Country of Origin Codes and Revision of Regulations on Hull Identification Numbers

AGENCY:

Coast Guard, DHS.

ACTION:

Final rule.

SUMMARY:

The Coast Guard is revising its regulations to allow U.S. manufacturers of recreational boats to display a 2-character country of origin code before the 12-character hull identification number (HIN) without separating the two by means of borders or on a separate label. This removal of our previous restriction will allow U.S. manufactures to comply with the International Organization for Standardization (ISO) HIN standard, without changing the information collected by States on undocumented vessels that they register because the U.S. HIN remains only 12 characters.

DATES:

This final rule is effective August 16, 2004.

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-2003-14272 and are available for inspection or copying at room PL-401 on the Plaza level of the Nassif Building, 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 final rule, call Mr. Alston Colihan, Office of Boating Safety, Coast Guard, telephone 202-267-0984. If you have questions on viewing or submitting material to the docket, call Andrea M. Jenkins, Program Manager, Docket Operations, telephone 202-366-0271.

SUPPLEMENTARY INFORMATION:

Regulatory History

On June 20, 2003, we published in the Federal Register (68 FR 36957) a notice of proposed rulemaking (NPRM) entitled “Country of Origin Codes and Revision of Regulations on Hull Identification Numbers.” We received six letters commenting on the proposed rule. No public hearing was requested and none was held.

Background and Purpose

In 1995, the International Organization for Standardization (ISO) finalized a hull identification number standard (ISO 10087:1995(E)) consisting of the existing Coast Guard 12-character HIN format preceded by a 2-character country code and a hyphen. Boat manufacturers in the United States that export to Europe started using the ISO HIN standard beginning with the 1996 model year.

The ISO standard states that “A HIN shall consist of 14 consecutive characters plus a hyphen * * *” But 33 CFR 181.27 of our HIN standard states, “If additional information is displayed on the boat within two inches of the [12-character] hull identification number, that information must be separated from the hull identification number by means of borders or must be on a separate label so that it will not be interpreted as part of the hull identification number.” While the ISO HIN standard includes a paragraph, ISO 10087:1995(E)(6) entitled “Additional information,” that contains language nearly identical to that in § 181.27, the ISO additional information requirements do not apply to the country code and hyphen, which are part of the 14-character, international HIN.

The American Boat and Yacht Council (ABYC) develops voluntary consensus safety standards for the design, construction, equipage, maintenance, and repair of small craft. An ABYC Technical Committee studying the ISO HIN standard and our HIN standard concluded that the differing requirements are a problem for U.S. builders exporting to Europe. One large U.S. manufacturer that exports to Europe pointed out that use of a separate tape to create the border required by our HIN standard often results in misalignment and other flaws that may be confused with attempts to alter an HIN.

This proposal was discussed at the October 29, 2001 meeting of the National Boating Safety Advisory Council (66 FR 49445, September 27, 2001) and there were no objections stated by State boating law administrators in attendance at the meeting. The NBSAC passed a resolution requesting the Coast Guard to immediately pursue rulemaking for an exception to current regulations to allow the U.S. HIN system to conform to the ISO HIN standard while not requiring the states to include the country code in their registration process.

Discussion of Comments

By the close of the comment period on September 18, 2003, we received six comments from the following categories: one individual, one State boating official, one boat manufacturer, and three associations.

Rule Beneficial to Import-Export Community

The individual supported the rule because it removes the limitations of the separate label requirement and will be beneficial to the import-export community.

The boat manufacturer supported the rule because separation of the 2-character country of origin code from the HIN by means of borders or on a separate label is burdensome and costly due to the necessity to maintain two different HIN labeling systems: One for boats sold domestically and a second one for boats exported for sale overseas. Removal of the requirement for borders or a separate label around the country of origin code will allow U.S. manufacturers to comply with the ISO HIN standard, without changing the information collected by the States on undocumented vessels they register.

This manufacturer stated that one of the challenges the company faces as an exporter is being cost-effective while maintaining compliance with regulations in different countries or regions. The more the company can streamline production to meet global market standards, according to the manufacturer, the greater the company's effectiveness as global marketing competitors. As these views are consistent with our proposed rule, we made no changes in the rule based on these two comments.

Importance of Manufacturers and State Officials Being Aware That Country of Origin Codes Are Not Part of U.S. HINs

The State boating official was not opposed to the hyphen between the country of origin and the HIN. According to the official, one issue that may arise would be the entering of stolen boats into State and National Crime Information systems. If the country of origin is included as part of the HIN on a theft entry, that entry would not produce a “hit” if someone looking to see if a vessel was stolen simply uses the 12-digit HIN which does not include a country code. Therefore, the official suggests that it be made clear to manufacturers and state titling authorities that manufacturer's statements of origin and state titles only include the 12-digit HIN.

The Coast Guard agrees. Consistent with the NBSAC resolution, our rule brings the U.S. HIN system into conformity to the ISO HIN standard and does not require the states to include the country code in their registration process. The manufacturer's statements of origin and state titles are State paperwork and ownership issues. Publication of the state official's concerns here in the Federal Register, however, should help ensure that manufacturers and State officials take note of this concern. In addition, we are revising our final rule to expressly include a reference in § 181.27, that the HIN is 12 characters long.

Advocates for Changing to 17-Character HIN

An association representing auto theft investigators opposed the proposed rule, because, according to the association, the addition of two new HIN characters would only serve to complicate and confuse the law enforcement and insurance communities, as well as various state registration departments and the general public. Also according to the comment, any HIN modification should result in the adoption of a 17-character HIN format as approved and submitted to the Coast Guard by the association representing auto theft investigators, the American Boat and Yacht Council (ABYC) and the National Association of State Boating Law Administrators (NASBLA).

Since the Coast Guard published the HIN regulations in 1972, boat manufacturers have had the option of including additional characters near the HIN, provided the additional characters were distinctly separate—by a hyphen from 1972 to 1984 and by means of borders or on a separate label from August 1, 1984 (48 FR 40716, September 9, 1983) to the present. United States manufacturers exporting overseas have been using the ISO HIN standards since 1996. In addition, the 17-character HIN format to which the comment refers is beyond the scope of this rulemaking.

An association representing State Boating Law Administrators as well as an association representing investigators of boat thefts also opposed the proposed rule and instead, supported adoption of the 17-character HIN format. Again, U.S. manufacturers exporting overseas have been using the ISO HIN standards since 1996; however, they have had to separate the country of origin code from the 12-character HIN by means of borders or with a separate label. This rule simply makes the U.S. HIN regulations more compatible with the ISO HIN Standard. In addition, the 17-character HIN format to which the associations refer is beyond the scope of this rulemaking that does not call for States to adjust for the addition of any characters to the HIN.

All three associations indicated we were creating a 14-character HIN. We are not. The country of origin code is separated by a hyphen and is not part of the U.S. HIN. As noted above, we have revised our final rule to reflect that our HIN remains 12 characters.

Discussion of Rule

We did not change the final rule from the rule we proposed in 2003 (68 FR 36957, June 20, 2003) with the exception of inserting a reference to the length of the HIN, 12 characters, in § 181.27. This final rule will relieve manufacturers of recreational boats who sell both internationally and domestically of the burden of the requirement to separate the country of origin code for the United States, “U.S.-”, from the 12-character HIN by means of borders or a separate label. Any other information would still have to be separated from the 12-character HIN by means of borders or a separate label.

Regulatory Evaluation

This 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 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. Allowing manufacturers following the ISO HIN format to separate the country of origin code without the use of borders or a separate label would relieve a burden and thereby reduce the costs of complying with the HIN display requirement.

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. The Small Business Administration (SBA) has size standards for each industry and has established codes under the North American Industry Classification System (NAICS). Each NAICS code identifies an industry, and has a corresponding revenue- or employee-based small business size standard. The only type of small entity that this rule would affect would be small businesses.

There were 4,420 U.S. manufacturers of recreational boats in 2002, an estimated 80 percent of which qualify as small businesses by the size standards of the SBA. However, we have observed that the businesses we have identified as small manufacture fewer numbers of boats than their larger competitors. In addition, most of the businesses we have identified as small do not export to the European market and therefore would not follow the ISO HIN format.

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.

Assistance for Small Entities

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we have offered to assist small entities in understanding this final rule so that they can better evaluate its effect on them and participate in the rulemaking. If the rule affects your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact Mr. Alston Colihan, Project Manager, Office of Boating Safety, by telephone at (202) 267-0984 or by e-mail at acolihan@comdt.uscg.mil.

Small businesses may also send comments on the actions of Federal employees who enforce, or otherwise determine compliance with Federal regulations 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 would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 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 final 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. This final rule would not impose an unfunded mandate.

Taking of Private Property

This rule would not affect 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 rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children.

Indian Tribal Governments

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would 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.

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. The proposed rule to remove the requirement to separate the 2-character country of origin code from the 12-character HIN by means of borders or on a separate label relates to the documentation of vessels and is not expected to have any environmental impact. 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 181

• Labeling
• Marine safety
• Reporting and recordkeeping requirements

For the reasons set out in the preamble, the Coast Guard amends 33 CFR part 181 as follows:

PART 181—MANUFACTURER REQUIREMENTS

1. The authority citation for part 181 is revised to read as follows:

Authority: 46 U.S.C. 4302.

2. Revise § 181.27 to read as follows: