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Rule

Raising the Threshold of Property Damage for Reports of Accidents Involving Recreational Vessels

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AGENCY:

Coast Guard, DOT.

ACTION:

Final Rule.

SUMMARY:

The Coast Guard raises the threshold of property damage for reports of accidents involving recreational vessels when damage to vessels and other property totals $2,000 or more in any one accident or—this represents a change from the Notice of Proposed Rulemaking—when a collision occurs involving two or more vessels, regardless of the amount of damage to property. The higher threshold better accounts for the rising cost of repairs to recreational vessels. This Final Rule will reduce the number of reports of accidents for minor or cosmetic damage, help us maintain statistics for future years comparable to those for past ones, and reduce the burden of paperwork on the public to report such incidents.

DATES:

This final rule is effective July 2, 2001.

ADDRESSES:

Comments and materials received from the public, as well as documents mentioned in this preamble as being available in the docket, are part of docket USCG-1999-6094 and are available for inspection or copying at the Docket Management Facility, U. S. Department of Transportation, room PL-401, 400 Seventh Street SW., Washington, DC, between 10 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The telephone number is 202-366-9329. You may also find this docket on the Internet at http://dms.dot.gov.

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FOR FURTHER INFORMATION CONTACT:

If you have questions on this rule, contact Bruce Schmidt, Project Manager, Office of Boating Safety, Program Management Division, Coast Guard, by e-mail at bschmidt@comdt.uscg.mil or by telephone at 202-267-0955.

If you have questions on viewing the docket, call Dorothy Beard, Chief, Dockets, Department of Transportation, telephone 202-366-9329.

You may obtain a copy of this rule by calling the U. S. Coast Guard Infoline at 1-800-368-5647 or by accessing either the Web Site for the Office of Boating Safety, at http://www.uscgboating.org, or the Internet Site for the Docket Management Facility, at http://dms.dot.gov.

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SUPPLEMENTARY INFORMATION:

Background and Purpose

On June 20, 2000, we published a Notice of Proposed Rulemaking (NPRM) entitled Raising the Threshold of Property Damage for Reports of Accidents Involving Recreational Vessels (65 FR 38229). We received 17 letters commenting on the proposed rule. No public hearing was requested and none was held.

Regulatory Authority and History

46 U.S.C. 6101 requires the Secretary (who has delegated the authority to the Commandant) to prescribe rules on the reporting of “marine casualties.” We use that authority to describe different types of marine casualties, including those involving certain amounts of property damage, that various parties must report. 33 CFR Part 173, Subpart C, contains the rules applicable to recreational vessels.

In 1972, the threshold of property damage for reports of accidents involving recreational vessels was $100. (This was the original threshold.) In 1979, the effects of inflation on the original threshold dictated that we raise the threshold to $200. The purpose of this adjustment was to reduce the number of reports filed for minor incidents.

Even the threshold of $200, however, eventually resulted in the submission of an excessive number of reports of accidents on minor incidents. This trend increased the reporting burden on the boating public, and the administrative burden on both the States and the Coast Guard. On February 6, 1989, to reduce these burdens, we published a Final Rule (54 FR 5608) raising the threshold to $500. As it had been in 1979, the effect of inflation on repair costs was the basis for this change.

The formula described in the preamble of the Final Rule of 1989 rested on a methodology allowing us to adjust the threshold annually by applying a deflator based on the Gross National Product (GNP) to account for inflation. In that preamble, we also stated our intent to review the threshold annually and, if necessary, adjust the threshold in law each time it rose by another $100.

How We Developed the New Methodology for Adjusting the Threshold

After analyzing the formula described in the preamble of the Final Rule of 1989, we determined that further adjustments both in the threshold and in the methodology used to determine it were necessary. Non-safety-related accident reports continued even after the threshold rose to $500 in 1989. We now believe both that the threshold was too low and that the methodology itself was amiss. An inflation index based on the GNP and applied to a base-year value of $500 yields a threshold for 2001 still low enough for the reporting of too many damages that are merely cosmetic. We decided that it is necessary to adjust the base-year value of the threshold to reach the level only where damage due to accidents implicates safety.

The National Association of State Boating Law Administrators (NASBLA) is a professional association consisting of officials of States, commonwealths, and provinces responsible for administering or enforcing the boating laws of those bodies. Within NASBLA, Start Printed Page 21672the Committee on Boating Accident Investigation, Reporting, and Analysis (BAIRAC) has responsibility for reporting and analyzing accidents.

The Boating Law Administrators (BLAs) who serve on BAIRAC are experts in enforcement, in education for boating safety, and in investigation of boating accidents. From their ongoing relationships with facilities that repair recreational boats, as well as from their experience with and knowledge of various types of damage to boats and costs to repair it, they have strongly conveyed the need for the Coast Guard to raise the threshold of property damage for reports of accidents involving recreational vessels to a level that accurately reflects current prices of boats and costs of repair.

BAIRAC called on the Coast Guard to initiate rulemaking to raise the threshold for reports of accidents involving only property damage from $500 to $2,000 and to amend the reportable conditions to include all accidents involving collisions of two or more vessels. The BLAs and the Coast Guard agreed that a threshold of $2,000 for those accidents involving only property damage would enable States' accident investigators to focus on reports of safety-related damage and would eliminate most of the reports of cosmetic damage. However, as we stated in the NPRM we published in 2000, we did not then see the benefit of requiring reports of all accidents involving collisions of two or more vessels, regardless of the amount of damage to property.

In that NPRM, we attempted to define a level of cosmetic damage using data contained in the Boating Accident Report Database (BARD). Data for 1998 show that 1,718 reported collisions of two or more vessels involved only property damage. Of those 1,718, 1,002 involved property damage below the proposed threshold of $2,000. Taking a closer look at the data, we discovered that nearly 90% of those 1,002 involved property damage at or below a threshold of $1,500. At that time, we considered most of these more cosmetic than safety-related, notwithstanding that they involved collisions. So, recognizing the need to reduce the number of reports for minor or cosmetic damage, the need to reduce the administrative burden on the public and the States of reports for such damage, and the need for States' accident investigators to focus on safety-related damage, we did not plan to mandate reports of all accidents involving collisions of two or more vessels. However, as will become clear in our discussion of comments, our position has changed. We now fully concur with BAIRAC that we should require reports of such accidents, regardless of the amount of damage to property.

The threshold of property damage for reports of accidents involving recreational vessels when damage to vessels and other property totals $2,000 or more in any one accident or of accidents involving collisions of two or more vessels, regardless of the amount of damage to property, is the minimum set by Federal rule; but States are free to impose stricter requirements. Thus, a State could require reports of all accidents, even if each report results only in property damage below the threshold of $2,000.

We have also determined that it is necessary to find an inflation-index that tracks the trends in the boat-repair industry more accurately than does the GNP. The GNP gives the total market value of all final goods and services produced in the U.S. for a given year. It comprises spending by all sectors of the economy. Therefore, the GNP deflator measures all changes in prices affecting consumers, private industry, and government.

The Producer Price Index (PPI) is an alternative inflation-index. It gives the average change over time of prices received by sellers of domestic goods and services. The data constituting the PPI are organized by industry and product, making it possible to find specific data about prices of repairs to non-military boats. These data track the specific changes in prices of repairs to recreational boats. As this rulemaking concerns these very prices, we believe the PPI to be more suitable for measuring the changes in those prices with an appropriate threshold of property damage for reports of accidents involving those vessels.

How we calculate the new threshold. For 2001 and beyond, we will use the PPI for Standard Industrial Classification (SIC) 3732, “Boat Building and Repairing: Boat repairing, non-military boats”, to reckon the threshold. The new value for 2001, of $2,000, will serve as the base value. To reckon the value of the threshold for 2002 using 2001 as the base year, one should run the following calculation:

(Base threshold for 2001) × ([PPI for 2002] / [PPI for 2001])

For example, if the preliminary estimate of the PPI by the Bureau of Labor Statistics for 2002 were 191.0, and for 2001 it were 189.0, the calculation would run as follows:

$2,000 × (191.0 / 189.0) = $2,021.16

Since this increase, rounded to the nearest $100, is less than $500, the threshold would remain at $2000. (An increment of $500 is small enough to serve the interest of safety and yet not so small as to entail too-frequent changes in the threshold.) We will calculate the increase every year; once it, rounded to the nearest $100, reaches $500, we will raise the threshold accordingly.

Discussion of Comments and Changes

We received a total of 17 comments on the proposed amendments to the rules. Eleven comments came from BLAs, and a twelfth from NASBLA. Two came from boating organizations, two from members of the general public, and one from an associate professor of education and safety research. Of the 17, one, from the State of California, arrived after the closing date of October 18, 2000; we accepted it because of the high volume of accident reports generated by the State each year, about 10 percent of all reported accidents occurring there, and because we could accept it without prejudice to other participants in the rulemaking.

Twelve comments, including seven submitted by BLAs and the one submitted by NASBLA, supported raising the threshold of property damage to $2,000 or more. Five of those twelve comments also supported requiring the reporting of all accidents involving collisions of two or more vessels, regardless of the amount of property damage.

The remaining five comments, including the remaining four submitted by BLAs, opposed raising the threshold of property damage at all.

Here follows a summary of each adverse comment:

The first stated that published accident figures are already too low by a factor of 16, and that raising the threshold would only worsen the situation. It further stated that the whole system of reporting accidents needs to be strengthened, not weakened.

The second, from the State of Alabama, suggested that we eliminate the threshold altogether. It argued that the amount of property damage has no relevance for analyzing accidents with the object of preventing them. It also presented criteria for reporting them that the State has been using for around 15 years.

The third, from the State of Connecticut, maintained that the cost of property damage alone does not furnish a fair proxy for safety and that adopting the revised threshold could eliminate the reporting of many important accidents involving smaller boats. Next, it concurs with NASBLA that any reporting should reach all collisions involving any numbers of vessels. Last, Start Printed Page 21673it states that eliminating or not mandating the reporting of all such collisions would likely reduce the value of BARD in illustrating the variety of boating accidents witnessed and investigated in Connecticut.

The fourth, submitted by the State of Ohio, presented a variety of arguments against raising the threshold. (1) We were failing to differentiate what we called “minor or cosmetic damage” from what we considered damage worthy of reporting. (2) An instant increase in the threshold from $500 to $2,000 would eliminate statistical comparability for most accidents. (3) Although the Coast Guard wishes to reduce the burden of paperwork on the public, (a) Congress, which enacted the reporting system, must have held that the information warranted the burden; (b) the threshold of $2,000 is totally arbitrary and subjective, with no basis in relevant experience; (c) the Coast Guard appears to have used a criterion other than inflation as the factor for determining the increase from $200 in 1979 to $500 in 1989; and (d) the Coast Guard has not defined a “non-safety-related accident,” it has not offered any authority for addressing itself solely to “safety-related accidents,” and it has not stated why one level of “material loss” is a proper concern of its while another is not. (4) If the Coast Guard accepts the demand of BAIRAC for proposing this change, it should also follow the full recommendation of BAIRAC-specifically, the call to cover all accidents involving collisions of two or more vessels, regardless of dollar amount of damage. (5) To set the threshold at a “proper” amount now, the Coast Guard should either fix it at $500 (where it arrived in 1989) but raise it with the PPI from now on or drop it back to the original $100 and raise it appropriately with the PPI. And, last, (6) the system for reporting accidents arose in the first place to benefit the boating community, and, if administered correctly, would be not a burden but rather a benefit.

The fifth, submitted by the State of California, stated that we had not demonstrated that all accidents in which property damage falls below $2,000 or even $500 are any less important, in establishing causation, than those where it falls above $2,000. California believes that even accidents where damage is nominal may serve in identifying problems and may benefit safety analysts as they conceive safety programs for needs emerging in their State. Further, California recommends the reporting of all accidents caused by factors under the control of operators as well as accidents involving defects in equipment, unmarked hazards, and other matters bearing on safety. When analyzing any accident, California considers two questions: whether, if this operator had acted in a more prudent manner, this accident could have been avoided and whether this accident could have been avoided but for the defects in equipment, unmarked hazards, and other matters. If the answer is yes to either question, California considers that accident very seriously when structuring safety programs.

Included in one comment was a recommendation to clarify that reports would be required when the damage in an accident stood not just above but at $2,000. Thus, it would have the Final Rule read not “Damage to vessels and other property totals more than $2,000 an accident * * *” but “Damage to vessels and other property totals $2,000 or more an accident * * *”

After thoughtfully considering all of the above comments, the Coast Guard has decided to raise the threshold of property damage for reports of accidents involving recreational vessels to a level where such damage totals $2,000 or more an accident and to require reports of accidents for collisions involving two or more vessels, regardless of amount of property damage. The higher threshold will go into effect for the remainder of calendar year 2001 after the EFFECTIVE DATE.

Our decision to amend the proposed rule so as to require reports of accidents for collisions involving two or more vessels, regardless of amount of property damage, rests on information furnished by the five comments that supported requiring reports of such accidents as well as raising the threshold to a level of $2,000 or more an accident. Even two of the five adverse comments agreed with BAIRAC, on requiring reports of such accidents. The primary justification for reporting all such accidents is that they owe to violation of the Navigation Rules (that is, No Proper Lookout, Excessive Speed, Reckless Operation, or the like). We concur, and add that these accidents are necessarily “safety-related.”

Over time, collisions involving two or more vessels are the most-reported kind of accident; every year, they represent about a third of all reported accidents. For 1999, BARD shows 2,774 such accidents. Of those, 1,707 (nearly two-thirds) resulted in property damage only: no fatalities and no injuries. The average damage for each of those 1,707 was around $2,900; but the damage for 1,023 (60%) of them came to less than $2,000, and the average damage for those 1,023 was around $1,000. We acknowledge that excluding those 1,023 (about 12 percent of all reported accidents) because of low damage alone would compromise the quality and scope of data captured by BARD. Next, the absence of 1,023 accidents most or all of which were due to violations of Navigation Rules would diminish the usefulness of the data in structuring safety programs. Last, we do not want to forgo valuable data on factors controllable by operators of less-expensive boats just because their boats incur less-expensive repairs. We agree that the reporting of all collisions involving two or more vessels is important both for understanding safety-related incidents at any moment and for tracking statistics over time. Thus, the benefits for the public of our collecting these data outweigh the burden on the public of supplying them.

In conclusion, our intent is to raise the threshold for reporting property damage to a level where we capture almost all useful data and almost no useless ones. Damage worthy of reporting comprises that whose cause implicates the safe operation and navigation of the vessel and whose effect implicates the “structural integrity” or “seaworthiness” of the vessel. Damage worthy of reporting is by definition worth the paperwork entailed by reporting. And more-selective reporting can only yield more-useful statistics. Again, States remain free to capture all the data they want.

In our previous Final Rule (54 FR 5608 (February 6, 1989)), we proposed to raise the threshold in increments of $100 over time to ensure the adjustment of the threshold to an appropriate level. We have not, nevertheless, raised it since then. Moreover, we doubt whether even the threshold of $500, set then, was high enough and we suspect that the methodology used to calculate it was amiss. (For instance, applying that methodology to the latter threshold would yield a threshold of barely $700 today. Our research suggests, and most of the comments confirm, that such a threshold would fail to capture many useful data.)

We will review the new threshold every year. When it should increase by $500, we will raise it to an appropriate level by appropriate means: Notice-and-comment rulemaking with the participation of all willing parties.

Regulatory Evaluation

This Final Rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866 and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget (OMB) has not reviewed this Start Printed Page 21674Rule under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Transportation (DOT) (44 FR 11040 (February 26, 1979)). We expect the economic impact of this Rule to be so minimal that a full Regulatory Evaluation under paragraph 10e of the regulatory policies and procedures of DOT is unnecessary.

Cost of Rule

This Final Rule would impose no added monetary costs on the operator or owner of a recreational vessel or on anyone else. On the contrary, it would decrease costs that the current rule imposes.

Benefits of Rule

Raising the threshold of property damage for reports of accidents involving recreational vessels to $2,000 or more an accident and requiring the reporting of accidents involving collisions of two or more vessels, regardless of amount of damage, for most of the remainder of 2001 would benefit owners and operators of recreational vessels, and officials of States and the Coast Guard, by reducing the current burden of submitting and administering accident reports. In 1999, there were 1,189 reported accidents that involved only property damage—no fatalities and no injuries—and also did not involve any collisions of two or more vessels. Requiring a threshold of $2,000 or more in property damage for reporting an accident would have kept the following 1,189 accidents from being published in our statistics on accidents for 1999:

Number of accidentsDamage amount
Capsizing11285,879
Collision with Fixed Object302239,242
Collision with Floating5444,702
Falls in Boat105,702
Falls Overboard1411,661
Fire or Explosion of Fuel3629,010
Fire or Explosion (Other)4634,482
Flooding or Swamping213161,227
Grounding186130,864
Other3927,018
Sinking8159,985
Skiers' Mishaps75,251
Struck by Boat1913,657
Struck by Motor or Propeller31,250
Struck Submerged Object5445,809
Unknown Type1310,759
Total1,189906,498

For these 1,189 accidents, the average amount of damage is about $762.00. If this level of property damage were enough to declare the particular vessel or vessels total losses, the accidents would meet Federal reporting-requirements. If not, this level of damage would count as more “cosmetic” than “safety-related” and therefore would not meet those requirements.

Small Entities

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we considered whether this Final Rule will 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.

This Rule applies exclusively to private citizens who own or operate recreational vessels and by definition are not “small entities”. Further, this Rule will reduce the reporting burden on those private citizens for reporting accidents involving recreational vessels.

Because it expects the effects of this Rule to be minimal, the Coast Guard certifies under 5 U.S.C. 605(b) that this Rule will not have a significant economic impact on a substantial number of small entities. Furthermore, as private citizens own the vast majority of recreational vessels and are not small entities, the Regulatory Flexibility Act does not apply to most of the public that this Rule would regulate.

Assistance for Small Entities

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding this Final Rule so that they could better evaluate its effects on them and participate in the rulemaking. We provided the name, telephone number, and e-mail address of a contact for any small entities that felt either that the Rule would affect their small businesses, organizations, or governmental jurisdictions or that had questions concerning its provisions or options for compliance.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal rules to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).

Collection of Information

This Final Rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). In fact, it should result in an actual reduction of paperwork as it requires reports of fewer accidents.

Federalism

We have analyzed this Final Rule under E.O. 13132, Federalism, and have determined that it does not have enough implications for federalism to warrant the preparation of a Federalism Assessment. States will remain free to impose stricter requirements for reports of accidents involving recreational vessels.Start Printed Page 21675

Unfunded Mandates Reform Act

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their regulatory actions not specifically required by law. In particular, the Act addresses actions that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this Final Rule will not result in such an expenditure, we do discuss the effects of this Rule elsewhere in this preamble.

Taking of Private Property

This Final Rule will not effect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

Reform of Civil Justice

This Final Rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

Protection of Children

We have analyzed this Final Rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This Rule is not an economically significant rule and does not concern an environmental risk to health or risk to safety that may disproportionately affect children.

Indian Tribal Governments

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. A rule with tribal implications has a substantial direct effect on one or more Indian tribe, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

Environment

We have considered the environmental impact of this Final Rule and concluded that, under figure 2-1, paragraph (34)(a), of Commandant Instruction M16475.lC, this Rule is categorically excluded from further environmental documentation. The Rule would merely raise the threshold of property damage for reports of accidents involving recreational vessels. A Determination of Categorical Exclusion is available in the docket where indicated under ADDRESSES.

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List of Subjects in 33 CFR Part 173

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For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 173 as follows:

Subpart C—Casualty and Accident Reporting

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1. The citation of authority for part 173 continues to read as follows:

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Authority: 31 U.S.C. 9701; 46 U.S.C. 2110, 6101, 12301, 12302; OMB Circular A-25; 49 CFR 1.46.

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2. Revise § 173.55(a)(3) to read as follows:

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Report of casualty or accident.

(a) * * *

(3) Damage to vessels and other property totals $2,000 or more or there is a complete loss of any vessel; or a collision occurs involving two or more vessels, regardless of the amount of damage to property; or

* * * * *
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3. Revise the heading of § 173.57 to read as follows:

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Contents of report.
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4. Revise the heading of § 173.59 to read as follows:

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Where to submit report.
Start Signature

Dated: March 15, 2001.

Terry M. Cross,

Rear Admiral, U. S. Coast Guard, Assistant Commandant for Operations.

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[FR Doc. 01-10839 Filed 4-30-01; 8:45 am]

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