Boating and Aviation Operation Safety Act : hearing before the Subcommittee on Commercial and Administrative Law of the Committee on the Judiciary, House of Representatives, One Hundred Fourth Congress, first session, on H.R. 234, to amend Title 11 of the United States Code to make nondischargeable online

weighs maybe 8,000 pounds and it is very, very fast. It responds
very quickly to maneuvering and it takes a great deal of skill to
operate.

And things on the water happen very quickly; as quickly some-
times or even more quickly than in an automobile. The road condi-
tion is probably not going to change because of wind. The sea con-
ditions, the bay conditions, the river conditions can change momen-
tarily because of a burst of wind and so you have to be extraor-
dinarily mindful of the other physical phenomena around you.

If you are going at these speeds, you must be sober. You cannot
be impaired or intoxicated, because, if you are, then not only do
you endanger yourself but you endanger those other of your pas-
sengers and other boaters around you.

We have another vessel, a little larger; this vessel is probably not
nearly as fast but it probably exceeds 30 knots. Thirty knots is very
fast on the water.

Then we have what we call the personal watercraft. And this
personal watercraft is a nice little single passenger vessel. It is ba-
sically a water pump. It has a water pump that brings the water
in and sends it out as a jet. And that is the propulsion. Now a PWC
can get up to 40 knots in a matter of yards. And you ride it like
you are on a motorcycle. The intent is that the passenger will be
in the water because that is the fun of it. You wear a bathing suit
to operate the PWC.

Now let me just read you how the industry sells these. This is
called the Kawasaki watercraft of the year 1995, and their adver-
tisement says it will "make everything else in the water shrivel
up."

And that is my testimony. Thank you.

[The prepared statement of Mr. Gilmore follows:]

Prepared Statement of Bruce A. Gilmore, Director, Boating Administration,
Maryland Department of Natural Resources

Mr. Chairman, members of the Subcommittee, it is a pleasure to be here today
to present testimony on H.R. 234 legislation which would amend Section 523(a)(9)
of Title 11, United States Code, to make non-dischargeable a debt for death or in-
jury arising from the debtor's operation of a watercraft or aircraft while intoxicated
from using alcohol, a drug, or another substance.

The perspective I wish to share with the Subcommittee today is that recreational
boating is the most fun when it is enjoyed with the utmost safety. Therefore, I
would suggest that the goal of legislation like H.R. 234 be that it creates another
consideration in the mind-set of boaters: that safe boating, particularly alcohol free
and drug free, is not only more enjoyable but also financially prudent.

Maryland is a boating state in every sense. We have contributed to the history
of boating in the United States whether in construction of Clipper Ships or the de-
sign of America Cup vessels and sails. Maryland has about 190,000 registered and
documented vessels which places us in the middle range of boating states. However,
any of you who have seen Maryland's waterways, particularly the Chesapeake Bay,
know that during the boating season, many more than that number utilize our wa-
terways. Indeed, recreational boating is a one-billion dollar industry in Maryland.



11

Average annual trip expenditures of $1,065.00 and boat maintenance expenditures
of $2,833.00 underscore the important economic impact of boating.^

Despite the heavy use of our waterways, we are fortunate that our accident rates
have been somewhat stable. In calendar 1994, the last vear of complete data, we
had 387 reported boating accidents and 23 fatalities. Of the accidents, 116 were col-
lisions, involving boats, 51 were collisions with fixed objects, and 9 were collisions
with floating objects, significantly, 25% of the 387 accidents involved people with
elevated blood alcohol levels.^

While numbers cannot always tell a story, these do show the potential for the es-
tablishment of liability for property damage or personal injury arising from the use
of alcohol. As such, these accidents woula be within the ambit of H.R. 234, should
it be enacted into law.

Despite these accidents, Maryland has been extraordinarily aggressive in its efibrt
to mate boating on our waterways safe. We have the first boating safety certificate
requirement: anyone born after July 1, 1972 must pass a boating safety course and
possess the boating safety certificate in order to operate a vessel alone. As a result,
the 1994 data shows that those who have this certificate are involved in a very
small number of accidents.

Our Natural Resource Police (NRP) have coordinated the State-wide boater safety
education courses with the Power Squadron, Coast Guard Auxiliary and the Mary-
land school system. The NRP has also established the "PFD Panda" award program,
the "Sober Skipper" and the "Wear Your PFD" program.

On the law enforcement front, the NRP established the nationally recognized "Op-
eration SWAMP' program (Safe Waterways through Alcohol Monitoring Patrols)
which focuses on areas of high boating activity for alcohol impaired boaters.

Maryland has also been a leader in establishing regulatory controls over boating.
We have undertaken vessel management plans for heavily used waterways which
have substantially increased safety. Our personal watercrafl (PWC) operating regu-
lations, promulgated five years ago, set safe operation standards as well as a mini-
mum age requirement and also has been nationally recognized. We have also en-
tered into a voluntary agreement with the PWC livery companies in the Ocean City,
Maryland area to monitor safety and to enable them to administer a boat safety
course aimed at PWC operation. These steps have reduced PWC accidents involving
PWC rentals. Unfortunately, we did experience our first two PWC fatalities in June
in the Upper Chesapeake Bay area both of which involved PWC owners.

Even with these initiatives, all of which were supported by boating organizations
and the Marine Trades Association of Maryland, we are still seeking ways to reduce
our accidents and fatalities. This effort is pursued aggressively because we know
safe boating is more fun and has a positive impact on Maryland's economy.

I hope this perspective is helpful to the Subcommittee.

Mr. Gekas. Would you mind passing that to the clerk?

Mr. GiLMORE. Be happy to. I have it marked.

Mr. Gekas. Are they book marked?

Mr. GiLMORE. Yes, they were marked with the kind of watercraft.
I also have the advertisements that the industry has for the per-
sonal watercraft, if you would like to see them.

Mr. Gekas. All right.

Suppose now we transfer our attention to Mr. Case, and we note
the attendance of the gentleman from South Carolina, Mr. Inglis.

STATEMENT OF STEPHEN H. CASE, VICE CHAIR, LEGISLATIVE
COMMITTEE, NATIONAL BANKRUPTCY CONFERENCE

Mr. Case. Thank you, Mr. Chairman. My name is Stephen Case.
I am the vice chair of the Legislative Committee of the National
Bankruptcy Conference. I have submitted a prepared statement.
Could I ask it be taken into the record, please?

Mr. Gekas. Without objection, it is so ordered.



^Lipton and Miller, "Recreational Boating In Maryland, An Economic Impact Study," 1994.
This study was a cooperative venture of the Sea Grant College, University of Maryland, Boating
Administration, Maryland Department of Natural Resources, and the Marine Trades Association
of Maryland.

2 Maryland Natural Resources Police, "Report of Boating Accidents and Related Data, 1994."



12

Mr. Casp]. The National Bankruptcy Conference, Mr. Chairman,
deplores drunk driving. If somebody is out on a motorboat in the
Susquehanna River, or a pilot is flying from Westerly, RI, over to
Block Island, he ought not to have any alcohol in the last 24 hours,
and the public deserves that protection against substance abuse.

However, with all respect to Congressman Ehlers, we are here to
express our opposition to this bill or, in the alternative, a more rea-
sonable version of the bill because of the importance of protecting
the broad discharge in bankruptcy for individuals which has been
a bedrock of Federal bankruptcy policy since 1898.

I would like to use a couple of minutes of my time to ask you
to consider how this law might affect an individual in a hypo-
thetical situation. So, Mr. Chairman, let us suppose this legislation
has been enacted. Then let us suppose that a well-regarded, nor-
mally sober, hard working man with a wife, a big mortgage, and
three kids, earns $400 a week. He has had a tough week, had a
fight with his wife. He is tired. Saturday at noon he goes down to
the lake to get away from it all. It becomes the worst day of his
life. Foolishly, stupidly, he drinks too many beers, gets into his
speed boat, rams another boat, and seriously injures a wealthy
pleasure boater. This is horrible.

Obviously, in my hypothetical the recent enactment of this bill
had no deterrent effect. Our hypothetical perpetrator had probably
never heard of the bankruptcy laws. Who in this room, as Con-
gressman Ehlers pointed out, has ever thought before doing or not
doing anything whether it was going to be discharged in bank-
ruptcy or not?

Now, what happens in my example is that the wealthy boater
collects from his insurance company. The insurance company then
wants to collect from our poor perpetrator through subrogation so
it sues him. It sues the poor drunken man in the name of the in-
jured wealthy man. A jury returns a verdict of $250,000. I don't
nave to say to you. Members of Congress, that a man with a family
earning $400 week is never going to pay a $250,000 judgment in
all his life.

Nevertheless, the insurance company wants recovery. Its regu-
lator is on its neck. So they attempt to garnish the paycheck. They
start proceedings to send the sheriff to seize the car, the furniture,
and the other belongings and to sell, the house, in foreclosure.

Confused and frightened, our perpetrator files for chapter 7
bankruptcy. The automatic stay stops the enforcement remedies as-
serted by the insurer. What happens next?

Mr. Chairman, personal bankruptcy is not a walk in the park.
The chapter 7 trustees seize all the nonexempt property of the
debtor and distributes it equitably to the creditors. The injured
boater's insurer will get a little money out of the proceeds. So will
the guy's uncle who lent him $300 last week. So will the telephone
company. So will the credit card company. But at least they all get
a pro rata share.

The chapter 7 discharge will take care of our debtor's liability to
his uncle and the phone company, but it will not do anything to
stop the subrogated insurance company from continuing to pursue
him in Pennsylvania for 20 years, which is the statute of limita-
tions for enforcement of a judgment.



13

After discharge, our debtor has no assets. He has lost his house
and his car. What is he going to pay this verdict with without the
protection of a discharge in bankruptcy?

You may remember Governor Connally of Texas who after a dis-
tinguished career in public service caught the real estate market
in the wrong way in Texas and had to go through the ignominious
process of having all his lifetime accumulation of possessions sold
at public auction. That is what happens to a chapter 7 debtor with
assets.

Now our debtor is at the end of this process. What is he going
to do? Hide his car from the repo man every night? The denial of
the discharge, faced with 20 years of creditors' rights enforcement,
leaves our debtor with antisocial incentives created by this legisla-
tion. It creates incentives to hide, to cheat, and to steal.

Mr. Chairman, if your creditors for years to come were going to
seize everything you could earn, would you even work? Exceptions
to discharge tell the debtor there is no hope. To quote from a popu-
lar song, some of us are old enough to remember, from Tennessee
Ernie Ford, he "owes his soul to the company store."

Now we recognize, to conclude, may I have two seconds?

Mr. Gekas. You may proceed.

Mr. Case. We recognize, to conclude, Mr. Chairman, that the
motor vehicle thing is already in the statute and if it is going to
be expanded, we suggest a flexible approach and we have appended
language to our statement which copies from legislation passed last
October about discharge of divorce-related property settlements,
and my final point is to say it gives the courts power to give a dis-
charge on facts such as those that I have described but not to give
a discharge if the drunken boater is an executive earning a half
million dollars a year.

Thank you very much.

Mr. Gekas. We thank the gentleman. And his statement will be
made a part of the record, as we have indicated.

[The prepared statement of Mr. Case follows:]

Prepared Statement of Stephen H. Case, Vice Chair, Legislative Committee,
National Bankruptcy Conference

Mr. Chairman, distinguished members of the subcommittee, Congressman Ehlers,
staff, fellow panelists and other attendees. Good morning. I am Stephen Case, Vice-
chair of the Legislative Committee of the National Bankruptcy Conference. Thank
you for inviting us today and considering our views. ^

We have submitted a prepared statement. May I now please ask that it be taken
into the record? I would like now to ask for about five minutes to address the Sub-
committee this morning. May I proceed?

Alcohol Abuse Is Deplorable But H.R. 234 Is Unwise. Under present law, the driv-
er of a "motor vehicle" can't get a discharge in bankruptcy from debts to people he
hurt or killed while driving drunk. H.R. 234 would expand the definition of "motor
vehicle" to include planes and boats. ^ We deplore drunk driving, but we respectfully



^The NBC is a 65-member group of judges, professors and lawyers interested in sound federal
bankruptcy policy. It operates on a budget of about $50,000 per year. This is funded by mem-
bers' dues. It has no staff. Since the mid-1930's, the NBC has endeavored to provide the Con-
gress with careful, professional analysis of bankruptcy issues being considered on Capitol Hill.

^The precise legal issue under consideration is this: "Is a motorboat or an airplane a 'motor
vehicle' within the meaning of 11 U.S.C. §523(aX9)?" Two courts have said "Yes." One has said
"iNvj." ^ompare Boyce v. Green way (In re Green way), 180 B.R. 179 (W.D. Tex. 1995) and Radivoj
v. Williams (In re Williams), 101 B.R. 356 (Bankr. S.D. Fla. 1989), affd 111 B.R. 361 (S.D. Fla.

Continued



14

oppose the bill. It will have no deterrent effect on drunken boating or flying. It will
deny vital relief to some debtors.

Nonetheless, we propose more reasonable language. Our proposal balances the
need for debtor relief fairly against abuse of the bankruptcy system by those who
can afford to pay.

Please Consider An Example. Mr. Chairman, please suppose that H.R. 234 has
been enacted. Next, please suppose that a well-regarded, normally sober, hard-
working man with a wife, a big mortgage and three children earns $400 per week.
Tired and hot after a tough week, he goes down to the lake to get away from it
all. It becomes the worst day of his life. P^oolishly, stupidly, he drinks too many
beers, gets into a speedboat, rams another boat and injures seriously a wealthy
pleasure boater.

This is horrible.

Quite obviously, the recent enactment of H.R. 234 had no deterrent effect. Our
hypothetical perpetrator had probably never heard of the bankruptcy laws, let alone
the concept of "exceptions to discharge." Who in this room has ever thought about
an "exception to discharge" when deciding to do or not to do anything?

In our example, the wealthy boater collects from his insurance company. The in-
surer wants to collect through subrogation. In the name of the wealthy boater, it
sues the drunk driver. A jury returns a verdict of $250,000 against him. Our drunk
boat driver will never be able to pay $250,000, in all his life (unless there is
hyperinflation or he wins the lottery). Nevertheless, using its rights under state law,
the subrogated insurance company attempts to garnish his pay check.^ It starts pro-
ceedings to send the sherifT to seize his car, his furniture and his other belongings.
It starts to sell his house in foreclosure. Confused and frightened, the debtor files
for Chapter 7 bankruptcy. The automatic stay stops the enforcement remedies as-
serted by the insurer. What happens next?

Debtors Must Forfeit Most of Their Assets To Get A Discharge. Well, Mr. Chair-
man, personal bankruptcy is no walk in the park. In Chapter 7, the trustee
liquidates the property and distributes it equitably to all creditors. All items of the
debtor's property with more than a modest value, generally, will be seized and sold."*
The injured boater's insurer will get a little money. So will the debtor's uncle who
lent him $300 the week before the accident. So will the telephone company and the
credit card company. The Chapter 7 discharge will end our debtor's liability to the
uncle and the companies. However, in our example, there is no end to paying the
judgment due to the injured boater's insurer, just an endless cycle of punishment.
The NBC believes that punishment should be imposed by the criminal laws, not the
bankruptcy laws.'^

Under State Law, Creditors Can Seize Paychecks And Most Assets From Debtors
With Undischarged Debt. Mr. Chairman, the broad discharge for the honest debtor
has been a sound and fundamental principle in our law since 1898. The NBC op-
poses expansion of exceptions to discharge. The reason is simple. After discharge,



1989) (motor boats are motor vehicles) with Willison v. Race (In re Race), 159 B.R. 857 (Bankr.
W.D. Mo. 1993) (motor boats are not motor vehicles).

3 Under Rhode Island law, the jury-verdict winner can force the employer to turn over all but
$50.00 of the debtors' paychecks. Under R.I. Gen. Laws § 10-58 (Supp. 1994), "a writ of garnish-
ment . . . shall be effective to attach . . . the salary . . . due and payable . . ., or to
become . . . due and p>ayable . . . as is in excess of the amount of . . . salary . . . ex-
empt by law from attachment." Under R.I. Gen. Laws § 9-26-4