[Federal Register Volume 70, Number 52 (Friday, March 18, 2005)]
[Rules and Regulations]
[Pages 13102-13105]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-5337]


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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 174

[USCG-2003-15708]
RIN 1625-AA75


Terms Imposed by States on Numbering of Vessels

AGENCY: Coast Guard, DHS.

[[Page 13103]]


ACTION: Final rule.

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SUMMARY: This rule expands the number of conditions that a State may 
require in order for owners to obtain vessel numbering certificates in 
that State. Current Federal statutes and regulations limit these 
conditions to proof of ownership or payment of State or local taxes. 
The rule allows any State to impose proof of liability insurance as a 
condition for obtaining vessel numbering certificates in that State. 
Currently, States are not prohibited from requiring proof of liability 
insurance to operate a recreational vessel. However, States are 
prohibited from using an efficient mechanism, such as vessel 
registration, to manage and enforce such a requirement.

DATES: This final rule is effective April 18, 2005.

ADDRESSES: Comments and material received from the public, as well as 
documents mentioned in this preamble as being available in the docket, 
are part of docket USCG-2003-15708 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 9 a.m. and 5 p.m., Monday through Friday, except Federal 
holidays. You may also find this docket on the Internet at http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: If you have questions on this rule, 
call Audrey Pickup, Office of Boating Safety, at Coast Guard 
Headquarters, telephone 202-267-0872. If you have questions on viewing 
the docket, call Andrea M. Jenkins, Program Manager, Docket Operations, 
Department of Transportation, telephone 202-366-0271.

SUPPLEMENTARY INFORMATION:

Regulatory History

    On January 14, 2004, the Coast Guard published a notice of proposed 
rulemaking (NPRM) entitled Terms Imposed by States on Numbering of 
Vessels, in the Federal Register (69 FR 2098). We received ten letters 
commenting on the proposed rule. No public hearing was requested and 
none was held.

Background and Purpose

    Title 46 of the United States Code contains provisions, in chapter 
123, for the numbering of undocumented vessels equipped with propulsion 
machinery of any kind, which primarily include recreational boats and 
some types of commercial vessels. Vessels must carry an identification 
number issued in compliance with the Standard Numbering System (SNS) 
maintained by the Coast Guard. States can administer their own 
numbering programs if those programs comply with SNS requirements and 
receive Coast Guard approval. SNS requirements include a limitation on 
the conditions that States can impose on applicants for vessel 
numbering. A State cannot impose any condition unless it relates to 
proof of tax payment, or has been sanctioned by Coast Guard 
regulations. The relevant Coast Guard regulation is 33 CFR 174.31. It 
permits States to impose only two conditions: proof of tax payment, and 
proof of ownership.
    In recent years, States have expressed an interest in imposing an 
additional condition--proof of liability insurance--which many people 
think will promote public safety. Currently, however, a State cannot 
impose such a requirement as a condition for vessel numbering without 
going beyond what 33 CFR 174.31 authorizes. As a result, a State 
imposing a liability insurance requirement as a condition for vessel 
numbering would not be in compliance with the SNS requirements of 
Federal law. This could threaten continued Coast Guard approval of the 
State's numbering system. Loss of that approval could result in 
decreased Federal funding for the State's recreational boating safety 
program. The Coast Guard views these as undesirable results in light of 
the possible public safety benefit that could result from a State's 
decision to add an insurance condition. This rule avoids those results 
by amending 33 CFR 174.31.

Discussion of Comments and Changes

    We received 10 sets of comments on this rule. The comments came 
from 2 State agencies, 2 national associations, 1 group of students, 
and 5 individuals.
    Three comments explicitly expressed support for the rule, which we 
appreciate.
    A State agency commented that most boat dealers who were polled 
showed strong opposition to the rule, with mild support from others. 
The State agency's position is that it can support the rule as long as 
proof of liability insurance is not a mandatory requirement.
    Response: This rule does not require liability insurance. It simply 
allows a State to decide whether or not to impose a liability insurance 
requirement, without risking the loss of Coast Guard approval of its 
vessel numbering system.
    One commenter noted that the rule would give States more 
flexibility in managing undocumented vessels. The commenter said it 
would allow States to provide an important assurance that the damage 
caused by a boater would be compensated by the boater's insurer, and 
that this in turn would promote boating safety by deterring unsafe 
boaters.
    Response: We agree with this commenter that the rule should provide 
States with greater flexibility in managing undocumented vessels that 
operate in their waters. However, we express no opinion on the policy 
issues raised by the commenter.
    Many other commenters took sides on whether or not proof of 
insurance should be required. Most of them expressed the opinion that 
such a requirement would not increase public safety. Others felt such a 
requirement would be worthwhile if one life could benefit from it, and 
one association reported that its members strongly support an insurance 
requirement. One commenter asked if any statistics could be presented 
to demonstrate the impact of insurance on public safety.
    Response: We express no opinion on the policy issues raised by 
these commenters. In some states, many people think boaters should 
carry liability insurance and that it could promote boating safety. 
However, under current regulations, if a State requires boaters to 
carry insurance as a condition for vessel numbering, the State could 
lose Coast Guard approval for its vessel numbering system. A State 
without a Coast Guard-approved vessel numbering system could lose 
valuable Federal funding. The only difference this rule makes is that, 
now, a State will be able to require insurance without losing Coast 
Guard approval of its numbering system.
    One commenter argued that the State-imposed requirements currently 
permitted by our regulation--proof of ownership and proof of tax 
payment--are both relevant to the process of numbering a vessel, 
whereas the vessel's insurance status is not. This commenter stated 
that States that impose an insurance requirement would be treating 
vessel ownership and, indirectly, the use of recreational vessels as a 
privilege and not as a right. Another commenter with a similar position 
stated that the rule would be forcing another cost on the marine 
industry.
    Response: Because this rule does not impose any liability insurance 
requirement and leaves that decision to States, we take no position on 
whether or not such a requirement could turn rights into privileges, 
whether some data might be more directly related to vessel numbering 
than others, or whether it could force a cost on the marine industry. 
This rule simply gives

[[Page 13104]]

States the ability to make these determinations for themselves, without 
jeopardizing the approved status of their vessel numbering systems.
    One group of students challenged various aspects of our regulatory 
analysis. They said our environmental checklist wrongly denies that the 
rule will have an impact on public health or safety; they felt the 
impact would be positive. Likewise, they challenged our small entities 
analysis and said the rule would affect local businesses and 
recreational boat owners, and should be changed to cover foreign boat 
manufacturers and operators as well. Finally, this group felt we were 
overlooking the rule's positive impact on protecting children.
    Response: We acknowledge that some persons believe requiring, or 
not requiring, boaters to carry liability insurance will have a bearing 
on the issues raised by this group. However, the Coast Guard takes no 
position on such a requirement, and the rule itself neither imposes nor 
prohibits such a requirement. Our only purpose is to allow each State 
to decide whether or not to impose such a requirement, without risking 
the loss of Coast Guard approval of its vessel numbering system.
    One commenter suggested that the Coast Guard should consider ways 
to ensure that a liability policy is maintained in force by the boater 
even after the vessel's certificate is issued.
    Response: Because this rule does not impose any liability insurance 
requirement and leaves that decision to States, the details of any such 
requirement are beyond the scope of this rule.

Regulatory Evaluation

    This final rule is not a ``significant regulatory action'' under 
section 3(f) of Executive Order 12866, Regulatory Planning and Review, 
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 it under that Order. It is not 
``significant'' under the regulatory policies and procedures of the 
Department of Homeland Security (DHS).
    We expect the economic impact of this rule to be so minimal that a 
full Regulatory Evaluation under the regulatory policies and procedures 
of DHS is unnecessary.

Cost of Rule

    This rule would allow States to require proof of liability 
insurance as a condition for vessel registration. Because this rule 
simply allows a State to decide whether or not to impose a liability 
insurance requirement as a condition for vessel numbering, it would not 
impose any direct costs on vessel owners in any State.

Benefits of Rule

    This rule expands the number of conditions States can consider in 
administering vessel numbering programs.

Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have 
considered whether this 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.
    This rule allows any State to impose proof of liability insurance 
as a condition for obtaining vessel numbering certificates in that 
State. It imposes no costs on the public. Therefore, the Coast Guard 
certifies under 5 U.S.C. 605(b) that this rule would not have a 
significant economic impact on a substantial number of small entities.

Collection of Information

    This rule calls for no new collection of information under the 
Paperwork Reduction Act of 1995 [44 U.S.C. Sec. Sec.  3501-3520].

Federalism

    A rule has implications for federalism under Executive Order 13132, 
Federalism, if it has a substantial direct effect on State or local 
governments and would either preempt State law or impose a substantial 
direct cost of compliance on them. We have analyzed this rule under 
that Order and have determined that it does not have implications for 
federalism.

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 discretionary 
regulatory actions. In particular, the Act addresses actions that may 
result in the expenditure by a State, local, or tribal government, 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.

Civil Justice Reform

    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 
create an environmental risk to health or risk to safety that may 
disproportionately affect children.

Indian Tribal Governments

    This final rule does not have tribal implications under Executive 
Order 13175, Consultation and Coordination with Indian Tribal 
Governments, because it does not have a substantial direct effect on 
one or more Indian tribes, 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.

Energy Effects

    We have analyzed this rule under Executive Order 13211, Actions 
Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use. We have determined that it is not a ``significant 
energy action'' under that order because it is not a ``significant 
regulatory action'' under Executive Order 12866 and is not likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy. The Administrator of the Office of Information and 
Regulatory Affairs has not designated it as a significant energy 
action. Therefore, it does not require a Statement of Energy Effects 
under Executive Order 13211.

Technical Standards

    The National Technology Transfer and Advancement Act (NTTAA) (15 
U.S.C. 272 note) directs agencies to use voluntary consensus standards 
in their regulatory activities unless the agency provides Congress, 
through the Office of Management and Budget, with an explanation of why 
using these standards would be inconsistent with

[[Page 13105]]

applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., specifications of materials, 
performance, design, or operation; test methods; sampling procedures; 
and related management systems practices) that are developed or adopted 
by voluntary consensus standards bodies.
    This rule does not use technical standards. Therefore, we did not 
consider the use of voluntary consensus standards.

Environment

    We have analyzed this rule under Commandant Instruction M16475.lD, 
which guides the Coast Guard in complying with the National 
Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321-4370f), and have 
concluded that there are no factors in this case that would limit the 
use of a categorical exclusion under section 2.B.2 of the Instruction. 
Therefore, this rule is categorically excluded, under figure 2-1, 
paragraph (34)(d), of the Instruction, from further environmental 
documentation. This rule simply allows a State to decide whether or not 
to impose a liability insurance requirement as a condition for vessel 
numbering. An ``Environmental Analysis Checklist'' and a ``Categorical 
Exclusion Determination'' are available in the docket where indicated 
under ADDRESSES.

List of Subjects in 33 CFR Part 174

    Marine safety, Reporting and recordkeeping requirements.


0
For the reasons discussed in the preamble, the Coast Guard amends 33 
CFR Part 174 as follows:

PART 174--STATE NUMBERING AND CASUALTY REPORTING SYSTEMS

0
1. The authority citation for part 174 is revised to read as follows:

    Authority: 46 U.S.C. 6101 and 12302; Department of Homeland 
Security Delegation No. 0170.1 (92).

0
2. Amend Sec.  174.31 by revising the section title, redesignating 
paragraph (b) as paragraph (c), and adding a new paragraph (b) to read 
as follows:


Sec.  174.31  Terms imposed by States for numbering of vessels.

* * * * *
    (b) Proof of liability insurance for a vessel except a 
recreational-type public vessel of the United States; or
* * * * *

    Dated: December 20, 2004.
R. D. Sirois,
Rear Admiral, U.S. Coast Guard, Assistant Commandant for Operations.
[FR Doc. 05-5337 Filed 3-17-05; 8:45 am]
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