24 MAY 2018 • FOGHORN REGULATORYREPORT By Peter Lauridsen, PV A Regulatory Affairs Consultant Increasing Property Damage Thresholds is an Exercise in Patience and Persistence O n March 19, 2018, the U.S. Coast Guard issued a final rule that updated Marine Casualty Reporting Property Damage Thresholds. Surprisingly, these damage thresholds had not been changed in more than 30 years even though material and repair costs have increased dramatically. PVAand others in the maritime industry felt strongly that it was high time to push for regu- latory change. Our goal was to urge the Coast Guard to increase these thresh- olds so as to provide relief for operators from having to fill out and submit an ever-growing number of 2692s, and initiate mandatory drug and alcohol testing, because damage thresholds were too low. The final rule fortunately raised the property damage threshold for a marine casualty that requires immediate notice under 46 CFR 4.05-1 and the written report under 46 CFR 4.05-10 is now $75,000 (up from $25,000). Also, the property damage threshold for an incident to be classi- fied as a serious marine incident (SMI) as defined in 46 CFR 4.03-2 is now $200,000 (up from $100,000). When this proposed change was first published in a Notice of Proposed Rulemaking on January 23, 2017, PVA eagerly supported the proposal. In preparing comments to the docket, the PVA Regulatory Committee, in researching available resources, saw an opportunity to propose what we believed were some well-founded changes to the proposed rule. In its comments, PVA recom- mended that the Coast Guard increase the initial damage threshold from $25,000 to $100,000 and $400,000 for a serious marine incident. Ultimately, the final rule did not change materially from what the Coast Guard initially proposed. As you can imagine, the final rule was well received by industry and rated specific notice and approval in public comments from the Passenger Vessel Association. We, as an inter- ested entity, had participated from the earliest stages of this step of the improvement of the marine casualty investigative process. The final rule of- ficially went into effect on April 18. As a marine inspector, I learned early that to properly understand regulations that I was to ultimately enforce it was necessary to read a rule’s preamble to get a sense of the need and the reasoning process that led to the solution. I found it even more important as a representative of the public removed from the birthing envi- ronment to read the preamble. In the preamble, the Coast Guard based its rationale to raise the thresh- olds only to $75,000 and $100,000 re- spectively on the Consumer Price Index. They argued that “The CPI- Universal is the most widely and accepted index approved by the BLS to measure the average change over time in price paid by urban consumers for a market basket of goods and services.” PVA strongly disagreed – and still disagrees – with the use of this index. In our comments to the docket, we recommended a different approach to indexing: “Urban consumption has no relation to industry-specific indices that are available. PVA has not been able to identify a single index that best fits the