Personal watercraft, popularly known as water bikes or jet skis, are vessels powered by a jet pump with engines up to 135 horsepower and capable of reaching speeds of over 60 mph. Jet skis skyrocketed in popularity during the 1990s with sales reaching $1.2 billion in 1996, accounting for 37 percent of the boats sold in the United States. The average jet ski cost $6,328 in 1996, and over a million were in operation. The leading producer with nearly half the market was Bombardier, based in Montreal, producer of Sea Doo personal watercraft. Other producers included Polaris Industries, Kawasaki, and Yamaha. Despite, or perhaps because of, their popularity jet skis were under attack from several quarters.
Safety concerns resulted from the speed of jet skis and from some of their operating characteristics. One character- istic was that they were nearly impossible to control when
29New York Times, March 28, 2011. 30www.globalnetworkinitiative.org.
31See the Chapter 24 case Google Out of China. 32New York Times, March 7, 2011.
33The Guardian, April 21, 2011.
34Wall Street Journal, April 20, 2011. 35Washington Post, April 24, 2011. an operator lost hold of the throttle. A study published in the Journal of the American Medical Association reported that inju- ries associated with personal watercraft increased dramatically with an estimated 12,000 people treated in hospital emergency rooms in 1995, including four fatalities. The study also indi- cated that the accident rate for personal watercraft was substan- tially higher than for regular motorboats. In California, jet skis accounted for 55 percent of boating injuries but only 18 percent of registered boats. The industry responded that surveys had shown that the average personal watercraft was used more per year than larger boats, making the accident rates “roughly com- parable” to water skiing. Kawasaki stated, “More fatalities are routinely recorded for kayaking and canoeing.” The National Transportation Safety Board had begun a study of jet ski safety, and a number of states and interest groups were pressuring the U.S. Coast Guard to examine jet ski accidents.
John Donaldson, executive director of the Personal Watercraft Industry Association, said, “This is just a recre- ational activity—it’s fun. It’s not a firearm.... It’s not a proven health risk like cigarettes.” Pat Hartman of Polaris Industries said that jet skis were “as safe as the driver. It’s like a loaded gun. If it’s in the wrong hands, it’s not safe.”

50 Part I • Strategy and the Nonmarket Environment
EPA regulations set new hydrocarbon and nitrogen oxide emissions standards for boats, and those standards would become more stringent each year until 2006 when a 75 percent reduction in emissions would have been achieved. The stan- dards were applied on a “corporate average” basis that required all of a company’s certified engines, on average, to achieve the standards. This allowed greater flexibility to manufactur- ers. The Earth Island Institute, an environmental activist group, criticized the EPA regulations as too weak.
The California Air Resources Board had begun a study to determine if jet skis should be regulated for their emissions. Other state and local agencies in California began to examine jet ski operations as a source of MTBE, a gasoline additive that reduced automobile emissions but could contaminate water supplies. The Northern California Marine Association expressed concern about the effect of a boating ban on recre- ation and the businesses that serviced boating. Administrative Director Mary Kirin Velez said, “Our whole emphasis is on getting the governor to give a waiver to let the oil companies produce gasoline without using MTBE.”36
Local environmental groups also took up the c