Streamlined Inspection Program

SUMMARY: The Coast Guard is establishing an optional Streamlined

Inspection Program (SIP) to provide owners and operators of U.S.

documented or registered vessels an alternative method of complying

with Coast Guard inspection requirements. Vessel owners and operators

opting to participate in the program will maintain a vessel in

compliance with a Vessel Action Plan (VAP) and have their own personnel

periodically perform many of the tests and examinations conducted by

Coast Guard marine inspectors. Coast Guard inspectors will conduct

inspections in accordance with the approved VAP. The Coast Guard

expects that participating vessels will continuously meet a higher

level of safety and inspection readiness throughout the inspection

cycle.

DATES: This final rule is effective September 17, 1998.

ADDRESSES: Documents as indicated 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., room 3406, 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: LT Paul Arnett, Vessel Compliance

Division (G-MOC-2), telephone 202-267-0498, fax 202-267-4394.

SUPPLEMENTARY INFORMATION:

Regulatory History

On April 8, 1997, the Coast Guard published a notice of proposed

rulemaking entitled, ``Streamlined Inspection Program'' in the Federal

Register (62 FR 17008). The Coast Guard received 27 letters commenting

on the proposed rulemaking. No public meeting was requested, and none

was held.

Background and Purpose

Section 3306 of title 46 U.S. Code authorizes the Coast Guard to

prescribe regulations necessary to carry out the inspection of vessels

required to be inspected under 46 U.S.C. 3301. The inspection of

vessels identified in 46 U.S.C. 3301 is required by statute; however,

the specific procedures for conducting inspections are set out in Coast

Guard regulations.

In 1992, as part of its Maritime Regulatory Reform initiative, the

Coast Guard considered a number of alternatives for inspection of U.S.

documented or registered vessels. Two of these alternatives are the

Alternate Compliance Program (ACP)(46 CFR part 8) and the Streamlined

Inspection Program (SIP).

The SIP is an optional, alternative inspection program for owners

and operators of U.S. documented or registered vessels. The objective

of the SIP is to have vessels participate in a constant state of

regulatory compliance rather than the traditional cyclical readiness

associated with vessels that must undergo Coast Guard periodic

inspections. Under this alternative, the vessel owner or operator works

with a Coast Guard representative to develop a Company Action Plan

(CAP) and a Vessel Action Plan (VAP). A CAP describes the company's

organization and its commitment to the SIP. The CAP also details how

the company will train its employees on their specific SIP

responsibilities. The VAP describes the Coast Guard regulations that

apply to the vessel and the company's detailed procedures for its

employees to maintain and examine vessel systems to ensure these

systems operate safely. To simplify the CAP and the VAP and to provide

consistency throughout the country, the Coast Guard will provide

specific guidance for prospective SIP participants and Coast Guard

personnel for each regulatory subchapter applicable to particular types

of vessels (e.g., 46 CFR chapter I, subchapters D, H, I, K, L, O, R, T,

and U).

Vessel owners or operators who do not elect to participate in the

SIP will continue to have their vessels inspected by the Coast Guard

under traditional procedures or, if eligible, may choose to be

inspected by a recognized classification society under the ACP.

Discussion of Comments and Changes

The Coast Guard received 27 letters commenting on the notice of

proposed rulemaking (NPRM). Fifteen comments generally supported the

proposed SIP. The following paragraphs contain a discussion of comments

received and an explanation of changes, if any, made to the proposed

regulations. General comments on the rulemaking project are discussed

first, followed by comments on specific sections of the regulation.

Other changes to the proposed rule, not based on comments, are

discussed last.

General Comments

Several comments noted that vessels enrolled in the SIP

should have their user fees reduced as an incentive to encourage vessel

operators to enroll.

As stated in the preamble to the NPRM, the Coast Guard will

consider a regulatory project to revise user fees for enrolled vessels

when sufficient cost data is available. Prototype programs have had

varying degrees of Coast Guard involvement and therefore cannot be a

basis for determining the overall costs or savings of the SIP.

A number of comments discussed the relationship between

the SIP and the ACP. The comments suggested combining the provisions of

the two programs and allowing vessels enrolled in the ACP to also

enroll in the SIP.

The SIP and the ACP are two separate inspection programs available

to vessel owners. The SIP and the ACP are mutually exclusive programs.

The SIP is an alternative method for meeting Coast Guard inspection

requirements, but all inspections are still done by Coast Guard marine

inspectors. The ACP provides for vessel inspections using inspectors

employed by a recognized classification society. The ACP is available

only to vessels operating on international voyages and classed through

a recognized classification society. The SIP alternative is available

to any U.S. inspected vessel meeting the eligibility requirements.

Some comments discussed personnel, staffing, and

consistency concerns. The comments suggested using retired Coast Guard

marine inspectors as SIP Advisors; expressed concerns that the SIP may

cause the Coast Guard to reduce staffing at MSOs; and stated that there

should be consistency of SIP determinations among the Officers in

Charge, Marine Inspection (OCMI).

Marine safety office (MSO) staffing and allocation of personnel and

resources are internal Coast Guard matters that are not part of this

rulemaking. The SIP should, in the long run, allow a more effective use

of Coast Guard resources in MSO activities. The Office of Compliance,

Vessel Compliance Division, is the Coast Guard-wide program manager for

the SIP, and the Office of Quality Assurance/Traveling Inspectors will

be providing the field oversight of the SIP to ensure national

consistency in plan development and inspections.

One comment from an individual who reviews Port State

Information Exchange (PSIX) information to evaluate

[[Page 44347]]

vessels for carrying cargo stated that one concern is, ``there will be

a notable drop off in 835s [CG-835, the widely used Merchant Marine

Inspection Requirement form] issued--indeed in USCG presence

generally.''

Under the SIP, the Coast Guard still conducts required inspections,

and CG-835s issued as a result of these inspections will still be

available in the PSIX. However, repairs made by the company as a result

of routine maintenance while complying with its VAP would be corrected

in accordance with the VAP and documented in VAP records by the vessel

owner. Coast Guard inspectors consider these items during required

inspections, but they would not be entered as a CG-835 requirement in

PSIX.

Another comment noted certain portions of the NPRM

mentioned vessel classes such as subchapters T and D, but neglected to

include subchapter O. The comment asked if the applicability section of

this regulation includes vessels inspected under subchapter O.

This regulation does apply to vessels inspected under subchapter O.

As previously noted in this preamble under Background and Purpose, the

SIP is an alternative for vessels inspected under 46 CFR subchapters D,

H, I, K, L, O, R, T, and U.

A comment disagreed with the philosophy of self-inspection

because no other mode of transportation is self-inspected (e.g.,

airlines and railways).

The SIP is not a self-inspection program. Under the SIP, company

personnel will be responsible for conducting regular tests and

examinations of various vessel systems and recording their findings and

initiating appropriate actions as specified in their OCMI-approved CAP

and VAP. The Coast Guard is still required to verify compliance with

applicable regulations and the conditions of the company's approved

plans. The local OCMI approves the establishment of the company and

vessel plans and Coast Guard marine inspectors provide all periodic and

follow-on inspections.

Some comments were concerned with the effects the SIP will

have on small passenger vessels. One comment suggested requiring fewer

procedures for small passenger vessels because they have fewer staff to

do the work. Another comment suggested providing free training and

guidance to small passenger vessels to encourage them to enroll in the

SIP. The comment also noted that the proposed SIP did not sufficiently

target small companies.

Each VAP will be based on the requirements in the inspection

subchapter applicable to a particular vessel. The Office of Compliance

(G-MOC) and the Director of Field Activities, Quality Assurance Staff

(G-MO-1) will provide Coast Guard oversight for the implementation of

the SIP throughout the country. As resources are available, local OCMIs

will provide training on the SIP to interested vessel owners and

operators.

One comment stated that participation in the program

should not mean that the vessel owner would be subject to increased

liability.

The Coast Guard will continue to conduct inspections and issue the

certificate of inspection (COI), and the vessel owner's compliance with

an approved VAP will constitute compliance with applicable vessel

inspection laws and regulations. Owner liability is not changed by

participation in this program.

One comment recommended the Coast Guard add language to

ensure that this program remains voluntary because many operators do

not have the resources, time, or incentive to participate in this

program.

The SIP is a voluntary program. If a company does not wish to, or

is not eligible to, participate in this alternative inspection program,

they will continue to be inspected under the traditional Coast Guard

inspection program for compliance with vessel inspection laws and

regulations. For clarity, the Coast Guard has placed the word

``voluntary'' in front of the word ``alternative'' in Sec. 8.500(a).

Some comments discussed the development of the SIP

guidance documents. One comment recommended that the Towing Safety

Advisory Committee (TSAC) help the Coast Guard to develop the SIP

guidance for owners of vessels inspected under subchapter D. The

comment also requested separate guidance for owners of tank vessels and

tank barges. Another comment asked that the Coast Guard not treat oil

spill recovery vessels (OSRV) like tank vessels when the Coast Guard

develops the SIP guidance documents.

The Coast Guard is already in contact with TSAC and other advisory

committees and organizations concerning development of implementation

guidance.

Comments on Specific Sections of the Rule

Scope and applicability (Sec. 8.505). Three comments suggested dry-

dock exams be included in the SIP because the benefits of the SIP can

only be fully realized when all vessel inspections are included in the

SIP.

As stated in the NPRM, the Coast Guard must evaluate SIP

performance data before adding dry-dock examinations to this program.

One comment stated that Sec. 8.505(c) is very specific regarding

the inspections that are excluded from the program. The comment asked

if the SIP will apply to inspections done under the Critical Area

Inspection Program (CAIP).

The CAIP is not a regulatory program. Currently, the Coast Guard is

invited to attend CAIP surveys, but we are not required to witness the

inspection. The CAIP surveys can be included as part of a CAP or VAP

just like any other preventative maintenance program, if approved by

the OCMI as part of the plan.

Definitions (Sec. 8.510). One comment suggested including form CG-

835 in the definition of ``documented deficiency.'' A documented

deficiency is broader than just a CG-835, and can also include a work

list item issued by a marine inspector which was identified during the

course of an inspection, re-inspection, or examination, but corrected

prior to the issuance of a CG-835. The Coast Guard agrees that both CG-

835s and work list items are forms of documented deficiencies. The

definition is meant to encompass all forms of Coast Guard-maintained

documentation on a vessel's condition, including CG-835s. Therefore, we

have not changed the wording in the definition.

One comment recommended the Coast Guard permit the continued use of

prototype program nomenclature for definitions in this part and, as an

alternative, permit the use of a reference sheet or glossary that would

define the nomenclature used in the prototype program in terms of the

nomenclature used in the SIP regulation.

Approved plans must be in compliance with the SIP final rule.

Companies enrolled in locally-endorsed prototype programs have 3 years

to bring their plans into compliance with the national standards. The

OCMI has the flexibility and authority to accept revisions to prototype

plans. A prototype program already in place that is also in compliance

with the final rule with the exception of nomenclature, may include a

cross reference glossary or index, as long as the glossary or index

allows confirmation of a plan's compliance with the requirements of the

national program.

Eligibility (Sec. 8.515). Several comments expressed the position

that newly-constructed vessels and recently-acquired, existing (i.e.,

new-to-company) vessels should be allowed to enroll in the SIP without

regard for the

[[Page 44348]]

3-year eligibility requirement. The comment stated that newly-

constructed vessels are in the best condition they will ever be in and

that is the best time to establish the vessel's base-line for

enrollment. For recently-acquired existing vessels, if a company

enrolled in the SIP takes the time to bring the vessel into full

compliance, then a vessel's performance under the previous operator

during the past 3 years should not be determinative of the vessel's

eligibility for SIP enrollment with the new owner. The Coast Guard

agrees that in many instances these vessels would be suitable for the

SIP and companies with one or more vessels already enrolled in the SIP

need not meet the 3-year requirement in Sec. 8.515(b)(1) for a newly-

constructed or recently-acquired vessel.

One comment recommended that vessels older than 20 years be

ineligible for the SIP.

The Coast Guard's experience indicates that the age of a vessel is

not the most reliable indicator of its condition or suitability for

continued safe operation. Age alone is not, therefore, a singularly

disqualifying factor for SIP eligibility. In considering a vessel for

enrollment, the OCMI will review all aspects of a vessel's condition,

its history, and the operational and management practices relative to

the vessel's service.

Two comments recommended that the SIP permit newly-formed companies

to participate from the onset of vessel construction to give operating

companies greater ownership of the program and better inspection

results.

Another comment suggested revising Sec. 8.515 to indicate that a

vessel is eligible, if there are no outstanding deficiencies issued

within the last 6 months. The eligibility section should recognize that

civil penalties vary in degrees of severity, from those that affect the

seaworthiness and safety of the vessel to those that involve relatively

minor regulatory infractions. The OCMI should have more discretion in

determining eligibility and in evaluating civil penalties.

As stated previously, the 3-year history requirements provide the

OCMI with a record of a company's commitment to the safe operation of

its vessels. Also, in most cases, a 6-month period would not include a

re-inspection cycle or an inspection for certification. However, under

the waiver provision in the final rule, the OCMI may consider enrolling

a company or vessel that does not meet all the eligibility

requirements. The OCMI evaluation of the company's eligibility will

take into consideration all factors, including the severity of any

civil penalties noted by the Coast Guard in the last 3 years.

OCMI review and action (Sec. 8.525). One comment suggested adding a

paragraph that states, if the vessel operates in more than one OCMI

zone, all OCMIs must accept the SIP. Another comment suggested that all

OCMIs in the area where a vessel operates should agree to an SIP

inspection conducted in another OCMI zone.

For companies with vessels in more than one OCMI inspection zone,

the CAP will be approved by the cognizant OCMI in the zone where the

initial application for the SIP enrollment is made. The same

requirements that regulate the operation and inspection of any vessel

in more than one OCMI zone apply to the SIP vessels. The Coast Guard's

internal implementation guidance will ensure consistent implementation

of the SIP.

Plan development and approval (Sec. 8.530). Four comments suggested

allowing the use of a highly experienced surveyor (including the

American Bureau of Shipping) to inspect and certify inspected equipment

and correct any deficiencies.

The intent of the SIP is to have company personnel conduct

examinations to provide a sense of ownership and improve safety

awareness. Using a third party surveyor, hired by the Company SIP Agent

as a ``designated SIP support person'' is subject to approval by the

OCMI. Maintenance or examination of certain shipboard systems may be

beyond the expertise of a company's vessel or shoreside personnel. In

that case, outside expertise may be appropriate and could be included

in the VAP. Section 8.530(a)(4) requires that the CAP identify the

responsibilities of those individuals who examine and maintain

equipment and how their satisfactory performance will be verified and

recorded.

One comment wanted the Coast Guard to incorporate a process into

the final rule, allowing companies with vessels that are sufficiently

alike in multiple ports to undergo the procedure of developing CAPs and

VAPs with a single OCMI. Companies can then use the original CAP and

VAP as a model for vessels in other OCMI zones. The comment stated that

incorporating this procedure would provide the consistency and

standardization required in maintaining and inspecting a large fleet of

similar vessels. The comment also stated that developing the CAP and

VAP would be simple for a company with a single vessel or multiple

vessels that are similar within the same OCMI zone. However, the

procedure becomes more complex for companies with similar vessels in

multiple OCMI zones.

The Coast Guard agrees that a single OCMI will be able to approve

an owner's CAP, however, the VAP is vessel- and area-specific.

Companies with multiple vessels in more than one OCMI zone should start

their enrollment process with a single vessel, or series of vessels and

a single OCMI. Once the CAP has been developed and approved for the

first vessel, it can be used as part of the application to the next

OCMI zone. Subsequent OCMI review should focus on the revision of the

CAP as it pertains to their zone. Section 8.530(a)(3) requires that the

CAP contain information on designated SIP support personnel responsible

for implementation and oversight of the program. Adding new ports and

vessels to a CAP will require revisions to the CAP only as it pertains

to operations under the SIP in the new location.

Three comments stated that developing a separate plan for each

vessel poses a significant administrative burden for a large barge

fleet. The comments suggested that companies develop a VAP for each

barge series where the construction, piping, and configuration are

consistent. The comment also stated that the Coast Guard should not

require VAPs to be maintained on board unmanned barges. Rather, VAPs

should be available to the Coast Guard upon request.

The Coast Guard agrees that a single VAP for each barge series may

be accepted by the OCMI. However, a VAP needs to be on board an

unmanned barge. Inspection certificates and company documents are

routinely maintained on board unmanned vessels. Coast Guard inspection

documents are required to be on board. The VAP is an inspection

document that the company and the Coast Guard may need to access at any

time. Having the VAP maintained on board the vessel ensures

availability.

One comment questioned if documents and plans created for the

Responsible Carrier Program (RCP) could be used as ``credit'' for the

CAP since the elements of the CAP are similar to the charter of the RCP

and to approved vessel response plans. Another comment suggested

allowing vessel owners to use documents developed for the International

Safety Management (ISM) Code as CAP and VAP documents.

The Coast Guard agrees that there may be some documentation

redundancy between a CAP and other required or voluntary documents and

plans. For example, companies with vessels that

[[Page 44349]]

are ISM Code compliant should have the necessary documentation

developed to apply for the SIP. If ISM Code documents are sufficiently

detailed, then they may also be suitable for use in a CAP or VAP. The

use of ISM documentation or other documents as part of a CAP or VAP

must be approved by the OCMI. In such cases, companies should submit

copies of what they already have in place to the OCMI for review and

possible use in development of its CAP and VAPs.

One comment stated that the Coast Guard should consider waiving the

extensive training requirements for a company that has implemented a

recognized quality management program such as an ISM or American

Waterways Operators (AWO) RCP.

The OCMI may accept evidence that the training conducted pursuant

to an approved quality management program is the same as the training

required under the SIP. The Coast Guard doesn't intend to impose a

redundant burden on companies that have already implemented a quality

management system. For those companies that have such a system in

place, the OCMI may consider accepting in the CAP and VAP those quality

management components that meet the specific requirements for a CAP and

VAP.

One comment asked, to what extent will outside vendors who repair

and service certain equipment be able to serve as SIP examiners and

under whose training program will they be accredited.

The use of outside vendors is common. The approved VAP should

answer these questions on the use of vendors, but the company's SIP

Agent will still be responsible for verifying that the work is

completed by approved facilities and qualified personnel where

required, that the equipment is installed and functioning properly, and

the work has been properly documented.

One comment requested that the Coast Guard reword Sec. 8.530(b) to

state, ``* * * Each VAP shall include at least the following or its

functional equivalent:''. The comment noted that the regulations must

allow flexibility in the method of documentation. If specific written

forms are required by these regulations, companies who develop

effective computer-based inspection scheduling systems will then have

to maintain a duplicate manual driven system.

The Coast Guard agrees in principle with the comment; however, we

made no regulatory changes. The OCMI has the discretion to approve any

appropriate recordkeeping system, including computer-based systems, as

part of a vessel's VAP. As stated previously in discussing comments to

Sec. 8.510, the Coast Guard must be able to verify compliance with the

requirements in the final rule and measure the effectiveness of the

program.

One comment wanted the Coast Guard to delete the organizational

commitment statement in paragraph (a)(2) of Sec. 8.530 in light of the

requirements in paragraphs (a)(3) through (a)(5) of this section.

The Coast Guard disagrees with this comment. The need for an

organizational commitment statement is not satisfied by the inclusion

of the items specified in paragraphs (a)(3) through (a)(5). Instead, it

is complemented by those requirements. The commitment statement defines

the company's philosophical position and goals. The items in

Sec. 8.530, paragraphs (a)(3) through (a)(5), specifically identify how

that philosophical commitment will be put into effect.

One comment stated that there is no guidance in Sec. 8.530 for the

handling of inspection criteria discrepancies. The comment recommended

that in Sec. 8.530, paragraphs (a)(4) and (a)(5) be revised to

incorporate the mechanism used in the offshore prototype programs for

handling vessel deficiencies. Prototype programs classified

deficiencies as ``urgent'' and ``routine,'' and assigned a time for

correction of the deficiency.

In Sec. 8.530, paragraph (a)(5) allows for flexibility when

determining corrective action. It is up to the company and the OCMI to

determine the time frame associated with corrective action. In

addition, the implementation guidance provided by the Coast Guard in

the inspection criteria references (ICR) includes information on

corrective action. The Coast Guard did not make the suggested change to

paragraphs (a)(4) and (a)(5).

Another comment stated that paragraph (a)(10) of Sec. 8.530 implies

that a CAP must have appendices that contain each approved VAP. For a

company with numerous vessels enrolled, this could become a very

unwieldy document. The comment recommended this section be revised to

require an appendix that lists each VAP approved under the CAP.

The CAP and VAPs are interdependent documents. It is necessary that

each VAP be accessible to the company SIP Agent, as well as having a

vessel-specific copy maintained on the vessel. Paragraph (a)(10) is not

revised in the final rule.

One comment suggested deleting paragraph (b)(2) of Sec. 8.530

because it appears to repeat the requirements of paragraph (a)(5).

The Coast Guard disagrees. The VAP and CAP are separate documents

and are not redundant in their function. Paragraph (b)(2) will remain

unchanged in the final rule.

Training and operational evaluation (Sec. 8.535). One comment

requested further clarification on what constitutes an SIP training

program. Many hours of training and apprenticeship are required for

designation as a Coast Guard ``barge inspector.'' There is concern that

training expectations may exceed training resource capabilities.

Vessel owners, through their SIP Agent, and the OCMI's SIP Advisor

must work closely to develop the SIP training requirements, based on

vessel type and operating requirements. Vessel-specific ICRs should be

used extensively as training aids to develop and maintain consistent

and efficient procedures under the VAP.

One comment discussed manning and crew fatigue. The comment stated

that the crew would be required to conduct additional tests and

examinations as a result of the SIP. The comment wanted to know how the

increase in work would be reflected in the manning scale on the

vessel's COI since there are work-hour restrictions and required rest-

hour periods mandated by law and international convention.

The regulations governing maximum work hours in a 24-hour period

and required rest intervals are not affected by this regulation; they

remain unchanged. Part of the CAP and VAP development process will be

incorporating the periodic system examinations contained in the VAP

into regular vessel routines.

Enrollment in SIP (Sec. 8.540). One comment suggested that the OCMI

enrollment letter be a mandatory requirement.

The Coast Guard agrees and has revised Sec. 8.540 to indicate that

once the company and its vessel(s) have successfully completed the

training and evaluation phase, and the OCMI concurs with the Coast

Guard SIP Advisor's recommendation, the OCMI will issue an enrollment

letter and endorse the COI.

Scope of Inspection for Enrolled Vessels (Sec. 8.545). Four comments

discussed an alternative to annual inspections. They recommended that

rather than annual inspections, vessels--especially unmanned tank

barges--should only be subject to periodic random inspections like the

current MARPOL checks.

[[Page 44350]]

The SIP is an alternative to traditional Coast Guard inspections. A

particular vessel inspection interval is determined by the regulations

contained in the applicable subchapter. It is beyond the scope of the

SIP rulemaking to adjust inspection intervals. To clarify the

inspection interval requirement and allow for any future changes within

the inspection subchapters, we have changed the word ``annual'' to

``periodic'' in paragraph (a) of Sec. 8.545.

One comment asked why an approved VAP is needed if the marine

inspector might conduct additional tests or examinations of a vessel.

The OCMI remains responsible for ensuring the safe operation of

vessels within that inspection zone. Marine inspectors under the SIP

will conduct their examinations in accordance with the VAP. The marine

inspector will only expand the examination parameters if discrepancies

are discovered or there is otherwise cause for concern. These would be

instances where the marine inspector believes the vessel is not being

operated in complete compliance with the approved VAP. This, if found

to be the case, is cause for disenrollment. There is nothing in the SIP

that diminishes the OCMI's authority or responsibility to ensure the

safety of life, property, the environment, and facilitation of maritime

commerce within that zone.

One comment expressed concerns that an audit or a spot check

boarding may not focus on compliance with the approved VAP. Once a VAP

is approved, that document becomes the primary guide for the owner or

operator to follow in determining inspection compliance issues. Coast

Guard inspections will focus on the condition of the vessel and

maintenance of the vessel in accordance with the VAP.

One comment suggested revising paragraph (b) of Sec. 8.545 to

indicate ``A Coast Guard inspector from the OCMI staff'' will conduct

the inspection. It should be made clear that the local inspection staff

conducts the inspections.

The SIP is designed so that any Coast Guard marine inspector should

be able to verify compliance with a VAP, regardless of whether the

vessel was enrolled in that particular OCMI zone or not. This

regulation establishes a uniform, nationwide program, in which marine

inspectors for the OCMI zone where the SIP inspection is scheduled will

conduct the examination. Only marine inspectors from ``the OCMI staff''

will be conducting inspections. Therefore, no changes to the regulation

have been made.

One comment recommended that Sec. 8.545 be revised to provide

guidance regarding the scope of an SIP audit, and that a sample audit

be included.

The scope of an SIP inspection is covered in Sec. 8.545, paragraphs

(b)(1) through (b)(4). Additional detailed guidance may be provided by

the OCMI. The intent of an SIP inspection is for the marine inspector

to verify compliance with the VAP.

One comment recommended that the VAP list specific inspections that

will be conducted by the qualified crewmember, operators, or Coast

Guard inspectors and stated that there are too many critical

inspections that require the presence of a marine inspector.

The ICR sheets provide information on the level of inspection

required. Since the VAP will contain ICRs, no further clarification is

required in the regulation.

Plan review and revisions (Sec. 8.550). One comment recommended a

change from a 2-year to a 5-year review cycle, unless the owner or

operator's performance record indicates needed oversight. Annual review

is time consuming and costly.

There is no required annual review of SIP documentation by the

company unless the company itself has established such an interval. The

requirement to review the CAP every 2 years is a quality control

measure that ensures that the plan contents are up to date. Properly

maintained plans will normally be revised as the need arises. There

may, in fact, be no changes necessary at the time of the review--it is

simply a company check for accuracy.

Three comments suggested eliminating the mandatory review and

revision for ISM compliant companies. The ISM process calls for the

continual review and revision of manuals and procedures when non-

conformities are identified. The internal and external audit programs

required by the ISM system also provide assurance that manuals will not

become obsolete.

The Coast Guard agrees that ISM compliant companies will probably

be able to prove to the OCMI that their review processes are meeting

the regulations. However, this method of continuous compliance needs to

be submitted to the cognizant OCMI for approval and incorporation into

the VAP during the application and VAP approval process.

One comment stated that requiring a company to submit a revised

plan to the OCMI each time that a revision is made could place an

unnecessary administrative burden on the local MSOs. The comment also

recommended periodic review or audit for operations that are ISM

compliant.

The Coast Guard must be kept informed of changes that affect a

company's CAP or VAP. The company SIP Agent and OCMI's SIP Advisor

should coordinate the manner in which this process is to be

accomplished, and the Coast Guard has not changed this requirement in

the final rule.

Disenrollment (Sec. 8.555). In Sec. 8.555(a), one comment suggested

adding the words ``that issued the Certificate of Inspection'' after

the words ``cognizant OCMI''. The OCMI that issued the COI should be

the one that voluntarily disenrolls the vessel.

The Coast Guard does not find this change necessary. As SIP is a

nationwide program, disenrollment requests through any cognizant OCMI

(defined as the OCMI responsible for the zone in which the vessel is

currently operating) will satisfactorily disenroll the vessel.

One comment asked the Coast Guard to clarify the parameters for re-

enrollment once a vessel has been disenrolled.

Once a vessel or company has been disenrolled either voluntarily or

involuntarily, the company must reapply for enrollment in accordance

with subpart E.

Waiver (Sec. 8.560). One comment had several questions concerning

waivers. The comment asked when a waiver can be requested; who can

request the waiver, the OCMI or the vessel operator; and is the waiver

the equivalent of an appeal for a marine inspection requirement.

A company may request a waiver at any time. The company will

request the waiver through its SIP Agent for any procedural requirement

in subpart E, such as eligibility. Waiver of substantive inspection

requirements should be submitted in accordance with procedures in the

subchapter containing the requirement.

One comment recommended that Sec. 8.560 be revised to provide

guidance on the discretionary authority of the District Commander to

grant waivers. The comment noted that this is necessary because the

preamble, which provides an explanation of the regulation will

disappear once the regulations are final. Two comments noted the waiver

section is a key provision and should be kept as is.

The Coast Guard agrees with these latter comments that no revisions

are needed.

Interim approval of prototype company vessel plans (Sec. 8.570).

One comment noted that prototype programs were based on ISM and

International

[[Page 44351]]

Organization for Standardization (ISO) standards. The comment stated

that the SIP regulations must permit companies participating in the SIP

some degree of flexibility with respect to the format of the CAP and

VAP to allow companies to structure the program for their individual

needs. This is consistent with the general provisions of the ISM Code

and ISO 9000 standards. The comment also noted that companies with

approved prototype programs should not have to revise their CAP and

VAP.

For the SIP to be uniformly applied there must be consistency

nationwide in its implementation. A prototype program vessel examined

in an OCMI zone that did not endorse that prototype program might

encounter needless difficulty during the SIP inspection. The extra

effort necessary to bring Coast Guard inspectors up to speed with all

possible prototype programs would nullify some of the benefits of the

SIP. In addition, some prototype programs lack disenrollment and other

important criteria. Therefore, companies and vessels in a prototype SIP

program will have 3 years from the effective date of the final rule to

bring their existing program into full compliance. As discussed

previously, the Coast Guard will consider equivalents and appropriate

cross-referencing to required documentation. This should provide the

needed flexibility for prototype programs to make a smooth transition.

One comment suggested that vessels of unique design only be

considered for this program after the 3-year period.

That determination is up to the OCMI. Therefore, the Coast Guard

made no changes based on this comment.

Other Changes to the Proposed Regulations

In addition to the changes made to the regulations as a result of

the comments, the Coast Guard has revised the definition of Exam

Checklists to accommodate a variety of documents. In the revised

definition, Exam Checklists may be any document or form approved in the

VAP to record the periodic examinations of vessel systems by vessel

personnel. For example, copies of the Inspection Schedule and

Verification (ISV) sheets could be used as Examination Checklists.

The Coast Guard has also revised the definition of ``prototype

vessel plan'' by removing the word ``vessel'' and adding the word

``SIP'' in its place. In addition, the heading and the first sentence

in paragraph (a) of Sec. 8.570 has been revised to include prototype

SIP company or vessel plans. This will provide consistency and account

for prototype SIP company or vessel plans.

Regulatory Evaluation

This 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 Coast Guard expects the economic impact of this rule to be so

minimal that a full Regulatory Evaluation under paragraph 10e of the

regulatory policies and procedures of DOT is unnecessary. The Coast

Guard expects this rule to provide an economic benefit to the owners

and operators of U.S. documented or registered vessels.

Currently, 11,800 U.S. documented or registered vessels may be

eligible to participate in this optional SIP. Entrance into the SIP is

voluntary. Because the program is new, it is difficult to estimate how

many vessel owners will choose to develop a VAP and seek enrollment.

Some Coast Guard offices have been working with company owners on

prototype programs that are similar to the SIP.

Over the next 3 years, the Coast Guard estimates that the following

number of vessels will voluntarily enroll in the SIP:

274 small passenger vessels (subchapter T).

78 small passenger vessels (subchapter K).

48 large passenger vessels (subchapter H).

131 offshore supply vessels (subchapter L).

29 cargo vessels (subchapter I).

4 tank ships (subchapter D).

942 tank barges or OSRVs (subchapter D or O).

These estimates of vessel enrollment reflect both the number of

vessels presently in prototype programs similar to the SIP and the

number of vessels that could enroll for the first time in the SIP

within the next 3 years.

Industry Cost

The Coast Guard based the cost estimates for the SIP on the

incremental costs company owners and operators have incurred

participating in prototype programs similar to the SIP. Company owners

and operators will have different economic impacts from this program

depending on the number, class, and size of the vessels that they

enroll in the program. The time and resources an owner or operator may

spend developing the VAP will vary depending on the vessel's system

complexity (simple tank barge systems or multi-faceted large passenger

vessel systems), the current company management infrastructure

(availability of support staff, system expertise, and strength of

organizational policies), and the number of crewmembers or employees

involved with the plan's implementation.

For a company to submit the application required to enroll its

vessels in the SIP, the Coast Guard estimates that--

Preparation of the application will take a senior staff

official 1 hour at $60 per hour; and

401 companies will apply for the program during the first

3 years at an industry cost of $8,040 annually over the first 3 years.

For a company to develop a CAP, the Coast Guard estimates that--

It will require 80 hours of senior staff time at a cost of

$60 per hour; and

401 companies will develop CAPs during the first 3 years

at an industry cost of $641,580 annually over the first 3 years.

For a company to develop a VAP, the Coast Guard estimates that--

It will require 40 hours of senior staff time at a cost of

$60 per hour; and

VAPs will be prepared for 1,506 vessels during the first 3

years at an industry cost of $1,204,800 annually over the first 3

years.

For a company to make the required updates to the plans, the Coast

Guard estimates that each company will devote 10 hours annually at $60

per hour for an industry cost of $80,220.

Additional costs associated with these plans include $25,100 in

printing and copying costs. We estimate the total industry cost

associated with plan development and approval to be $1,959,740.

Under this rule, vessel owners and operators will incur some SIP

implementation training costs. These costs reflect a slight increase in

existing crew or employee training costs to ensure responsible

personnel have the skills needed to conduct maintenance and

examinations of vessel equipment and systems required by the VAP.

One small passenger vessel owner (regulated under subchapter K)

currently in a prototype program estimated that VAP training took

approximately 35 hours to train each of four employees to properly

conduct and record the tests and examinations under the VAP. Based on

an hourly salary of $16 for the trainer and an average hourly salary of

$13 for each of the four

[[Page 44352]]

employees, we estimate a one-time training cost of $2,380 for a similar

passenger vessel.

A tank barge owner currently in a prototype program estimated that

VAP training took approximately 40 days to train 16 employees to

conduct and record examinations under the VAP for a 200-barge fleet.

Based on an 8-hour training day, an hourly salary of $33.65 for the

trainer, and an average hourly salary of $25 for each of the employees,

we estimate a training cost of $138,770 for a similar size barge fleet.

The Coast Guard estimates that the one-time training costs for

personnel on vessels in the SIP will range from $700 ($138,770 divided

by a 200-simple-system fleet) to $3,000 (for one large multi-system

vessel) per vessel. The Coast Guard assumes that once the VAP is

approved and the vessel is enrolled in the SIP, any further training

will be incorporated into established company training and vessel

maintenance programs at little or no additional cost. Therefore, we did

not include recurring training costs in the cost estimates for this

rule.

Some owners and operators participating in prototype programs

purchased computers and other administrative items to help with

collation of plan information. A computer could reduce the

administrative time spent developing the VAP; however, this rule does

not require a company to have a computer. Because a company could meet

all of the SIP criteria without a computer, the Coast Guard did not

include equipment costs in the cost estimates for this rule.

Industry Benefits

Benefits from the SIP are expected to vary and are not currently

quantifiable. Participants in prototype programs stated that the cost

to participate and maintain this type of voluntary program has been

partially offset by an increased availability of their vessels for

profit-making ventures. Some Coast Guard marine inspectors have noted

as much as a 50 percent reduction in their onboard inspection time on

vessels participating in a prototype program. Prototype program

participants have also reported other benefits. These participants

reported that they have experienced the following benefits:

The vessel's material condition was kept at a consistently

high level and there were fewer major repairs.

The company's cost of maintaining the vessel in regulatory

compliance was reduced and expenses were more evenly distributed over

time.

The licensed mariners recognized their role in regulatory

compliance and welcomed the empowerment to conduct the procedures

specified in the VAP.

The unlicensed crew experienced more rapid professional

growth as they were trained and became familiar with conducting the

step-by-step verification procedures.

The communication between the company and the Coast Guard

was open and problem-solving.

The vessel's working environment was better than it had

been under the traditional inspection program.

There were fewer insurance claims and personnel injuries.

The vessel's maintenance records provide more information

and are better than the records the company required on its own.

There were no monetary estimates for the value of these benefits.

User Fees

The Coast Guard expects that once implemented, the SIP will result

in fewer onboard Coast Guard inspection hours required to inspect and

certify participating vessels. This rule, however, will not change

existing vessel inspection user fees. When sufficient data exists

regarding the Coast Guard costs required to administer the new program,

the Coast Guard plans to review the existing user fee structure to

determine if a reduction in fees is warranted.

Government Costs

This rule has short-term costs to the Coast Guard but, in the long-

term, will save resources. In the initial implementation of the SIP,

Coast Guard inspectors will need to review company applications, assist

companies in plan development, and oversee the operational

implementation of the plan. The time required by this program varies

depending on the type of vessel and the current company management

infrastructure. It may take the Coast Guard as little as 3 hours to

verify a tank barge company's eligibility, 18 hours to assist in

developing and reviewing its plan, and 8 hours to oversee its operation

prior to a favorable assessment of the VAP by the Coast Guard marine

inspector. However, the Coast Guard may take significantly more time to

assist in developing, reviewing, and overseeing the plans and operation

of a large passenger vessel because of its complex onboard systems and

the large number of company personnel involved in managing the CAP and

VAP. After the initial investment of Coast Guard resources (time and

training) to assist vessel personnel with their plans, the Coast Guard

expects to reduce the amount of time taken to inspect and certify

vessels enrolled in the SIP.

Small Entities

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), the Coast

Guard must consider 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.

The Coast Guard expects this rule to have a positive economic

impact for owners and operators who choose to participate in the SIP.

Of the 1,506 vessels which owners may submit for SIP enrollment, we

estimate that small entities will own 334 small passenger vessels, 52

offshore supply vessels, and 94 tank barges or OSRVs. Under Section 601

of the Regulatory Flexibility Act, the Coast Guard has provided a

flexible approach that meets the needs of each company and its vessels

and will benefit any small businesses choosing to enter the program.

This rule will have no impact on vessel owners who do not choose to

participate in the program.

This rule provides an optional way of complying with existing

inspection regulations and will only have an economic impact if the

vessel owner enrolls in the SIP instead of the existing Coast Guard

scheduled inspection program. For a small entity, plan development may

be too large an initial investment recoverable after too long a time

for them to see the benefits. To assist small entities in plan

development, the Coast Guard will provide detailed guidance tailored to

the small passenger vessel operator and to other small entities that

operate other vessel types. This rule also provides for one-on-one time

with Coast Guard inspectors to assist in plan development. Benefits

from the SIP are expected to be especially positive to those small

entities with more than one vessel in the program because after

developing the first CAP and VAP, costs will be minimal for developing

VAP(s) for the remaining vessels.

The SIP is a voluntary program; it provides benefits to small

entities willing to invest the time and training needed for enrollment.

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.

[[Page 44353]]

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

wants to assist small entities in understanding this rule so they can

better evaluate its effects on them and participate in the rulemaking

process. If your small business or organization is affected by this

rule and you have questions concerning its provisions or options for

compliance, please contact LT Paul Arnett at the numbers listed under

FOR FURTHER INFORMATION CONTACT.

Collection of Information

This final rule provides for a collection of information under the

Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

The information collections associated with this rule concern the

application for enrollment, development of the VAP, development of the

CAP, and updates to the CAP and VAP. The costs and hour-burdens

associated with these procedures are outlined in the Industry Costs

section. A total information collection hour-burden of 32,244 is

estimated for this program.

One comment noted that the collection of information section of the

NPRM states ``* * * reports must be submitted whenever a company

representative performs activities required by the VAP.'' The comment

was concerned that this requirement could create a paperwork burden for

industry and the Coast Guard. For example, a company may require a

deckhand to check void spaces several times a day and record those

checks.

Under the frequency of response section of the NPRM, the Coast

Guard did not state that all documentation should be sent to the Coast

Guard. It is true that if the VAP requires certain activities to be

documented, then company personnel will do that documenting. The

documentation will be kept by the company or on the vessel and will be

made available to the Coast Guard. But these recordkeeping requirements

should not be confused with reporting requirements. This rule does not

require the documentation to be submitted to the Coast Guard.

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. Originally, the Coast Guard

submitted to OMB requests for additions to four existing collection-of-

information requests--OMB Approval Numbers 2115-0025, 2115-0071, 2115-

0578, and 2115-0592. These requests added SIP collection hours to

existing programs and all but 2115-0071 were approved by OMB. The

Office of Management and Budget did not approve 2115-0071, titled

Official Logbook, because a public comment expressed confusion over the

inclusion of SIP collection hours in that particular request. To

eliminate confusion, the Coast Guard submitted a consolidated, SIP-

exclusive, collection-of-information request to OMB. This consolidated

request presents the numbers in a form that is easier to understand and

makes it easier for the Coast Guard to renew when it expires.

The Office of Management and Budget has approved the consolidated

collection. The section numbers are Secs. 8.520, 8.530, 8.535, and

8.550, and the corresponding approval number from OMB is OMB Control

Number 2115-0633, which expires on July 31, 2001.

Federalism

The Coast Guard has analyzed this rule under the principles and

criteria contained in Executive Order 12612 and has determined that

this rule does not have sufficient federalism implications to warrant a

Federalism Assessment.

The authority to regulate safety requirements of U.S. vessels is

delegated to the Coast Guard by statute. Furthermore, because these

vessels tend to move from port to port in the national market place,

these safety requirements need to be national in scope to avoid

numerous, unreasonable and burdensome variances. Therefore, this action

preempts State action addressing the same matter. One comment stated

disagreement with the Coast Guard's determination that the regulations

would preempt state or local regulations involving inspection of

vessels, citing the decisions of the Supreme Court in Ray v. ARCO and

of the District Court for the Western District of Washington in

INTERTANKO v. Lowery, as affirmed in part by the Ninth Circuit Court of

Appeals for the premise that Federal preemption is limited to

regulations relating solely to the design, equipment, and construction

of vessels. The Coast Guard disagrees with this limited interpretation

of the Supreme Court precedent in the Ray case and the ruling of the

Ninth Circuit Court of Appeal in the INTERTANKO case that adopts this

limited interpretation. The Coast Guard has historically inspected

vessels for their compliance with Federal regulations that address the

safety of vessels and protection of the marine environment. The

certificate of inspection issued to vessels as a result of these

inspections indicates that the vessels are safe for the service in

which they are engaged. It is the Coast Guard's opinion that the

Supremacy Clause preempts state and local regulations that seek to

impose different or higher standards governing the inspection of U.S.

vessels.

Environment

The Coast Guard considered the environmental impact of this rule

and concluded that, under figure 2-1, paragraph (34)(d) of Commandant

Instruction M16475.1C, this rule is categorically excluded from further

environmental documentation. This rule is excluded based on its

inspection and equipment aspects. A Categorical Exclusion Determination

is available in the docket for inspection or copying where indicated

under ADDRESSES.

List of Subjects in 46 CFR Part 8

Administrative practice and procedures, Organization and functions

(Government agencies), Reporting and recordkeeping requirements.

For the reasons set out in the preamble, the Coast Guard amends 46

CFR part 8 as follows:

PART 8--VESSEL INSPECTION ALTERNATIVES

1. The authority citation for part 8 is revised to read as follows:

Authority: 46 U.S.C. 3103, 3306, 3316, 3703; 49 CFR 1.46.

2. Subpart E, consisting of Secs. 8.500 through 8.570, is added to

read as follows:

Subpart E--Streamlined Inspection Program

Sec.

8.500 Purpose.

8.505 Scope and applicability.

8.510 Definitions.

8.515 Eligibility.

8.520 Application.

8.525 OCMI review and action.

8.530 Plan development and approval.

8.535 Training and operational evaluation.

8.540 Enrollment in SIP.

8.545 Scope of inspection for enrolled vessels.

8.550 Plan review and revisions.

8.555 Disenrollment.

8.560 Waiver.

8.565 Appeal.

8.570 Interim approval of prototype SIP company or vessel plans.

Subpart E--Streamlined Inspection Program

Sec. 8.500 Purpose.

(a) This subpart establishes the Streamlined Inspection Program

(SIP) which is a voluntary alternative

[[Page 44354]]

inspection program for U.S. documented or registered vessels required

to maintain a valid certificate of inspection (COI).

(b) This subpart sets out the eligibility and application

requirements and the plan development and approval procedures for

enrollment of companies and their vessels in the SIP.

Sec. 8.505 Scope and applicability.

(a) This subpart applies to U.S. documented or registered vessels

that have a valid COI.

(b) A vessel enrolled in the SIP will be inspected in accordance

with its approved Vessel Action Plan (VAP).

(c) The SIP includes all inspections required to renew and maintain

a valid COI. The SIP does not include dry-dock examinations,

unscheduled inspections related to vessel casualties, equipment repair

or replacement, or vessel modifications. Those inspections will be

conducted in accordance with the subparts applicable to the vessel.

Sec. 8.510 Definitions.

The following definitions apply to this subpart:

Civil penalty means a final assessment under the provisions of 33

CFR part 1, subpart 1.07 or part 20 of this chapter.

Coast Guard SIP Advisor means the Coast Guard marine inspector

assigned by the Officer in Charge, Marine Inspection (OCMI), to assist

in the development of an action plan.

Company means the owner of the vessel or any other organization or

person, such as the manager or the bareboat charterer, who operates a

vessel under the SIP.

Company Action Plan (CAP) means the document describing a company's

organization, policies, and responsibilities required for participation

in the SIP.

Company SIP Agent means the individual who is responsible for the

Company Action Plan and the Vessel Action Plan development and

implementation and who has the authority to bind the company to the

terms of these plans.

Correction Report means a document which sets out specific vessel

deficiencies and is used to record their correction by the company.

Documented deficiency means an incident documented in a Coast Guard

record in which the condition of a vessel, its equipment, or its

operation was not in compliance with Coast Guard regulations.

Examination Checklist means any document or form approved in the

VAP, that may be used by company employees to record the periodic

examinations required by the VAP.

Inspection Criteria References (ICR) means the individual pages in

the VAP that list each item on the vessel required by regulation to be

periodically inspected.

Inspection Schedule and Verification (ISV) means the document that

lists the items to be inspected and the intervals for their inspection,

and on which is recorded the completion of required examinations and

tests conducted by designated company employees.

Prototype SIP plan means the SIP plans developed for a company or

vessel participating in a Coast Guard District-or OCMI-endorsed SIP

before August 18, 1998.

Reportable casualty means a marine casualty or accident required to

be reported under 46 CFR part 4, subpart 4.05 of this chapter.

Streamlined Inspection Program (SIP) means the alternative

inspection program set out in this subpart.

Vessel Action Plan (VAP) means the document that prescribes

procedures for maintenance, examination, and inspection of a vessel

enrolled in the SIP.

Sec. 8.515 Eligibility.

(a) The company must--

(1) Have owned or operated at least one U.S. documented or

registered vessel for a minimum of 3 consecutive years before the SIP

application date; and

(2) Have paid all civil penalties and user fees.

(b) Except as allowed by paragraph (c) of this section, each vessel

must--

(1) Have been in operation with an eligible owner or operator for

at least 3 consecutive years before the SIP application date;

(2) Have had no revocation of its COI during the 3 years before the

SIP application date; and

(3) Have no documented deficiency for any of the following in the 3

years before the SIP application date:

(i) Any vessel operation inconsistent with the operating details

specified on its COI.

(ii) Operating without the required amount of lifesaving appliances

on board the vessel or with inoperable survival craft.

(iii) Operating without the required firefighting equipment on

board the vessel or with an inoperable fire pump(s).

(iv) Unauthorized modifications to the vessel's approved systems or

structure, such as fixed firefighting systems, pollution prevention

arrangements, overcurrent protection devices, or watertight boundary

arrangements.

(v) Operating without the required navigation equipment on board

the vessel or with inoperable navigation equipment.

(c) A vessel constructed for, or acquired by, a company with one or

more vessels enrolled in the SIP need not meet the requirement in

paragraph (b)(1) of this section for enrollment in the SIP, provided

that the vessel holds a valid COI issued by the OCMI where the vessel

will principally operate.

Sec. 8.520 Application.

To apply for SIP enrollment, a company will submit an application,

in writing, to the cognizant OCMI. The application must contain the

following:

(a) A statement that the company and prospective vessel(s) meet the

requirements of Sec. 8.515.

(b) A summation of the company's current status in relation to

Sec. 8.530(a).

(c) The name and official number of the vessel(s) the company

intends to enroll in the SIP.

(d) The name and contact information for the Company SIP Agent.

Sec. 8.525 OCMI review and action.

(a) The cognizant OCMI will review Coast Guard records for the 3

years before the SIP application date to verify the eligibility of the

company and each vessel listed in the SIP application.

(b) If the company and one or more of its vessels meets the

eligibility requirements contained in Sec. 8.515, the cognizant OCMI

will notify the company of its eligibility and assign a Coast Guard SIP

Advisor.

(c) If, according to Coast Guard records, a company or vessel does

not meet the eligibility requirements contained in Sec. 8.515, the

cognizant OCMI will notify the company in writing of its ineligibility

stating each reason for not accepting the company or a vessel.

Sec. 8.530 Plan development and approval.

The Company SIP Agent will develop the CAP and VAP with guidance

from the Coast Guard SIP Advisor for OCMI approval.

(a) Company Action Plan. The CAP shall include at least the

following:

(1) A copy of the OCMI CAP approval letter (once the CAP is

approved).

(2) An organization commitment statement.

(3) A company organization chart that includes the name(s) of the

designated SIP support personnel who will be responsible for

implementation and oversight of the approved CAP and VAP(s).

(4) A statement describing the responsibilities and authorities of

personnel involved in the examination and maintenance of the vessel(s)

for the company.

[[Page 44355]]

(5) A description of the method the company will use to integrate

the applicable subpart regulations into its SIP and the method or

system used to initiate corrective action.

(6) A description of the company's safety program.

(7) A description of the company's environmental protection

program.

(8) A description of the company's training infrastructure, the

method used to track and record training for individual employees, and

the training required for the designated SIP support personnel to

implement the CAP and the VAP.

(9) A master list of all SIP documents and ICRs that the company

intends to use in its VAP(s).

(10) Appendices for each approved VAP.

(b) Vessel Action Plan. Each VAP shall include at least the

following:

(1) A copy of the OCMI VAP approval letter (once the VAP is

approved).

(2) A description of the method that will be used to integrate the

VAP into the vessel's regular operations.

(3) Vessel-specific ICRs.

(4) Vessel-specific ISV forms.

(5) Vessel-specific examination checklists.

(6) Correction reports.

(c) Plan Approval. The Company SIP Agent will submit the CAP and

each VAP to the cognizant OCMI for approval. Once approved, a copy of

the VAP shall be kept on board the vessel.

Sec. 8.535 Training and operational evaluation.

When the CAP and VAP(s) have been approved by the cognizant OCMI,

the company may begin training and operating under the plans. This

evaluation phase includes the following:

(a) The company shall provide the designated SIP support personnel

with training as required by the CAP.

(b) The vessel must operate and be examined under the VAP for a

period of at least 3 months.

(c) During the operational periods, the Coast Guard SIP Advisor

will conduct an ongoing evaluation of the vessel's operation, the

training records, and the ability of all designated persons to perform

their assigned functions under the VAP. The Coast Guard SIP Advisor

will report periodically to the cognizant OCMI and the Company SIP

Agent on the vessel's performance, and make recommendations, if needed.

(d) Revisions recommended under paragraph (c) of this section, or

any additional operational periods under a revised CAP or VAP as may be

required by the cognizant OCMI must be completed prior to enrollment.

Sec. 8.540 Enrollment in SIP.

Upon successful completion of the training and evaluation phase,

the Coast Guard SIP Advisor will recommend to the OCMI that the company

or vessel be enrolled in the SIP. If the OCMI concurs with the

recommendation, he or she will issue an enrollment letter and endorse

the vessel's COI. Subsequent inspections covered under this subpart

will be conducted in accordance with the approved VAP.

Sec. 8.545 Scope of inspection for enrolled vessels.

(a) A Coast Guard marine inspector will conduct required periodic

and follow-on inspections necessary to ensure compliance with Coast

Guard regulations.

(b) A Coast Guard marine inspector will conduct the inspections in

paragraph (a) of this section in accordance with the procedures set out

in the VAP. These inspections will normally include the following:

(1) Administrative review. This portion of the inspection consists

of a review of prior Coast Guard SIP inspection forms, the contents of

the VAP, and other certifications of equipment and vessel systems.

(2) SIP performance review. This portion of the inspection consists

of a review of vessel SIP documentation and records, review of the SIP

procedures, and a company evaluation of their SIP.

(3) Materiel review. This portion of the inspection consists of a

general examination of the vessel, witnessing the examination of

selected items under the VAP by company designated SIP support

personnel, inspection of selected items, and witnessing crew

performance in drills.

(4) Conclusion and recommendations. This portion of the inspection

contains the Coast Guard marine inspector's evaluation of regulatory

compliance of the vessel under its VAP.

(c) A Coast Guard marine inspector may conduct any additional tests

or examinations of vessel equipment or systems necessary to ensure

compliance with Coast Guard regulations during an inspection covered in

paragraph (a) of this section.

Sec. 8.550 Plan review and revisions.

(a) Mandatory reviews and revisions. The CAP and VAP(s) must be

reviewed and revised as follows:

(1) Every 2 years after the plan approval date, the company shall

review the CAP and update all information required by Sec. 8.530.

(2) Every 5 years after the plan approval date, the Coast Guard SIP

Advisor and the Company SIP Agent will review the VAP.

(3) If a reportable casualty occurs, the cognizant OCMI will review

the portions of the VAP related to equipment, training, personnel, and

systems involved in the casualty and determine whether revisions to the

VAP are appropriate.

(4) When statutes or regulations change, the appropriate sections

of the CAP and VAP(s) will be revised.

(b) Discretionary reviews and revisions. The CAP and VAP(s) may be

reviewed and revised by the company at any time. The revisions must be

submitted to the cognizant OCMI for approval.

Sec. 8.555 Disenrollment.

(a) Voluntary disenrollment. A company may request SIP

disenrollment (which includes all of its vessels) or may request

disenrollment of a specific vessel from the SIP by writing to the

cognizant OCMI. The OCMI will then issue a letter disenrolling the

vessel or company. Disenrolled vessels will be inspected in accordance

with the requirements of 46 CFR part 2, subpart 2.01 of this chapter.

(b) Company disenrollment. The OCMI may issue a letter disenrolling

the company if the company no longer has at least one enrolled vessel

or if the company fails to continue to meet the eligibility

requirements in Sec. 8.515.

(c) Vessel disenrollment. The OCMI may issue a letter disenrolling

a vessel if any one or more of the following occurs:

(1) The sale of the vessel.

(2) A finalized letter of warning or assessment of a civil penalty

for--

(i) Operating outside the scope of the vessel's COI or Stability

Letter;

(ii) Not reporting a personnel or material casualty required to be

reported under 46 CFR part 4; or

(iii) A material deficiency listed in Sec. 8.515(b)(3).

Sec. 8.560 Waiver.

(a) A Coast Guard District Commander may waive any requirement of

this subpart--

(1) If good cause exists for granting a waiver; and

(2) If the safety of the vessel and those on board will not be

adversely affected.

(b) Requests for waiver of any requirement of this subpart must be

submitted in writing to the cognizant OCMI for review before forwarding

to the Coast Guard District Commander for action.

(c) A copy of each waiver granted under this section shall be

maintained at all times in the VAP.

[[Page 44356]]

Sec. 8.565 Appeal.

A company may appeal any decision or action taken under this

subpart in accordance with 46 CFR part 1, subpart 1.03 of this chapter.

Sec. 8.570 Interim approval of prototype SIP company or vessel plans.

(a) A company operating under an approved prototype SIP company or

vessel plan must apply in writing by November 1, 1998, to the cognizant

OCMI for approval to continue operating under the plans while revisions

are developed to bring the prototype SIP company or vessel plan into

conformance with this subpart. The OCMI may approve the request for a

period of up to 3 years.

(b) A company that does not request approval as required by

paragraph (a) of this section or does not obtain approval to continue

operating under a prototype SIP company or vessel plan by February 1,

1999, may no longer operate under the plans and will be inspected in

accordance with the requirements of 46 CFR part 2, subpart 2.01 of this

chapter.

Dated: August 5, 1998.

Joseph J. Angelo,

Acting Assistant Commandant for Marine Safety and Environmental

Protection.

[FR Doc. 98-21549 Filed 8-17-98; 8:45 am]

BILLING CODE 4910-15-P