FR 2021-00526

Summary of the Rule

The document discusses a new rule implemented by the Coast Guard, which extends the validity period for recreational vessel endorsements on Certificates of Documentation (COD) from one year to five years. This change is in accordance with the Frank LoBiondo Coast Guard Authorization Act of 2018. The rule is designed to ease the administrative burden on vessel owners by allowing them to renew their documentation less frequently. Additionally, it establishes new user fees based on the length of the renewal period chosen by the vessel owner.

Issues and Concerns

Prediction Assumptions

One major concern with this document is the reliance on assumptions about vessel owners' future behavior. The Coast Guard assumes that owners will uniformly select renewal periods during a phase-in period, which may not accurately reflect the diverse preferences of individual owners. This assumption introduces a level of speculation in the cost savings estimations for both the government and the industry.

Data Reliability

The projections made within the document use historical data from 2013 to 2017 to predict future trends. However, given economic changes post-2018, these figures may not accurately capture current or future conditions. Additionally, the calculations for potential savings and impacts rely on hypothetical scenarios without clear, verifiable backing data.

Complexity and Accessibility

The document is highly technical and complex, making it difficult for a general audience, particularly small entities, to fully understand the implications. The breakdown of calculations, especially in projecting savings over a ten-year period, requires substantial familiarity with economic terms and principles, which could be overwhelming for stakeholders without a background in economics.

Government Efficiency

While the rule anticipates significant cost savings for the government, it does not address how current administrative resources will be reallocated. The reduction in renewals could lead to an excess capacity of resources within the Coast Guard, and the document does not clarify if there are plans to reassign these resources productively.

Impact on the Public

This rule is expected to broadly impact recreational vessel owners by reducing the frequency of document renewals, which translates into less paperwork and potentially lower costs over time. By extending the validity of CODs to five years, owners can focus more on their recreational activities without worrying about annual renewals, which reduces their administrative burden.

Impact on Specific Stakeholders

Vessel Owners

Owners of recreational vessels stand to gain from this change, as the reduced frequency of renewals saves them both time and money. The rule also introduces phased user fees which, although initially might require adjustment, ultimately streamline costs associated with vessel documentation.

Small Entities

For small entities, understanding and adapting to these regulatory changes might present challenges, especially during the transition phase. The complexity of the rule necessitates additional effort to fully grasp the changes and their implications. The document does not give much assurance on supporting these entities, thus they may need more guidance to capitalize on these changes effectively.

Government Efficiency

The Coast Guard is expected to experience reduced workloads due to fewer annual renewals, leading to potential administrative cost savings. However, whether this translates into improved governmental efficiency or resource reallocation is not fully addressed, leaving an open question for future operational adjustments within the agency.

By providing a five-year renewal option, the rule aims to simplify regulatory compliance for vessel owners while managing the cost implications of this extended timeframe judiciously. Despite the positive outlook, the assumptions and methodologies used in estimating impacts need cautious interpretation, highlighting a need for flexibility in future rules and expectations.

The Federal Register document addresses a rule implemented by the Coast Guard to extend the validity of a recreational vessel Certificate of Documentation (COD) from one year to five years, as mandated by the Frank LoBiondo Coast Guard Authorization Act of 2018. This change has financial implications for vessel owners and the Coast Guard, and the document provides detailed forecasts of associated cost savings.

Estimated Costs and Savings:

One of the primary financial changes introduced by this rule is the adjustment in renewal fees for recreational vessel CODs to correspond with the new five-year validity period. The cost of a COD is calculated based on a new fee structure of $26 annually. Therefore, for a five-year period, the cost totals $130. This fee adjustment aligns with statutory requirements and ensures the Coast Guard collects appropriate funds to cover the costs of providing this service.

The document estimates significant savings for both vessel owners and the government. It projects that recreational vessel owners will realize cost savings amounting to approximately $696,727 annually over ten years, while the Coast Guard is expected to reduce its annual spending on COD renewals by about $997,345. Combined, the estimated 10-year savings for both industry and government is projected to be approximately $17.6 million, discounted to present value terms.

Analysis of Assumptions and Projections:

The financial projections presented in the document rely heavily on assumptions regarding the behavior of vessel owners during the period when they can choose renewal periods ranging from one to five years. This approach assumes that vessel owners will choose equally among the available options during the transitional phase, a speculative assumption that may not accurately capture real-world behaviors. Such uniformity in behavior is unlikely, demanding careful consideration and potentially leading to variability in actual savings across different stakeholders.

Moreover, the calculations, especially with respect to the anticipated savings for government administration, may not consider resource reallocations or efficiency improvements that could arise from having fewer renewals to process. The document presumes a linear reduction in administrative tasks without exploring how the freed resources might be reallocated within the Coast Guard.

Complexity and Accessibility:

The financial estimates, particularly projecting savings over a ten-year period, involve complex calculations and assumptions rooted in economic principles, which may not be immediately comprehensible to all stakeholders, including small entities. Additionally, historical data from 2013 to 2017 serves as a basis for these projections, which may not fully represent current or future conditions due to economic changes post-2018.

Furthermore, while the document complies with statutory obligations, it does not provide specific accommodations for vessel owners who may not benefit, thereby necessitating efforts to ensure that these changes are well-communicated and understood across all affected parties.

In conclusion, while the rule aims to reduce the administrative burden and costs for vessel owners and the government, the assumptions and projections involved in estimating financial impacts require ongoing evaluation to ensure they truly align with evolving economic and behavioral conditions.