Jeanne M. Grasso, Jonathan K. Waldron, Sean T. Pribyl, and Stefanos N. Roulakis
Action Item: The recently published Subchapter M Final Rule establishes a comprehensive safety system and inspection program for towing vessels. Stakeholders involved in the operation or ownership of towing vessels should carefully evaluate the new measures, review safety procedures, and develop plans to comply with the timeframes mandated by the new regulations.
On June 20, 2016, the U.S. Coast Guard (the “Coast Guard”) promulgated its Final Rule on Inspection of Towing Vessels under 46 C.F.R. Subchapter M (the “Final Rule”), which becomes effective on July 20, 2016. The Final Rule establishes safety requirements governing the inspection of and standards for certain towing vessels, as well as specifying a safety management system compliance option for towing vessel owners and operators. The Final Rule also creates many new requirements for operations, equipment, design, and construction of towing vessels. Existing towing vessels will have up to two years before having to comply with many of the new requirements of the Final Rule.
Following two separate towing vessel incidents in 2001 and 2002, Congress recognized a need for “full safety inspection of towing vessels.” Subchapter M has its roots in the Coast Guard and Maritime Transportation Act of 2004 (the “2004 Act”), in which Congress directed the Coast Guard to add towing vessels to the list of vessels subject to Coast Guard safety inspections. The 2004 Act also authorized the Secretary of the Department of Homeland Security to consider the establishment, by regulation, of a safety management system appropriate for the characteristics, methods of operation, and nature of service of towing vessels. As a result, on December 30, 2004, the Coast Guard published a notice and request for comments in the Federal Register regarding “Inspection of Towing Vessels.” (69 Fed. Reg. 78471). On August 11, 2011, the Coast Guard published a Notice of Proposed Rulemaking (“NPRM”) titled “Inspection of Towing Vessels.” This Final Rule is the culmination of a rulemaking process that spans over a decade.
Coast Guard’s Final Rule on Inspection of Towing Vessels
The Coast Guard’s stated purpose of the Final Rule is to bring towing vessels under an inspection system to ensure and improve safety of the waterways. The Final Rule establishes requirements for towing vessel inspections, safety management systems (“SMS”), and hours of service requirements. The Coast Guard estimates that the Final Rule will affect 5,509 U.S.-flag towing vessels engaged in pushing, pulling, or hauling alongside, including 1,096 owners or operators of towing vessels.
Applicability and Inspection Options
The Final Rule provides inspection mechanisms generally applicable to two classes of vessels, U.S.-flag towing vessels at least 26 feet in length, and U.S.-flag towing vessels less than 26 feet pushing, pulling, or hauling a barge carrying oil or hazardous material in bulk.
Significantly, the Final Rule mandates that inspected towing vessel owners/operators are required to select a compliance option for the managed fleet from two inspection regimes: (1) the Towing Safety Management System (“TSMS”) option, or the (2) Coast Guard inspection option. Prospective organizations that seek approval as third-party TSMS auditors and surveyors would be required to submit an application to the Coast Guard.
1. Towing Safety Management System Option
A TSMS establishes policies, procedures, and required documentation to ensure the owner or operator meets its established goals while ensuring continuous compliance with all regulatory requirements. Under the TSMS option, owners or operators of a towing vessel must implement, among other things, an external or internal survey program for vessel compliance.
Under an external survey program, Third-Party Organizations (“TPO”s) perform routine inspections of towing vessels. Prospective organizations that seek approval as third-party TSMS auditors and surveyors would be required to submit an application to the Coast Guard. TPOs will include certain classification societies, with oversight and audits of such TPOs by the Coast Guard.
In contrast, the internal survey program would be conducted with the oversight of a TPO in which the owner/operator would conduct either required surveys using internal resources or contracted surveyors. Notably, an SMS that is compliant with the International Safety Management (“ISM”) Code requirements will be deemed in compliance with the TSMS-related requirements in Subchapter M, and other existing SMSs may be considered for acceptance.
The Final Rule suggests that the TSMS option offers flexibility to owners/operators to “tailor their safety management system to their own needs, while still ensuring an overall level of safety acceptable to the Coast Guard.” Owners/operators choosing the TSMS option would be subject to annual surveys by a TPO between inspections. Under the Final Rule, towing vessel owners/operators need only to obtain a TSMS certificate from a TPO at least six months before being able to have any of their vessels obtain a Certificate of Inspection (“COI”).
2. Coast Guard Inspection Option
Under this option, the Coast Guard will conduct annual routine inspections of vessels or fleets whose owners/operators choose not to develop and implement their own TSMS. The Coast Guard states it is prepared for the estimated demand for annual inspection from owners/operators selecting the Coast Guard annual-inspection option.
An owner/operator choosing the Coast Guard option may use an SMS, vessel operations manual, towing vessel record (“TVR”), or logbook to meet Subchapter M’s recordkeeping requirements.
Certificate of Inspection Issuance Deadlines
Regardless of the option selected, the Coast Guard is responsible for issuing a towing vessel COI, and may board a vessel at any time to verify compliance. A new towing vessel must obtain a COI before it enters into service. An owner/operator of only one existing towing vessel is required to have a valid COI by July 20, 2020. All owners/operators of more than one existing towing vessel must ensure that each existing towing vessel under their ownership or control is issued a valid COI according to the following schedule:
- By July 22, 2019, at least 25 percent of its fleet.
- By July 2020, at least 50 percent of its fleet.
- By July 19, 2021, at least 75 percent of its fleet.
- By July 19, 2022, 100 percent of its fleet.
After a towing vessel receives its initial COI, the Coast Guard’s cognizant Officer in Charge of Marine Inspections (“OCMI”) will inspect a towing vessel at least once every five years.
Safety Compliance Dates and Requirements
The Final Rule creates a number of new requirements for design, equipment, construction, and operations for towing vessels, but also includes a number of exceptions. For example, excepted vessels include workboats that do not engage in commercial towing for hire but perform intermittent towing within a worksite, or those vessels used solely for response to an emergency or a pollution event. Also, excepted vessels need not comply with certain provisions regarding fixed fire extinguishing equipment.
As to compliance dates for existing vessels, many of the requirements become effective within 30 days. Many of the other requirements for existing vessels related to such things as lifesaving, fire protection, machinery, electrical systems, construction, and arrangements, have delayed compliance dates and become effective no later than either July 20, 2018, or the date the vessel obtains a COI, whichever date is earlier. Importantly, these compliance dates must be met even if a COI is issued for a particular vessel after July 20, 2018, in accordance with the COI issuance dates, as discussed above.
The Coast Guard made several changes to the language proposed in the NPRM, both substantive and non-substantive. Some of the notable changes include:
- Under the TSMS option, the NPRM proposed that owners or managing operators of towing vessels must obtain the TSMS certificate no later than two years after the effective date of the Final Rule. In the Final Rule, operators of towing vessels need only to obtain a TSMS certificate at least six months before obtaining a COI.
- For external audits, the NPRM suggested that auditors must be provided access to examine any requested documentation, question personnel, examine vessel equipment, witness system testing, and observe personnel training, as necessary to verify TSMS effectiveness. But, under the Final Rule, auditors now have the responsibility to witness drills, and the Final Rule added language to require an expanded examination by the surveyor when he or she finds multiple deficiencies indicative of systematic failures.
- For existing towing vessels, the NPRM proposed compliance with certain construction and arrangement standards. Under the Final Rule, the Coast Guard added possible standards for an existing vessel without a stability document to meet the requirements of the regulations, including satisfactory service, operational tests, or a satisfactory stability assessment, as acceptable standards.
Industry Response and Concerns
The industry has expressed concerns about the rulemaking process and the requirements in the Final Rule. During the rulemaking process, the Coast Guard received and considered more than 3,000 comments from more than 265 written submissions, and oral statements from 105 persons at public meetings. Individuals, trade organizations, and maritime companies all provided comments to the NPRM, many of whom expressed opposition and concerns about added cost burdens on business and impact on personnel.
In particular, some industry segments expressed concerns about the financial impact to the towing industry. The Coast Guard estimates that the regulation will have an annual cost to the industry of $33 million, with cost savings stemming from the extensive exemptions available for existing vessels noted above. Some commenters viewed this estimate as vastly underestimated. Other industry concerns included high costs with retrofit requirements, which could have the unintended consequences of driving operators out of business or requiring industry consolidation. In partial response, as discussed above, the Coast Guard delayed implementation of many of the requirements until July 20, 2018.
In 2009, the Coast Guard established the voluntary Towing Vessel Bridging Program to assist both the Coast Guard and the towing vessel industry in meeting requirements stemming from the Inspection of Towing Vessels rulemaking. The Coast Guard is currently in Phase 2 of that program. During Phase 1, the Coast Guard conducted Industry Initiated Examinations for companies taking advantage of the opportunity to participate in this Coast Guard program and get a head start in front of the Final Rule. Phase 2 is focused on Risk-Based Targeted Examinations and is scheduled to continue until this Final Rule becomes effective. Phase 3 will commence with the implementation of the new Subchapter M towing vessel inspection regulations and issuance of COIs.
After over a decade of rulemaking involving thousands of comments from the public, many owners, operators, and stakeholders in the towing vessel industry have begun implementing standards, policies, and procedures that meet the Final Rule. However, the whole of the inspected towing vessel industry must carefully review and examine the Final Rule in its entirety to ensure compliance with the mandated standards and timeframes. Delay in fully implementing the Final Rule into operations could subject owners, operators, and individuals to risk of substantial penalties, liabilities, and the termination or delay in towing vessel operations.