> ![](media/image1.png){width="7.5in" height="1.0in"}
>
> July 23, 2008

Rear Admiral Brian M. Salerno

United States Coast Guard

Assistant Commandant for Policy and Planning

2100 Second Street, S.W.

Washington, DC 20593-0001

Captain Michael M. Rosecrans

United States Coast Guard

Chief, Fishing Vessel Safety Division

2100 Second Street, S.W.

Washington, DC 20593-0001

Electronic Address: [www.regulations.gov](http://www.regulations.gov/)
(Docket No. USCG--2003--16158)

RE: Docket No. USCG--2003--16158 Commercial Fishing Industry Vessels
Advance Notice of Proposed Rulemaking

Dear Rear Admiral Salerno and Captain Rosecrans:

The Office of Advocacy of the U.S. Small Business Administration
(Advocacy) submits this comment to the Department of Homeland Security's
(DHS) United States Coast Guard (USCG) advance notice of proposed
rulemaking on *Commercial Fishing Industry Vessels.* The Office of
Advocacy commends the USCG for seeking comments on the potential
economic impact of each requirement on small entities. As the USCG moves
forward with a notice of proposed rulemaking, the agency should prepare
an initial regulatory flexibility analysis (IRFA) pursuant to the
Regulatory Flexibility Act (RFA) in order to determine the impact on
small entities.

**Advocacy Background**

Congress established the Office of Advocacy under Pub. L. 94-305 to
represent the views of small business before Federal agencies and
Congress. Advocacy is an independent office within the Small Business
Administration (SBA), so the views expressed by Advocacy do not
necessarily reflect the views of the SBA or of the Administration.
Section 612 of the RFA requires Advocacy to monitor agency compliance
with the Act, as amended by the Small Business Regulatory Enforcement
Fairness Act.[^1]

On August 13, 2002, President George W. Bush enhanced Advocacy's RFA
mandate when he signed Executive Order 13272, which directs Federal
agencies to implement policies protecting small entities when writing
new rules and regulations. Executive Order 13272 also requires agencies
to give every appropriate consideration to any comments provided by
Advocacy. Under the Executive Order, the agency must include, in any
explanation or discussion accompanying the final rule's publication in
the [Federal Register]{.underline}, the agency's response to any written
comments submitted by Advocacy on the proposed rule, unless the agency
certifies that the public interest is not served by doing so.

**The Proposed Rule**

On March 31, 2008, the USCG published an advance notice of proposed
rulemaking (ANPRM) on amendments to its commercial fishing industry
vessel regulations.[^2] The proposed rule would add new requirements for
vessel stability and watertight integrity, stability training and
assessments, vessel maintenance and self-examinations, immersion suits,
crew preparedness, safety training, safety equipment, and additional
documentation. The purpose of this action is to enhance maritime safety.

**Requirements of the RFA**

The RFA requires agencies to consider the economic impact that a
proposed rulemaking will have on small entities. Pursuant to the RFA,
the agency is required to prepare an IRFA to assess the economic impact
of a proposed action on small entities. Under section 601of the RFA
\"small business\" has the same meaning as the term \"small business
concern\" under section 3 of the Small Business Act.[^3] The IRFA must
include: (1) a description of the impact of the proposed rule on small
entities; (2) the reasons the action is being considered; (3) a succinct
statement of the objectives of, and legal basis for the proposal; (4)
the estimated number and types of small entities to which the proposed
rule will apply; (5) the projected reporting, recordkeeping, and other
compliance requirements, including an estimate of the small entities
subject to the requirements and the professional skills necessary to
comply; (6) all relevant Federal rules which may duplicate, overlap, or
conflict with the proposed rule; and (7) all significant alternatives
that accomplish the stated objectives of the applicable statutes and
minimize any significant economic impact of the proposed rule on small
entities.[^4] In preparing its IRFA, an agency may provide either a
quantifiable or numerical description of the effects of a proposed rule
or alternatives to the proposed rule, or more general descriptive
statements if quantification is not practicable or reliable.[^5] The RFA
requires the agency to publish the IRFA or a summary of the IRFA in the
[Federal Register]{.underline} at the time of the publication of the
general notice of proposed rulemaking for the rule.[^6]

Pursuant to section 605(b), an agency may prepare a certification in
lieu of an IRFA if the head of the agency certifies that the proposed
rule will not have a significant economic impact on a substantial number
of small entities.[^7] A certification must be supported by a factual
basis.

**Size Standard**

The RFA requires agencies to use SBA\'s size standards for their
analysis of regulations, unless they are authorized by Federal statute
to use a different standard. If an agency wants to use an alternate
standard, it must first consult with Advocacy and publish the standard
in the [Federal Register]{.underline} for public comment. The proposed
rule involves commercial fishing vessels as defined generally in 46
U.S.C. chapter 45, ''Uninspected Commercial Fishing Industry Vessels.''
SBA's Office of Size Standards indicates that the correct North American
Industry Classification System (NAICS) code for this industry is 11411,
which includes "Finfish Fishing," "Shellfish Fishing," and "Other Marine
Fishing." The size standard for businesses in that industry is \$4
million in average annual receipts.[^8] This is the proper size standard
that should be used for this regulation.

**Determining Impact on Small Entities**

In the ANPRM, DHS and the USCG requested information about the potential
economic impact on several groups, including small businesses and local
governments. Advocacy applauds the agencies' efforts to solicit this
information. Census data indicates that the total number of firms for
NAICS Code 11411 is 1901. Of this total, 1842 firms or 96.8% have
estimated annual receipts of less than \$5 million. In addition, 29.4%
of these entities have average annual receipts of less than \$100,000;
49.4% have average annual receipts of les than \$500,000.[^9]

The new stability and watertight integrity requirements, except for
training, would apply only to vessels of 50 to 79 feet. The number of
small entities owning vessels 50 to 79 feet with annual receipts of less
than \$4 million would need to be determined to understand how many
small entities are affected by this proposed rule. Advocacy encourages
the USCG to review its licensing data or data available from other
agencies to make this determination.

New monthly self-examination and documentation requirements would apply
to vessels that "operate beyond the boundary line, with more than 16
persons on board, or that are fish-tender vessels in the Aleutian
trade." In addition, the proposed rule would establish new crew
preparedness requirements for these vessels including training, drills,
safety officers, and on board drill conductors. Advocacy encourages the
USCG to assess the additional costs for labor, training, and
documentation to be incurred by vessels subject to these requirements
and evaluate the economic impact on small entities.

Likewise, under the new regulations, vessels operating in
seasonally-cold waters as defined in the 1993 notice of proposed rule
making (NPRM) are required to carry immersion suits for their crew
members.[^10] These suits range in price from \$300 to \$800 each and
the purchase of such equipment could be a substantial expense for some
small firms given their average annual receipts.

Under the proposed regulations, compliance with most of the measures
under consideration would include new documentation requirements
including documentation of the registration of emergency position
indicating radio beacons with the National Oceanic and Atmospheric
Administration. Advocacy urges the USCG to determine the cost of the
labor necessary for this new documentation requirement given the
different requirements based on vessel size, operational locations, and
equipment, drills, and personnel involved.

**Conclusion**

The RFA requires agencies to consider the economic impact on small
entities prior to proposing a rule and to provide the information on
those impacts to the public for comment. Advocacy recommends that the
Coast Guard perform an IRFA based on this and other public comments it
receives, particularly with respect to the appropriate size standard
used to determine the number of small businesses that will be affected,
the projected costs of the proposed rule, and less costly alternatives
that still meet the objectives for maritime safety.

In its analysis, Advocacy suggests the USCG assess the numbers and types
of vessels likely to be affected by these new requirements, summarize
the laws and associated regulations that already cover these
requirements, provide an economic analysis of the commercial fishing
industry, the cost of compliance associated with each of the
requirements specified at the vessel level, and the implications in
terms of the financial impact to the firms subject to the new
requirements.

Thank you for the opportunity to comment on this important proposal and
for your consideration of Advocacy's comments. Advocacy is available to
assist the Coast Guard in its RFA compliance. If you have any questions,
please feel free to contact the Office of Advocacy at (202) 205-6533.

> Sincerely,
>
> //signed//
>
> Thomas M. Sullivan
>
> Chief Counsel for Advocacy
>
> //signed//
>
> Joan R. Rothenberg
>
> Mercatus Fellow

cc: The Honorable Susan E. Dudley, Administrator,

Office of Information and Regulatory Affairs

[^1]: Pub. L. No. 96-354, 94 Stat. 1164 (1980) (codified at 5 U.S.C. §§
    601-612) amended by Subtitle II of the Contract with America
    Advancement Act, Pub. L No. 104-121, 110 Stat. 857 (1996). 5 U.S.C.
    § 612(a).

[^2]: 73 [Federal Register]{.underline} 16815 (March 31, 2008).

[^3]: 5 USC § 601.

[^4]: 5 USC § 603.

[^5]: 5 USC § 607.

[^6]: 5 USC § 603.

[^7]: 5 USC § 605.

[^8]: Information about NAICS codes and their respective size standards
    can be found at <https://eweb1.sba.gov/naics/dsp_naicssearch2.cfm> .

[^9]: U.S. all industries data by receipt size for 2002 can be found at
    <http://www.sba.gov/advo/research/us_rec02.txt>.

[^10]: 58 [Federal Register]{.underline} 29506 (May 20, 1993), Table
    28.110(c) *Cold Water Areas, Coastal Waters and Beyond, Offshore of
    the United States (Atlantic Ocean, Pacific Ocean and the Great
    Lakes).*