the Uniform Commercial Code (UCC),
specifically Articles 2 and 9, which govern the titling of property.
Because most States rely on compliance with the UCC to facilitate an
array of commercial transactions, they have been unable to modify their
laws to comply with the Coast Guard's certification guidelines in
subpart D.

B. UCOTA-V

    The National Conference of Commissioners on Uniform State Laws
(NCCUSL) drafted UCOTA-V \6\ with input from members of the National
Association of State Boating Law Administrators (NASBLA), boat
manufacturers and dealers, banking interests, and the Coast Guard,
which continues to be supportive of it. Unanimously approved by the
NCCUSL in July 2011, UCOTA-V provides a consistent consumer protection
measure that allows the identification of vessels that have been deemed
unsafe, preventing them from being sold without disclosure.
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    \6\ A copy of UCOTA-V is located in the docket at https://www.regulations.gov, as indicated in the Public Participation and
Request for Comments portion of this preamble.
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    The NASBLA membership adopted UCOTA-V as a model act of the
association at its annual business meeting in September 2011. Through
one of its policy committees, NASBLA has continued to work with NCCUSL
in promoting and supporting UCOTA-V adoption by the States. Currently,
five States have adopted the act and five other States are at various
stages of preparation to do so. The NCCUSL set forth several
``principal objectives'' when writing UCOTA-V. The objectives for
UCOTA-V are to:
    (1) Qualify as a State titling law that the Coast Guard will
approve;
    (2) Facilitate transfers of ownership of a vessel;
    (3) Deter and impede the theft of vessels by making information
about the ownership of vessels available to both government officials
and those interested in acquiring an interest in a vessel;
    (4) Accommodate existing financing arrangements for vessels;
    (5) Work seamlessly with the UCC;
    (6) Manage, to the extent possible, the complications that can
arise from a vessel's transition in or out of Federal documentation;
    (7) Provide clear rules on the consequences of compliance or
noncompliance;
    (8) Impose minimal or no new burdens or costs on State titling
offices; and
    (9) Protect buyers and others acquiring an interest in an
undocumented vessel by requiring that the title for the vessel be
branded if a casualty or sinking has caused significant damage to the
vessel's hull integrity.\7\
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    \7\ See 46 U.S.C. 12503, Information available to the system. In
addition to the vessel identification information made available by
States. See NBSAC Resolution 2014-92-01 https://homeport.uscg.mil/Lists/Content/DispForm.aspx?ID=483&Source=/Lists/Content/DispForm.aspx?ID=483.

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    Various maritime interests recommended that the Coast Guard update
its certification guidelines so that States that have adopted laws
compliant with UCOTA-V can meet the certification guidelines. In 2014,
the National Boating Safety Advisory Council (NBSAC), a group
established under the Federal Advisory Committee Act to advise the
Coast Guard, passed Resolution No. 2014-92-01 recommending that the
Coast Guard initiate a rulemaking to revise subpart D based on UCOTA-V,
for the following reasons:
    (1) The well-conceived and well-drafted nature of UCOTA-V;
    (2) The lack of State support for current subpart D;
    (3) The interest in complying with a revised subpart D to obtain
the benefits of preferred mortgages;
    (4) Theft deterrence by facilitating interstate recovery of stolen
vessels; and
    (5) Facilitation of greater participation in the VIS.\8\
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    \8\ See 46 U.S.C. chapter 125, (Vessel Identification System).
Subsection (a) of section 12501 requires the Secretary of DHS to
establish a system of information concerning vessels of the United
States for law enforcement and other purposes. The Secretary is
required to make available information from the system relating to
the ownership of vessels documented under chapter 121 of title 46,
numbered under chapter 123 of that title, and titled under the law
of a State. See https://cgmix.uscg.mil/VISInformation.aspx?VISOption
for more information regarding VIS.
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    In addition, NASBLA recommended the incorporation of UCOTA-V
provisions as well. In response to an agency solicitation for
regulatory reform proposals pursuant to Executive Order 13777
(Enforcing the Regulatory Reform Agenda),\9\ NASBLA recommended that
the Coast Guard revise subpart D to align Coast Guard certification
requirements with the requirements of UCOTA-V. NASBLA noted that the
current subpart D regulations ``have become obsolete, fostered
inefficiencies, and/or have become increasingly difficult to
consistently apply.'' \10\
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    \9\ Executive Order 13777 was revoked by Executive Order 13992
(Volume 86 of the Federal Register (FR) at Page 7049 (Jan. 25,
2021)).
    \10\ Comment from NASBLA, available at https://www.regulations.gov, docket number USCG-2017-0480-0149.
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    Based on the recommendations of these two organizations, as well as
our desire to increase State participation in the VIS, the Coast Guard
is proposing revisions to subpart D to allow for any State adopting
titling laws in accordance with the guidelines in UCOTA-V to meet Coast
Guard certification requirements. We discuss the specific proposed
requirements for subpart D below.

V. Discussion of Proposed Rule

    For the reasons described above, this proposed rulemaking would
revise subpart D of 33 CFR part 187 so that State titling laws modeled
on UCOTA-V would meet the certification requirements of subpart D. We
propose to replace the entire text of the existing subpart D with new
guidelines that would accommodate States that adopt variants of the
model code appropriate for their State commercial legal regimes. The
Coast Guard is not proposing to incorporate UCOTA-V in its entirety
because some sections of UCOTA-V are not applicable to the Federal
Government. For example, included in UCOTA-V is a ``savings clause''
provision (see section 28 of UCOTA-V). Because the execution of the
savings clause would be governed by State law applicable to vessel
titling that existed prior to the adoption of UCOTA-V,\11\ there is no
Federal interest or need to apply Federal oversight of the application
of a savings clause.
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    \11\ See the explanation contained in the table on page 57 of
UCOTA-V which says: ``States will decide under existing state law
how they will treat vessels that were previously titled under state
law prior to adoption of UCOTA-V.'' Thus, previously existing state
requirements do not bear on the titling issues that this proposal
seeks to address.
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    In short, so long as vessels have been properly registered through
the State, the savings clause provision found in section 28 of UCOTA-V
has no bearing on the Coast Guard's regulatory regime. Therefore, we
are not including UCOTA-V's savings clause provision within this
proposal. Instead, we are proposing certification guidelines that
incorporate UCOTA-V, but with a number of policy or stylistic changes,
such that the guidelines are flexible enough to allow for the
variations in State law permitted by UCOTA-V.
    In addition to the savings clause provision in section 28, the
Coast Guard is proposing to omit the following sections of UCOTA-V that
do not bear specifically on titling concerns.
    Section 1, Short title. We are integrating the requirements of
UCOTA-V into Coast Guard regulations, so we do not need to adopt the
act's title.
    Section 4, Supplemental principles of law and equity. This
provision concerns the interpretation principles of UCOTA-V and, while
this is a general principle of the UCC, it is not needed for Coast
Guard certification of a State's titling law.
    Section 8, Creation and cancellation of certificate of title,
subsection (f). We are not incorporating subsection (f) of section 8
because it is an optional provision for the States that ``provides a
procedure for the office to follow before canceling a certificate of
title. It is intended for those states whose public records or other
law does not already provide a procedure that ensures all interested
parties are notified in advance and given an opportunity to be heard.''
\12\
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    \12\ UCOTA-V, Section 8, Legislative Note, page 25.
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    Section 26, Uniformity of application and construction. This
provision also concerns interpretation principles and is not needed for
Coast Guard certification.
    Section 27, Relation to electronic signatures in global and
national commerce act. This section describes the relation of a State's
law to certain Federal statutes concerning electronic signature, which
is not relevant in the certification of State titling law.
    Section 28, Savings clause. For the reasons discussed above, the
Coast Guard is not incorporating section 28.
    The Coast Guard also proposes a variety of stylistic changes.
First, we propose keeping the general numbering scheme of the text of
UCOTA-V in regulatory text, replacing references to ``Section X'' with
the appropriate citation to the equivalent regulatory section,
subsection, or paragraph. We would also replace certain words such as
``shall'' with ``must,'' as provided by the Federal Plain Language
Guidelines.\13\ Additionally, we would replace references to ``the
UCC'' or specific sections of the UCC with references to ``State law.''
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    \13\ See Federal Plain Language Guidelines, Rev. 1, (May 2011)
on p. 25. These can be accessed at https://www.plainlanguage.gov/guidelines.)
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    We provide a section-by-section discussion of the proposed
certification guidelines below.
    Section 187.7, What are the definitions of terms used in this part?
We propose to rename this section Definitions. We propose to use most
of the existing definitions within Section 187.7 and add new
definitions from section 2 of UCOTA-V. If a definition from UCOTA-V
differs from an existing regulatory definition (for example, the term
``documented vessel'' in UCOTA-V differs from the current definition in
Sec.  187.7), we would use the definition from UCOTA-V.
    The definitions from UCOTA-V that we propose adding are as follows:
     Barge;
     Builder's certificate;
     Buyer;
     Cancel;
     Certificate of title;

     Electronic;
     Electronic certificate of title;
     Foreign-documented vessel;
     Good faith;
     Hull damaged;
     Lien creditor;
     Office;
     Owner of record;
     Purchase;
     Purchaser;
     Record;
     Secured party of record;
     Sign;
     State of principal operation; \14\
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    \14\ In UCOTA-V, this term is ``State of principle [sic] use.''
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     Title brand;
     Transfer of ownership;
     Vessel number; and
     Written certificate of title.

    Subpart D heading and section titles. For clarification, we propose
to revise the heading for subpart D from ``Guidelines for State Vessel
Titling Systems'' to the more general ``State Vessel Titling Systems.''
We would also change the section titles in revised subpart D to better
align with the section titles of UCOTA-V.
    Section 187.301. We propose to clarify this section by replacing
the language that says the Coast Guard ``may certify'' a State vessel
titling system if it complies with the requirements of the subpart with
``will certify.'' We propose this change because, if the State's
titling system meets the requirements of this regulation, the state has
met the Coast Guard's requirements. Thus, the Coast Guard will certify
the State's titling system, thereby fulfilling the requirements set
forth in 46 U.S.C. 31322(d)(1) for preferred mortgage status. The
purpose of this regulation is for States to take advantages of sharing
validated vessel information that meets the minimum requirements listed
in regulations.
    Section 187.302 (new). We propose moving the list of terms States
must define from Sec.  187.303 to this new section to keep the
structure consistent with the rest of UCOTA-V. The new Sec.  187.302(a)
would incorporate the current requirement of Sec.  187.303 that States
define listed terms substantially as they are defined in Sec.  187.7.
The terms already listed in Sec.  187.7 would not be removed or
substantively changed, but some definitions would be rephrased, and
several new terms would be added as recommended by UCOTA-V, section
2(a), which includes a list of definitions for States to adopt
directly. In addition, the new Sec.  187.302(b) would require States to
define the terms listed in UCOTA-V section 2(b). These are general
terms derived from the UCC, which all States have adopted, or adopted
in modified form. Finally, we would add a new Sec.  187.302(c),
incorporating UCOTA-V section 2(c), stating that subpart D definitions
do not apply to any State or Federal law governing licensing,
numbering, or registration if the same term is used in that law.
    Section 187.303. We would revise Sec.  187.303 to incorporate
UCOTA-V section 3 applicability provisions. As described above, the
current list of terms States must define would be moved to the new
Sec.  187.302.
    Section 187.304. We would retain this section, without change, but
would rename it to better match the rest of the subpart.
    Section 187.305. This section currently specifies requirements for
title applications. We would move the material on this topic to the
revised Sec.  187.307. The revised Sec.  187.305 would incorporate
UCOTA-V section 5, defining which State's law governs vessels covered
by title certificates.
    Section 187.306 (new). This new section would incorporate the
UCOTA-V section 6 discussion of when a title certificate is and is not
required.
    Section 187.307. The revised Sec.  187.307 would incorporate UCOTA-
V section 7 specifications for title application contents. Currently,
this section mandates certain provisions that States must impose on
vessel dealers and manufacturers. We would no longer require these
dealer- or manufacturer-specific conditions because they are covered by
the UCOTA-V provisions that we propose adopting.
    Section 187.308 (new). This new section would incorporate the
UCOTA-V section 8 provisions for creating and canceling title
certificates, with the exception of optional paragraph (f), as detailed
above in the discussion of UCOTA-V section 8.
    Section 187.309. Section 187.309 currently covers requirements for
voluntary title transfers (transfers other than by operation of law).
Section 187.317 currently covers title certificate contents. Under our
proposal, we would exchange these, so the revised Sec.  187.309 would
cover title certificate contents (an adaptation of UCOTA-V section 9)
and the revised Sec.  187.317 would cover requirements for voluntary
title transfers (an adaptation of UCOTA-V section 17). We propose this
change to better align with the structure of UCOTA-V.
    Section 187.310 (new). This new section would incorporate UCOTA-V
section 10 title brand provisions. We would incorporate these
provisions to deter title washing and protect buyers and others
acquiring an interest in an undocumented vessel.
    Section 187.311. This section currently requires new title
certificates after vessel ownership transfers by operation of law. We
propose moving this discussion to the new Sec.  187.320. The revised
Sec.  187.311 would incorporate UCOTA-V section 11 requirements for
maintenance of and access to State title certificate files.
    Section 187.312 (new). This new section would incorporate UCOTA-V
section 12, concerning the duties of the State and title holder upon
creation of a title certificate.
    Section 187.313. This section currently requires a State to honor
evidence of vessel ownership from another State, country, or the Coast
Guard. Under this proposal, we would move this discussion to Sec.
187.328. The revised Sec.  187.313 would incorporate UCOTA-V section
13, declaring the prima facie evidential value of title certificate
contents.
    Section 187.314 (new). This new section would incorporate UCOTA-V
section 14, concerning the possession of a title certificate and
judicial process against a certificate.
    Section 187.315. This section currently provides that a State title
is invalidated when exchanged for a certificate of documentation. The
revised Sec.  187.315 would incorporate UCOTA-V section 15 provisions
for perfecting vessel security interests, which is currently addressed
in Sec.  187.323.
    Section 187.316 (new). This new section would incorporate UCOTA-V
section 16, concerning the termination of a security interest in a
vessel. Currently, Sec.  187.327 requires States to establish their own
termination procedures. We propose removing and reserving Sec.
187.327.
    Section 187.317. To better align with UCOTA-V's structure, we would
exchange the provisions on the topics covered by Sec.  187.309 with the
topics covered by Sec.  187.317, as discussed above at Section 187.309.
    Section 187.318 (new). This new section would incorporate UCOTA-V
section 18, concerning the effect of missing or incorrect title
certificate information.
    Section 187.319. This section currently covers applying for
replacement or ``redundant'' title certificates. We propose moving this
topic to the new Sec.  187.322. The revised Sec.  187.319 would
incorporate UCOTA-V section 19, concerning the transfer of a vessel
ownership interest by a secured party's transfer statement.

    Section 187.320 (new). This new section would incorporate UCOTA-V
section 20, concerning ownership interest transfers by operation of
law, which Sec.  187.311 currently contains.
    Section 187.321. This section currently requires a hull
identification number to be assigned and affixed to a vessel upon proof
of its ownership. We propose replacing the existing language with a
substantively identical adaptation of UCOTA-V section 21, concerning
applications for transferring ownership or for canceling a security
interest that is not accompanied by a certificate of title. UCOTA-V
recommends more specific requirements for recording hull identification
numbers, which we would include in revised Sec. Sec.  187.307, 187.309,
187.311, 187.315, and 187.325. For example, UCOTA-V requires the State
to issue a hull identification number in cases where the State did not
issue one to the vessel owner or operator upon original construction,
such as an antique vessel built prior to November 1972.
    Section 187.322 (new). This new section would incorporate UCOTA-V
section 22, concerning replacement title certificates, which is
currently addressed in Sec.  187.319.
    Section 187.323. This section currently specifies procedures for
perfecting vessel security interests, which would be addressed in Sec.
187.315. The revised Sec.  187.323 would incorporate UCOTA-V section
23, concerning the rights of a vessel purchaser who is not a secured
party.
    Section 187.324 (new). This new section would incorporate UCOTA-V
section 24, concerning the rights of secured parties.
    Section 187.325. This section currently requires States to specify
the procedure for assigning vessel security interests, which would be
addressed in the revised Sec.  187.315(f). The revised Sec.  187.325
would incorporate UCOTA-V section 25, specifying certain requirements
for the administrative operation of a State certificating authority,
such as length of record retention and allowable fees.
    Section 187.327. We would remove this section, which covers the
discharge of a vessel security interest. This topic would be covered in
the new Sec.  187.316.
    Sections 187.329. We would remove this section. It is not necessary
to retain the requirement in Sec.  187.329 for States to specify
titling system forms, as UCOTA-V requirements for specific records
would appear throughout revised subpart D. An example of this is in the
title application and certificate provisions of Sec. Sec.  187.306
through 187.310.
    Section 187.331. We would remove this section. Section 187.331
requires States to retain title system information and make it
available to government authorities. In the revised subpart D, similar
requirements would appear in Sec. Sec.  187.311(d) and 187.325(a).

VI. Regulatory Analyses

    The Coast Guard developed this NPRM after considering numerous
statutes and Executive orders related to rulemaking. Below, we
summarize our analyses based on these statutes or Executive orders.

A. Regulatory Planning and Review

    Executive Orders 12866 (Regulatory Planning and Review) and 13563
(Improving Regulation and Regulatory Review) direct agencies to assess
the costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
    The Office of Management and Budget (OMB) has not designated this
rule a significant regulatory action under section 3(f) of Executive
Order 12866. Accordingly, OMB has not reviewed it. We developed an
analysis of the costs and benefits of the proposed rule to ascertain
its probable impacts. A regulatory analysis (RA) follows.
    This RA provides an evaluation of the economic impacts associated
with this proposed rule. Table 1 provides a summary of the proposed
rule's costs and benefits. The Coast Guard requests public comments on
all aspects of the following analysis. In particular, the Coast Guard
requests comments on the categories of unquantified costs and benefits
and potential costs listed in Table 1 below.

           Table 1--Summary of the Proposed Rule's Impacts \1\
------------------------------------------------------------------------
             Category                              Summary
------------------------------------------------------------------------
Affected Population...............  56 States of which 18 are not
                                     currently in compliance with VIS
                                     requirements and 47 have not
                                     adopted UCOTA-V (subpart D) or
                                     started the process.
Costs (7-percent discount rate)...  $138,490 (10-year discounted cost).
                                    $19,718 (annualized cost).
Unquantified Costs \2\............   2 States currently have
                                     legislative conflicts that may
                                     impact VIS participation. While the
                                     cost to negotiate and amend the
                                     legislation is estimated, the cost
                                     of labor to put forward and vote on
                                     the privacy legislation is
                                     difficult to quantify.
                                     47 States currently have
                                     legislative conflicts that may
                                     impact adopting UCOTA-V. While the
                                     cost to negotiate and amend the
                                     legislation is estimated, the cost
                                     of labor to put forward and vote on
                                     the privacy legislation is
                                     difficult to quantify.
Potential Costs \3\...............   Costs to vessel owners,
                                     imposed by States without titling
                                     programs (7 States), who require
                                     vessel owners to obtain a title.
                                     Estimated potential cost of
                                     obtaining title is $50 (not in cost
                                     analysis);
                                     Costs to vessel owners,
                                     imposed by States without titling
                                     programs (7 States), who may
                                     experience opportunity costs for
                                     labor expended to obtain a title (
                                     not in cost analysis);
                                     Costs to vessel owners,
                                     imposed by States with titling
                                     programs (47 States), who may
                                     impose additional costs or fees on
                                     vessel owners (not in cost
                                     analysis);
                                     Cost to States to update
                                     website after reviewing rule (not
                                     in cost analysis);
                                     Cost to States seeking to
                                     become VIS compliant to transfer
                                     data to the Coast Guard (included
                                     in cost analysis).
Unquantified Benefits.............  Ability to obtain preferred mortgage
                                     status; lower transaction costs;
                                     deterrence to ``title washing;''
                                     recovery of stolen vessels;
                                     identification of abandoned
                                     vessels; consumer protection; and
                                     security measures for financial
                                     entities; lower administrative
                                     burden and costs to the buyer.
------------------------------------------------------------------------
\1\ Figures are rounded to the nearest one dollar.
\2\ Unquantified costs are defined as costs that are incurred as a
  direct or indirect result of the rulemaking, which are not quantified.
\3\ Potential costs are defined as costs that may potentially be
  incurred as a direct or indirect result of the rulemaking.

    This proposed rule has several goals. The Coast Guard intends to
establish minimum requirements for States electing to become subpart D-
compliant and to prescribe guidelines for State vessel titling systems.
We also intend to provide guidance on how to obtain certification of
compliance with State guidelines for vessel titling systems for the
purpose of conferring preferred status on mortgages, instruments, or
agreements under 46 U.S.C. 31322(d).
    The proposed revisions would affect States that voluntarily seek to
certify their State titling laws with the Coast Guard, pursuant to
regulations under 33 CFR part 187, and to participate in the VIS. As
such, the affected population for this proposed rule would include the
56 U.S. States.
    The Coast Guard has been encouraging States to participate in the
VIS since it has been in place in 2007, but some have chosen not to
participate, primarily because of privacy laws regarding the sharing of
personally identifiable information. The VIS comprises a nationwide
information system for identifying recreational, commercial, and public
vessels that are numbered. As of January 21, 2020, 38 States were
participating in the VIS.\15\ To encourage further participation,
participating States have access to all VIS data.
---------------------------------------------------------------------------

    \15\ https://cgmix.uscg.mil/VISInformation.aspx?VISOption. This
page was last viewed on January 22, 2020. On that date the last
update was January 21, 2020.
---------------------------------------------------------------------------

    As described later, the benefits of this proposed rule would
include increased uniformity across States in their titling laws. In
turn, this would lead to a reduction in transaction costs, increased
fraud prevention (insurance fraud and fraud from illegitimately owned
vessels), increased consumer protection, a decrease in risk to lenders,
the recovery and identification of abandoned vessels, and increased
efficiencies for interstate commerce. Even through there is no new
requirement in the proposed rule for vessel owners to report vessel
damage to the VIS directly, the insurance company would be required to
provide the information to the State if the owners make claims to
repair the vessels. Once the States provide the vessel information to
the VIS, the system can track the vessel information and share with
other States if the repaired boats are sold as boats with no damage
outside the State.
    More specifically, transaction costs would be lower because
consumers may be able to get preferred loans which have lower interest
rates. Also, a buyer's administrative burden and costs when buying a
vessel from a private party may be lessened because the buyer would not
have to do extensive research to assure the vessel is being sold by the
legitimate owner. In addition, some non-titling States require bonds
when vessels are sold; this transaction cost may be eliminated with the
adoption of UCOTA-V.
Affected Population
    This proposed rule would potentially affect all 56 States. The
affected population of the regulated public may be parsed by VIS
participation and also by UCOTA-V adoption. As of January 21, 2020, 38
States were participating in the VIS,\16\ 16 States were interested in
joining the VIS, but had not signed a Memorandum of Agreements (MOA) on
VIS participation, and two States were not able to comply with VIS
requirements due to conflicts with their own state's privacy laws.
Regarding UCOTA-V adoption, 47 of 56 States have not adopted UCOTA-
V.\17\
---------------------------------------------------------------------------

    \16\ VIS participation is defined by the existence of a signed
MOA.
    \17\ The five States that have adopted UCOTA-V are Connecticut,
the District of Colombia, Florida, Hawaii, and Virginia. The four
States in the process of adopting UCOTA-V are Alabama, Georgia,
Tennessee and Texas. This data is current as of January 21, 2020.
---------------------------------------------------------------------------

Costs
    The proposed rule would result in costs to the regulated public
(State and territorial governments) and to the Coast Guard. Costs to
the States may be divided between VIS compliance costs and UCOTA-V
adoption (proposed subpart D compliance) costs. The proposed rule would
not impose direct costs on vessel owners, as it would deter fraud by
introducing penalties for providing false information. However, there
is potential for indirect costs, as noted later.
    Vessel owners are not required to take action as a result of the
proposal. For example, this proposed rule does not require additional
documentation from vessel owners. Transfer of title always requires a
new title to be issued, which is common practice. There is no
requirement other than a statement from the current owner declaring the
vessel is, or has been, damaged. There is no other documentation
required for proof of damage. There is no requirement for a statement
from an insurer. This merely provides disclosure to a buyer.
    The proposed changes of the NPRM would lead to changes in some
States, which may have cost implications for vessel owners and the
States. Below describes the potential costs to vessel owners as a
direct or indirect result of this proposed rule.
Potential Costs to Vessel Owners
    The proposed rule would affect 56 States, all of which have vessel
owners. In States that currently have a titling program for vessels,
and that participate in the VIS, vessel owners would experience no
incremental impact. In States with an existing titling program, vessel
owners would be affected if the State changes or imposes additional
fees through their legislative or regulatory process. States that are
compliant with UCOTA-V (proposed subpart D) report that they did not
impose any additional fees after the adoption of UCOTA-V provisions,
and, according to the Coast Guard's Office of Auxiliary and Boating
Safety (BSX), no State has signaled the intent to increase titling fees
if their system becomes certified as UCOTA-V compliant. However, the
Coast Guard cannot definitively conclude that recreational vessel
owners would not face a cost increase as an indirect effect of these
proposed changes. Nonetheless, we have not computed a cost due to the
proposal to vessel owners in States with a titling system, due to the
uncertainty of a potential cost increase.\18\ The Coast Guard will
revisit this evaluation further after reviewing the public comments it
receives during the comment period of this proposed rule.
---------------------------------------------------------------------------

    \18\ According to BSX, recreational vehicle owners for the 10
compliant and semi-compliant States did not incur a cost increase.
---------------------------------------------------------------------------

    In States without a vessel titling program, recreational vessel
owners may experience a cost increase because of this proposed rule.
These States have not indicated to the Coast Guard how they would
handle existing vessels once they have established a titling system.
Existing vessels may be grandfathered in and permitted to be titled
voluntarily by the owner, or States may require all vessel owners to
obtain a title. A review of websites for States with a titling program
demonstrated that the cost of vessel titles are generally $50 or
less.\19\ Because the Coast Guard does not have information on how
future titling programs would be operated, we have not computed the
potential costs to obtain titles in these States as a cost in this
rulemaking. We acknowledge that there may be some opportunity costs
\20\

for labor expended to obtain the title and actual fees for the title.
---------------------------------------------------------------------------

    \19\ This statement is based on the Coast Guard's review of
website information for 52 States (March 2020). For Virginia state
fees, see https://dwr.virginia.gov/boating/registration/procedure/.
For Florida state fees, see https://www.flhsmv.gov/motor-vehicles-tags-titles/vessels/vessel-titling-registrations/.
    \20\ The use of leisure time to obtain the title. The cost of
this task may be calculated by the formula: One-half of the median
household income. The Coast Guard followed the Department of
Transportation's (DOT) guidance for valuing the opportunity cost of
leisure time. Readers should consult the DOT Memorandum ``Revised
Departmental Guidance on the Valuation of a Statistical Life,''
which may be found at https://www.transportation.gov/sites/dot.gov/files/docs/2016%20Revised%20Value%20of%20Travel%20Time%20Guidance.pdf.
---------------------------------------------------------------------------

    No further action would be required by vessel owners. Vessel owners
do not need to renumber their vessels as a result of the proposed rule,
since existing hull numbers are unrelated to titling. No equipment is
required by vessel owners for compliance.
    Table 2 below summarizes this section detailing potential costs of
the proposed rule. All are considered indirect costs, as they are costs
that may be imposed by the State on vessel owners as a result of the
proposed rule, but not mandated by the rule itself.
    There are other potential costs of the rule detailed in future
section. For a comprehensive list of all potential costs, please refer
to Table 1.

                                       Table 2--Summary of Potential Costs
----------------------------------------------------------------------------------------------------------------
                                                                                Potential direct or
                 Task                        Description           Party bearing cost        indirect cost of
                                                                                proposed rule
----------------------------------------------------------------------------------------------------------------
Obtaining a vessel title (Cost of      Costs to vessel owners,  Vessel owners in 7       Potential indirect cost
 title).                                imposed by States        States.                  of proposed
                                        without titling                                   rulemaking.
                                        programs (7 States),
                                        that require vessel
                                        owners to obtain a
                                        title. Potential cost
                                        of obtaining title is
                                        $50.
Obtaining a vessel title (opportunity  Costs to vessel owners,  Vessel owners in 7       Potential indirect cost
 cost of obtaining title).              imposed by States        States.                  of proposed
                                        without titling                                   rulemaking.
                                        programs (7 States),
                                        who may experience
                                        opportunity costs for
                                        labor expended to
                                        obtain a title.
N/A..................................  Costs to vessel owners,  Vessel owners in 47      Potential indirect cost
                                        imposed by States with   States.                  of proposed
                                        titling programs (47                              rulemaking.
                                        States) that may
                                        impose additional
                                        costs or fees on
                                        vessel owners.
----------------------------------------------------------------------------------------------------------------

Costs to the Coast Guard
    We estimate that the Government costs associated with this
regulatory action would be labor costs for the Coast Guard to: (1)
Process MOAs from the States; (2) coordinate with States; and (3)
update the Coast Guard website. No additional equipment would be needed
to perform these tasks under the proposed rule.
    In order to process an MOA, it is first transmitted from the States
to a Coast Guard compliance officer in BSX and then to the Commandant
(or designee) for approval. To coordinate with the States, a Coast
Guard compliance officer would engage with and respond to inquiries
from the States. The Coast Guard estimates that a Coast Guard
compliance officer would spend 0.25 hour to process an MOA from a State
and another 0.25 hour to transmit it to the Commandant (or designee)
for approval. The Commandant or designee would spend 0.2 hour to
approve an MOA (Cost = Count of MOAs x [(0.5 hour x Compliance
officer's wage rate) + (0.2 hour x Commandant's wage rate)]).
    As a result of this proposal, we estimate that the Coast Guard
would need to engage with, respond to inquiries, and coordinate with
States regarding VIS participation and UCOTA-V compliance. Eighteen
States are not in the VIS We estimate that a Coast Guard compliance
officer would need to coordinate with each of these States for VIS
participation.\21\ To engage with and respond to inquiries from States,
we estimate that the compliance officer would spend 0.5 hour per
State's inquiry to coordinate a response (Cost = 18 States x (0.5 hour
x Compliance officer's wage rate)). For the 47 States needing to adopt
UCOTA-V, we estimate that a Coast Guard compliance officer would spend
0.5 hour per State to assist (Cost = 47 States x (0.5 hour x Compliance
officer's wage rate)).
---------------------------------------------------------------------------

    \21\ Readers may consult Coast Guard data at https://cgmix.uscg.mil/VISInformation.aspx. This web page was last viewed on
January 21, 2020. Sixteen States have initiated VIS participation,
but have not completed an MOA. Two States do not participate.
---------------------------------------------------------------------------

    Lastly, the Coast Guard would need to update its website with
information on this proposed rule. We estimate that 1 hour would be
needed by a computer technician and an additional 0.25 hour for a
compliance officer to supervise and approve the update. This is a one-
time task that is expected to occur in the first year of the final
rule's enactment (Cost = [(0.25 hour x Coast Guard compliance officer's
wage rate) + (1 hour x Federal computer technician's wage rate)]).

                                  Table 3--Summary of Costs to the Coast Guard
----------------------------------------------------------------------------------------------------------------
                                 Time burden and                         Applicable     Direct or  indirect cost
             Task               responsible party         Cost           population          of proposed rule
----------------------------------------------------------------------------------------------------------------
Process MOA from States.......  0.25 hours to      (0.5 hours x USCG  One-time cost to  Direct.
                                 process MOA        Compliance         the Coast Guard
                                 (USCG Compliance   officer's wage     for all 56
                                 officer).          rate) + (0.2       States.
                                0.25 hours to       hour x
                                 transmit for       Commandant or
                                 approval (USCG     designee's wage
                                 Compliance         rate) x 56
                                 officer).          States.
                                0.2 hours for
                                 approval
                                 (Commandant or
                                 designee).

Coordinate with States........  0.5 hours for 18   18 States x (0.5   One-time cost to  Direct.
                                 States without     hour x USCG        the Coast Guard
                                 VIS (USCG          Compliance         for 18 States.
                                 Compliance         officer's wage    One-time cost to
                                 officer).          rate).             the Coast Guard
                                0.5 hours for 47   47 States x (0.5    for 47 States.
                                 States needing     hour x USCG
                                 to adopt UCOTA-V   Compliance
                                 (USCG Compliance   officer's wage
                                 officer).          rate).
Update Coast Guard Website....  1 hour to update   0.25 hour x USCG   One-time cost to  Direct.
                                 (Federal           compliance         the Coast Guard.
                                 computer           officer's wage
                                 technician).       rate) + (1 hour
                                0.25 hours to       x Federal
                                 approve (USCG      computer
                                 Compliance         technician's
                                 officer).          wage rate.
----------------------------------------------------------------------------------------------------------------

Costs to the Regulated Public (States)
    Compliance with the proposed rule would require a variety of tasks
by the regulated public. This section documents the Coast Guard's
assessment of the proposed rule's changes and the steps States would
need to take as a result. Not all tasks would need to be carried out by
all the States. In this section, the Coast Guard notes first the tasks
that apply to all States. Next are the tasks that result from the
proposed rule. We split these tasks into categories to better calculate
the costs, since some tasks apply to some States and others apply to
other States, depending on their current level of compliance with
existing rules.
    Below is a list of all costs to the regulated public:
Costs to the Regulated Public--States
    All 56 States would need to be familiarized with the proposed rule
and complete the task of reviewing the State's website. Upon review of
the State's procedures and websites, some States may need to make
updates. These are discussed in more detail below.
    The Coast Guard estimates that States would spend 0.5 hour to
become familiarized with the proposed rule.\22\ A manager would perform
this task. A manager would spend another 0.5 hour to review the State's
procedures and website to make a determination if anything would need
to change in response to the proposed rule (Cost = 56 States x 0.5 hour
x State manager's wage rate). All 56 States may potentially need to
update their websites, which would be accomplished by a computer
technician. The Coast Guard estimates that this task would take 1 hour
and would be performed by a computer technician at the direction of a
manager.\23\ However, as the Coast Guard does not have an estimate on
how many States would need to update their website, the cost is
considered only a potential cost and is not factored into the cost
analysis.
---------------------------------------------------------------------------

    \22\ This estimate is based on a previous Coast Guard
rulemaking. In the 2014 final rule for Personal Flotation Devices
Labeling and Standards (79 FR 56491), the Coast Guard estimated that
the task would take 0.5 hour (https://www.federalregister.gov/documents/2014/09/22/2014-22373/personal-flotation-devices-labeling-and-standards). Time estimate can be found under Table 2, ``State
Regulatory Review''. No public comments were received on this
estimate. This page was last viewed on May 21, 2021.
    \23\ The Coast Guard estimates a manager would spend 0.25 hour
to provide direction and supervise and approve the work of a
computer technician.
---------------------------------------------------------------------------

    Although not explicitly required, some States may send email
notifications or a press release to interested parties (e.g., such as
the media, recreational boaters, boating associations, the Coast Guard
Auxiliary, etc.) Another 0.5 hour is estimated for a State manager to
write a notification of regulatory change for the public.\24\ We
estimate these as one-time costs to the State.
---------------------------------------------------------------------------

    \24\ This estimate is based on the Coast Guard's rule for
Tankers Automatic Pilot Systems (83 FR 55272). Please see https://www.federalregister.gov/documents/2018/11/05/2018-24127/tankers-automatic-pilot-systems, Table 3, ``Write Notification of Regulatory
Change'', 4th Entry (0.5 hours). This estimate is defined as
``Communicate regulatory change'', which is an identical task
undertaken by the State manager. This page was last viewed on May
21, 2021).

                                       Table 4--Summary of Costs to States
----------------------------------------------------------------------------------------------------------------
                                 Time burden and                         Applicable      Direct or indirect cost
             Task               responsible party         Cost           population         of proposed rule
----------------------------------------------------------------------------------------------------------------
Become familiarized with rule.  0.5 hours State    Cost = (56 States  One-time cost to  Direct.
                                 manager.           x 0.5 hour x       all 56 States.
                                                    State manager's
                                                    wage rate) + (56
                                                    States x 0.5
                                                    hour x State
                                                    manager's wage
                                                    rate).
Review website................  0.5 hours State                                         Direct.
                                 manager.
Update website (Not included    1 hour Computer    Cost = 1 hour x    Potential one-    Potential direct cost.
 in cost analysis).              technician.        56 States x        time cost to
                                                    Computer           all 56 States.
                                                    Technician's
                                                    wage rate.
Notification of change........  0.5 hours State    Cost = 0.5 hour x  One-time cost to  Direct.
                                 manager.           56 States x        all 56 States.
                                                    State manager's
                                                    wage rate.
----------------------------------------------------------------------------------------------------------------

Costs to the Regulated Public--States (VIS Compliance Costs)
    Based on BSX data,\25\ we estimate that there are two States
currently not in compliance with any existing VIS requirements. Some
States are in partial compliance with existing requirements for the
VIS. Coast Guard data demonstrates that 16 States have initiated VIS
participation, but are not in compliance because they do not have a
signed MOA with the Coast Guard. The remaining 38 States have signed
MOAs, which means they are participating in the VIS.
---------------------------------------------------------------------------

    \25\ https://cgmix.uscg.mil/VISInformation.aspx. This web page
was last viewed on January 8, 2020.
---------------------------------------------------------------------------

    The 16 States that have initiated VIS activity, but do not have a
signed MOA with the Coast Guard, would need to complete the following
steps for an MOA. In order to comply, States would incur costs to: (1)
Coordinate with the Coast Guard for data transfer; (2) prepare and
submit a completed MOA and participation form; and (3) engage in
coordination activities to complete a new user request form.
    All the VIS-participating States would engage in activities to
upload data to the VIS. However, according to Info-Link
Technologies,\26\ the contractor responsible for VIS updates, VIS data
uploads for each State are often an automated process, where software
automatically prepares and uploads a data file each month. The economic
impact of the data submission is zero as a result of Info-Link
Technologies already bearing the cost for the data, which they receive
from every State regardless of their participation in VIS. Thus, States
that do not currently participate in VIS still engage in a virtual data
submission with the contractor and will not incur an additional cost or
time burden. As a result, we conclude that VIS data uploads would not
produce costs to States new to VIS.
---------------------------------------------------------------------------

    \26\ Email from Info-Link Technologies, Inc. to William Burgess,
Compliance Officer, CG-BSX-1 dated February 5, 2020 (available in
the docket where indicated under the Public Participation and
Request for Comments portion of this NPRM).
---------------------------------------------------------------------------

    New VIS participants would need to complete the new user request
form. We estimate that it would take 0.1 hour to complete the form.
These estimates are based on data provided by Info-Link Technologies
and the Coast Guard's Collection of Information entitled ``Vessel
Identification System,'' OMB Control Number: 1625-0070.\27\
---------------------------------------------------------------------------

    \27\ During the renewal process for the collection of
information request, no public comments were received on the
estimate. In preparing this NPRM, the Coast Guard reviewed data and
revised the estimate for the duration of labor to upload VIS data.
The revision better reflects the amount of time needed to perform
periodic uploads of automated data.
---------------------------------------------------------------------------

    Lastly, two States would have to address legislative conflicts with
existing privacy laws that complicate or prevent VIS participation. We
estimate that such a task would require that a manager to negotiate the
changes with a State legislative committee. An attorney would draft the
legislation. Unlike UCOTA-V, which has uniform legislation to follow
for each State, privacy law amendments may take more time to develop.
Therefore, we estimate that a manager would spend 40 hours to negotiate
legislative changes. Another 40 hours would be spent by an attorney to
draft the legislative language. State laws are often voted in blocks
and the labor to put the amended privacy legislation forward and to
vote on it is considered to be unseverable. For that reason, we have
not estimated a cost for this step. However, the Coast Guard would like
to request comments from the public on any information regarding the
estimated cost to draft and negotiate legislative changes. Presently,
we use our current estimates for drafting and negotiating these changes
but omit the cost of labor to put forward and vote on the legislation.
    We computed a cost to transmit VIS data to the Coast Guard for 18
States on the basis that States may correspond with the Coast Guard to
initiate the data transfer or may have issues in their computer systems
preventing automatic data transfer. In the event that this occurs, the
State may send spreadsheets to the Coast Guard, and a technician
contracted to the Coast Guard would upload the data. However, we
acknowledge that this is already a task under existing regulations and,
in most cases, data is automatically transmitted.

                                            Table 5--Summary of Costs
                                                [VIS compliance]
----------------------------------------------------------------------------------------------------------------
                                                                                Direct or
              Task                Time burden and          Cost         Applicable population   indirect cost of
                                 responsible party                                               proposed rule
----------------------------------------------------------------------------------------------------------------
Prepare and submit an MOA......  16 hours (State    18 States x (16    One-time cost for 18    Direct.
                                  manager).          hours x State      States.
                                                     Manager wage
                                                     rate).
Complete New User request form.  0.1 Hour (State    18 States x (0.1   One-time cost for 18    Direct.
                                  manager).          hour x State       States.
                                                     Manager wage
                                                     rate).
Coordinate with Coast Guard for  1 hour (State      18 States x (1     Potential one-time      Direct
 data transfer.                   manager).          hour x State       cost for States with    (Potential).
                                                     Manager wage       issues with the
                                                     rate).             automatic data
                                                                        transfer. (Even
                                                                        though considered
                                                                        potential, included
                                                                        in cost analysis due
                                                                        to potential
                                                                        correspondence to
                                                                        initiate data
                                                                        transfer or issues
                                                                        with automatic data
                                                                        transfer).
Draft legislative language to    40 hours (State    2 States x [(40    One time cost for 2     Direct.
 amend privacy laws.              manager) 40        hours x State      States.
                                  hours (State       Manager wage
                                  attorney).         rate) + (40
                                                     hours x State
                                                     attorney wage
                                                     rate)].
----------------------------------------------------------------------------------------------------------------

Costs to the Regulated Public--States in UCOTA-V Adoption (Proposed
Subpart D Compliance)
    We base our cost estimates on all 56 States choosing to adopt
UCOTA-V. As of January 16, 2020, five States have adopted UCOTA-V, and
five States are developing legislation to become UCOTA-V-compliant.\28\
Many of the remaining States have reported that they are waiting for
the Coast Guard to promulgate a rule on UCOTA-V before going through
the legislative process. In addition, States often wait for their
neighboring States to adopt legislation that potentially has effects
across State borders. Insurers and manufacturers have lobbied for the
changes. For these reasons, the Coast Guard estimates that all 56
States would adopt UCOTA-V.
---------------------------------------------------------------------------

    \28\ Email from Uniform Law Commission to William Burgess,
Compliance Officer, Coast Guard (January 16, 2020) (available in the
docket where indicated under the Public Participation and Request
for Comments portion of this NPRM).
---------------------------------------------------------------------------

    Currently, 47 States have not adopted UCOTA-V nor initiated
legislation to adopt UCOTA-V. The cost analysis of UCOTA-V adoption
focuses solely on these 47 States. In order to comply with the proposed
rule, States would need to develop legislation and amend their computer
systems to comport with UCOTA-V. As noted earlier, all States would
post information on their website about this rulemaking; that task
appears in a preceding section of this analysis.
    In order to develop UCOTA-V legislation,\29\ a State would require
the labor of an attorney \30\ to draft the legislation \31\ for a State
legislative committee to begin the legislative process. The Uniform Law
Commission has developed legislative text for UCOTA-V which each State
may use to develop its respective State law. For this reason, the labor
for each State is relatively low. We estimate that an attorney would
spend approximately 24 hours \32\ to draft the legislative language.
Given that State laws \33\ are often voted in blocks, the labor to put
UCOTA-V legislation forward and to vote on it is considered to be
unseverable and, for that reason, we have not estimated a further cost
on developing legislation.
---------------------------------------------------------------------------

    \29\ For all uniform acts, the State's legislative drafting
office mainly formats the bill to conform to the State's required
format and fill in bracketed areas of the text. The Uniform Law
Commission (ULC) (https://www.uniformlaws.org/home) also includes
italicized legislative notes when they format the bill for the
particular State. This allows the time to draft the bill to be
relatively shorter than with other regulations.
    \30\ Each State has its own legislative drafting agency
responsible for drafting legislation. The bill drafters are
attorneys who draft bills for all the state legislators.
    \31\ As this is part of the State's normal legislative process,
we do not anticipate any additional fees beyond the normal process
for these bills.
    \32\ This estimate comports with previous estimated durations of
making legislative changes at the State level. In the final rule for
Personal Flotation Devices Labeling and Standards (79 FR 56491,
USCG-2013-0263, RIN 1625-AC02), Coast Guard estimated that a change
by legislative would take 10 hours. No public comments were received
on this estimate. Please see https://www.federalregister.gov/documents/2014/09/22/2014-22373/personal-flotation-devices-labeling-and-standards). The Coast Guard adjusted this estimate to reflect
the more complex nature of this change.
    \33\ Some States may delegate the approval process of such
changes to an administrative law committee rather than vote on it in
the legislature. The process to develop the law and to put it
forward for voting would be the same.
---------------------------------------------------------------------------

    States adopting UCOTA-V would need to update their procedures and
websites to reflect the resulting changes. We estimate that 5 hours
would be spent by a State manager to review and edit State procedures,
manuals, policy documents and other information (Cost = (47 States x 5
hours x State manager's wage rate).\34\
---------------------------------------------------------------------------

    \34\ This estimate comports with previous estimated durations of
reviewing and editing manuals and policy documents. The Coast Guard
reviewed previously approved OMB collections for the final rule for
Marine Vapor Control Systems (RIN 1625-AB37, USCG-1999-5150, 80 FR
7539), the proposed rule for Revision of Crane Regulation Standards
(RIN 1625-AB78, USCG-2011-0992, 78 FR 27913) and the final rule for
Personal Flotation Devices Labeling and Standards (79 FR 56491,
USCG-2013-0263, RIN 1625-AC02, 78 FR 27913). Previously approved
collections of information may be found at Information Collection
Review (reginfo.gov). No public comments were received on these
estimates. The Coast Guard adjusted its estimate to reflect changes
in complexity of the task.
---------------------------------------------------------------------------

    The remaining UCOTA-V compliance costs items would be: (1) Labor
for a manager to coordinate with the Coast Guard to ensure the State's
program meets UCOTA-V certification requirements (Cost = 47 States x
(0.5 hour x State manager's wage rate)); (2) labor for an
administrative assistant and a manager to assist with the conversion or
update to a subpart D-compliant system (Cost = 47 States x [(0.25 hour
x administrative assistant's wage rate) + (0.75 hour x State manager's
wage rate)]); (3) labor for a manager to oversee conversion to a
subpart D-compliant system (Cost = 47 States x 0.25 hour x State
manager's wage rate); and (4) labor for a software developer to convert
the system to a subpart D compliant system (Cost = 47 States x (12.6
hours x computer technician's wage rate)). These tasks and their
calculations are shown in table 6.\35\
---------------------------------------------------------------------------

    \35\ According to BSX, most States use an ``off the shelf''
system, so changes are easy and menu driven. Some States have older
systems which would take more time to adjust, but the older systems
are the exception, not the rule. The Coast Guard estimates the
average number of hours of labor for a computer technician by using
the average time spent on design and coding from a University of
South Carolina study on software developers. Readers can find the
study at: https://cse.sc.edu/job/how-software-developers-really-spend-their-time. The study uses the average number of hours per
week software developers spend designing and coding software. The
Coast Guard considers this to be a reasonable rough proxy for the
purpose of this analysis.
---------------------------------------------------------------------------

    For the 7 States that do not have an existing titling program, the
labor tasks for amending State's computers to comport with UCOTA-V
would be greater. We estimate that 24 hours would be spent by a
computer technician in these States to amend the State's computers to
comport with UCOTA-V, and that a manager would spend another 0.5 hour
to review and approve the work. The Coast Guard requests comments from
States on their assessment of tasks and costs that would result from
the proposed rule.
    BSX routinely contacts States regarding their vessel titling
systems. There are currently 45 States titling vessels and 1 State that
makes titling optional.\36\ Provided that these States become compliant
with the recent regulatory changes in the Standard Numbering System,
Boating Accident Report Database, and VIS (33 CFR parts 173, 174, 181,
and 187) by the required date, any changes made to the current titling
systems should be minimal.
---------------------------------------------------------------------------

    \36\ Email from NASBLA Vessel Registration, Identification, and
Titling Committee (VIRT) to William Burgess, Compliance Officer,
Coast Guard, February 10, 2010. Available in the docket where
indicated under the Public Participation and Request for Comments
portion of the preamble.
---------------------------------------------------------------------------

    Coast Guard personnel attended the National Association of State
Boating Law Administrators Workshop held in Lexington, KY from 23 to 28
February 2020. Approximately 40 boating administrators from the States
were in attendance, and 4 stated they were contemplating adopting
UCOTA-V. The four states are Wisconsin, Minnesota, Alaska, and South
Carolina. None of these 4 states have conducted a complete cost
analysis, but the initial projected cost ranged from minimal to about
$8,000.
    The primary changes required would include the ability to mark a
title as ``branded,'' and to add any numbered vessels that are not
currently required to be titled. For example, Virginia adopted UCOTA-V
and reprogrammed their system to accept the ``branded'' designation.
According to the State of Virginia's Boating Law Administrator

(BLA),\37\ this was accomplished at no cost to the State.\38\
---------------------------------------------------------------------------

    \37\ According to the Virginia BLA, updates to the system are
included as a part of routine information technology maintenance.
https://community.nasbla.org/blogs/thomas-guess/2018/08/23/ucotva-in-virginia. The website is dated August 23, 2018. This page was
last viewed on February 5, 2020.
    \38\ The governor of each State appoints a single agency to be
the recipient and administrator of grant funds received from the
State Recreational Boating Safety Grant Program, which is authorized
under 46 U.S.C. Chapter 131. These State agencies in turn appoint a
BLA to be the State's single point of contact for the purposes of
administering the grant program. Although duties can vary from State
to State, their primary function is to administer the recreational
boating safety program within the State. Every State and territory
of the United States has an assigned BLA. The BLA for Virginia is an
employee with the Virginia Department of Game and Inland Fisheries.
---------------------------------------------------------------------------

    The remaining 11 States that do not currently title vessels do
title vehicles, and their vehicle titling systems could add vessels. As
an example, Connecticut (previously a non-titling State) adopted UCOTA-
V and its Department of Motor Vehicles began issuing titles for
vessels.\39\ This process is analogous to registering a motor vehicle.
In other words, at the time a person buys a car, the owner must
register and title the car with the cognizant state. Likewise, a vessel
owner would now be able to register and title vessel at the same time
and in the same place. Connecticut did not incur any new costs
associated with this transition since it used the existing
infrastructure, and the change was completed as a part of an
information technology update as per the State BLA.\40\
---------------------------------------------------------------------------

    \39\ No changes would be required to any State's systems to
facilitate population of the VIS. Data received from the States for
inclusion in the VIS would be handled by the Coast Guard contractor
and reformatted as necessary to populate the VIS database. We do not
expect States to incur additional costs as the cost is already
captured under the existing Coast Guard long-term contract for
management and maintenance of the VIS.
    \40\ Conversation at the Boating Law Administrators Workshop
(circa February 28, 2018 to March 1, 2018) with Ms. Eleanor Mariani,
Boating Law Administrator, Connecticut, and William Burgess,
Compliance Officer, Coast Guard.
---------------------------------------------------------------------------

    The 10 States that have adopted or have begun adopting the UCOTA-V
model have engaged in the tasks noted in this text as costs of
compliance. For example, they have already collaborated with the Coast
Guard regarding their vessel titling system updates. These States would
not incur additional costs because they elected to adopt the UCOTA-V
model prior to this regulation. These States would not require the use
of a computer technician to upgrade the computer system because the
conversion has taken place already. No further actions would be needed
by States in this situation. As noted earlier, these States would
already be familiar with and would have reviewed their existing
procedures as a result of the rulemaking. The Coast Guard invites
comments on any additional costs that would be incurred by States that
are currently (pre-proposal) in the process of adopting UCOTA-V.

                               Table 6--Summary of Costs for Subpart D Compliance
----------------------------------------------------------------------------------------------------------------
                                    Time burden and                           Applicable      Direct or indirect
              Task                 responsible party         Cost             population             cost
----------------------------------------------------------------------------------------------------------------
Draft UCOTA-V legislative         2 hours (State      47 States x [(2     One-time cost for   Direct.
 language.                         manager) 5 hours    hours x State       47 States.
                                   (State attorney).   manager wage
                                                       rate) + (5 hours
                                                       x State attorney
                                                       wage rate)].
Coordinate with Coast Guard for   0.5 hours (State    47 States x (0.5    One-time cost for   Direct.
 compliance and certification.     manager).           hour x State        47 States.
                                                       manager wage
                                                       rate).
Assist with update and convert    0.25 hours (admin   47 States x [(0.25  One-time cost for   Direct.
 to compliant computer system.     assistant) 0.75     hour x admin        47 States.
                                   hours (State        assistant wage
                                   manager).           rate) + (0.75
                                                       hour x State
                                                       manager wage
                                                       rate)].
Oversee update or conversion to   0.25 hours (State   47 States x (0.25   One-time cost for   Direct.
 compliant system.                 manager).           hour x State        47 States.
                                                       manager wage
                                                       rate).
Update or convert to a compliant  12.6 hours          47 States x (12.6   One-time cost for   Direct.
 system.                           (computer           hours x computer    47 States.
                                   technician).        technician wage
                                                       rate).
Amend State's computers to        2 hours (computer   7 States x [(2      One-time cost for   Direct.
 comport with UCOTA-V. (Applies    technician) 0.25    hours x computer    7 States.
 to States without an existing     hours (State        technician wage
 titling program.).                manager).           rate) + (0.25
                                                       hour x State
                                                       manager wage
                                                       rate)].
Update State procedures or        5 hours (State      47 States x (5      One-time cost for   Direct.
 processes..                       manager).           hours x State       47 States.
                                                       manager wage
                                                       rate).
Post updated procedures on        0.25 hours (State   24 States x [(0.25  One-time cost for   Direct.
 website..                         manager) 1 hour     hour x State        24 States.
                                   (computer           manager wage
                                   technician).        rate) + (1 hour x
                                                       computer
                                                       technician wage
                                                       rate)].
----------------------------------------------------------------------------------------------------------------

Cost Calculations for the Proposed Rule
    We discuss the derivation of cost data in the following paragraphs.
We estimate the approximate loaded hourly labor rates of State
employees as follows: Manager ($94.30); administrative assistant
($33.81); computer technician ($67.98); and lawyer ($124.57). The
loaded wage factor is 1.74 for non-managerial State workers and 1.56
for managers at the State level, based on Bureau of Labor Statistics
(BLS) data. See table 7 for details.

                             Table 7--Loaded Wage Factor Calculation (2020 dollars)
----------------------------------------------------------------------------------------------------------------
                                                                       Total          Wage &        Loaded wage
          Personnel category               Data source(s) \1\      compensation      salaries         factor
----------------------------------------------------------------------------------------------------------------
All Workers, State and Local            BLS Employer Costs for            $51.54         $29.546            1.74
 Government.                             Employee Compensation,
                                         all workers in State
                                         and Local Government.
Managers, State and Local Government..  BLS Employer Costs for             64.02           41.02            1.56
                                         Employee Compensation,
                                         Managers in State and
                                         Local Government.
Coast Guard Uniform Positions.........  2020 Military Active &    ..............  ..............            1.85
                                         Reserve Component Pay
                                         Tables \2\.
----------------------------------------------------------------------------------------------------------------
\1\ A loaded wage rate is what a company pays per hour to employ a person, including the hourly wage and the
  cost of benefits (health insurance, vacation, etc.). To calculate the load factor, we used the series IDs
  CMU3019200000000D (for all workers) and CMU3010000100000D (for managers, professions and related
  occupations'') using the multi-screen database. Visit Employer Cost for Employee Compensation: Multi-Screen
  Data Search: U.S. Bureau of Labor Statistics (bls.gov)/and select ``State and local government workers''.
  Select ``Total Compensation'' and ``Wages and salaries''. Select ``All workers'' or ``Managers, professional,
  and related occupations''. Select ``Public Administration''. Select ``All workers''. Select ``United States''.
  Select ``Cost of Compensation''. Select ``Not seasonally adjusted''. Finally, use values for the 4th Quarter
  of 2020 to calculate the load factor by dividing total compensation by wages and salaries.
\2\ https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables.html. Data was posted on December 30, 2019
  and web page was last updated January 27, 2020. This page was last viewed on February 20, 2020.

    For all provisions with costs to the Government, we use publicly
available data found on OPM's website under ``Policy, Data, and
Oversight'' and in the Congressional Budget Office's report,
``Comparing the Compensation of Federal and Private-Sector Employees,
2011 to 2015.'' We estimate labor costs attributed to the Government
Coast Guard compliance officers, GS-14 managers, GS-13 computer
technicians, and the Commandant. We estimate the fully loaded labor
costs for a GS-13 and GS-14 compliance officer at $71.03 and $79.48
respectively.\41\ We use a weighted average of the wage rates ($73.14)
for calculations. We estimate the wage rate for a GS-14 manager at
$79.48, the wage rate for a GS-13 computer technician at $79.48, and
the wage rate for the Commandant (O-10) at $163. This figure represents
a loaded wage rate for uniformed Coast Guard positions.\42\
---------------------------------------------------------------------------

    \41\ General Schedule (Pay & Leave: Salaries & Wages--OPM.gov).
Labor costs calculated by 1) finding hourly wage rate for GS-level
under ``2020 General Schedule (Base)''. Choose Step 5 value. 2) To
calculate load factor, we go to https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/52637-federalprivatepay.pdf. Use
tables 2 and 4. Divide the total compensation by the wages for a
Federal employee. Multiply by hourly wage rate obtained from OPM.
GS-13 falls under ``Master's Degree'' and GS-14 falls under
``Professional/Doctorate Degree''. For the Master's Degree we end up
with a benefits to wage ratio, using this method, of $74.80/$45 =
1.66 and for the Professional/Doctoral Degree of $81.70/$51.90 =
1.56. Using these to obtain a fully burdened rate, we end up, for
the GS-13 labor, $42.73 x 1.66 = $ $71.03 and, for the GS-14 labor,
$50.49 x 1.56 = $79.48.
    \42\ The load factor for uniformed positions is based on the
Coast Guard's analysis of compensation and benefits of Coast Guard
enlisted and commissioned personnel based on data found in https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables.html. This
page was last viewed on December 20, 2019.
---------------------------------------------------------------------------

    For positions outside the Coast Guard, we use publicly available
data from the BLS Occupational Compensation Survey to estimate wage
rates for State and local positions that would be impacted by the
proposed rule. We present the estimated wage rates and a summary of the
data for the proposed rule in table 8.

                                        Table 8--Loaded Wage Calculation
                                                     [$2020]
----------------------------------------------------------------------------------------------------------------
                                                                    Mean hourly
         Personnel category               Data source(s) \1\           wage         Load factor     Loaded wage
----------------------------------------------------------------------------------------------------------------
Computer Developer.................  Software Developers,                 $54.94            1.74          $95.60
                                      Applications (OC 15-1256)
                                      \2\.
Administrative Support.............  Secretaries and                       19.43            1.74           33.81
                                      Administrative Assistants,
                                      Except Legal, Medical, and
                                      Executive (OC 43-6014) \3\.
General Manager....................  General and Operations                60.45            1.56           94.30
                                      Managers (OC 11-1021) in
                                      Management Occupations \4\.
Lawyer.............................  Lawyers, Judges, and                                   1.74          124.57
                                      Related Workers (OC 23-
                                      1011) in the Legal
                                      Occupations.\5\.
Coast Guard Commandant (O-10)......  Military Active & Reserve                              1.85             163
                                      Component Pay Tables \6\.
Civilian Computer Technician (GS-    OPM Salary Table (2020)....          42.736            1.66           71.03
 13).
Civilian Manager (GS-14)...........  OPM Salary Table (2020)....           50.49            1.57           79.48
Coast Guard Compliance Officer (GS-  OPM Salary Table (2020)....           42.73            1.66           71.03
 13).
Coast Guard Compliance Officer (GS-  OPM Salary Table (2020)....           50.49            1.57           79.48
 14).
Coast Guard Compliance Officer       Weighted average by the      ..............  ..............           73.14
 (average) \7\.                       formula: [(0.75 x $71.03
                                      GS-13 Compliance Officers'
                                      wage rate) + (0.25 x
                                      $79.48 GS-14 Compliance
                                      Officers' wage rate)].
----------------------------------------------------------------------------------------------------------------
\1\ To calculate the loaded wages, we used Occupational Code 11-1021 (General and Operations Managers) for
  general managers, Occupational Code 43-6014 (Secretaries, Except Legal, Medical, and Executive) for clerical,
  and Occupational Code 15-1256 (Software Developers and Software Quality Assurance Analysts and Testers) for
  computer developer. Please see footnotes of Table 7 for instructions on calculating load factors.

\2\ Software Developers and Software Quality Assurance Analysts and Testers (bls.gov).
\3\ Secretaries and Administrative Assistants, Except Legal, Medical, and Executive (bls.gov).
\4\ General and Operations Managers (bls.gov).
\5\ Lawyers (bls.gov).
\6\ https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables.html.
\7\ Coast Guard compliance officers consist of GS-13s and GS-14s. There are four Coast Guard employees who would
  complete this requirement (three GS-13s and one GS-14). To calculate the in-government wage rate, we
  calculated three-fourths of the GS-13 in-government wage rate ($71.03) and one-fourth of the GS-14 in-
  government wage rate ($79.48) and added them together to estimate a more accurate wage rate for the team that
  would complete this process.

    We estimate the costs in this RA in 2020 dollars based on BLS wage
rates. We estimate the total cost for States to be $182,607,
undiscounted (not including Government costs). We estimate the total
Government costs associated with this proposed rule to be $14,537. We
show the summary of compliance costs in Table 9.

                                  Table 9--Estimated Cost of Proposed Rule \1\
----------------------------------------------------------------------------------------------------------------
           CFR citation                      Task \2\                Cost calculation           Total costs
----------------------------------------------------------------------------------------------------------------
Costs to Regulated Public
 (States):
    General Compliance Costs (All
     States) (See Table 3) (One-
     time costs for States):
        33 CFR 187................  Become familiar with NPRM.  56 States x (0.5 hour x    $2,640
                                                                 $94.30/hour State
                                                                 manager).
        33 CFR 187................  Review procedures and       56 States x (0.5 hour x    2,640
                                     website.                    94.30/hour State
                                                                 manager).
        33 CFR 187................  Write press release or      56 States x (0.5 hour x    2,640
                                     email.                      94.30/hour State
                                                                 manager).
        33 CFR 187................  Update website. (Potential  56 States x (1 hour x      Not in cost
                                     cost, not used in           95.60/hour computer        calculations
                                     analysis).                  technician).
                                                                                ----------------------
            Subtotal--General       ..........................  .........................  $7,921
             Compliance Costs
             (States).
    VIS Compliance Costs (States)
     (See Table 5) (One-time costs
     for States):
        33 CFR 187.7..............  Prepare and submit an MOA.  18 States x (16 hours x    27,158
                                                                 94.30/hour State
                                                                 manager).
        33 CFR 187.7..............  Complete New User request   18 States x (0.1 hour x    170
                                     form.                       94.30/hour State
                                                                 manager).
        33 CFR 187.7..............  Coordinate with Coast       18 States x (1 hour x      1,697
                                     Guard for data transfer.    94.30/hour State
                                     (Potential cost, but used   manager).
                                     in analysis).
        33 CFR 187.7..............  Draft legislative language  2 States x [(40 hours x    17,510
                                     to amend privacy laws.      94.30/hour State
                                                                 manager) + (40 hours x
                                                                 124.57/hour State
                                                                 attorney)].
        33 CFR 187.7..............  Put forward and vote on     Applies to 2 States......  Unquantified
                                     the privacy legislation.
                                                                                ----------------------
            Subtotal--VIS           ..........................  .........................  46,535
             Compliance Costs
             (States).
    UCOTA-V Adoption (Proposed
     Subpart D) Compliance Costs
     (States) (See Table 6) (One-
     time costs for States):
        33 CFR 187.306............  Draft UCOTA-V legislative   47 States x [(2 hours x    38,138
                                     language.                   94.30/hour State
                                                                 manager) + (5 hours x
                                                                 124.57/hour State
                                                                 attorney)].
        33 CFR 187.306............  Put forward and vote on     Applies to 47 States.....  Unquantified
                                     the privacy legislation.
        33 CFR 187.306............  Coordinate with Coast       47 States x (0.5 hour x    2,216
                                     Guard for compliance and    94.30/hour State
                                     certification.              manager).
        33 CFR 187.312............  Assist with update and      47 States x [(0.25 hour x  3,721
                                     convert to compliant        33.81/hour admin
                                     system.                     assistant) + (0.75 hour
                                                                 x 94.30/hour State
                                                                 manager)].
        33 CFR 187.312............  Oversee update or           47 States x (0.25 hour x   1,108
                                     conversion to compliant     94.30/hour State
                                     system.                     manager).
        33 CFR 187.312............  Update or convert to a      47 States x (12.6 hours x  56,614
                                     compliant system.           95.60/hour computer
                                                                 technician).
    33 CFR 187.312................  Amend State's computers to  7 States x [(2 hours x     1,503
                                     comport with UCOTA-V.       95.60/hour computer
                                                                 technician) + (0.25 hour
                                                                 x 94.30/hour State
                                                                 manager)].

    33 CFR 187....................  Update procedures or        47 States x (5 hours x     22,161
                                     processes.                  94.30/hour State
                                                                 manager).
    33 CFR 187....................  Post updated procedures on  24 States x [(0.25 hour x  2,860
                                     website.                    94.30/hour State
                                                                 manager) + (1 hour x
                                                                 95.60/hour computer
                                                                 technician)].
                                                                                ----------------------
        Subtotal: UCOTA-V           ..........................  .........................  128,321
         (Proposed Subpart D)
         Compliance Costs (States).
            Total Cost for          ..........................  .........................  182,607
             Regulated Public
             (States).
Federal Government Costs (One-time
 cost to Government for States
 affected):
    33 CFR 187.306................  Process New User request    18 States x (0.5 hour x    658
                                     from States.                73.14/hour Compliance
                                                                 Officer).
    33 CFR 187.306................  Process an MOA from States  18 States x [(0.2 hour x   11,448
                                                                 163/hour Commandant) +
                                                                 (8.25 hours x 73.14/hour
                                                                 Compliance Officer)].
    33 CFR 187.306................  Coordinate with 18 States   18 States x (0.5 hour x    658
                                     for VIS.                    73.14/hour Compliance
                                                                 Officer).
    33 CFR 187.312................  Coordinate with 47 States   47 States x (0.5 hour x    1,682
                                     on UCOTA-V certification.   73.14/hour Compliance
                                                                 Officer).
    33 CFR 187....................  Update Coast Guard's        (1 hour x 71.03/hour       91
                                     website. (Initial year      computer technician) +
                                     cost).                      (0.25 hour x 79.48/hour
                                                                 Federal manager).
        Total for Federal           ..........................  .........................  14,537
         Government (Coast Guard).
            Total for Regulated     ..........................  .........................  197,148
             Public and Government.
----------------------------------------------------------------------------------------------------------------
\1\ Totals may not sum due to rounding. Undiscounted costs appear in the table.
\2\ ``Potential indirect costs'' not included (See Table 2). Unquantified costs included but are not part of
  cost calculations.

Total Costs
    Using a 7-percent discount rate, we estimate the total discounted
cost of the proposed rule to be $138,490 (rounded). The total
annualized cost at a 7-percent discount rate is $19,718 (rounded). See
table 10.
    For the projected cost to the regulated public, the Coast Guard
expects all States would comply within 10 years of this rule. However,
we do not have specific information as to the rate of compliance. As
such, we assume equal probability for each year; that is, we estimate
10 percent will comply each year for the next 10 years. Given this, the
total cost to the regulated public, as shown in the table 9, is
$182,607. This is $18,261 (rounded) when averaged across 10 years.
    For the cost to the Government, we assume that the $91 website
update will occur in the first year. Subtracting that, we calculate the
annual cost over the next 9 years by dividing the total by 10 ($1,445).
The first year cost to Government will be $1,445 + $91, which is
$1,536.

                                                   Table 10--Total Estimated Cost of the Proposed Rule
                                         [10-year Period of analysis, 7 and 3 percent discount rates $2020] \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                             Costs to the regulated public (states)            Costs to the government                    Total estimated costs
           Year            -----------------------------------------------------------------------------------------------------------------------------
                             Undiscounted        7%           3%       Undiscounted        7%           3%       Undiscounted        7%           3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.........................         $18,261   $17,066.07   $17,728.83          $1,536    $1,435.51    $1,491.26         $19,797   $18,501.59   $19,220.10
2.........................          18,261    15,949.60    17,212.46           1,445     1,262.12     1,362.05          19,706    17,211.72    18,574.51
3.........................          18,261    14,906.17    16,711.13           1,445     1,179.55     1,322.38          19,706    16,085.72    18,033.51
4.........................          18,261    13,931.00    16,224.40           1,445     1,102.38     1,283.86          19,706    15,033.38    17,508.26
5.........................          18,261    13,019.63    15,751.84           1,445     1,030.27     1,246.47          19,706    14,049.89    16,998.31
6.........................          18,261    12,167.88    15,293.05           1,445       962.86     1,210.16          19,706    13,130.74    16,503.21
7.........................          18,261    11,371.85    14,847.62           1,445       899.87     1,174.92          19,706    12,271.72    16,022.54
8.........................          18,261    10,627.89    14,415.17           1,445       841.00     1,140.70          19,706    11,468.90    15,555.86
9.........................          18,261     9,932.61    13,995.31           1,445       785.98     1,107.47          19,706    10,718.60    15,102.78
10........................          18,261     9,282.81    13,587.68           1,445       734.56     1,075.22          19,706    10,017.38    14,662.89
    Total.................      182,607.00   128,255.52   155,767.47       14,537.00    10,234.12    12,414.49      197,148.00   138,489.64   168,181.97
        Annualized........  ..............    18,260.70    18,260.70  ..............     1,457.11     1,455.36  ..............    19,717.81    19,716.06
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Totals may not sum due to independent rounding.

Benefits
    The proposed rule would amend the Coast Guard's existing
regulations (see 33 CFR 187 subpart D, ``Guidelines for State Vessel
Titling Systems'') to better align with UCOTA-V. The proposed rule
would encourage uniformity amongst the States through the adoption of
the UCOTA-V model, in its entirety or in part, and, as mentioned in the
Background section of this NPRM, Section IV, it would follow
recommendations by the NBSAC and NASBLA. Although the movement to
harmonize State titling laws has existed for some time, not all States
have pursued legislation. Some States have chosen to wait for the Coast
Guard to pass the UCOTA-V regulation.
    The proposal would also promote consumer protection against fraud.
A large number of recreational vessels are resold annually. In 2017,
there were approximately 981,600 pre-owned vessels sold in the United
States.\43\ Given this large number, the industry is vulnerable to the
types of fraud UCOTA-V is designed to prevent.
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    \43\ https://www.nmma.org/press/article/21678 (``U.S. Boat Sales
Strong Heading into 2018, Poised for Another Year of Growth,''
January 9, 2018). Accessed and last viewed on December 26, 2019.
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    The proposed rule would facilitate the procurement of secured loans
on vessels. If the Coast Guard does not certify a State titling system,
then a State cannot confer preferred mortgage status on a mortgage or
security interest for a vessel, which functions as a security measure
for financial entities. Many financial institutions require eligible
vessels to be documented and to have their preferred mortgages
recorded. A preferred mortgage is considered more secure, with less
risk to the lender. This places the lender in a position to provide
lower interest rates over longer terms to the consumer. In turn, the
lender earns more over the term of the loan with less risk. More
specifically, the lender would have a lower risk of loans defaulting;
therefore, the lender's loan portfolio would provide better returns
despite the lower interest rates offered to borrowers.
    The consumer would benefit as well. With preferred loans, the
borrower would have a loan with better terms. Relative to non-preferred
loan, the consumer would pay less per month due to the lower interest
rate on preferred loans.
    In addition, consistent titling procedures across States would
deter the practice of ``title washing,'' whereby after the sale of a
damaged vessel for salvage, the buyer makes cosmetic repairs and
resells the vessel without disclosing its previous damage. Recreational
boaters may benefit from this proposed rule by being able to assist
States and law enforcement in recovering their lost or stolen vessels.
    Additionally, we intend the proposed rule to promote maritime
security by facilitating State participation in the VIS. After the
September 2001 terrorist attacks, a Coast Guard gap analysis showed
that law enforcement agencies, including the Coast Guard, lacked the
ability to easily and verifiably identify recreational vessels and
their owners and operators, especially when a vessel is registered in a
State other than that in which the law enforcement agency operates.
This inability deprives law enforcement agencies of critical tools for
deterring crime and maritime-based terrorism.
    Since its inception in 2007, the VIS has remedied this inability by
collecting and providing verifiable data for vessels in VIS-
participating States. However, 16 States still do not participate in
the VIS.\44\ Facilitating full VIS participation by these States would
enhance maritime security. Because of the high level of interest among
the States in aligning their vessel titling systems with UCOTA-V,
aligning our subpart D regulations with UCOTA-V would make it easier
for States to obtain subpart D certification.
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    \44\ As of January 21, 2020.
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Alternatives Considered
    Alternative 1--Take no action. This alternative would allow
existing regulations to remain in conflict with State laws and UCOTA-V.
For States complying with the existing regulations, this alternative
would result in them not receiving the benefits of deterred ``title
washing,'' recovery and identification of abandoned vessels, consumer
fraud protection, and security measures for financial entities.
Participation in the VIS would continue at its current low rate. This
alternative would result in no additional costs, as no new regulations
would be implemented, but would also result in no benefits, as there
would be no changes to current practice. Therefore, we rejected this
alternative.
    Alternative 2--This is the preferred alternative. This alternative
would change the guidelines in subpart D so that any State that adopts
UCOTA-V and participates in the VIS would be in compliance. This would
encourage compliance and participation and provide benefits to States,
lenders, and consumers. The cost implications associated with this
alternative are specified in the Costs section of this RA and assume
100 percent participation from all 56 States. The total 7 percent
discounted cost over 10 years would be $176,570. The qualitative
benefits would be increased mitigation of fraudulent ownership, the
creation of uniformity amongst the States, which will help facilitate
transfers of vessel ownership, to deter theft of vessels and aid law
enforcement agencies by making recovery of stolen vessels across State
lines easier, promote consumer protection, and facilitate making
secured loans on vessels. Therefore, this is the preferred alternative.
    Alternative 3--This alternative would repeal existing guidelines
for certification of State titling requirements and allow States to
regulate vessel titling with no coordination or oversight. This would
remove the ability for States to establish separate programs to enable
vessels to gain preferred mortgage status and discourage participation
in the VIS. In this scenario, each State would have a unique vessel
titling system; this alternative would produce varying costs and
benefits, which may be beneficial to the States as they could customize
a titling program to meet their specific needs. However, we are unable
to estimate the costs due to the number of possibilities offered, and
they would occur without coordination or oversight from the Coast
Guard. Harmonization of regulations across States would be impossible.
As this would not satisfy the goals of this potential regulatory
action, we rejected this alternative.

B. Small Entities

    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612) (RFA) and
Executive Order 13272 (Consideration of Small Entities in Agency
Rulemaking) require a review of proposed and final rules to assess
their impacts on small entities. An agency must prepare an initial
regulatory flexibility analysis unless it determines and certifies that
a rule, if promulgated, would not have a significant impact on a
substantial number of small entities.
    Under the RFA, we have 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. Based on the analysis above, this
proposed rule would affect 56 States and U.S.

territories.\45\ All governmental jurisdictions that would potentially
be directly regulated by this rule have populations greater than
50,000. These entities are not considered to be small entities based on
the Small Business Administration's definition of what is a small
governmental jurisdiction.\46\ 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.
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    \45\ See 46 U.S.C. 123. The only issuing authorities are the 56
States. Tribal governments are excluded legally as authorities from
numbering and titling vessels.
    \46\ Small governmental jurisdictions are defined as governments
of cities, counties, towns, townships, villages, school districts,
or special districts with a population of less than 50,000.
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    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 docket
at the address in the ADDRESSES section of this preamble. In your
comment, explain why you think it qualifies and how and to what degree
this rule would economically affect it.

C. 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
proposed rule would affect your small business, organization, or
governmental jurisdiction and you have questions concerning its
provisions or options for compliance, please contact the person in the
FOR FURTHER INFORMATION CONTACT section of this proposed rule. The
Coast Guard will not retaliate against small entities that question or
complain about this proposed rule or any policy or action of the Coast
Guard.

D. Collection of Information

    This proposed rule would require a modification of an existing
collection of information under the Paperwork Reduction Act of 1995
(PRA), 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 collection, 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.
    Title: Vessel Identification System.
    OMB Control Number: 1625-0070.
    Summary of the Collection of Information: Public Law 100-710 (46
U.S.C. 12501) requires the establishment of a nationwide vessel
identification system (VIS). The VIS provides participating States with
access to data of vessels numbered by States. States voluntarily
provide the VIS data. The States, boating public, and law enforcement
would be the primary beneficiaries. To become part of the VIS, States
must submit a Memorandum of Agreement (MOA) to the Coast Guard.
    Need for Information: The VIS collects State-numbered vessel
identification and ownership data and provides that data to law
enforcement agencies in the States that choose to participate in the
VIS. Participation in the VIS is entirely voluntary. In order to
participate, States must comply with certain requirements to ensure the
integrity and uniformity of the information provided to the VIS.
    Proposed Use of Information: The Coast Guard would use this
information to track vessel information and facilitate the recovery of
stolen or missing vessels.
    Description of the Respondents: The 50 States, District of
Columbia, and 5 territories. The Coast Guard describes these as ``56
States.''
    Number of Respondents: As a result of the proposal, the Coast Guard
anticipates that there would be two additional States joining the VIS
annually until all States join. Over a 10 year period, this proposed
rule would increase the number of respondents from 38 States to 56
States.
    Frequency of Response: The number of responses per year of this
proposed rule would vary by participating States. New MOA applications,
VIS user requests, and VIS data uploads are required with the initial
MOA application process. For existing participants, VIS user requests
and VIS data uploads are required. Based on the current collection of
VIS information data, the Coast Guard anticipates that each new
participant will submit an MOA application once, a VIS user request
once a year, and upload VIS data every 2 weeks.
    Burden of Response: The burden of response includes three
components--MOA applications, VIS data uploads, and VIS user requests.
The burden for an MOA application, VIS data upload and VIS new user
request form are: 16 hours, 0.6 hour, and 0.1 hour, respectively. An
MOA application and a VIS new user request form would be prepared by a
manager. A computer technician would handle the VIS data upload.
    Estimate of Total Annual Burden: This proposed rule would require
additional hours for VIS data uploads (32 hours annually),\47\ MOAs (32
hours annually), and VIS user requests (1 hour annually).\48\ The
proposed rule would increase the total burden by 64 hours (rounded from
the actual 63.3 hours), from 5,792 hours to 5,856 hours.\49\
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    \47\ Rounded from the actual 31.2 hours.
    \48\ Rounded from the actual 0.2 hour.
    \49\ Rounded from the actual 5,855.3 hours.
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    As required by 44 U.S.C. 3507(d), we will submit a copy of this
proposed rule to OMB for its review of the collection of information.
    We ask for public comment on the proposed collection of information
to help us determine, among other things:
    (1) How useful the information is;
    (2) Whether it can help us perform our functions better;
    (3) Whether it is readily available elsewhere;
    (4) How accurate our estimate of the burden of collection is;
    (5) How valid our methods for determining burden are;
    (6) How we can improve the quality, usefulness, and clarity of the
information; and
    (7) How we can minimize the burden of collection.
    If you submit comments on the collection of information, submit
them to both the OMB and to the docket where indicated under ADDRESSES.
    You need not respond to a collection of information unless it
displays a currently valid control number from OMB. Before the Coast
Guard could enforce the collection of information requirements in this
proposed rule, OMB would need to approve the Coast Guard's request to
collect this information.

E. Federalism

    A rule has implications for federalism under Executive Order 13132
(Federalism) if it has a substantial direct effect on the States, on
the relationship between the national government and the States, or on
the distribution of power and responsibilities among the various levels
of government. We have analyzed this proposed rule under Executive
Order 13132 and have determined that it is consistent with the
fundamental federalism principles and preemption requirements described