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Proposed Rule

Vessel Documentation: Lease Financing for Vessels Engaged in the Coastwise Trade; Second Rulemaking

Document Details

Information about this document as published in the Federal Register.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

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AGENCIES:

Coast Guard, DHS, and Maritime Administration, DOT.

ACTION:

Joint notice of proposed rulemaking; withdrawal.

SUMMARY:

The Coast Guard and the Maritime Administration (MARAD) are withdrawing their joint notice of proposed rulemaking on documentation, under the lease-financing provisions, of vessels engaged in the coastwise trade. The joint notice of proposed rulemaking was superseded by legislation. A new notice of proposed rulemaking addressing the provisions of the new legislation will be published in the future.

DATES:

The joint notice of proposed rulemaking is withdrawn on April 13, 2005.

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FOR FURTHER INFORMATION CONTACT:

Patricia Williams, Deputy Director, National Vessel Documentation Center, Coast Guard, telephone 304-271-2506 or John T. Marquez, Jr., Maritime Administration, telephone 202-366-5320.

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SUPPLEMENTARY INFORMATION:

Background

On February 4, 2004, the Coast Guard and the Maritime Administration (MARAD) published a joint notice of proposed rulemaking entitled “Vessel Documentation: Lease Financing for Vessels Engaged in the Coastwise Trade; Second Rulemaking” in the Federal Register (69 FR 5403). The rulemaking concerned the documentation of vessels under the lease-financing provisions of 46 U.S.C. 12106(e) and asked the following questions:

1. To what extent and how should the Coast Guard prohibit or restrict the chartering back (whether by time charter, voyage charter, space charter, contract of affreightment, or other contract for the use of a vessel) of a lease-financed vessel to the owner, the parent, or to a subsidiary or affiliate of the parent? (Coast Guard.)

2. To ensure that control of a lease-financed vessel engaged in the coastwise trade is not returned to the owner or a member of its group, should the Maritime Administrator's approval be required before an interest in or control of a U.S. documented vessel is transferred to a non-U.S. citizen? (Maritime Administration.)

3. What limitations, if any, should the Coast Guard impose on the grandfather rights of lease-financed vessels with a coastwise endorsement issued before February 4, 2004? (Coast Guard.)

4. Should the Coast Guard require that an application for coastwise endorsement under the lease-financing regulations be audited by a third party to further ensure that the transaction in fact qualifies under the lease-financing laws and regulations? (Coast Guard.)

Discussion of Comments on the Joint Notice of Proposed Rulemaking

The comments received on the questions above clearly indicated that the lease-financing statute was subject to significantly differing interpretations and needed clarification. Congress also arrived at this conclusion and passed new legislation, signed into law on August 9, 2004, (discussed below) to clarify the lease-financing statute. However, because this legislation did not address the issue of third-party audits (question number 4 above) and because the notice of proposed rulemaking did not contain proposed regulatory text on that issue, comments to that question will be considered under the future Coast Guard rulemaking discussed below. Start Printed Page 19377

New Legislation

On August 9, 2004, the President signed the Coast Guard and Maritime Transportation Act of 2004 (Pub. L. 108-293) (the Act), which addressed most of the questions listed above and negated the need for this rulemaking as follows:

On the question of charters back to the owner (questions 1 and 2 above), section 608(a) of the new Act added new paragraph (f) to 46 U.S.C. 12106 to clarify Congress's position on the issue by requiring that the owner of a lease-financed vessel certify annually that it (or, if the vessel is owned by a trust or similar arrangement, the beneficiary of the trust or similar arrangement) is independent from, and not an affiliate of, any charterer of the vessel or any person who has the right, directly or indirectly, to control or direct the movement or use of the vessel.

On the question of limitations to grandfather rights (question number 3 above), section 608(c) of the Act required that the amendments made by section 608 and any regulations published after February 4, 2004, with respect to coastwise endorsements do not apply to a certificate of documentation, or renewal of one, endorsed with a coastwise endorsement for a vessel under 46 U.S.C. 12106(e) or a replacement vessel of a similar size and function, that was issued before August 9, 2004, as long as the vessel is owned by the person named in the certificate, or by a subsidiary or affiliate of that person, and as long as the controlling interest in the owner has not been transferred to a person that was not an affiliate of the owner as of August 9, 2004. A similar grandfather provision in section 608(c) of the Act was applied to offshore supply vessels, except that it was limited only to 3 years after enactment of the Act or until August 9, 2007.

On the question of third-party auditing of applications for coastwise endorsements (question number 4 above), the Act did not address the issue and it is being carried forward to the future rulemaking discussed below.

Future Rulemaking

The new Act requires that the Coast Guard publish final regulations by August 8, 2005, to carry out section 608 of the Act, including amendments made by the Act to 46 U.S.C. 12106. Therefore, the Coast Guard will publish in the Federal Register a new notice of proposed rulemaking with opportunity for public comment to address these changes. In addition, the Coast Guard will again consider the issue of third-party audits in the new notice and will address, in that notice, all comments on the subject submitted since the February 4, 2004, notice.

Withdrawal

For the reasons stated above, the Coast Guard and MARAD are withdrawing the joint notice of proposed rulemaking published on February 4, 2004 (69 FR 5403).

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Authority: The Coast Guard's portion of this rulemaking is taken under authority of 46 U.S.C. 2103 and 12106 and Department of Homeland Security Delegation No. 0170.1. The Maritime Administration's portion of this rulemaking is taken under authority of 46 App. U.S.C. 802, 803, 808, 835, 839, 1114(b), 1195, 46 U.S.C. chs.301 and 313; 49 U.S.C. 336; 49 CFR 1.66.

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Dated: November 2, 2004.

Thomas H. Collins,

Admiral, Coast Guard Commandant.

Dated: March 29, 2005.

By Order of the Maritime Administrator.

Joel C. Richard,

Secretary, Maritime Administration.

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[FR Doc. 05-7436 Filed 4-12-05; 8:45 am]

BILLING CODE 4910-15-P