# International Management Code for the Safe Operation of Ships and for Pollution Prevention (International Safety Management (ISM) Code)

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URL: https://www.frixlaw.com/law-library/documents/fr%3A97-33528

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** December 24, 1997
- **Citation:** 62 FR 67492

## Text

SUMMARY: In a Notice of Proposed Rulemaking (NPRM) published on May 1,
1997, the Coast Guard proposed national regulations for responsible
persons and their vessel(s) engaged on international and domestic
voyages, to develop safety management systems to enhance vessel
operating safety at sea, prevent human injury or loss of life, and
avoid damage to the environment, in particular to the marine
environment, and to property. Section 602 of the Coast Guard
Authorization Act of 1996 (Pub. L. 104-324) requires this action. This
final rule completes those standards which will allow U.S. vessels that
are certificated to engage on international voyages to meet the
mandatory certification requirements, or voluntarily meet these safety
standards for domestic voyages. It also provides standards to permit
recognized organizations to apply for authorization from the U.S. to
complete external audits and issue international convention
certificates for U.S. vessels on behalf of the U.S.

DATES: This final rule is effective on January 23, 1998. The
incorporation by reference of certain publications listed in the rule
are approved by the Director of the Federal Register on January 23,
1998.

ADDRESSES: Unless indicated, documents referred to in this preamble are
available for inspection or copying at the office of the Executive
Secretary, Marine Safety Council (G-LRA/3406), U.S. Coast Guard
Headquarters, 2100 Second Street SW., Washington, DC 20593-0001,
between 9:30 a.m. and 2 p.m., Monday through Friday, except Federal
holidays. The telephone number is (202) 267-1477.

FOR FURTHER INFORMATION CONTACT: Mr. Robert M. Gauvin, Project Manager,
Vessel and Facility Operating Standards Division (G-MSO-2), U.S. Coast
Guard, 2100 Second Street SW., Washington, DC 20593-0001, telephone
(202) 267-1053, or fax (202) 267-4570.

SUPPLEMENTARY INFORMATION:

Regulatory History

In May of 1994, the ISM Code was adopted as Chapter IX of the
International Convention for the Safety of Life at Sea (SOLAS) 1974, as
amended. The ISM Code's adoption occurred at the International Maritime
Organization's (IMO's) Conference of Contracting Governments to SOLAS
in London at IMO's Headquarters.
On October 19, 1996, the President signed into law the Coast Guard
Authorization Act of 1996 as Pub. L. 104-324, 110 Stat. 3901. Section
602 of the Act added Chapter 32 to Title 46 U.S. Code, ``Management of
Vessels.'' 46 U.S.C. 3203 mandated the Secretary of Transportation to
develop regulations for the implementation of safety management systems
which are consistent with the International Safety Management (ISM)
Code, for vessels and their companies which are engaged on foreign
voyages.
On April 24, 1997, the Secretary of Transportation delegated to the
Commandant of the Coast Guard the responsibilities under 46 U.S.C.
Chapter 32 and 46 U.S.C. 3103 for the implementation and enforcement of
safety management systems on U.S. vessels engaged on foreign voyages.
This delegation was published as a final rule in the Federal Register
(62 FR 19935) and codified in 49 CFR 1.46 (fff) and (ggg).
On May 1, 1997, the Coast Guard published a NPRM (62 FR 23705) in
the Federal Register on implementation standards for safety management
systems for vessels and their companies that are certificated to engage
on international voyages. These proposed regulations provided standards
for:
The development and compliance of safety management
systems for U.S. vessels and their companies;
Mandatory certification of safety management systems to
international levels;
Voluntary certification of safety management systems for
U.S. domestic trading vessels; and
Authorization by the U.S. to organizations to complete
external audits and certification of U.S. vessels required to meet the
U.S. and international safety management system standards.
The NPRM comment period closed on July 30, 1997. During the 90 day
comment period, 51 documents were received that contained 118 comments.
Seventeen comments requested public hearings but none were held.
Reasons for not holding public hearings before the publishing of this
rule are explained in the ``Discussion of Comments and Changes''
section of this rule.

Background and Purpose

This rule is necessary to fulfill the mandates of 46 U.S.C. 3203,
as added by section 602 of the Coast Guard Authorization Act of 1996
(Pub. L. 104-324, 110 Stat. 3901). The purpose of this rule is to
establish national safety management system standards and requirements
for the development, documentation, auditing, and completion of
certification by vessel owners or responsible persons. These vessel
safety management system regulations are consistent with the
international regulations of Chapter IX of the International Convention
for the Safety of Life at Sea (SOLAS) 1974, as amended. Chapter IX of
SOLAS requires that all vessels to which SOLAS is applicable, and their
companies, have effective safety management systems developed to meet
the performance elements of the International Safety Management (ISM)
Code (International Maritime Organization (IMO) Resolution A.741(18)).
The development of these requirements has been fueled by the
continued occurrences of significant marine casualties despite
engineering and technological innovations to stop such casualties over
the last two decades. In an effort to further reduce these casualties,
the Coast Guard evaluated the role of the ``human element'' in the
maritime safety equation. Recent casualty studies concluded that in
excess of 80 percent of all high consequence marine casualties may be
directly or indirectly attributable to the ``human element.''
Consequently, the international maritime community saw the need to
emphasize shipboard safety management practices to minimize human
errors or omissions. These types of errors play a part in virtually
every casualty, including those where structural or equipment failure
may be the direct cause.
The U.S. has been at the forefront providing input, analysis and
direction for the IMO's development of these international regulations.
The U.S. recognized that the human element needed to be addressed and
initiated the Prevention Through People (PTP) program which examines
and defines the critical role that the human element plays in maritime
safety. The PTP concept asserts that safe and profitable operations
require a systematic approach toward the constant and

[[Page 67493]]

balanced interaction between the elements of management, the work
environment, individual behavior, and appropriate technology. The ISM
Code offers a systematic approach to mariners with the policy and
procedures needed to understand their duties and address the human
element issues and risks that can prevent casualties from occurring.
The voluntary certification of safety management systems by U.S.
vessels in domestic trade supports the PTP strategies to bring
government and industry together in making cultural change and
partnerships to address the human element in maritime operations and
pollution prevention.
Accordingly, the Coast Guard endorsed the guidance provided by the
ISM Code in IMO Resolution A.741(18), and provided it as a reference in
Navigation and Vessel Inspection Circular No. 2-94 (NVIC 2-94)
published March 15, 1994, ``Guidance Regarding Voluntary Compliance
with the International Management Code for the Safe Operation of Ships
and for Pollution Prevention.''
In May 1994, Chapter IX of SOLAS, ``Management for the Safe
Operation of Ships,'' was adopted by the U.S. at the IMO's Conference
of Contracting Governments to SOLAS, 1974. Chapter IX of SOLAS mandates
that all vessels subject to SOLAS, and their companies, have effective
safety management systems developed and in use that conform to the
performance elements of the ISM Code (IMO Resolution A.741(18)).
Companies whose U.S. flag vessels trade internationally (engaged on a
foreign voyage) and are subject to SOLAS, must have their safety
management system externally audited and must receive the appropriate
international certificates from the U.S. or from an organization
authorized to act on behalf of the U.S.
The ISM Code marks a significant philosophical shift in the
maritime community's approach to safety by recognizing the human
element's role in preventing marine casualties and ensuring vessels are
operated responsibly in accordance with domestic and international
standards. The ISM Code is seen as a major contributor to industry's
self-evaluation and actions to address the human element concerns. It
is intended to change the current approach of regulatory compliance
from industry's passive defect notification and correction response
mode to an aggressive approach to safety and environmental protection.
Under this proactive approach, potential discrepancies are resolved by
the companies themselves before casualties or incidents that can
adversely impact the marine environment can occur.
The ISM Code performance elements require the development of safety
management systems which document and communicate the owner's operation
policy, chain of authority, and operational and emergency procedures.
It also requires management reviews, internal audits and correction(s)
of non-conformities as directed by company's management procedures. The
documentation of a safety management system provides the basis for
auditing an employee's knowledge, ashore and afloat, of the company's
procedures and policies. It illustrates owner, manager and Master
responsibilities specifically and ensures awareness of national and
international standards in the system's procedures.
The ISM Code performance standards are broad based to allow
flexibility for the differences that each responsible person has to
work with in managing a variety of vessels or just one. A safety
management system is seen as a living system that will change and grow
as the responsible person, his or her managers and shore-based and
vessel-based personnel see the need for change, or as technology and
vessel operations change. The best safety management system is one
where there is commitment from the top management of the company and
its personnel to act safely and in an environmentally responsible
manner at all times. The accessibility of senior management throughout
the development of the safety management system and throughout the
systems life, is also a key factor to its success.
To ensure that the U.S. public and maritime industry understood the
mandatory requirements of the ISM Code, the Coast Guard published a
notice in the Federal Register on October 5, 1995 (60 FR 52143). This
notice explained the adoption of the ISM Code by the Contracting
Parties of SOLAS, and scheduled four public meetings held at the
following times and locations:

October 30, 1995, Federal Building, Seattle, Washington;
November 1, 1995, Port Authority Building, Long Beach, California;
November 13, 1995, Holiday Inn Downtown, New Orleans, Louisiana; and
November 16, 1995, Port Authority Building, New York City, New York.

At these public meetings, the Coast Guard received comments on
implementation of the international requirements and provide a
presentation on the U.S.'s voluntary safety management system
guidelines in NVIC 2-94. Comments received at these meetings were
audiotaped and are a part of this docket.

Discussion of Comments and Changes

The Coast Guard received a total of 51 documents containing 118
comments to the public docket. This section of the preamble discusses
the comments received and the Coast Guard's responses and changes to
the proposed rule. This section is divided into three parts. First, we
discuss the comments that request public hearings. Second, we discuss
the comments on specific CFR cites. Third, we discuss the general
comments concerning other issues relating to this rulemaking and the
implementation of safety management system requirements.

Comments Requesting Public Hearings

Sixteen comments requested a public hearing to discuss the
requirements in 33 CFR 96.250(f)(4), involving the determination of
medical fitness for seafarers. The concern expressed was that this
section permitted amendments to the standards that determined the
medical fitness of mariners. The Coast Guard is not amending any
regulations or standards regarding the determination of medical fitness
for mariners as part of this rulemaking. This rulemaking only requires
that the responsible person provide procedures or policies in the
safety management system on how these existing requirements are managed
by the company. We do not intend to hold public hearings due to these
requests, as they would require actions on regulations outside the
scope of this rulemaking. We understand the importance of these
requests and asked the Executive Director of the Merchant Marine
Personnel Advisory Committee (MERPAC) to place these comments and
concerns on the Committee's working agenda to discuss in its public
meetings with the Coast Guard. The Executive Director of MERPAC and the
Committee's Chairperson agreed to place it on MERPAC's working agenda.
MERPAC is a federal advisory committee appointed by the Secretary
of the Department of Transportation under the Federal Advisory
Committee Act (5 U.S.C. App. 2). MERPAC is composed of marine industry
personnel appointed to advise the Coast Guard on merchant marine
issues. The Committee offers an open forum to hear individuals, groups
or industry specific concerns, then works to provide the Coast Guard
with recommendations as to what actions may be needed. MERPAC has
addressed the issue of mariner's physical fitness

[[Page 67494]]

standards in the past and will, when changes are proposed, address it
in the future. MERPAC's next meeting is scheduled for May 1, 1998. A
notice announcing the Committee's working agenda, schedule and place of
meeting will be published in the Federal Register.
One comment requested a public hearing if the Coast Guard does not
plan to include specific protections for the Northern Right Whale in
the final rule. The focus of the proposed rule is to implement safety
management systems consistent with the ISM Code. The Coast Guard does
not intend to hold a public hearing in response to this request.
Comments about protection of the Northern Right Whale and the ISM Code
are addressed in detail in the final section of these comment
responses.

Comments Relating to Specific CFR Sections

All changes to each section of the rule are discussed within the
following paragraphs.
1. 33 CFR 96.110, 96.210, and 96.310. Four comments were received
on these sections which discussed who these subparts apply to. Two
comments found the use of the terminology ``trades in U.S. waters,'' or
``on an international voyage,'' or ``engaged on a foreign voyage'' to
be confusing in determining which vessels and persons must comply with
the proposed regulations. One comment requested that ``vessel engaged
on a foreign voyage,'' be used throughout the rulemaking as it conforms
to the statutory requirements of 46 U.S.C. 3201. We agree and amend
proposed Secs. 96.110, 96.210 and 96.310, to use the phrase, ``vessel
engaged on a foreign voyage,'' as defined in Sec. 96.120.
For purposes of clarification regarding foreign vessel voyages that
come under U.S. jurisdiction, the Coast Guard amends Secs. 96.110(c),
96.210(a)(3) and 96.310(c), by adding the words, ``bound for ports or
places under the jurisdiction of the U.S.'' This will ensure that a
foreign vessel or self-propelled mobile offshore drilling unit (MODU)
are held accountable to the requirements and certification of safety
management systems when navigating in U.S. waters. A foreign vessel
engaged on a foreign voyage, involving innocent passage through waters
subject to the jurisdiction of the U.S. will not be boarded under these
regulations.
The second and third of these comments also discussed the use of
the phrase, ``on an international voyage'' in 46 CFR 31.40-30(a),
71.75-13(a), 91.60-30(a), 107.415(a), 115.925(a), 126.480(a),
176.925(a), and 189.60-30(a). The Coast Guard does not agree with a
need to change this phrase. ``On an international voyage'' is described
in 46 CFR 2.01-8, entitled ``Application of regulations to vessels or
tankships on an international voyage.'' For consistency throughout
title 46 CFR, we have not changed the final rule.
The fourth comment on these sections recommends that a specific
subpart be developed for foreign vessel requirements, separate from
regulations for U.S. vessels in subparts A, B and C. The comment
suggested that this new subpart include requirements for foreign
vessels whose countries are parties to SOLAS and those vessels whose
countries are not, similar to 33 CFR 96.370. The Coast Guard disagrees
that a separate subpart is needed, but has added language in
Sec. 96.390(a) to ensure that it is understood that actions for safety
management system certification by vessels whose countries are a party
to SOLAS are acceptable as an equivalent to the requirements of 33 CFR
part 96, subparts B and C. Further discussions of this matter are found
in paragraph 27 of this comment reply section of the final rule
preamble.
The Coast Guard amended Sec. 96.210(a)(2)(I) by removing the word
``passenger'' in that sentence. Under 46 U.S.C. 3202(a)(1)(A) ``a
vessel transporting more than 12 passengers * * *'' must comply with
these regulations, not just a passenger vessel. The Coast Guard removed
this word to ensure the meaning that all vessels carrying more than 12
passengers, not just passenger vessels, must comply with these
regulations.
The Coast Guard amended Secs. 96.210(a)(2)(i) and (d)(1)(i),
96.330(a) and (d), 96.340(a) and (d), 96.370(a), and 96.390(a)(2) as
the statements were to require that these sections applied to vessels
transporting or carrying ``more than 12 passengers'' as stated in 46
U.S.C. 3202(a)(1)(A), and not ``12 or more passengers.''
2. 33 CFR 96.120. Five comments were received on definitions in
this section. One comment requested that a definition for ``designated
person'' be added to this section to ensure that this person's
responsibilities for overseeing the safety management system is not
confused with the responsibilities of the ``responsible person.'' It
should also be understood that a responsible person with a large fleet
of vessels can assign the responsibility of the designated person to
more than one employee, or that a designated person could be
responsible for more than one vessel. The Coast Guard agrees with the
comment and has added a definition for designated person to this
section.
One comment requested that the term ``responsible person'' be
replaced by the term ``owner'' because of possible confusion with the
term ``responsible party,'' which is defined in the Oil Pollution Act
of 1990 (OPA 90). The Coast Guard does not agree with this comment and
has not changed the definition of the ``responsible person.''
Responsible party is defined in section 1001(32) of OPA 90 to clarify
liability of the owners and operators of vessels, onshore facilities,
offshore facilities, deepwater ports, and pipelines in the event of an
oil spill. The Coast Guard's definition of responsible person in this
rulemaking clearly relates to responsbility surrounding the development
and use of safety management systems ashore and aboard vessels.
One comment suggested redefining the term ``company'' to include
the definition of an ``operator'' as defined in 30 CFR 250.2 of the
Mineral and Management Service's regulations for offshore oil and gas
exploration. The Coast Guard does not agree. There are times when a
lessee or operator of an offshore oil or gas exploration vessel becomes
responsible by contract with the owner of the vessel to assume the
duties imposed by these rules. When this occurs, a written designation
of that responsibility must be provided by the owner to the lessee or
operator of the contracted vessel and placed in the documentation of
the safety management system as required by the ISM Code. This is part
of the safety management system's documents and reports required by
Sec. 96.250(b)(2), and there is no need to expand on the definition of
``company''.
One comment requested that the term ``recognized organization'' be
changed to a ``member of the International Association of
Classification Societies (IACS).'' The Coast Guard does not agree with
this comment. Other organizations, outside the membership of IACS, may
apply and be recognized if they meet the requirements of 46 CFR part 8.
The regulations of that part do not limit the application or
recognition of any organization because they are or are not, members of
IACS. The Coast Guard has amended the definition of a recognized
organization in this section to be clear on which requirements of 46
CFR part 8, an organization must meet to be accepted. As subparts C and
D of 46 CFR part 8 provides requirements for other international
certificate authorizations and the U.S. Alternate Compliance Program,
which have no effect on U.S. ISM Code certification authorization,
these subparts are removed from the definition. This

[[Page 67495]]

change of definition has also required changes to the language in the
definition of an ``Authorized Organization Acting on behalf of the
U.S.'' and Secs. 96.400(a), 96.410 and 96.430(b) (formerly
Sec. 96.430(a)(5)). Also, we have removed the phrase ``national or
international'' from the recognized organization definition for
consistency with subpart D.
One comment inquired whether the phrase, ``vessel engaged on a
foreign voyage'' includes the operation of U.S. flag oilfield crewboats
to and from foreign ports during operations supporting oil exploration
programs internationally. Such vessels that are offshore supply vessels
(OSVs) of 500 gross tons or more, or are carrying more than 12
passengers, would be considered engaged on a foreign voyage under
paragraph (b) of the term's definition. This definition states that a
vessel is considered to be on a foreign voyage when, ``making a voyage
between places outside the United States'' (Sec. 96.120). These
crewboats must meet the requirements of 33 CFR part 96 and the ISM Code
for safety management systems, when certificated for such voyages. No
changes were made to the final rules in response to this comment.
In November 1997, the SOLAS Conference on the Safety of Bulk
Carriers was held at IMO's headquarters in London. During this
conference, a new Chapter XII of SOLAS was adopted, entitled
``Additional Safety Measures for Bulk Carriers.'' During deliberations
on this new chapter of SOLAS an interpretation was adopted regarding
the definition of a bulk carrier. This interpretation is found in
Resolution 6 of the resolutions adopted by the conference. This
interpretation pertains to the definition of bulk carrier in Regulation
1.6 of Chapter IX of SOLAS on the ISM Code, as well as the new Chapter
XII on Bulk Carrier Safety. The definition in Chapter IX is, ``Bulk
carrier means a ship which is constructed generally with single deck,
top-side tanks and hopper side tanks in cargo spaces, and is intended
primarily to carry dry cargo in bulk, and includes such types as ore
carriers and combination carriers.'' The interpretation removes the
ambiguity of the term ``constructed generally.'' Specifically, the
resolution ``Urges SOLAS Contracting Governments to interpret the
definition of the term ``bulk carrier'' given in regulation IX/1.6, for
the purpose of the application of SOLAS regulation IX/2.1.2 * * * to
mean: ships constructed with a single deck, top-side tanks and hopper
side tanks in cargo spaces and intended primarily to carry dry cargo in
bulk; or ore carriers; or combination carriers.'' Bulk carriers that
meet this interpretation are required to meet the first effective date
of the ISM Code, July 1, 1998. Other vessels, which carry bulk cargoes,
but do not meet this interpretation, must meet the second effective
date of the ISM Code (July 1, 2002), as required by Sec. 96.210. The
U.S. has decided to accept this IMO interpretation to SOLAS. This
rulemaking has not defined bulk carriers, but intends to use all vessel
type definitions as provided by Regulation 1 of Chapter IX of SOLAS.
For clarity, we added a new paragraph (a) to the definition section to
explain that we will use the definitions provided by Chapter IX of
SOLAS, and not the definitions in Title 46 of the U.S. Code.
3. 33 CFR 96.230(a). Four comments were received on this paragraph.
Two requested clarification whether these practices have to be in
writing. One comment noted that requiring written practices would
impose requirements on U.S. vessels that are not required on foreign
vessels. We agree. Requiring these objectives in writing would extend
U.S. vessel requirements beyond requirements for a foreign vessel under
the ISM Code. This change would also require a foreign vessel that
operates in the U.S. to complete further work on their safety
management system that exceeds the requirements of the ISM Code. We
amend the rule to remove the term ``written'' and have reworded the
paragraph to ensure that the objectives required by this section are
consistent with the ISM Code.
The third comment requested clarification of the term ``type'' of
vessel, and suggested that this definition would have the same meaning
as vessel ``category.'' This terminology is required to be used on the
Document of Compliance certificate to illustrate what type of vessel(s)
a company's safety management system is developed to manage. If the
type of vessel(s) a responsible person owns changes, then the safety
management system must be amended to include the specifics of managing
the new or different vessel type. Vessel types are: passenger ship;
passenger high-speed craft; cargo high-speed craft; bulk carrier; oil
tanker; chemical tanker; gas carrier; MODU; and other cargo ship. The
term ``cargo ship'' used to describe a vessel type under SOLAS has the
same meaning as ``freight vessel'' for these regulations.
The final comment on this paragraph noted that, as drafted, the
meaning of this paragraph could be interpreted to require the safety
management system to provide a safe work environment ``for'' the
vessel. The intent of the ISM Code is to require a safe working
environment ``on board'' the vessel. The Coast Guard agrees with the
comment and has reworded the paragraph to clarify its meaning and be
consistent with the ISM Code.
4. 33 CFR 96.230(b) and 96.230(c). Five comments requested that we
amend these paragraphs because the ``listing'' of safeguards and
continuous improvement methods is not the same as ``establishing or
implementing'' those safeguards. The Coast Guard agrees with the
comments and amends paragraphs (b) and (c) accordingly.
5. 33 CFR 96.230(d). One comment requested that this paragraph be
struck from the final rule because ensuring compliance with the many
international, national, industry standards and codes is unworkable and
a second comment requested that the term ``industry guidelines'' be
expanded to ``maritime industry guidelines.'' We disagree that this
paragraph is unworkable or should be struck, but have amended it to
include maritime regulations and standards in the safety management
system. It does not require any more actions than those already
completed by foreign vessels under their ISM Code compliance
responsibilities. The Coast Guard agrees with the comment recommending
the use of the phrase, ``maritime industry guidelines'' and amends this
paragraph in the final rule. To ensure clarity, we amended this
paragraph to use the word ``relevant.''
6. 33 CFR 96.240(b). One comment discussed that this paragraph was
unclear, because as drafted, it appeared that foreign vessels would be
required to comply with U.S. national standards and U.S. regulations
for ship construction and operation not normally applicable to foreign
flag vessels. The comment pointed out that this is inconsistent with
the ISM Code. This was not the intent of the proposed requirements. We
have amended this paragraph to make it clear that foreign vessels need
to follow U.S. regulations applicable to them when they operate in U.S.
waters.
7. 33 CFR 96.240(c). One comment discussed that the documentation
which describes the levels of communication was not a functional
requirement of safety management systems. The comment suggests that
requiring this documentation would be an arduous task with respect to
the operation of a self-propelled MODU, because the organizational
makeup of the vessel changes depending on whether the vessel is
navigating, or is anchored in oil exploration operations. The Coast

[[Page 67496]]

Guard disagrees. The directions and management needed for this type of
operation between the responsible person, the navigating crew, whomever
manages the operational drilling crew and the supervising staff of the
drilling crew aboard the MODU itself, is exactly the situation that
this requirement addresses. No change has been made to this requirement
in the final rule.
8. 33 CFR 96.240(d). One comment questioned the Coast Guard's
authority to require ``near accident reporting'' in this paragraph,
arguing that this was inconsistent with the ISM Code. We disagree.
Section 9.1 of the ISM Code requires that, ``The safety management
system should include procedures ensuring that non-conformities,
accidents and hazardous situations are reported to the company,
investigated and analyzed with the objective of improving safety and
pollution prevention.'' The Coast Guard interprets that near-accident
reporting is hazardous situation reporting. The Coast Guard has also
reinforced the meaning of this requirement in the standards provided by
Sec. 96.250(i).
The comment also suggests amending this paragraph to conform to the
ISM Code. Specifically, the comment suggests revising the language to
say ``procedures for reporting * * * non-conformities with the ISM
Code,'' as opposed to ``non-conformities with the safety management
system.'' The Coast Guard disagrees that only non-conformities with the
ISM Code should be included here. The functional requirements of a
safety management system must ensure the continuous evaluation and
appropriate improvement of the safety management system by the
company's management. However, to ensure clarity this paragraph is
amended.
One comment supported Sec. 96.240(d) as drafted, and emphasized the
importance of near-miss reporting and follow-up to establish lessons
learned. We agree. The Coast Guard, in partnership with the Federal
Maritime Administration (MARAD), is developing a nationwide voluntary
near-miss accident reporting program to compile lessons learned for the
education of mariners and maritime industry. When completed, the Coast
Guard will publish policy on the use of the national near-miss accident
reporting program and a responsible person's ability to use the U.S.
national program to conform with the requirements of near-accident or
hazardous situation reporting required by the ISM Code. The Coast
Guard's program manager for this project is the Chief, Office of
Investigations and Analysis (G-MOA), at Coast Guard Headquarters.
9. 33 CFR 96.240(e). One comment objected to the use of the word
``procedures'' in this paragraph stating that the functional
requirements should define a ``process'' for ensuring an appropriate
response to emergency situations. The Coast Guard disagrees because the
paragraph, as drafted, is interpreted broadly and will define a process
for response as required by the ISM Code. Multiple levels of
management, such as on a MODU and third party managed vessel, need to
define their ``processes'' in terms of procedures in a safety
management system for it to work. Procedures that define these
processes can be used as training tools, tracking tools, and action
tools. This requirement does not require a new process to be developed
if they are already in hand or developed under current regulation or
management procedures. No change is made in response to this comment.
10. 33 CFR 96.240(g). Two comments discussed expanding this
paragraph to include the use of objective internal safety assessments
in place of internal auditing, and stated that safety management
systems should be reviewed to evaluate their efficiency against
established industry evaluation procedures. Both comments contain
merit, and the Coast Guard agrees that the efficiency and measurement
of safety management system impacts and their effectiveness should be
determined. However, the Coast Guard disagrees with the need for such
requirements in the final rule. The suggested requirements would extend
managerial responsibility past the minimum requirements of the ISM
Code. Therefore, no changes are made in response to this comment.
11. 33 CFR 96.250. Five comments were received on this section. One
comment noted that both functional and documentary requirements are
included in the table within Sec. 96.250. The comment recommended
referencing the documentary requirements of Sec. 96.240 to the table
within Sec. 96.250. The Coast Guard does not agree that there is a need
to cross reference the requirements of Sec. 96.240, as the requirements
for performance objectives documentation are already covered within the
requirements of the table in Sec. 96.250.
Four comments suggested that these regulations should contain
provisions to protect records that are maintained as part of a safety
management system. The comments request that the regulations be amended
to prohibit use of these records in civil or administrative
proceedings. Specific concerns were that the documentation and
reporting requirements will contain sensitive company information that,
while essential for purposes of company personnel use, should not be
made publicly available for use in civil proceedings. The Coast Guard
agrees that for a safety management system to work correctly and to be
continuously self-improving, it requires the proactive actions of the
responsible person to have reports completed on non-conformities and
hazardous situations, no matter how minor or major, so that management
reviews can be completed and corrections made to the safety management
system accordingly. However, the Coast Guard cannot provide any
protection for these records because to do so would exceed its
authority granted in 46 U.S.C. Chapter 32. To clarify our intent, a
note has been added at the end of the table in Sec. 96.250, in the
final rule.
12. 33 CFR 96.250(b). Three comments were received on this
paragraph. The first comment requested clarification whether the
requirement for the company's responsibility and authority statement
should extend to all vessels owned by the responsible person, or just
the vessels of the company that must comply with this part. The Coast
Guard contends that it would be to the responsible person's benefit to
have all vessels that he or she owns meet the safety management system
requirements of this part. However, only vessels required to meet 33
CFR part 96, are required to be covered by this requirement.
The second comment discussed the possibility of confusion regarding
the determination of the responsible person on a self-propelled MODU,
between the owner, operator, lessee, or drilling contractor. The
delineation of the relationships of these persons or companies involved
in a MODU's operation should be explained by the company's policies and
procedures. Proper explanation of these relationships in the safety
management system ensures that personnel responsible for specific
duties involving safe operation, and the services provided to the
vessel by contracted personnel, will understand their responsibilities
correctly thereby reducing human element errors which can cause
accidents. It will also enhance the vessel's response to casualties and
accidents, resulting in mitigation damages to the vessel and the
environment, or injury to vessel personnel.
The third comment on this paragraph discussed subparagraph (b)(4),
which requires the safety management system

[[Page 67497]]

to contain a statement that describes the company's responsibilities to
ensure adequate resources. The comment further states that describing
this responsibility in the safety management system does not
necessarily mean that the company bears responsibility. We understand
that vessel resources can be provided by a myriad of contract companies
and personnel not under the direct control of the responsible person.
Safe management does not point fingers but ensures communications so
when problems develop, there are clear policies that employees can
follow to make decisions. The reasoning that the performance objectives
of these safety management system standards are so general is to allow
them to be customized to specific type vessel operation for ease of the
user. No changes have been made to the final rule due to these
comments.
13. 33 CFR 96.250(c). One comment requested that the term
``oversee'' used in this paragraph, be changed to the word ``monitor''
to describe the actions required of the designated person. The Coast
Guard agrees with this comment and amends this paragraph in the final
rule.
14. 33 CFR 96.250(d). Three comments were received on this
paragraph. One comment stated that not all vessels are certificated or
required by the provisions of national regulations to have Masters, but
instead may have Persons-In-Charge. The Coast Guard agrees with this
comment, but has not amended the regulation. The Coast Guard uses the
term Master to be consistent with the ISM Code. Additionally, all U.S.
vessels mandatorily required to meet the safety management system
requirements of this part are certificated to have Masters on board.
The Coast Guard understands that there are vessels which can
voluntarily meet these standards, such as non self-propelled MODUs,
which are not required to have a Master but a Person-In-Charge as
senior manager of the vessel. The Coast Guard is developing a new
chapter in Volume II of it's Marine Safety Manual (MSM), on the U.S.
safety management system compliance and enforcement policies which will
be used by the Coast Guard and organizations authorized, to audit and
certificate safety management systems. The Coast Guard has not amended
this paragraph because the MSM guidance will clarify that the term
``Master'' includes a Person-In-Charge in this situation.
The other two comments questioned whether a vessel's Master is
capable of having responsibility and authority over shore-based
resources, and asked that such contentions be deleted from this
paragraph. During some duties, the Master of the vessel will be the
responsible person's representative contracting and supervising vessel
support from shore-based resources, as well as directing resources from
the vessel managing company. The safety management system should
clearly describe these duties to allow the Master to understand his or
her responsibilities and decision-making policies. This will also help
shore-based resources understand their duties, their importance to the
vessel, and their responsibilities to the vessel Master as a manager.
The Coast Guard does not agree with these comments and has not amended
this paragraph of the final rule.
15. 33 CFR 96.250(e). Two comments were received on this paragraph.
One discussed that the Master of a vessel does not have overall
authority for vessel operation because the Master's authority is
overridden by flag state, coastal state, and numerous other
governmental authorities. We respond that the Master is the responsible
person's representative on the vessel and all authorities that can be
expected of the Master should be supported by the safety management
system. The Master has overriding responsibility and authority to
ensure that the vessel is operated safely, and consistently with all
applicable laws. When the Master is not specified, it is impossible to
expect the individual employed as the Master to provide proper
leadership or decision making clarity. Where the Master follows
international, national, coastal, or local regulations or directions,
regarding management of a vessel, he/she is making decisions on how to
use these factors in the efficient and safe operation of the vessel
taking into account the policies provided by the safety management
system.
The second comment encouraged the Coast Guard to amend this
paragraph by adding a subparagraph (3) which states, ``Responsibility
with the bridge team and officers on watch to monitor navigation,
collision avoidance, and communications while the ship is piloted.''
The Coast Guard does not agree that this statement needs to be added to
this paragraph because this requirement for providing procedures for
shipboard operations is covered by paragraphs (f) and (g) of the table
in Sec. 96.250. The Coast Guard has made no changes to the final rule
due to either of these comments.
16. 33 CFR 96.250(f). Four comments were received on this
paragraph. One comment discussed that the statement in
Sec. 96.250(f)(6) required knowledge of the relevant rules,
regulations, codes and guidelines, which was a subtle difference from
than ``an adequate understanding'' required by the ISM Code. We agree
that this statement may be misinterpreted to require more than what
would be consistent with the ISM Code and have changed the language
accordingly.
One comment discussed that there should be an understanding that
the documentation of training identified and required by other national
regulations or international conventions, can be documented under the
safety management system in compliance with these requirements and also
meet the requirements for training and documentation of the
International Convention on Standards of Training, Certification and
Watchkeeping for Seafarers, 1978, as amended in 1995 (STCW). The Coast
Guard agrees with this comment, and this understanding is stated in
NVIC 4-97 (Guidance on Company Rules and Responsibilities under the
1995 Amendments to the STCW). NVIC 4-97 states, ``If you operate your
vessel under a safety management system (SMS) in compliance with the
International Safety Management (ISM) Code and hold a valid Safety
Management Certificate (SMC) and Document of Compliance issued by the
Coast Guard under 46 U.S.C. 3205, you are presumed to be in compliance
with STCW Regulation I/14.'' On the other hand, NVIC 7-97 (Guidance on
the STCW Quality Standard System (QSS) for Merchant Mariner Courses or
Training Programs), explains that, ``* * * In order for shipping
companies that are ISM Code certified to have their training meet the
STCW QSS requirement, their training program must meet the criteria in
46 CFR 10.309.
It should be remembered that documentation and training requirement
programs developed by a company can cover a magnitude of different
vessel type specific requirements. Each vessel type, under the umbrella
of a company's safety management system, may only need to use those
portions of the training and documentation program of the total company
system that are applicable due to the vessel type, area of operation,
or specific requirements under other conventions, laws or regulations.
No changes were made to this section in response to this comment.
One comment discussed the need to reevaluate federal manning levels
required on U.S. vessels, suggesting that current manning levels do not
reflect the additional personnel which will be needed to satisfy the
requirements of the

[[Page 67498]]

ISM Code. The comment stated that the ISM Code places more duties on
vessel personnel than were expected when manning levels were
established. The Coast Guard disagrees with this comment. We received
comments from companies that have safety management systems in
operation. They developed those safety management systems by initially
reviewing existing company management policies and procedures. By doing
this, they found numerous antiquated, unnecessary or duplicative
management procedures and documentation which could be eliminated.
Thus, they reduced the management overhead that they had been
experiencing before placing the safety management system in operation.
If policies are not needed due to changes in the company, management,
regulations, policies, or for a number of other different reasons, then
they should be removed or amended. By doing this the management system
and oversight reporting is reduced in size, which does not increase the
personnel needed to operate a vessel safely. No changes have been made
to the final rules due to this comment.
The final comment on this paragraph recommends that all personnel
should receive general safety management system familiarization when
joining a vessel and also six further specific levels of training.
These include: three support level training programs; two operational
level training programs; and one level of management training programs.
The Coast Guard supports a company's use of training, at whatever level
necessary to ensure that policies and procedures of the management
system are understood by their staffs aboard a vessel or working ashore
in support of a vessel. We agree that if a company evaluates its safety
management system and finds a need to develop training to ensure the
proper understanding and use of the system, then the training should be
initiated by that company. In NVIC 4-97, the Coast Guard recommended
that ship-specific familiarization include directing a new crew
member's attention to the vessel's safety management system. However,
the Coast Guard has not made changes to this section of the final rule,
as the comment requests additional training which exceeds the
requirements of the ISM Code.
17. 33 CFR 96.250(j). Three comments were received on this
paragraph. One comment requested that the format of the paragraph and
subparagraphs be changed to mirror the ISM Code, and two comments
requested that subparagraph (2) have the word ``non-conformity,''
changed to ``deficiency.'' The Coast Guard disagrees with the first
comment and has not altered the format of this section or table in the
final rule. The Coast Guard agrees that there may be confusion
understanding subparagraph (2) and has added the words ``and
deficiency'' after ``non-conformity'' to ensure that the requirement is
understood.
18. 33 CFR 96.250(k). Two comments were received on the control of
documentation required by this paragraph. One comment requested that
the word ``destroyed'' be changed to ``removed'' in subparagraph (4).
We agree with this request and amend the word in the final rule. The
second comment stated that the meaning of data maintenance is unclear
and that the complete paragraph does not provide specific direction on
data control. The requirements for safety management systems were
written in general performance element style to allow different types
of companies to tailor their systems to their specific needs. Some
companies may use paper based systems, other computer based, a third
company a mixture of both. No matter how this data is displayed or
communicated, it will be controlled equally and in compliance with
these standards. The Coast Guard disagrees that further amendments are
needed, because these standards allow flexibility for development of
systems documentation. Consequently, we have not made any changes to
the final rule due to this comment.
19. 33 CFR 96.250(l). Two comments were received on this paragraph.
One comment requested the word ``deficiencies,'' in subparagraph (4) be
changed to ``non-conformities,'' to conform with the ISM Code. In this
case, the Coast Guard agrees that confusion could occur on what
requires timely action for the system and has added the words ``non-
conformities or'' before the word ``deficiencies'' in subparagraph (4)
in the final rule.
The second comment stated that proposed section Sec. 96.240 of the
regulations should include the requirements of section 12 of the ISM
Code that require evaluating the efficiency of the system and reviewing
the safety management system with established procedures. The Coast
Guard agrees and notes that these requirements are already included in
Sec. 96.250(l)(1). Critical management review of the system, as well as
non-conformity and deficiency reports, are necessary to evaluate
whether the system is running properly. No changes to the text of the
final regulations were made due to this comment.
20. 33 CFR 96.320(f). Three comments were received on this section
regarding the reporting of non-conformities to the company's owner or
vessel's Master at completion of a safety management audit. The
comments requested that this paragraph be amended to require auditors
to issue reports of non-conformities to the company's owner and
vessel's Master. It was also recommended that the safety management
system's designated person receive copies of this reports as well. The
Coast Guard agrees in part and amends this section to require auditors
to provide these reports to a company's owner when the company is
audited, and to a vessel's owners and Master when a vessel is audited.
If a company wants its designated person to receive a copy of this non-
conformity report, it is recommended that this request be made to the
auditors prior to the audit being completed on behalf of the company.
21. 33 CFR 96.330. One comment expressed concern that this section
would require multiple Document of Compliance certificates to be issued
by each flag state for a multi-flagged fleet under one responsible
person's ownership. Multiple certificates may not be required as the
international interpretation for their issuance allows flag states to
agree to accept each others certificates for safety management system
compliance. Each situation may be different and to verify the U.S.
acceptance of other flag state certificates contact Commandant (G-MOC-
2), Vessel Compliance Division, 2100 Second Street SW., Washington DC
20593-0001 in writing, by telephone (202) 267-1464, or by facsimile
(202) 267-0506. No changes were made to this section of the final rule
due to this comment.
22. 33 CFR 96.330(f). One comment requested that this paragraph be
amended because it requires the Document of Compliance certificate to
be verified annually, instead of the company's safety management
system. The Coast Guard agrees and amends this paragraph to ensure the
verification of the system and not the certificate in the final rule.
23. 33 CFR 96.330(g)(1), 96.340(g)(1), and 96.340(f). Four comments
were received on these paragraphs. Two comments requested that the
revocation of a Document of Compliance certificate or Safety Management
Certificate not be based on the failure of the responsible person to
request an audit, but rather on the failure to complete an audit. The
Coast Guard agrees with this comment and amends these paragraphs in the
final rule.

[[Page 67499]]

The next comment pointed out that when a vessel is laid up or taken
out of service for a period of time the Safety Management Certificate
may lapse, if the vessel is unmanned for long periods of time. Because
there are no personnel working under a safety management system when a
vessel is laid up, the certificate cannot be validated or endorsed.
When brought back into service, the responsible person can request that
an initial audit of the vessel be completed when the vessel is
remanned, and a new Safety Management Certificate can be issued. No
change to the final rule was made due to this comment.
The last comment stated that Sec. 96.340(f) should be amended as it
requires foreign vessels to meet U.S. requirements for safety
management system audits. A foreign vessel which is certificated by its
flag state or by an organization who acting on behalf of the flag
state, completes a safety management system audit following the
guidelines of IMO Resolution A.788(19), meeting the same requirements
found in these regulations. The Coast Guard will accept such a
determination as required by the articles of SOLAS. No changes have
been made to this section of the final rule due to this comment.
The Coast Guard has added wording to Sec. 96.330(g), with a new
subparagraph (3), to ensure that their personnel and auditors of an
authorized organization acting on their behalf, can complete audits and
reviews of safety management systems properly and effectively. A
Document of Compliance certificate may be revoked if the Coast Guard or
an authorized organization is denied or restricted access to the
vessel, records, or personnel necessary to ensure compliance with 33
CFR part 96. Neither the Coast Guard, nor an authorized organization
acting on its behalf, should be expected to certificate compliance with
any international convention regulation, unless all needed information
and records for that review are provided by the vessel's or company's
personnel.
24. 33 CFR 96.340(e)(2). One comment requested that the wording in
this section regarding the ``anniversary date'' of the intermediate
verification audit be amended for clarity. The Coast Guard agrees and
amended the final rule with the words ``period of validity'' rather
than the ``anniversary date.''
25. 33 CFR 96.360(a)(2). One comment was received on this section
which requested a determination of ``* * * a U.S. vessel which is new
to the responsible person or their company.'' For an interim Safety
Management Certificate to be issued, this vessel would be considered an
individual vessel that was just purchased by or just brought under the
management of a responsible person. No change to the final rule was
made due to this comment.
26. 33 CFR 96.380. Two comments were received on this section. One
comment stated that the use of a civil penalty under 46 USC 3318 is not
consistent with the law for violations of compliance with documentation
responsibilities under these regulations. The comment went further to
state that a suitable grace period for the production of certificate
copies, or a grace period to bring the vessel into compliance, along
the line of a formal requirement (CG Form 835) be issued prior to
actions to assess a civil penalty. The requirement as written states
that the ``* * * vessel owner, charterer, managing operator, agent,
Master, or any other individual in charge of the vessel that is subject
to this part, may be liable for a civil penalty * * *.'' The proposed
regulations do not say that the Coast Guard must pursue a civil
penalty.
Traditionally, the Coast Guard has considered all possible
administrative actions in dealing with incidents of non-compliance. The
Coast Guard wrote this section to ensure that affected companies and
individuals were aware that civil penalties were a possible sanction
for violations of these regulations. It is the Coast Guard's opinion
that civil penalties authorized under 46 U.S.C. 3318 apply to
violations of these regulations because these penalty provisions are
applicable to violations of laws and regulations issued under the
authority of 46 U.S.C. Part B, which includes 46 U.S.C. Chapter 32.
The second comment discussed concerns surrounding
Sec. 96.380(a)(2), which allows the Coast Guard to board a vessel to
verify that the vessel's crew or shore-based personnel are following
the procedures and policies of the safety management system while
operating the vessel or transferring cargoes. The comment concluded
that this action would go well beyond the authority internationally
recognized for port state control examinations found in SOLAS: Chapter
I, regulation 19; Chapter IX, regulation 6; Chapter XI, regulation 4;
as well as the IMO Procedures for Port State Control. The comment also
requested that we modify this subparagraph to conform with
internationally recognized port state control guidelines. The comment
further requested that we draft Coast Guard policy on these actions and
distribute them for comment to the maritime industry prior to their
implementation.
The Coast Guard is working to complete policy development which
falls into line with this request. A port state control NVIC is being
developed which describes the Coast Guard boarding policy for foreign
vessels including examination of the vessel safety management system
and certificates. This NVIC will discuss normal actions during a port
state control examination of a foreign vessel by the U.S., and what
clear grounds must be found of observed non-compliance with a safety
management system before an expanded Coast Guard examination will be
completed. The Coast Guard expects to have this NVIC published in the
same time frame as this final rule. However, we disagree that this
policy requires review and comment by the maritime industry. These
procedures for safety management system evaluation fall in-line with
the U.S. port state control program already in existence and meets the
port state control regulations of SOLAS and the IMO Procedures for Port
State Control. No changes have been made to this section of the final
rule due to this comment.
27. 33 CFR 96.390(a). One comment stated that this subparagraph
would prohibit Coast Guard acceptance of foreign issued international
management certificates which met SOLAS guidelines, unless they would
attest to full compliance with U.S. regulations. The Coast Guard agrees
that as written, this requirement provides a limitation of acceptance
of foreign issued certificates which is not consistent with SOLAS. This
subparagraph has been amended in the final rule to ensure that such
certificates would be acceptable when issued in accordance with Chapter
IX of SOLAS and the IMO Guidelines for Contracting Parties to SOLAS.
28. 33 CFR 96, Part D. Two comments were received regarding
organizations who have applied to be recognized and are authorized to
complete external audits and certification of safety management systems
for U.S. vessels and their companies. One comment questioned the use of
the term ``expertise,'' and whether that term encompassed the marine
field, quality systems, or both, and whether this authorization should
be limited to classification societies. The comment further stated that
anyone with an appropriate marine business and academic background is
qualified to act on behalf of the U.S. in ISM Code auditing and
certification.
These requirements are based in part, on the guidelines provided by
IMO Resolution A.739(18), which are

[[Page 67500]]

incorporated by reference in Sec. 96.130. These international
guidelines provide minimum standards to ensure organizations authorized
by any flag state, worldwide, will provide uniform actions and
oversight when their personnel complete actions regarding vessel
surveying and auditing in the marine field. This is important to the
owner of a vessel and the flag state, because as it ensures that the
international certificates issued by authorized organizations acting on
behalf of a flag state, will be accepted worldwide, on face value, for
compliance with international conventions. The Coast Guard disagrees
that ``just anyone'' can meet these requirements. Coast Guard
requirements for recognition of organizations are rigorous and conform
to the IMO guidelines. The Coast Guard expects and will ensure that
actions by an organization acting on its behalf are incontestable under
any port state scrutiny. Any organization, with a proven history of
marine experience working with and making decisions based on maritime
industry standards, national standards and regulations, and
international guidelines and conventions, may meet these requirements.
The organization, due to the auditing expertise needed for ISM Code
certification, must also provide a certified level of standards that it
can meet for its personnel to complete audits. The requirements are
restrictive because the Coast Guard must ensure that the U.S. marine
transportation industry is able to operate, uninterrupted, worldwide.
The second comment on this part recommended that organizations
already accepted by the Coast Guard to issue voluntary certificates,
under NVIC 2-94, should be automatically authorized to issue mandatory
ISM Code certificates on behalf of the U.S. without having to reapply
under these regulations. The Coast Guard disagrees and expects these
organizations will apply under this part. No changes were made to this
section of the final rule due to these comments.
29. 33 CFR 96.410. One comment was received on this section which
stated that the term ``safety management certificates'' should not be
used in this section because it has a specific meaning, and should not
be used to refer to these certificates in a general way. The Coast
Guard agrees with this comment and has changed this section to
eliminate confusion. The Coast Guard has also edited this section to
make it easier to read by removing the words ``wish to'' from this
section.
30. 33 CFR 96.430. Four comments were received on this section. One
comment discussed the reciprocity requirement of 46 U.S.C. 3316 for a
foreign classification society to be authorized to act on behalf of the
U.S. to complete external audits and certification of safety management
systems. The comment stated reciprocity with ABS should not be required
because a subsidiary corporate entity of ABS is providing these
functions, not ABS, thus there is no need for the documentation of
reciprocity by a foreign classification society. The Coast Guard does
not agree. Currently, ABS certification comes under the voluntary
system of NVIC 2-94 which is not subject to the provisions of 46 U.S.C.
3316. Under these regulations, all future written agreements for
authorization to act on behalf of the U.S. regarding the mandatory
certification of safety management systems will be made with ABS under
the provisions of 46 U.S.C. 3316. Under this agreement, ABS will not be
able to use subsidiary group offices to complete these actions for the
U.S. No change was made in the final rule due to this comment.
The second comment recommended that the Coast Guard also accept the
quality standards of ASQC Q9002 and quality management standards of
ASQC C9001 and C9002. The Coast Guard disagrees. Under 46 CFR
8.230(a)(15), an organization must meet ANSI/ASQC Q9001 or an
equivalent quality standard to be recognized. No other quality standard
is incorporated in 46 CFR part 8. For purposes of consistency, no
others will be incorporated here either. Quality management standards
(ASQC C9001 and C9002) are not required for recognition of an
organization, so none will be required here. No changes have been made
to this section of the final rule due to this comment.
The third and fourth comments on this section questioned the
terminology used in Sec. 96.430(a)(3), and inquired whether a
recognized organization could use subsidiary organizations and their
auditors to carry out audits and certification in accordance with the
IMO guidelines and the ISM Code. The Coast Guard disagrees and has
explicitly written this subparagraph to ensure that only exclusive
auditors of organizations authorized to act on behalf of the U.S. are
used by these organizations to complete audits under this
authorization. When the Coast Guard reviews an organization's
application for authorization authority under this subpart, quality
standards must: (1) Demonstrate how the organization selected
individuals as auditors; (2) explain training and recertification
methods; and (3) describe the code of ethics the auditors must follow.
An organization's auditor standards will be approved as part of the
organization's application package to be authorized to act on behalf of
the U.S., and will be part of the U.S. written agreement with the
organization as required by Sec. 96.440(c). No change was made to this
section of the final rule due to these comments.
As the reciprocity requirement effects only foreign classification
societies which can be authorized to act on behalf of the Coast Guard
under this section, old paragraph (a)(5) of this section has become a
new paragraph (b) for clarity. Old paragraph (b) is now paragraph (c).
31. 33 CFR 96.480. One comment cautioned that the termination of
authority from an organization acting on behalf of the U.S. could have
extreme consequences on vessel operation for vessels certificated by
that organization. Specific concern was expressed for situations in
which the vessel's Safety Management Certificate is near expiration
when the authorization is terminated. Also, the comment questioned the
obligatory notification requirements of companies and vessels
certificated by the terminated organization. In all cases, the Coast
Guard will request information from the administrative files of the
organization being terminated to understand the effect of termination
on the companies and vessels certificated by the organization. The
Coast Guard will assist any company and vessel to maintain
certification while transferring to another authorized organization.
The original certificates of the terminated organization will remain
valid until expiration or periodic audit which will allow continuity
with a new authorized organization. There should be no extra cost for
the company or vessel as the audit actions required by the new
organization are the same actions that would have been completed by the
original certifying organization. This paragraph was also edited to
ensure clarity.
The Coast Guard will enter into a written agreement with all
organizations receiving authorization under this part, as stated in
Sec. 96.460. Failure to notify affected companies or vessels upon
termination of authority for safety management system certification,
will result in a review by the Coast Guard of the ability of the
organization to complete any actions on behalf of the Coast Guard.
Additionally, this termination could affect any or all other delegated
authorities, in such a

[[Page 67501]]

situation. The final rule was not changed due to these comments.
32. 46 CFR 126.480(a). Three comments were received on this
section. Two comments discussed the use of the phrase ``offshore supply
vessels (OSVs) engaged on foreign voyages'' and questioned the
applicability of the 33 CFR part 96 on OSVs and ocean-going towing
vessels certificated for international voyages. The applicability of
those regulations to OSVs and towing vessels on international voyages
is determined by whether these vessels are over 500 gross tons and are
``vessel(s) engaged on a foreign voyage'' as that term is defined in 46
U.S.C. 3201 and this part. No change was made to the final rule due to
these comments.
The final comment sought clarification when the ISM Code applied to
OSVs and ocean-going towing vessels under the vessel admeasurement
system. The ISM Code applies to vessels engaged on a foreign voyage. In
the case of OSVs and ocean-going towing vessels, the ISM Code applies
only if the vessel is 500 gross tons or greater, as OSVs and towing
vessels are considered freight (cargo) vessels for purposes of SOLAS.
Because the applicability of the statue implementing the ISM Code
provisions is based on tonnage (see 46 U.S.C. 3202) and this statute
was enacted after July 18, 1994, its applicability to vessels is based
on their international convention tonnage because of 46 U.S.C.
14302(b). However, under 46 U.S.C. 14305, a vessel owner may request
that a vessel be measured under the regulatory tonnage system and under
those circumstances the applicability of SOLAS, as well as the other
enumerated statutes, would be based on the vessel's regulatory tonnage.
This means that the owner of an OSV or towing vessel that has a
convention tonnage greater than 500 gross tons could elect to have the
vessel admeasured under the regulatory tonnage system, and if the
vessel had a regulatory tonnage of less than 500 gross tons, these
regulations would not apply. However, the applicability of all other
laws enumerated in 46 U.S.C. 14305 would also be determined based on
the optional regulatory tonnage (see 46 U.S.C. 14305(b)). NVIC 11-93,
Change 2, discusses when regulatory tonnages may be used by a vessel
owner to determine the applicability of SOLAS requirements. No changes
in the final rule have been made as a result of these comments.
33. 46 CFR 175.540(d). Four comments were received on this section.
One comment stated that the applicability of the requirements of 33 CFR
part 96 are mitigated by the addition of paragraph (d) to this section
of the regulations for small passenger vessels. This amendment does not
mitigate or soften the applicability. This paragraph provides an
equivalent means for these small vessel owners to meet the safety
management system requirements. An equivalence is not an exemption. The
Coast Guard developed a job aid with the assistance of a marine
industry working group. This job aid can be used as an example of what
an owner of a small passenger vessel may do to establish an equivalent
safety management system. Section 175.540(d) does not reduce the
effectiveness of the safety management system, but instead provides
direction to these small passenger vessel owners to help them develop
their systems so they can be certificated by the cognizant Coast Guard
OCMI.
Two comments did not support an exemption for small passenger
vessels due to their limited operation or company sizes. The Coast
Guard disagrees. These vessels are not being exempted from the
requirements, but are offered a cost-effective course of action to
implement the regulations due to their size, limitation of operation,
and historical low risk with proven safety records. The Coast Guard job
aid developed for these vessels provides a customized safety management
system program, which will support small passenger vessels with limited
international routes. It does not remove any of the requirements of 33
CFR part 96. A small passenger vessel owner can request a job aid at no
charge from the local cognizant OCMI.
The final comment requested clarification whether the Coast Guard
would allow a small passenger vessel approved and actively using the
Streamlined Inspection Program (SIP) to use that program as an
equivalent to the safety management system requirements. The SIP
program is based on performance elements similar to the safety
management system requirements. The Coast Guard may allow this if an
owner developed a program that included all the requirements of 33 CFR
part 96. This program would be provided to the cognizant OCMI for
review and acceptance after discussion and recommendations are received
from the authorized organization certificating the safety management
system. However, the Coast Guard made no changes or amendments to this
section due to these comments.

General Comments (Non-CFR Specific)

34. Four general comments were received which supported the
proposed rules as written. One comment also requested confirmation that
operation of large passenger vessels around the islands of Hawaii
constituted coastal trade and would not require mandatory development
and certification of a safety management system. A U.S. vessel
certificated to a limited route of coastal operations within the
Hawaiian island chain is not required to meet this part. However, if
the vessel involved in this operation holds an international registry
and a Certificate of Inspection authorizing international voyages, even
though the owner of the vessel limits its operations, this vessel would
have to meet all SOLAS requirements and be certificated to the ISM
Code.
One comment requested that the safety management system
requirements be placed in each part of title 46 of the CFR to
correspond to each type of vessel required to meet the ISM Code. The
Coast Guard does not agree that this should be done as the agency has
actively reduced the number of regulations where possible, including
elimination of redundant parallel regulations in the CFR. The limited
reference in each part of Title 46 affected by the final rules in 33
CFR part 96 will allow ease of reference and continuity of using the
regulations for all vessels affected by these requirements. No change
to the final rule has been completed due to these comments.
35. Two general comments supported the use of plain English in the
development of these regulations by the Coast Guard. Each described the
use of the question and answer format as useful, but both felt that the
style did not provide enough detail to really answer the questions
posed. One comment stated that the questions did not appear to be
answered. The other comment felt that the standards of plain English
were not followed adequately.
The Coast Guard's authority for developing these regulations
required consistency with the ISM Code. The ISM Code's standards are
general in nature to allow flexibility for different types of vessel
companies to meet them without restricting their creativity or
mandating a specific management style. Other international or U.S.
quality standards and management standards are written following the
same logic. No change to the final rule has been made due to these
comments.
36. Two general comments discussed the need to carefully oversee
safety management system development and certification programs for
U.S. and foreign vessels. The comments pointed out that Coast Guard
personnel should

[[Page 67502]]

be specifically trained to oversee these new requirements. We agree.
U.S. Coast Guard marine inspectors and program managers have been
trained to meet national auditing standards. Since 1995, approximately
120 Coast Guard marine inspectors completed a course which is
specifically based on the auditor standards of ANSI ASQC Q 9001 and the
ISM Code. The Coast Guard also reviewed its in-house training programs
for marine safety responsibilities and included compliance and
enforcement of the ISM Code in each basic marine safety training
course. No changes have been made to the final rule due to these
comments.
37. One general comment stated that there are numerous
organizations worldwide, who may be authorized by an Administration to
complete ISM Code audits and certification, whose abilities to act on
behalf of an Administration may be questionable. Two other general
comments alluded to the same problem, and provided suggestions on how
these organizations should be rated for performance and how port state
targeting schemes could be modified when a specific organization fails
to complete its authorized responsibilities.
The Coast Guard agrees. Coast Guard program managers will monitor
and compare compliance with the ISM Code for all flag states,
authorized organizations, companies and foreign flagged vessels.
Because this information will be monitored centrally by Coast Guard
Headquarters program managers, compliance infractions will be tailed
and may affect the targeting scheme for specific foreign vessels, flag
states, and vessel owners or authorized organizations. This information
will enable the Coast Guard to modify its targeting scheme, if
necessary, to ensure that vessels with continuous noncompliance issues
receive a higher level of oversight and boardings when in U.S. ports.
The Coast Guard will use the information collected to provide IMO
and flag states with reports on port state interventions, detentions
and denials of U.S. port entries required by the port state reporting
requirements of SOLAS. If a specific authorized organization
continuously fails to complete its assigned duties, such reports will
illustrate these failures to all SOLAS Contracting Parties, who can
increase their port state control requirements on vessels certificated
by this organization on behalf of any flag state. This will help flag
states recognize the need for extended oversight when continuous
problems are documented, and promote revocation of authorizations by
the flag state when necessary. In the event that these actions do not
appropriately address non-compliance, the Coast Guard will continue to
heighten its oversight and boardings of vessels certificated by these
organizations. This may lead to interventions, detentions and denial of
entry into U.S. ports and places. No change has been made to the final
rule due to these comments.
38. One general comment recommended that a Master's or crew's
unfamiliarity with the company's safety management system and training
requirements of a safety management system should be clear grounds to
perform a more extensive examination of a foreign flag vessel during a
routine boarding by the Coast Guard. The Coast Guard agrees with the
comment and developed its port state control boarding procedures to
allow for an expanded examination of a foreign vessel's safety
management system when this situation is found during a routine Coast
Guard boarding. As the policy for Coast Guard actions required during
port state examinations of foreign vessels are covered in the NVIC on
ISM Code compliance for foreign vessels, the final rule has not been
changed due to this comment.
39. Two general comments recommended the Coast Guard require
foreign vessels to provide information in advance of their U.S. port
arrivals to ensure their compliance with the ISM Code. The Coast Guard
agrees with these comments and on December 11, 1997, published an
Interim Rule in a separate rulemaking (CGD 97-067) to require this
advance notice of arrival requirement (62 FR 65203). No change has been
made to this rulemaking due to these comments.
40. One general comment requested the Coast Guard review all
current regulations that place the responsibility for the safe
operation of a vessel on the vessel's Master, and where appropriate,
share some of that responsibility with the designated person. The Coast
Guard disagrees. As defined in Sec. 96.120, the designated person does
not have a responsibility for operation of the vessel. The designated
person's responsibility is to monitor the safety management system of
the company and the vessel(s), as directed by the responsible person.
If problems arise with the policies and procedures for the safe
operations of the vessel which the Master does not believe he or she
has the right tools to manage, those problems should be communicated to
the vessel's owner. The Master can communicate through the safety
management system, or directly to the vessel owner, or through the
designated person to the vessel's owner. By documenting these
circumstances in the safety management system, a critical review by the
vessel management will be performed and new or corrected policies or
procedures placed into the safety management system to assist the
Master. The Coast Guard has made no change to the final rule due to
this comment.
41. Two general comments recommended that the final rule provide a
list of administrative requirements or detailed guidance on the issues
of revocation of a Document of Compliance certificate or a Safety
Management Certificate. The Coast Guard will provide guidance for such
actions in the new chapter of Volume II of the Coast Guard Marine
Safety Manual on the compliance and enforcement of safety management
systems for U.S. vessels. The Coast Guard determined that placing this
policy in regulations would limit its ability to consider all necessary
circumstances and make decisions on a case-by-case basis.
All Coast Guard actions to enforce safety management system
requirements on U.S. vessels and their companies can be appealed to the
Coast Guard under 46 CFR 1.03, ``Rights to Appeal.'' This section
provides time frames and procedures for use by the maritime industry to
effectively question actions taken by the Coast Guard in enforcing
revocations on these certificates, as needed. No change has been made
to the final rule due to these comments.
42. One comment stated that the proposed regulations do not fully
anticipate problems and provide direction necessary to manage important
day-to-day operations with regard to the endangered Northern Right
Whale. In particular, the comment expressed concern that the ISM Code
regulations were too narrowly focused and sought various clarifications
regarding the application of the regulations to protected species and
their critical habitats. It suggested that the language in proposed
Sec. 96.250(g) be amended to specifically include operation plans and
instructions with respect to protected species in their critical
habitats.
The ISM Code does not define specific operating procedures or
practices, but instead provides broad, general performance elements as
guidelines to be applied by ship owners and their companies to
shoreside operations and to their vessels. Shipping is a varied
industry with numerous types of companies operating under a large range
of different conditions. The ISM Code guidelines

[[Page 67503]]

are based on general principles and objectives to promote the
development of sound management and operating practices within the
industry as a whole. Its purpose is to require companies to establish
operating practices and policies so that company management will be in
a position to ensure that their vessels comply with all applicable
international and U.S. laws for purposes of safety and environmental
protection. It does not seek to define or incorporate detailed
regulatory requirements, but instead to establish the management
structure that will ensure that requirements applicable to vessels are
communicated to shoreside and vessel personnel, and complied with.
Thus, the requirements in this regulation are expressed in broad terms
so they may have widespread application. As expressed in the comment,
the suggestions applicable to protected species are too narrow to be
addressed in this rulemaking.
This does not mean that these regulations will not beneficially
effect endangered species or their critical habitats. Besides the
beneficial effect that company policies and management structures
promoting safe, environmentally sound vessel operations will have on
the marine environment in general, including protected species, the
management structure and policies put in place through the ISM Code
will promote compliance with all applicable laws, including
environmental efforts. Under these regulations, company management
would establish an operational and management structure that would
ensure that vessel Masters and crews within their fleets would be
provided with the applicable safety and environmental requirements for
operations in U.S. waters. Additionally, the system would ensure that
necessary training would be conducted. The system would then be audited
periodically to determine whether the system is working and compliance
is occurring.
An example of how this would work involves the Northern Right
Whale. The Coast Guard is working closely with the National Marine
Fisheries Service and its charter agency, the National Oceanographic
and Atmospheric Administration (NOAA), to develop national programs to
assist in protection of the Northern Right Whale by providing mariners
operating directions for the whale's critical habitat areas on the east
coast of the United States. Part of this effort is the publication of
navigation warnings for the Northern Right Whale in Coast Guard Notices
to Mariners and in the U.S. Coast Pilot publications covering critical
habitat areas of the Northern Right Whale. These warnings include the
requirements of 50 CFR parts 217 and 222 that establish Northern Right
Whale avoidance measures for vessels and reporting criteria for whale
strikes. Coast Guard navigation safety requirements for foreign and
U.S. vessels are established in 33 CFR part 164. These regulations
include requirements for vessels to have aboard the current edition of
the U.S. Coast Pilot for the area in which vessels are operating. In
addition, other regulations require vessels to have aboard proper
operating radiotelephone equipment that will allow vessels to monitor
frequencies over which Notices to Mariners are broadcast. Compliance
with the ISM Code requirements in this part means that companies that
own and operate vessels will have in place the means to ensure that
vessel Master are aware of these requirements, that they comply and
that corporate officers are aware of, and correct, instances of
noncompliance. For these reasons, no change has been made to the final
rule due to these comments.
43. One comment focused on the introduction of injurious exotic
species into U.S. coastal and riparian waters through ballast water
discharges by vessels engaged on foreign voyages to ports or places in
the U.S. The Coast Guard is currently developing new regulations to
address vessel discharges of ballast water into U.S. waters. The Coast
Guard is also monitoring actions at IMO which involve these vessel
operations. No change has been made to the final rule due to this
comment.
44. One general comment requested that an interim rule be published
by the Coast Guard for review and comment on this rulemaking prior to
the final rule being published. We disagree. As written comments on the
proposed rulemaking did not point to any significant problems nor any
problems that have not been addressed in the final rule, the Coast
Guard does not expect that publishing an interim rule would markedly
improve the regulations nor assist vessel owners in complying with the
ISM Code by its first effective date of July 1, 1998. Therefore, the
Coast Guard has completed this rulemaking process by publishing this
final rule.
45. Two general comments were made by one commentor on: (1)
Mandatory requirements for safety management systems on U.S. domestic
vessels; and (2) the benefits that would be reaped by these domestic
vessels compliance with these regulations.
The Coast Guard contends that the use of safety management systems
by all U.S. commercial vessels would result in significant benefits and
we will support the development of such programs. 46 U.S.C. 3202 states
that U.S. domestic vessels may voluntarily meet the requirements of
that Chapter, but does not provide the Coast Guard with the authority
to require such safety management systems on these U.S. domestic
vessels. Thus, the final rule has not been changed due to these
comments.
46. Editorial changes. 46 CFR Secs. 33.40-30 (a) & (b), 71.75-13
(a) & (b), 91.60-30 (a) & (b), 107.415 (a) & (b), 126.480 (a) & (b),
and 186.60-30 (a) & (b). In these sections, paragraphs (a) and (b) have
been combined to make it clear that only those vessels to which 33 CFR
part 96 applies must have the ISM certificates.
33 CFR 96.100. The public law cite was removed and replaced with 46
U.S.C. Chapter 32, which is the authority for this subparts purpose.
33 CFR 96.400(a). In the last sentence of this paragraph, the term
``delegated to'' is replaced with the term ``delegated by''. This will
correctly reflect that audits and certification functions are not
delegated ``to'' the Coast Guard. They are delegated to the recognized
organization ``by'' the Coast Guard.
33 CFR 96.470. In this section, the terms ``of recognized
organizations'' is added to clarify which Commandant's list the removal
may be from.

Incorporation by Reference

The Director of the Federal Register has approved the material in
Sec. 96.130 for incorporation by reference under 5 U.S.C. 552 and 1 CFR
part 51. Copies of the material are available from the sources listed
in that section.

Regulatory Evaluation

This final rule is not a significant regulatory action under
section 3(f) of Executive Order 12866 and does not require an
assessment of potential costs and benefits under section 6(a)(3) of
that Order. It has not been reviewed by the Office of Management and
Budget under that Order. It is not significant under the regulatory
policies and procedures of the Department of Transportation (DOT) (44
FR 11040; February 26, 1979).
The basis for the number of vessels effected by this rulemaking was
developed from the Coast Guard's Marine Safety Management System (MSMS)
database on vessel inspection, documentation and certification files.
From this source it was determined that there are 415 vessels with 163-
discreet owners that hold Safety of Life at Sea (SOLAS) certificates
and are considered to be subject to the mandatory

[[Page 67504]]

application of the ISM Code. There are 186 vessels that must comply
with this regulation by July 1, 1998, and 229 vessels that must comply
by July 1, 2002.

Costs

Three distinct processes were used to derive the costs to implement
and maintain the ISM Code. They include developing a safety management
system, certification and audit fees, and training Coast Guard and
authorized organization personnel to conduct management system audits.
The following cost estimates are a result of one set of choices
made by an organization managing relevant U.S. vessels in a normal and
prudent manner, but not having a safety management program that meets
the ISM Code. This scenario and maintenance of a safety management
system assumes the employment of a separate staff person with fleet-
wide responsibility for safety, environmental protection, and general
quality control. On-going distribution of updated safety and technical
documents is a normal company practice. The operator routinely
maintains data-processing and communication capability adequate to
handle the ship-to-shore information flow required by the ISM Code. It
was assumed that the owner or operator is responsible for more than one
vessel.
The start-up costs for initiating a safety management system is
calculated at approximately $150K per company and $2K per vessel, with
recurring expenses estimated to be $10K per vessel for system
maintenance.
To clearly describe the effected population and improve the
regulatory analysis, shipping concerns were separated into three
categories of large, medium and small sized companies. For all
companies, the cost is compiled for a 10-year period (1998-2007
inclusive). For large companies, which is estimated to be 71 of the
total 163 companies effected, the start-up cost is approximately $38.5
million. The average cost for these 71 companies per year is estimated
to be $3.8 million. For medium companies, the total cost for the 27
companies is approximately $7.8 million. The average cost for these
medium companies is estimated to be $780,000 per year. Out of a total
of 65 small companies, only 12 companies face these costs, and the
total cost is approximately $3.2 million. The average cost per year for
these 12 small companies is estimated to be $320,000.

Total Costs

Small Companies: $3.2 million.
Medium Companies: $7.8 million.
Large Companies: $38.5 million.
Total: $49.5 million (1998-2007 inclusive).
The average cost per year: $5.0 million.

Benefits

A study was conducted to identify the significant types and
circumstances of U.S. vessel accidents potentially preventable due to
ISM Code compliance. The data used to support the analysis of ISM Code
benefits was drawn from the MSMS Marine Investigation Module (MINMOD)
and vessel information files. Marine Casualty Investigation Reports
(MCIR's) were included in the study if they involved either currently-
registered U.S. vessels, that would be subject to the ISM Code or if a
Human Factors Supplement was filed in the case. A Human Factors
Supplement contains a standardized ``class'' or ``subclass''
designation of a particular human factor or factors considered by the
investigating officer to have contributed to the accident. Only MCIR
with problems considered by the Coast Guard to be preventable through
ISM Code procedures were retained. There were 214 such cases over the
three year period (1993-1995). These benefits needed to be quantified.
Five factors were used to estimate the cost of the 214 relevant
casualties. The five factors are listed below: (The dollar figures
below reflect a 1997 dollar value.)
1. Vessel and property damage: The total dollar damage value per
casualty has been estimated to be $10,000.
2. Injuries: The total dollar damage value per injury has been
estimated to be $424,174.
3. Deaths: The number of deaths or missing persons shown in the
MCIR record multiplied by $2,700,000. This factor is currently
recommended by DOT for use in regulatory impact estimation.
4. Vessel Downtime: An average vessel downtime cost of $224,337 was
arrived at by averaging all vessel damage evaluations shown in the MICR
records other than for vessels evaluated as either seaworthy or as a
total loss. This is the same factor that was used in the study
completed for the International Convention on Standards of Training,
Certification and Watchkeeping for Seafarers (STCW) rulemaking,
implementation benefits.
5. Environmental Damage: Any spillage recorded in the MCIR record
is converted to 42-gallon barrel terms and multiplied by $15,810. This
is the average cost used in the benefit study done for STCW to
represent per-barrel costs of natural resource damage, loss of
beneficial use of shoreline and cleanup for ``small'' spills.
We identified relevant accidents that occurred between 1993-1995
and developed factors to estimate their cost to society. The following
steps were used to estimate the annual reduction in future marine
casualty costs that may be expected from ISM Code implementation:
1. The projected costs were divided into three categories depending
on the cause of the casualty. The three categories were personnel
nature, any primary nature other than pollution, and pollution
casualties.
2. Based on the study's findings, a percentage range was created.
This range expressed the expectation of future casualties with the
implementation of the ISM Code final rule.
3. The STCW rulemaking creates some of the same benefits as
implementation of the ISM Code. The average annual cost reduction from
the implementation of STCW were taken into account to avoid double
counting of benefits.
4. The expected percentage impact of ISM Code implementation was
then applied to produce the expected cost reduction.
After all of these procedures were followed an estimated benefit
range was determined. The range for the economic benefit of expected
avoided costs of all relevant accident types combined was estimated to
be $6.9 to $12.8 million per year, dominated by the $6.4 to $12.2
million estimated for reduction in the costs of personnel casualties.

Cost-Benefit

The total average cost for this final rule (1998-2007) has been
estimated at $49.5 million. This is approximately $5.0 million per
year. The range for the economic benefit of expected avoided costs of
all relevant accident types combined was estimated to be $6.9 to $12.8
million per year.
The estimated cost-benefit for this final rule was calculated by
dividing the measure's present value cost by the measure's present
value benefit. The estimated cost-benefit range for this rule is 0.39
to 0.72. A rule with a cost-benefit factor of less than 1.0 implies
that efficient standards have been set by balancing the costs of
anticipated abatement against the benefits of expected avoided costs.
Therefore, this rulemaking can be deemed as cost effective.

Small Entities

Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the
Coast Guard

[[Page 67505]]

considered whether this rule will have a significant economic impact on
a substantial number of small entities. ``Small entities'' include
small businesses, not-for-profit organizations that are independently
owned and operated and are not dominant in their fields, and
governmental jurisdictions with populations of less than 50,000.
Our initial evaluation was that this rule would effect
approximately 72 small entities, whose U.S. small passenger vessels
operate on international voyages. For purposes of the ``small entity''
analysis, the Coast Guard considered the 72 vessels owned by 65
companies as small entities. To ease the burden on small entities 54 of
these are allowed to apply for an equivalence to these requirements to
significantly reduce their cost to develop and certify their safety
management systems, if they opt to do so. No comments or statements
were received during the NPRM on the impact of this rulemaking on small
entities. No change or amendment to the final rule was completed that
would alter the effect already stated in the NPRM on small entities.
Therefore, the Coast Guard certifies under section 605(b) of the
Regulatory Flexibility Act (5 U.S.C. 601 et seq.) that this final rule
will not have a significant economic impact on a substantial number of
small entities.

Assistance for Small Entities

In accordance with section 213(a) of the Small Business Regulatory
Enforcement Fairness Act of 1996 (Pub. L. 104-121), the Coast Guard
offered to assist small entities in understanding the rule so that they
could better evaluate its effects on them and participate in the
rulemaking process. No written requests were received by the Coast
Guard to provided assistance for the development of safety management
systems by small entities. One comment stated that the equivalence
option provided for small passenger vessels as unnecessary, if the
limiting factor is the cost incurred to be certificated by an
organization acting on behalf of the U.S. The Coast Guard disagrees.
This final rule offers an option for small entities to develop an
equivalent safety management system in concert with the cognizant Coast
Guard OCMI. This option will significantly reduce the cost for the
safety management system and will allow direct auditing and
certification by the Coast Guard. No extra fee will be required for
these owners who elect to take advantage of this option.
When developing the small passenger vessel equivalence, the Coast
Guard considered cost issues. Cost was not the only reason used by the
Coast Guard to determine that small passenger vessel operations could
benefit equally by an equivalence to the requirements provided in these
regulations. Their historical operational risk was evaluated, the
traditional policies that are used to regulate international
conventions on these vessels, and the small number of vessels within
this type of vessels which would be impacted. The Coast Guard is also
required by the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), and
the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L.
104-121), to evaluate the impact of new federal regulations and the
ability to assist these businesses. Also, what played a factor was
verbal comments received from operators of such vessels at the public
meetings held at four ports in the October and November 1995 time frame
at the initiation of this rulemaking process. The Coast Guard has seen
great success with using an equivalence option with these vessel types
and agreed that no reduction of safety would be incurred by using this
option in the enforcement of these new regulations. No change has been
made to the final rule due to this comment.
The Coast Guard is also providing these small entity owners with a
job aid on safety management system development which will help them
meet these standards and will cut the cost of their having to go to a
third party source for support and training. These small passenger
vessel owners will be provided with continued support by the local
cognizant OCMI to ensure that their vessels have a properly operating
safety management system which is certificated prior to the effective
date of these requirements.

Collection of Information

This final rule provides for a collection of information under the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
Information is collected to show the compliance status of
responsible persons and their U.S. vessels to the Coast Guard by
recognized organizations authorized by the Coast Guard to act on behalf
of the U.S. A responsible person must establish a safety management
system and prepare internal audit reports for the responsible person's
company and vessel(s) which demonstrate compliance with the ISM Code.
Preparation of these reports required a new information collection
request submittal to OMB.
Title 46, chapter 32 also requires that a responsible person's
company and U.S. vessel(s) possess Document of Compliance certificates
and Safety Management Certificates, respectively, as evidence of
compliance with the ISM Code. Recognized organizations authorized to
act on behalf of the U.S. and the Coast Guard will issue these
certificates. To prepare and issue these international management
certificates, an amendment to existing information collection request
2115-0056 was submitted to OMB.
Safety management systems will be externally audited and reported
on by an authorized organization through a review of the internal audit
reports prepared by a company. Since the Coast Guard reviews this
information that documents the ISM Code compliance, existing collection
request 2115-0626 also requires amendment and was submitted to OMB for
approval.
As described above, the Coast Guard submitted new and amended
information collection requests pursuant to the estimates described in
the NPRM. No comments were received to the NPRM docket regarding these
estimates. No change was made to the proposed regulatory text which
would require new information collection requests. Also, no change was
made to the final rule which would affect those estimates.
As required by 5 U.S.C. 3507(d), the Coast Guard submitted a copy
of this rule to the Office of Management and Budget (OMB) for its
review of the collection of information. OMB has approved the
collection. The section numbers are: 33 CFR 96.250, 96.320, 96.330,
96.340, 96.350, 96.360, and 46 CFR 2.01-25, 31.40-30, 71.75-13, 71.75-
20, 91.60-30, 91.60-40, 107.417, 115.925, 126.480, 175.540, 176.925,
176.930,189.60-30, 189.60-40; and the corresponding approval numbers
from OMB are OMB Control Number(s), 2115-0056; 2115-0057, and 2115-
0626, which expire on August 31, 2000.
Persons are not required to respond to a collection of information
unless it displays a currently valid OMB control number.

Federalism

The Coast Guard completed an analysis of this final rule under the
principles and criteria contained in Executive Order 12612 and has
determined that this rule does not have sufficient implications for
federalism to warrant the preparation of a Federalism Assessment.

[[Page 67506]]

Federal Preemption

Historically, the Coast Guard has inspected vessels for their
compliance with Federal regulations and international standards to
which the United States is a party that address the safety of vessels
and protection of the marine environment. These regulations implement
the provisions of the International Convention for the Safety of Life
at Sea, 1974, (SOLAS) as amended, to which the United States is a
party. As a party to this Convention, the United States has agreed to
implement its provisions for vessels flying the flag of the United
States and to apply these provisions to foreign vessels in accordance
with the enforcement regime established within the Convention. In
addition, actions by state and local governments that seek to impose
different standards than those imposed by these regulations would
frustrate the desire of Congress to impose uniform, international
standards relating to the implementation of safety management systems
for vessels when it enacted 46 U.S.C. Chapter 32. It is the Coast
Guard's opinion that the Supremacy Clause of the Constitution would
preempt state and local regulations that seek to impose different or
higher standards than those established in these regulations.

Environment

The Coast Guard considered the environmental impact of this final
rule and concluded during the rulemaking stage that under paragraph
2.B.2.e(34) of Commandant Instruction M16475.1B, this rule is
categorically excluded from further environmental documentation.
Paragraph 2.B.2.e(34)(d) categorically excludes regulations concerning
manning, documentation, measurement, inspection and equipping of
vessels. A ``Categorical Exclusion Determination'' is available in the
docket for inspection or copying where indicated under ADDRESSES.

List of Subjects

33 CFR Part 96

Administrative practice and procedure, Incorporation by reference,
Marine safety, Reporting and recordkeeping requirements, Safety
management systems, Vessels.

46 CFR Part 2

Marine safety, Reporting and recordkeeping requirements, Vessels.

46 CFR Part 31

Cargo vessels, Marine safety, Reporting and recordkeeping
requirements, Safety management systems.

46 CFR Part 71

Marine safety, Passenger vessels, Reporting and recordkeeping
requirements, Safety management systems.

46 CFR Part 91

Cargo vessels, Marine safety, Reporting and recordkeeping
requirements, Safety management systems.

46 CFR Part 107

Marine safety, Oil and gas exploration, Reporting and recordkeeping
requirements, Safety management systems, Vessels.

46 CFR Part 115

Marine safety, Passenger vessels, Reporting and recordkeeping
requirements, Safety management systems.

46 CFR Part 126

Marine safety, Offshore supply vessels, Reporting and recordkeeping
requirements, Safety management systems.

46 CFR Part 175

Marine safety, Passenger vessels, Reporting and recordkeeping
requirements, Safety management systems.

46 CFR Part 176

Marine safety, Passenger vessels, Reporting and recordkeeping
requirements, Safety management systems.

46 CFR Part 189

Marine safety, Oceanographic research vessels, Reporting and
recordkeeping requirements, Safety management systems.

For the reasons discussed in the preamble, the Coast Guard amends
33 CFR Chapter I and 46 CFR Chapter I as follows:

TITLE 33--NAVIGATION AND NAVIGABLE WATERS

1. Add part 96 to read as follows:

PART 96--RULES FOR THE SAFE OPERATION OF VESSELS AND SAFETY
MANAGEMENT SYSTEMS

Subpart A--General

Sec.
96.100 Purpose.
96.110 Who does this subpart apply to?
96.120 Definitions.
96.130 Incorporation by reference.

Subpart B--Company and Vessel Safety Management Systems

96.200 Purpose.
96.210 Who does this subpart apply to?
96.220 What makes up a safety management system?
96.230 What objectives must a safety management system meet?
96.240 What functional requirements must a safety management system
meet?
96.250 What documents and reports must a safety management system
have?

Subpart C--How Will Safety Management Systems Be Certificated and
Enforced?

96.300 Purpose.
96.310 Who does this subpart apply to?
96.320 What is involved to complete a safety management audit and
when is it required to be completed?
96.330 Document of Compliance certificate: what is it and when is
it needed?
96.340 Safety Management Certificate: what is it and when is it
needed?
96.350 Interim Document of Compliance certificate: what is it and
when can it be used?
96.360 Interim Safety Management Certificate: what is it and when
can it be used?
96.370 What are the requirements for vessels of countries not party
to Chapter IX of SOLAS?
96.380 How will the Coast Guard handle compliance and enforcement
of these regulations?
96.390 When will the Coast Guard deny entry into a U.S. port?

Subpart D--Authorization of Recognized Organizations To Act on Behalf
of the U.S.

96.400 Purpose.
96.410 Who does this subpart apply to?
96.420 What authority may an organization ask for under this
regulation?
96.430 How does an organization submit a request to be authorized?
96.440 How will the Coast Guard decide whether to approve an
organization's request to be authorized?
96.450 What happens if the Coast Guard disapproves an
organization's request to be authorized?
96.460 How will I know what the Coast Guard requires of my
organization if my organization receives authorization?
96.470 How does the Coast Guard terminate an organization's
authorization?
96.480 What is the status of a certificate if the issuing
organization has its authority terminated?
96.490 What further obligations exist for my organization if the
Coast Guard terminates its authorization?
96.495 How can I appeal a decision made by an authorized
organization?

Authority: 46 U.S.C. 3201 et. seq.; 46 U.S.C. 3103; 46 U.S.C.
3316, 33 U.S.C. 1231; 49 CFR 1.45, 49 CFR 1.46.

Subpart A--General

Sec. 96.100 Purpose.

This subpart implements Chapter IX of the International Convention
for the Safety of Life at Sea (SOLAS), 1974,

[[Page 67507]]

International Management Code for the Safe Operation of Ships and for
Pollution Prevention (International Safety Management (ISM) Code), as
required by 46 U.S.C. Chapter 32.

Note: Chapter IX of SOLAS is available from the International
Maritime Organization, Publication Section, 4 Albert Embankment,
London, SE1 75R, United Kingdom, Telex 23588. Please include
document reference number ``IMO-190E'' in your request.

Sec. 96.110 Who does this subpart apply to?

This subpart applies to you if--
(a) You are a responsible person who owns a U.S. vessel(s) and must
comply with Chapter IX of SOLAS;
(b) You are a responsible person who owns a U.S. vessel(s) that is
not required to comply with Chapter IX of SOLAS, but requests
application of this subpart;
(c) You are a responsible person who owns a foreign vessel(s)
engaged on a foreign voyage, bound for ports or places under the
jurisdiction of the U.S., which must comply with Chapter IX of SOLAS;
or
(d) You are a recognized organization applying for authorization to
act on behalf of the U.S. to conduct safety management audits and issue
international convention certificates.

Sec. 96.120 Definitions.

(a) Unless otherwise stated in this section, the definitions in
Chapter IX, Regulation 1 of the International Convention for the Safety
of Life at Sea (SOLAS) apply to this part.
(b) As used in this part--
Administration means the Government of the State whose flag the
ship is entitled to fly.
Authorized Organization Acting on behalf of the U.S. means an
organization that is recognized by the Commandant of the U.S. Coast
Guard under the minimum standards of subparts A and B of 46 CFR part 8,
and has been authorized under this section to conduct certain actions
and certifications on behalf of the United States.
Captain of the Port (COTP) means the U.S. Coast Guard officer as
described in 33 CFR 6.01-3, commanding a Captain of the Port zone
described in 33 CFR part 3, or that person's authorized representative.
Commandant means the Commandant, U.S. Coast Guard.
Company means the owner of a vessel, or any other organization or
person such as the manager or the bareboat charterer of a vessel, who
has assumed the responsibility for operation of the vessel from the
shipowner and who on assuming responsibility has agreed to take over
all the duties and responsibilities imposed by this part or the ISM
Code.
Designated person means a person or persons designated in writing
by the responsible person who monitors the safety management system of
the company and vessel and has:
(1) Direct access to communicate with the highest levels of the
company and with all management levels ashore and aboard the company's
vessel(s);
(2) Responsibility to monitor the safety and environmental aspects
of the operation of each vessel; and
(3) Responsibility to ensure there are adequate support and shore-
based resources for vessel(s) operations.
Document of Compliance means a certificate issued to a company or
responsible person that complies with the requirements of this part or
the ISM Code.
International Safety Management (ISM) Code means the International
Management Code for the Safe Operation of Ships and Pollution
Prevention, Chapter IX of the Annex to the International Convention for
the Safety of Life at Sea (SOLAS), 1974.
Non-conformity means an observed situation where objective evidence
indicates the non-fulfillment of a specified requirement.
Major non-conformity means an identifiable deviation which poses a
serious threat to personnel or vessel safety or a serious risk to the
environment and requires immediate corrective action; in addition, the
lack of effective and systematic implementation of a requirement of the
ISM Code is also considered a major non-conformity.
Objective Evidence means quantitative or qualitative information,
records or statements of fact pertaining to safety or to the existence
and implementation of a safety management system element, which is
based on observation, measurement or test and which can be verified.
Officer In Charge, Marine Inspection (OCMI) means the U.S. Coast
Guard officer as described in 46 CFR 1.01-15(b), in charge of an
inspection zone described in 33 CFR part 3, or that person's authorized
representative.
Recognized organization means an organization which has applied and
been recognized by the Commandant of the Coast Guard to meet the
minimum standards of 46 CFR part 8, subparts A and B.
Responsible person means--
(1) The owner of a vessel to whom this part applies, or
(2) Any other person that--
(i) has assumed the responsibility from the owner for operation of
the vessel to which this part applies; and
(ii) agreed to assume, with respect to the vessel, responsibility
for complying with all the requirements of this part.
(3) A responsible person may be a company, firm, corporation,
association, partnership or individual.
Safety management audit means a systematic and independent
examination to determine whether the safety management system
activities and related results comply with planned arrangements and
whether these arrangements are implemented effectively and are suitable
to achieve objectives.
Safety Management Certificate means a document issued to a vessel
which signifies that the responsible person or its company, and the
vessel's shipboard management operate in accordance with the approved
safety management system.
Safety Management System means a structured and documented system
enabling Company and vessel personnel to effectively implement the
responsible person's safety and environmental protection policies.
SOLAS means the International Convention for the Safety of Life at
Sea, 1974, as amended.
Vessel engaged on a foreign voyage means a vessel to which this
part applies that is--
(1) Arriving at a place under the jurisdiction of the United States
from a place in a foreign country;
(2) Making a voyage between places outside the United States; or
(3) Departing from a place under the jurisdiction of the United
States for a place in a foreign country.

Sec. 96.130 Incorporation by reference.

(a) The Director of the Federal Register approves certain material
that is incorporated by reference into this subpart under 5 U.S.C.
552(a) and 1 CFR part 51. To enforce any edition other than that
specified in paragraph (b) of this section, the Coast Guard must
publish notice of the change in the Federal Register and the material
must be available to the public. You may inspect all material at the
Office of the Federal Register, 800 North Capitol St., NW., Suite 700,
Washington, DC and at the U.S. Coast Guard, Office of Design and
Engineering Standards (G-MSE), 2100 Second St., SW., Washington, DC
20593-0001, and receive it from the source listed in paragraph (b) of
this section.
(b) The material approved for incorporation by reference in this
subpart and the sections affected are as follows:

[[Page 67508]]

American National Standards Institute (ANSI)--11 West 42nd St., New
York, NY 10036.

ANSI/ASQC Q9001-1994, Quality Systems--Model for Quality Assurance in
Design, Development, Production, Installation, and Servicing, 1994--
96.430

International Maritime Organization IMO--4 Albert Embankment,
London, SE1 7SR, United Kingdom.

Resolution A.741(18), International Management Code for the Safe
Operation of Ships and for Pollution Prevention, November 4, 1993--
96.220, 96.370
Resolution A.788 (19), Guidelines on Implementation of the
International Safety Management (ISM) Code by Administrations, November
23, 1995--96.320, 96.440
Resolution A.739(18), Guidelines for the Authorization of Organizations
Acting on Behalf of the Administration, November 4, 1993--96.440

Subpart B--Company and Vessel Safety Management Systems

Sec. 96.200 Purpose.

This subpart establishes the minimum standards that the safety
management system of a company and its U.S. flag vessel(s) must meet
for certification to comply with the requirements of 46 U.S.C. 3201-
3205 and Chapter IX of SOLAS, 1974. It also permits companies with U.S.
flag vessels that are not required to comply with this part to
voluntarily develop safety management systems which can be certificated
to standards consistent with Chapter IX of SOLAS.

Sec. 96.210 Who does this subpart apply to?

(a) This subpart applies--
(1) To a responsible person who owns or operates a U.S. vessel(s)
engaged on a foreign voyage which meet the conditions of paragraph
(a)(2) of this section;
(2) To all U.S. vessels engaged on a foreign voyage that are--
(i) A vessel transporting more than 12 passengers; or
(ii) A tanker, a bulk freight vessel, a freight vessel or a self-
propelled mobile offshore drilling unit (MODU) of 500 gross tons or
more; and
(3) To all foreign vessels engaged on a foreign voyage, bound for
ports or places under the jurisdiction of the U.S., and subject to
Chapter IX of SOLAS.
(b) This subpart does not apply to--
(1) A barge;
(2) A recreational vessel not engaged in commercial service;
(3) A fishing vessel;
(4) A vessel operating only on the Great Lakes or its tributary and
connecting waters; or
(5) A public vessel, which includes a U.S. vessel of the National
Defense Reserve Fleet owned by the U.S. Maritime Administration and
operated in non-commercial service.
(c) Any responsible person and their company who owns and operates
a U.S. flag vessel(s) which does not meet the conditions of paragraph
(a), may voluntarily meet the standards of this part and Chapter IX of
SOLAS and have their safety management systems certificated.
(d) The compliance date for the requirements of this part are--
(1) On or after July 1, 1998, for--
(i) Vessels transporting more than 12 passengers engaged on a
foreign voyage; or
(ii) Tankers, bulk freight vessels, or high speed freight vessels
of at least 500 gross tons or more, engaged on a foreign voyage.
(2) On or after July 1, 2002, for other freight vessels and self-
propelled mobile offshore drilling units (MODUs) of at least 500 gross
tons or more, engaged on a foreign voyage.

Sec. 96.220 What makes up a safety management system?

(a) The safety management system must document the responsible
person's--
(1) Safety and pollution prevention policy;
(2) Functional safety and operational requirements;
(3) Recordkeeping responsibilities; and
(4) Reporting responsibilities.
(b) A safety management system must also be consistent with the
functional standards and performance elements of IMO Resolution
A.741(18).

Sec. 96.230 What objectives must a safety management system meet?

The safety management system must:
(a) Provide for safe practices in vessel operation and a safe work
environment onboard the type of vessel the system is developed for;
(b) Establish and implement safeguards against all identified
risks;
(c) Establish and implement actions to continuously improve safety
management skills of personnel ashore and aboard vessels, including
preparation for emergencies related to both safety and environmental
protection; and
(d) Ensure compliance with mandatory rules and regulations, taking
into account relevant national and international regulations,
standards, codes and maritime industry guidelines, when developing
procedures and policies for the safety management system.

Sec. 96.240 What functional requirements must a safety management
system meet?

The functional requirements of a safety management system must
include--
(a) A written statement from the responsible person stating the
company's safety and environmental protection policy;
(b) Instructions and procedures to provide direction for the safe
operation of the vessel and protection of the environment in compliance
with the applicable U.S. Code of Federal Regulations, and international
conventions to which the U.S. is a party (SOLAS, MARPOL, etc.);
(c) Documents showing

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A97-33528. Public record. Not legal advice.