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Federal Register / Vol. 86, No. 181 / Wednesday, September 22, 2021 / Proposed Rules 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. 31322d.
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.
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 buyers 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.

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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 UCOTAV.
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 UCOTAV 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 states privacy laws. Regarding UCOTAV adoption, 47 of 56 States have not adopted UCOTAV.17
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 UCOTAV 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 16 VIS participation is defined by the existence of a signed MOA.
17 The five States that have adopted UCOTAV
are Connecticut, the District of Colombia, Florida, Hawaii, and Virginia. The four States in the process of adopting UCOTAV are Alabama, Georgia, Tennessee and Texas. This data is current as of January 21, 2020.

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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 UCOTAV proposed subpart D report that they did not impose any additional fees after the adoption of UCOTAV
provisions, and, according to the Coast Guards Office of Auxiliary and Boating Safety BSX, no State has signaled the intent to increase titling fees if their system becomes certified as UCOTAV
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.
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
18 According to BSX, recreational vehicle owners for the 10 compliant and semi-compliant States did not incur a cost increase.
19 This statement is based on the Coast Guards 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-titlingregistrations/.
20 The use of leisure time to obtain the title. The cost of this task may be calculated by the formula:

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