[Federal Register Volume 61, Number 250 (Friday, December 27, 1996)]
[Rules and Regulations]
[Pages 68510-68522]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32801]



[[Page 68509]]

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Part X





Department of Transportation





_______________________________________________________________________



Coast Guard



_______________________________________________________________________



46 CFR Parts 8, 31, 71, 91, and 107



Vessel Inspection Alternatives; Classification Procedures; Final Rule

  Federal Register / Vol. 61, No. 250 / Friday, December 27, 1996 / 
Rules and Regulations  

[[Page 68510]]



DEPARTMENT OF TRANSPORTATION

Coast Guard

46 CFR Parts 8, 31, 71, 91 and 107

[CGD 95-010]
RIN 2115-AF11


Alternative Compliance via Recognized Classification Society and 
U.S. Supplement to Rules

AGENCY: Coast Guard, DOT.

ACTION: Interim rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: The Coast Guard is issuing regulations to provide owners of 
U.S. tank vessels, passenger vessels, cargo vessels, miscellaneous 
vessels and mobile offshore drilling units an alternative method to 
fulfill the requirements for vessel design, inspection and 
certification. Under this interim rule, the Coast Guard can issue a 
certificate of inspection based upon reports by a recognized, 
authorized classification society that the vessel complies with the 
International Convention for the Safety of Life at Sea, the 
International Convention for the Prevention of Pollution from Ships, 
other applicable international conventions, classification society 
rules and other specified requirements. This new procedure will reduce 
the burden on vessel owners and operators by establishing an 
alternative to the current Coast Guard inspection system that results 
in plan reviews and inspections by the vessel's classification society 
as well as by the Coast Guard.

DATES: This interim rule is effective on December 27, 1997. Section 
8.440 applies to existing vessels as of July 31, 1997. Comments on this 
interim rule must be received on or before March 27, 1997. The Director 
of the Federal Register approves the incorporation by reference of 
certain publications listed in the regulations as of December 27, 1997.

ADDRESSES: Comments may be mailed to the Executive Secretary, Marine 
Safety Council (G-LRA/3406) (CGD 95-010), U.S. Coast Guard 
Headquarters, 2100 Second Street SW., Washington, DC 20593-0001, or may 
be delivered to room 3406 at the same address between 9:30 a.m. and 2 
p.m., Monday through Friday, except Federal holidays. The telephone 
number is (202) 267-1477. Comments on collection-of-information 
requirements must be mailed also to the Office of Information and 
Regulatory Affairs, Office of Management and Budget, 725 17th Street 
NW., Washington, DC 20503, ATTN: Desk Officer, U.S. Coast Guard.
    The Executive Secretary maintains the public docket for this 
rulemaking. Comments will become part of this docket and will be 
available for inspection or copying at room 3406, U.S. Coast Guard 
Headquarters, between 9:30 a.m. and 2 p.m., Monday through Friday, 
except Federal holidays. A copy of the material listed in 
``Incorporation by Reference'' of this preamble is available for 
inspection at room 1304, U.S. Coast Guard Headquarters.

FOR FURTHER INFORMATION CONTACT:
LCDR George P. Cummings, Marine Safety and Environmental Protection (G-
MSE-1), telephone (202) 267-2997, fax (202) 267-4816.

SUPPLEMENTARY INFORMATION: In accordance with 5 U.S.C. 553(d), the 
provisions of this interim rule relating to foreign classification 
societies are issued without a prior notice of proposed rulemaking and 
become effective immediately. The Coast Guard Authorization Act of 1996 
(Pub. L. 104-324) removed a restriction that had been imposed on 
foreign classification societies that were interested in participating 
in the Coast Guard Alternate Compliance Program (ACP). To remove this 
restriction in a timely fashion, the Coast Guard is omitting prior 
notice and comment under the exception permitted by 5 U.S.C. 553(d)(1).

Request for Comments

    The Coast Guard encourages interested persons to participate in 
this rulemaking by submitting written data, views, or arguments. 
Persons submitting comments should include their names and addresses, 
identify this rulemaking (CGD 95-010) and the specific section of this 
rule to which each comment applies, and give the reason for each 
comment. Please submit two copies of all comments and attachments in an 
unbound format, no larger than 8\1/2\ by 11 inches, suitable for 
copying and electronic filing. Persons wanting acknowledgement of 
receipt of comments should enclose stamped, self-addressed postcards or 
envelopes.
    The Coast Guard will consider all comments received during the 
comment period. It may change this rule in view of the comments.
    The Coast Guard plans no public hearing. Persons may request a 
public hearing by writing the Marine Safety Council at the address 
under ADDRESSES. The request should include the reasons why a hearing 
would be beneficial. If it determines that the opportunity for oral 
presentations will aid this rulemaking, the Coast Guard will hold a 
public hearing at a time and place announced by a later notice in the 
Federal Register.

Regulatory Information

    This rule is being published as an interim rule and is being made 
effective on the date of publication with the exception of enrollment 
of existing vessels in the ACP. The rule is effective on July 31, 1997, 
for enrollment of existing vessels in the ACP. This delay is intended 
to allow the time necessary for completion of the ACP pilot program and 
the required training of Coast Guard personnel. Because the number of 
vessel owners seeking to have vessels constructed under the ACP is 
expected to be low, the rule will be effective on the date of 
publication for new vessel enrollment in the ACP.

Background and Regulatory History

Alternate Compliance Pilot Program

    In response to a solicitation for comments regarding regulatory 
reform, members of the U.S. maritime industry noted the continuing 
economic pressure on the U.S. oceangoing merchant fleet and commercial 
shipbuilding industry. Comments were submitted calling for reduction of 
the cost disadvantage attributed to Coast Guard inspection and 
certification of U.S. merchant vessels in order to improve the 
international competitiveness of the U.S. merchant fleet.
    In order to address these concerns, the Coast Guard sought a means 
to alleviate the cost burdens on the maritime industry that resulted 
from the Coast Guard inspection program. The Coast Guard has had 
authority under 46 U.S.C. 3116 to rely on reports, documents and 
certificates issued by the American Bureau of Shipping (ABS) in 
carrying out its responsibilities for safety of U.S. merchant vessels 
and to delegate to ABS the inspection or examination of these vessels. 
The Coast Guard had in fact delegated to ABS the authority to issue 
certain certificates required by international conventions such as the 
International Convention for the Safety of Life at Sea, as amended, 
(SOLAS) Cargo Ship Safety Construction Certificate. Compliance with 
these standards is required for oceangoing vessels, i.e. vessels 
engaged in trading with foreign countries. Additionally, insurance 
companies require that, before a vessel is insured, it be classed. This 
means that a classification society must survey a vessel for compliance 
with its class rules. Class rules are rules developed by the particular 
classification society to

[[Page 68511]]

cover design, construction and safety of vessels. To ensure compliance 
with these class rules and with international standards, classification 
societies perform surveys on vessels using qualified marine surveyors. 
Many of the items examined by the classification society surveyors are 
the same as those examined by Coast Guard marine inspectors in their 
inspections for certification.
    Thus, there is duplication of effort involving safety of vessels 
between the Coast Guard and the ABS that results in extra costs to U.S. 
vessel owners. In light of the authority in 46 U.S.C. 3316 to delegate 
to ABS, the Coast Guard, in order to address the concerns of the vessel 
owners regarding these costs, examined the feasibility of an 
alternative to the current situation that would avoid the duplication 
involved between ABS and the Coast Guard. A joint Coast Guard/ABS task 
force compared the Coast Guard requirements in the Code of Federal 
Regulations (CFR) to the class requirements in ABS class rules, SOLAS, 
and the International Convention for the Prevention of Pollution from 
Ships, as amended, (MARPOL 73/78) concerning the design, construction 
and safety systems for oceangoing merchant vessels. The purpose of this 
comparison was to identify redundancies between the requirements and to 
determine if the class and international requirements, which U.S. 
vessels must currently comply with, could be used in place of Coast 
Guard regulatory requirements. The standard used was whether compliance 
with the class and international standards would achieve a level of 
safety equivalent to compliance with Coast Guard regulatory 
requirements.
    The task force determined that many Coast Guard regulatory 
requirements could be satisfied by certification of compliance with ABS 
classification rules, SOLAS, MARPOL 73/78, or combination of the three. 
This led to the development of a U.S. Supplement to the ABS 
classification rules. This supplement addresses those areas where 
current Coast Guard requirements are not embodied by either ABS 
classification rules or international conventions.
    The Coast Guard concluded that the design requirements and survey 
provisions of ABS classification rules, applicable international 
conventions and the U.S. Supplement to the ABS classification rules 
provide a level of safety equivalent to corresponding Federal 
regulations.
    As a result of this effort, the ACP was developed to reduce 
redundant regulatory efforts without jeopardizing safety. The Coast 
Guard expects that, under the ACP, vessel owners and operators will 
have reduced vessel down time, greater flexibility in scheduling 
inspections, and greater flexibility in meeting required standards.
    The Coast Guard is conducting an ACP pilot program, which was 
announced by the Federal Register notice of February 3, 1995 (60 FR 
6687). The purpose of the pilot program is to test and evaluate the 
standards and procedures that have been developed for the ACP. The 
Coast Guard plans to conclude this pilot program and fully implement 
the ACP on July 31, 1997.

Notice of Proposed Rulemaking

    On June 22, 1995, the Coast Guard published a notice of proposed 
rulemaking (NPRM) entitled ``Alternate compliance via Recognized 
Classification Society and U.S. Supplement to Rules'' in the Federal 
Register (60 FR 32478). The NPRM proposed regulatory changes to allow 
owners, operators, shipbuilders, and designers of U.S. flagged tank 
vessels, passenger vessels, cargo vessels, miscellaneous vessels and 
mobile offshore drilling units to use the services of a recognized 
classification society to conduct inspection and plan review functions 
now performed by the Coast Guard.
    The NPRM proposed establishment of the ACP through addition of new 
sections in 46 CFR parts 31 (31.01-3), 71 (71.15-5), 91 (91.15-5), and 
107 (107.205). These sections would allow the owner or operator of a 
vessel to submit the vessel for inspection by a recognized 
classification society. The classification society would survey the 
vessel and document compliance with applicable international 
requirements, class rules and its U.S. supplement. The cognizant Coast 
Guard Officer-in-Charge, Marine Inspection could then issue a 
certificate of inspection based upon the classification society's 
reports documenting that the vessel is classed and that it complies 
with all applicable requirements.
    Additionally, the NPRM proposed new sections in 46 CFR parts 30 
(30.01-4), 70(70.01-10) and 90 (90.01-10) to incorporate by reference 
the ABS Class Rules for Building and Classing Steel Vessels, 1996, and 
the ABS U.S. Supplement to Class Rules for Building and Classing Steel 
Vessels, 1996. When developed, the ABW U.S. Supplement to Class Rules 
for Building and Classing Mobile Offshore Drilling Units will be added 
to the existing incorporation by reference provisions in 46 CFR 
107.115.

Overview of Interim Rule

    This rule is published as an interim rule and is effective on the 
date of publication except for enrollment of existing vessels into the 
ACP. The effective date for application of the ACP to existing vessels, 
except for those currently involved in the pilot program, will be 
delayed until July 31, 1997 in order to allow the time necessary for 
completion of the ACP pilot program and the required training of Coast 
Guard personnel.
    This interim rule modifies the NPRM in several areas. Changes to 
the NPRM are based on public comments received and recent changes to 
U.S. law allowing delegation of U.S. statutory authority to inspect and 
conduct plan approval to foreign classification societies. Changes to 
the NPRM are explained in this preamble.
    Additionally, this interim rule establishes a new Part 8 in 46 CFR. 
This new part, entitled, ``Vessel Inspection Alternatives'', contains 
regulations regarding the ACP, recognition of classification societies, 
and future regulations regarding other vessel inspection alternatives.

Coast Guard Recognition and Authorization of a Classification Society

    Until the passage of the 1996 Coast Guard Authorization Act (Pub. 
L. 104-324, 110 Stat. 3901), the Coast Guard could only delegate marine 
safety functions related to vessel plan review and inspection to the 
ABS or a similar U.S. classification society. Section 607 of Pub. L. 
104-324 amended 46 U.S.C. 3316 to allow delegation of these functions 
to a classification society based in a foreign country. This new 
authority increases the number of classification societies that may be 
authorized to review and approve plans and to conduct vessel 
inspections and examinations on behalf of the Coast Guard. This also 
means that other classification societies may be utilized in a manner 
similar to the ABS under the ACP. But before any classification society 
can be delegated authority under this amendment to act on behalf of the 
Coast Guard for any purpose, the statute requires that the 
classification society be recognized by the Coast Guard. Thus, the 
Coast Guard is adopting a structured process to recognize 
classification societies other than the ABS for the delegation of 
marine safety functions.
    Ship structural design has traditionally been covered by 
classification society rules. The fundamental motivation for the 
creation of classification societies was to meet

[[Page 68512]]

the need of hull underwriters to determine structural fitness before 
providing insurance coverage. Over time, and primarily based on service 
experience, some classification societies have developed, and continued 
to refine, the ``rules'' that address hull structural design.
    Classification societies have expanded their services beyond ship 
structural design, analysis, and inspection to include various 
functions delegated to them on behalf of maritime administrations to 
document compliance with international regulations pertaining to other 
aspects of ship design and operations. Currently, most classification 
societies provide documentation of vessel's structural and mechanical 
``fitness-for-service'', a service used by owners in obtaining 
insurance.
    The Coast Guard will use the term ``recognized'' to indicate that a 
classification society has met minimum standards which address general 
characteristics and performance of a classification society. Achieving 
the status of ``recognized classification society'' will not, in 
itself, indicate any specific delegation of authority to the 
classification society by the Coast Guard. The Coast Guard will use the 
term ``authorized'' to indicate that a recognized classification 
society has been delegated the authority to conduct a specific marine 
safety function such as plan review, vessel inspection, or insurance of 
an international convention certificate. This approach will provide the 
necessary flexibility to accommodate determinations of reciprocity and 
individual classification society capabilities.
    The terms used in the NPRM regarding classification society status 
have been modified to reflect this approach. A new section 8.100 
defines these terms to clarify that a recognized classification society 
must receive authorization to conduct specific delegated functions.

Reciprocity (Section 8.120)

    Section 607 of the 1996 Coast Guard Authorization Act amends 46 
U.S.C. Sec. 3316 by stating that delegations may be made to foreign 
classification societies only to the extent that the foreign country in 
which the society is headquartered delegates authority to the ABS and 
provides access to ABS to inspect, certify and provide related services 
to vessels flagged by that country. Thus, the Coast Guard will not 
consider any request to delegate authority until the conditions of 
reciprocity have been demonstrated and verified. Additionally, the 
Coast Guard may not evaluate a classification society for recognition 
until the conditions of reciprocity have been demonstrated and verified 
for at lest one of the delegations of authority being sought by the 
classification society.
    There is no reciprocity clause associated with delegation of Load 
Line certification under 46 U.S.C. 5107 or Tonnage certification under 
46 U.S.C. 14103.

Recognition of a Classification Society (Section 8.220)

    A classification society must be recognized by the Coast Guard in 
order to be eligible to receive statutory authority delegated by the 
Coast Guard. This includes authority delegated under the ACP.
    A classification society that applies for recognition, and is found 
to meet the criteria for recognition, will be notified in writing by 
the Commandant.
    If the Coast Guard determines that a classification society does 
not meet the criteria for recognition, the reasons for this 
determination will be provided. A classification society may reapply 
for recognition when it complies with the criteria for recognition set 
forth in the regulation.

Minimum Standards for a Recognized Classification Society (Section 
8.230)

    In order to become recognized, a classification society must meet 
the Coast Guard's minimum standards for a recognized classification 
society established in this rule. In developing these minimum 
standards, the Coast Guard reviewed several international standards 
which address the quality and capability of a classification society. 
The standards evaluated by the Coast Guard for this purpose were: 
International Maritime Organization (IMO) Resolution A.739(18), 
Guidelines for the Authorization of Organizations Acting on Behalf of 
the Administration; European Communities Council Directive 94/57/EC; 
and the membership conditions of the International Association of 
Classification Societies. The Coast Guard's options were to either 
invoke the requirements of these standards through an Incorporation by 
Reference citation or include selected portions in the text of this 
rule. The Coast Guard decided that the existing criteria were not 
completely satisfactory and chose to include selected portions, with 
some modification, in the rule.
    The Coast Guard has incorporated classification society 
performance, as indicated by its record under the Coast Guard Port 
State Control Program, as an element of the minimum standards for 
classification society recognition under this rulemaking. The record of 
a particular classification society regarding detention of vessels 
classed or certificated by the society is one of the factors considered 
in determining boarding priorities for vessels calling in the U.S. This 
record represents a key measurement of the current performance of a 
classification society. Evaluation of classification society 
performance under the Coast Guard Port State Control Program is 
deceived in a report to the U.S. Congress entitled Port State Control, 
Evaluation of Classification Society Performance, dated May 13, 1996. A 
copy of this report is available in the docket for inspection or 
copying where indicated under ``ADDRESSES.''
    It should be noted that there is a fundamental difference between 
the Coast Guard's recognition of a classification society for the 
delegation of authority under this rulemaking and any recognition 
issued previously under the Coast Guard's Port State Control Program 
indicating that the society met the requirements of IMO Resolution 
A.739(18). Classification societies found to meet this standard for the 
purposes of the Port State Control Program were sent letters indicating 
this. The Coast Guard's recognition of a classification society as 
meeting IMO Resolution A.739(18) for the purposes of the Port State 
Control targeting scheme does not constitute recognition for the 
purpose of delegation of Coast Guard vessel safety authorities.

Application for Recognition (Section 8.240)

    A classification society must apply for recognition in writing to 
the Commandant (G-MSE). Applications should indicate which specific 
authority the classification society seeks to have delegated to it by 
the Coast Guard. The classification society must provide documentation 
with this application to establish that the conditions of reciprocity 
have been met for the authority sought to be delegated. Upon 
certification from the Coast Guard that the conditions of reciprocity 
have been met, the requesting classification society must submit 
documentation to establish that they meet the Coast Guard's minimum 
standards for a recognized classification society.

Revocation of Recognition (Section 8.260)

    A recognized classification society which fails to maintain the 
minimum standards will be reevaluated for revocation of its recognized 
status.

[[Page 68513]]

Authorization to Perform Delegated Functions

    The Coast Guard may authorize a recognized classification society 
to perform delegated functions after it has determined that the 
classification society is fully capable of conducting that function. 
This determination will include a review of applicable classification 
society rules and survey procedures. The Coats Guard will review the 
submitted material in order to determine whether delegation of 
authority to the particular classification society will result in the 
equivalent level of safety as that achieved through traditional Coast 
Guard performance of that function. When the classification society 
seeks ACP delegation, the classification society's class rules will be 
reviewed, and a U.S. Supplement to the classification society's class 
rules developed, as has been done with the ABS.
    If the Coast Guard determines that the classification society's 
rules or procedures are not satisfactory, the requested delegation will 
not be granted. The Coast Guard will provide information to the 
applicant on deficiencies identified in rules or procedures. A 
classification society may reapply for the requested authorization 
after correction of any deficiencies in its rules or procedures.
    Classification society authorization to perform delegated functions 
will be promulgated through an authorization agreement.
    Existing Outlines of Cooperation between the Coast Guard and 
classification societies regarding passenger ship control verification 
are not affected by this rulemaking.

Authorization to Issue International Certificates (Section 8.320)

    A recognized classification society will be eligible to receive 
authorization to issue certain international convention certificates on 
behalf of the Coast Guard. The Coast Guard may delegate the following 
international convention certifications to a recognized classification 
society: International Load Line Certificate; International Tonnage 
Certificate; SOLAS Cargo Ship Safety Construction Certificate; SOLAS 
Cargo Ship Safety Equipment Certificate; SOLAS Certificate of Fitness 
for the Carriage of Dangerous Chemicals in Bulk; SOLAS Certificate of 
Fitness for the Carriage of Liquefied Gasses in Bulk; SOLAS Mobile 
Offshore Drilling Unit Safety Certificate; MARPOL 73/78 International 
Oil Pollution Prevention Certificate; and MARPOL 73/78 International 
Oil Pollution Prevention Certificate for the Carriage of Noxious Liquid 
Substances in Bulk.
    The Coast Guard Authorization Act of 1996 authorizes the Coast 
Guard to delegate International Safety Management (ISM) Code 
certification to organizations including classification societies. The 
procedures for this delegation will be established in separate 
rulemaking.

Authorization for Participation in the Alternate Compliance Program 
(Section 8.420)

    Because of the comprehensive nature of ACP delegation, the Coast 
Guard must ensure that a recognized classification society has adequate 
experience with exercising delegated authority on behalf of the Coast 
Guard. A classification society will be eligible to participate in the 
ACP only after it has performed a delegated function related to general 
vessel safety assessment for a period of two years. For the purposes of 
this interim rule, a delegated function related to general vessel 
safety assessment is issuance of the SOLAS Cargo Ship Safety 
Construction Certificate or issuance of the SOLAS Cargo Ship Safety 
Equipment Certificate. The Coast Guard believes this evaluation period 
is necessary to assess the capabilities and performance of a 
classification society. The Coast Guard requests comments on the 
requirement for this evaluation period.
    If, after this evaluation period, the Coast Guard finds that the 
classification society has not performed satisfactorily or lacks 
adequate experience, the classification society will not be eligible to 
receive ACP delegation. The Coast Guard will provide the reason for 
this determination to the classification society.

U.S. Supplement to Class Rules (Section 8.430)

    If the Coast Guard finds that a classification society is eligible 
to receive ACP delegation, the classification society will be required 
to prepare a U.S. Supplement to its rules. This supplement will address 
areas in which U.S. marine safety regulations are not adequately 
covered by the classification society's rules and applicable 
international regulations.

Agreement conditions (Section 8.130)

    The Coast Guard will enter into a written authorization agreement 
with a recognized classification society that meets the standards 
necessary to receive delegation of authority. The agreement will define 
the scope, terms, conditions and requirements of that delegation.
    Any authorization agreement between the Coast Guard and a 
recognized classification society must include the agreement conditions 
established in this rule. Development of these conditions included 
review of Appendix 2 of IMO Resolution A.739(18), Guidelines for the 
Authorization of Organizations Acting on Behalf of the Administration, 
and the Model Agreement for the Authorization of Recognized 
Organizations Acting on Behalf of the Administration, developed by the 
IMO Flag State Implementation Subcommittee.

Termination of Authorizations (Sections 8.330 and 8.450)

    Loss of recognized status for a classification society will result 
in termination of any authorization agreement with the Coast Guard.
    A certificate issued by a classification society that has had its 
authorization agreement terminated will remain valid until the next 
classification society survey associated with that certificate is 
required or until the certificate expires.
    An owner of any vessel enrolled in the ACP and classed by a 
classification society which loses its authority to participate in the 
ACP will either have to reclass the vessel with a different 
classification society that is authorized to participate in the ACP, or 
disenroll the vessel from the ACP.

Acceptance of Plan Review and Inspection Tasks Performed by a 
Recognized Classification Society

    The Coast Guard may modify Navigation and Vessel Inspection Circuit 
(NVIC) 10-82, Acceptance of Plan Review and Inspection Tasks Performed 
by the American Bureau of Shipping for New Construction or Major 
Modification of U.S. Flag Vessels, to include other recognized 
classification societies. This determination will be based on a 
classification society's authorization to perform plan review and 
inspection functions, delegated under this rulemaking, that are similar 
to the tasks addressed in NVIC 10-82.

Acceptance of Standards and Functions Delegated Under Existing 
Regulations (Section 8.250)

    Existing Coast Guard regulations contain provisions for acceptance 
of the standards of recognized classification societies, and for the 
delegation of some marine safety functions to recognized classification 
societies. Classification society rules will only be accepted as Coast 
Guard standards when that classification society has received 
authorization to conduct the related function. A recognized 
classification society is not permitted to conduct any

[[Page 68514]]

delegated function until it receives a separate written authorization 
from the Commandant to conduct that function.

Discussion of comments and changes

    The Coast Guard received nine comment letters to the NPRM published 
on June 22, 1995. No public hearing was requested and none was held. 
The following discussion contains an analysis of comments received and 
an explanation of any changes made in the rule.

Regulatory Reform

    Three comments indicated the NPRM does not go far enough toward 
eliminating the gap between U.S. regulatory standards and those of 
other flag states. One comment stated that, in development of the U.S. 
Supplement, the Coast Guard did not purge the current regulations of 
unique requirements in areas in which adequate international standards 
exist. One comment expressed concern that recent regulatory action and 
legislation leave U.S. flag operators at a significant cost 
disadvantage with respect to vessel rules.
    The ACP is one of several elements of the Coast Guard's regulatory 
reform initiative. The intent of this rulemaking on the ACP and 
recognition of classification societies is to provide a compliance 
option to owners and operators of vessels which are classed by 
recognized classification societies and that have SOLAS, MARPOL 73/78, 
and other applicable international certificates. The ACP will reduce 
the current regulatory burden by eliminating the requirement for 
duplicative plan review and inspection for certain vessels by both a 
classification society and the Coast Guard.
    Reducing and eventually eliminating the gap between U.S. 
requirements and international standards is a primary goal of Coast 
Guard regulatory reform. There are a series of ongoing and recently 
completed rulemaking projects which work toward this goal. These 
projects eliminate obsolete or unnecessary Coast Guard regulations and 
harmonize Coast Guard regulations with international standards.
    Because these regulatory reform projects focus on elimination of 
many regulations which are unique to U.S. flag vessels, they will 
likely reduce the areas in which gaps exist that need to be covered by 
U.S. supplements to classification society class rules under the ACP. 
However, the U.S. supplement to class rules also contains U.S. 
interpretations of international convention regulations. This portion 
of the supplement is affected by the proceedings of the IMO as well as 
by the Coast Guard regulatory reform initiative. It is, therefore, 
unlikely that the need for a U.S. supplement under the ACP will be 
entirely eliminated.
    Two comments questioned the use of U.S. standards for vessel 
equipment as the basis for equivalency determinations under the ACP. 
One comment stated that this could result in rejection of equipment for 
vessels participating in the ACP that would otherwise be acceptable for 
foreign flag vessels under SOLAS, MARPOL 73/78, and ABS class rules. 
The ACP is based on a determination of vessel equivalency between the 
standards that apply to a vessel enrolled in the ACP and those that 
apply to other similar vessels certificated by the Coast Guard. As 
discussed above, harmonization with international standards is a 
principle goal of the Coast Guard regulatory reform initiative. 
Completion of this initiative should eliminate the adverse consequences 
raised by this comment.
    One comment suggested that consideration be given to elimination of 
the requirement for a Certificate of Inspection (COI). The Coast Guard 
considered this during the initial development of the ACP and decided 
against it. The COI serves an important purpose in addition to serving 
as evidence of compliance with vessel inspection requirements because 
it also establishes specific vessel manning requirements and 
operational restrictions.
    One comment stated this rulemaking was consistent with the goals of 
the President's National Performance Review and should reduce the 
inspection burden on owners and operators. The Coast Guard agrees with 
this comment. Goals expressed in the President's National Performance 
Review served as a basis for development of the ACP, which will reduce 
the burden of compliance with Coast Guard regulations.

Authorization of Classification Societies

    Four comments supported Coast Guard delegation to classification 
societies other than the ABS under the ACP and, thereby, broaden the 
choices of classification societies that would be available to a 
participating vessel owner. One comment noted that the criteria for 
classification society eligibility for this program has not been 
published, and suggested stringent parameters to include criteria 
covering size, rules, international network, documented quality, and 
technical competence in general.
    The Coast Guard Authorization Act of 1996, Pub. L. 104-324, 110 
Stat. 3901, broadens Coast Guard authority to delegate by including 
foreign classification societies. This allows the Coast Guard to expand 
the ACP to include foreign classification societies which meet the 
criteria for recognized classification societies and the requirements 
for authorization of the delegations necessary to participate in the 
ACP. The Coast Guard agrees with the comment that criteria for 
recognition should be very stringent and agrees with the suggested 
parameters. This rulemking establishes the criteria as suggested.

Conducting the Program

    One comment stated that the success of the program is highly 
dependent on the Coast Guard's role as auditor. The Coast Guard agrees 
with this comment and recognizes that the role of the Coast Guard 
auditor under the ACP is substantially different from the traditional 
role of the Coast Guard marine inspector. The Coast Guard is redefining 
the role of the marine inspector in order to address major changes such 
as the ACP. These changes will be reflected in new Coast Guard 
procedures and training for marine inspectors.
    One comment stated that older U.S. flag ships, which are not 
required to meet all of the provisions of SOLAS, are not addressed in 
the proposed rulemaking and questioned if this meant that only recently 
built ships or future new buildings will be able to enroll in the ACP. 
Nonapplicability of specific SOLAS regulations based on vessel age does 
not preclude vessel enrollment in the ACP. SOLAS regulations which do 
not apply to a vessel due to its age will not be applied to that vessel 
by virtue of the fact that it is enrolled in the ACP.
    One comment stated that further information on the program should 
be distributed to candidates through seminars or meetings. The Coast 
Guard has disseminated information on the ACP through several major 
marine industry publications, the Federal Register, and Coast Guard 
publications. In addition, the Coast Guard is conducting a pilot 
program for the ACP. For these reasons, the Coast Guard does not see a 
need for a seminar or public meeting to publicize the ACP.
    One comment stated that the Coast Guard should not totally remove 
itself from vessel inspections, and that the ACP should remain an 
option and not a requirement. The ACP is an optional program designed 
to provide an alternative means for vessel certification. The 
traditional process of

[[Page 68515]]

Coast Guard plan review and vessel inspection will remain available to 
all vessel owners and operators.
    Two comments addressed Coast Guard oversight of this program and of 
classification society performance. An oversight program was developed 
as part of the ACP and published in COMMANDANT INSTRUCTION 16711.17, 
Oversight of the U.S. Coast Guard's ABS Based Alternate Compliance 
Program. Coast Guard oversight ensures that the classification 
societies perform their duties and responsibilities in accordance with 
the terms and conditions of their authorization agreement, and provides 
a means to monitor the performance of plan review and vessel inspection 
conducted on behalf of the Coast Guard. The Coast Guard will continue 
to board vessels participating in the ACP to conduct annual 
inspections. Coast Guard boardings will cover those requirements and 
activities not delegated to the classification societies. For example, 
boardings will be conducted by the Coast Guard to verify crew 
competency in emergency drills and to assess the vessel's condition. 
Additionally, Coast Guard oversight will ensure that the vessels 
participating in the ACP do not experience any degradation in the level 
of safety demonstrated by comparable vessels that continue to be 
inspected by the Coast Guard under vessel inspection regulations. Upon 
completion of the ACP pilot program, the oversight program will be 
evaluated and modified as necessary.
    One comment recommended that more flexibility be given to the Coast 
Guard Officer in Charge, Marine Inspection (OCMI) concerning evaluation 
of the severity of inspection deficiencies that would preclude issuance 
of a COI under the ACP. The Coast Guard agrees with this comment and 
has modified the regulation to give greater discretion to the OCMI to 
evaluate the severity of deficiencies that may allow issuance of a COI. 
The revised text is in Section 8.440(d). Guidance is provided to Coast 
Guard OCMIs in COMMANDANT INSTRUCTION 16711.18, Procedures for Issuing 
COIs to vessels enrolled in the U.S. Coast Guard's ABS Based Alternate 
Compliance Program. This guidance allows OCMIs to accept the terms and 
conditions of classification society outstanding requirements leading 
to issuance of a COI unless they conflict with applicable U.S. law, or 
they present a direct and immediate threat to the vessel's crew, the 
safety of navigation, or the marine environment.
    One comment suggested the Coast Guard add the IMO Mobile Offshore 
Drilling Unit (MODU) Safety Certificate to the list of the 
international certificates authorized to be issued under the ACP. The 
Coast Guard agrees with this comment and has included issuance of the 
IMO MODU Safety Certificate on the list of functions which may be 
delegated to a recognized classification society. Additionally, the ABS 
is currently developing a U.S. MODU Supplement to ABS Class Rules. Upon 
completion and Coast Guard acceptance of this supplement and related 
survey procedures, the ABS will be authorized to conduct ACP functions 
on MODUs.
    One comment questioned whether the Coast Guard could maintain the 
technical expertise necessary to provide adequate oversight of 
classification societies under the ACP considering the reduction in 
field level training and vessel inspections opportunities that will 
likely result from the ACP. The Coast Guard recognizes the need to 
maintain the technical expertise of those individuals who will be 
charged with performing this oversight role, its marine inspectors. The 
Coast Guard will maintain its capabilities to perform all of the 
functions it now performs related to vessel inspection and 
certification. In addition to certification of U.S. flag vessels, 
marine inspectors with technical expertise are also currently required 
for an effective Port State Control Program. The importance of Coast 
Guard Port State Control responsibilities ensures a continuing need for 
training of, and technical expertise on the part of, Coast Guard marine 
inspectors.
    One comment questioned the process for obtaining an equivalency 
determination for foreign equipment from the ABS under the ACP. The 
procedure for ABS equivalency determinations for vessels enrolled in 
the ACP is discussed in NVIC 2-95, U.S. Coast Guard's ABS Based 
Alternate Compliance Program.

User Fees

    Two comments addressed reduction of user fees for vessels 
participating in the program. One comment recommended that information 
obtained from the pilot program be used to promulgate new user fees 
because the anticipated reduction in Coast Guard inspection involvement 
for vessels under the ACP should reduce user fees proportionately.
    The Coast Guard will modify current vessel inspection user fees 
based on information gathered during the ACP pilot program. Any changes 
to user fee regulations for vessels enrolled in the ACP will be 
promulgated in a separate rulemaking.

The Pilot Program

    Two comments recommended that information obtained from the pilot 
program be published and used to identify required changes to the 
program. The Coast Guard agrees with these comments. The Coast Guard is 
collecting data on the ACP pilot program in order to assess the impact 
and effectiveness of the ACP. Results of the pilot program will be 
compiled in a final report which will be published in the Federal 
Register.

Economic Impact

    One comment stated that if the rule were implemented and the 
surveys were properly planned, the overall cost of inspections and 
certification for U.S. shipowners should decrease. The Coast Guard 
agrees with this comment. One of the benefits intended to be provided 
through the ACP is the reduction of vessel down-time necessary to 
accommodate both Coast Guard inspections for certification and 
classification society surveys.
    One comment stated that this program could have a positive economic 
effect for those operators who choose to participate. One comment 
questioned the economic benefit to the shipbuilder and ship owner 
during the ship acquisition phase and contended that the increase in 
ABS involvement would be at an increased cost to the shipbuilder. This 
comment also stated that a benefit of the ACP would be an improvement 
in the review process response time. The ACP is intended to be a 
voluntary alternative compliance method available to the U.S. maritime 
industry. Individual operators must evaluate their individual benefits 
of participation in this program.
    One comment stated that the additional cost for the classification 
society surveyor to conduct inspections for the Coast Guard should be 
substantially less than the $5,000 estimated in the NPRM, and requested 
specific information on the projected additional effort and fees 
anticipated by the classification society. The Coast Guard is not 
involved with the setting of fees for ACP or any other functions 
delegated to classification societies. Classification society fee 
information is available from each classification society.
    One comment stated that if there were no U.S. Supplement then, 
theoretically, there should be no additional cost. As discussed above, 
other, ongoing and recently completed regulatory reform

[[Page 68516]]

rulemaking projects work toward eliminating unique Coast Guard 
regulations. These regulatory reform rulemakings that harmonize U.S. 
vessel regulations with international standards will remove the need to 
cover some of the areas that would currently be required to be included 
in the supplements to classification society class rules under the ACP. 
U.S. interpretations to international conventions, however, will 
continue to be covered in classification society supplements. 
Additionally, unique U.S. requirements required by U.S. statute will 
also be included in classification society supplements.

Specific Provisions

    One comment noted that Section 91.15-5(b) of the NPRM prohibited 
vessels subject to Coast Guard intervention or enforcement action for 
violations of 46 CFR, Chapter I, from participating in the ACP and that 
this prohibition was not included in similar sections for other vessel 
types. This comment urged removal of this restriction. The Coast Guard 
agrees with this comment and has removed the restriction.

Incorporation by Reference

    The Director of the Federal Register has approved the material in 
Sec. 8.110: ABS Rules for Building and Classing Steel Vessels, 1996, 
U.S. Supplement to ABS Rules for Steel Vessels for Vessels on 
International Voyages, October 21, 1996, and ANSI/ASQC Q9001-1994, 
Quality Systems--Model for Quality Assurance in Design, Development, 
Production, Installation, and Servicing, 1994. Copies of the material 
area available for inspection at Commandant (G-MSE-1), U.S. Coast Guard 
Headquarters, 2100 Second Street SW., Washington, DC 20593-0001. Copies 
of the material are available from the sources listed in Sec. 8.110.

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. flagged vessels. Currently, 549 U.S. 
vessels may be eligible to participate in this optional ACP. The Coast 
Guard estimates that while a vessel owner may have to pay an additional 
$5,000 in classification society fees for functions presently preformed 
by the Coast Guard, the savings in design, construction and operating 
costs will recover this expense many times over during the lifetime of 
the vessel. Moreover, ships built and maintained to SOLAS, MARPOL 73/
78, recognized classification society rules and accepted U.S. 
supplement are expected to experience greater competitiveness in the 
worldwide shipping market.
    Additionally, streamlining the certification process will reduce 
time frames for Coast Guard involvement in the Certificate of 
Inspection process from an average of over 50 hours to 10 hours or 
less. Because the vessel is already inspected by the classification 
society, this program will reduce duplication of effort, decrease 
vessel ``down time'' and permit greater scheduling flexibility. Lower 
construction and operating costs, greater flexibility for the vessel in 
the global market and additional availability for vessel hire will 
offset the costs incurred through the alternate plan review and 
inspection process utilizing a recognized classification society. The 
Coast Guard specifically solicits comments on potential costs, savings 
and benefits.

Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the 
Coast Guard must consider the economic impact on small entities of a 
rule for which a general notice of proposed rulemaking is required. 
``Small entities'' may include (1) small business and not-for-profit 
organizations that are independently owned and operated and are not 
dominant in their fields and (2) governmental jurisdictions with 
populations of less than 50,000. This rule change provides an 
alternative to complying with existing regulations. The Coast Guard 
believes this rulemaking will have a positive economic impact if the 
owner chooses to participate in the ACP. Because of the current 
structure of the industry, it is not expected that any small businesses 
will be affected by the rule. However, under Section 601 of the 
Regulatory Flexibility Act, the Coast Guard has provided a flexible 
approach which could benefit any small businesses which choose to enter 
this industry. This rulemaking will have no impact on vessel owners who 
do not choose to participate in this program. Therefore, the Coast 
Guard certifies that under 5 U.S.C. 605(b) this rule will not have a 
significant economic impact on a substantial number of small entities.

Collection of Information

    Under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.), the 
Office of Management and Budget (OMB) reviews each rule that contains a 
collection of information requirement to determine whether the 
practical value of the information is worth the burden imposed by its 
collection. Collection of information requirements include reporting, 
recordkeeping, notification and other similar requirements.
    This rule contains collection of information requirements in the 
following sections: Secs. 31.01-3, 71.15-5, 91.15-5, and 107.205. The 
following particulars apply:
    DOT No.: 2115-0626.
    OMB Control No.: 2115-0626.
    Administration: U.S. Coast Guard.
    Title: Alternate Compliance via Recognized Classification Society 
and U.S. Supplement to Rules.
    Need for Information: Vessel inspection reports are needed to 
document the compliance of a vessel with recognized classification 
society rules, the accepted U.S. supplement to rules, and applicable 
international maritime safety and marine environmental conventions. 
Classification societies recognized to participate in this program will 
submit copies of reports they routinely prepare to the Coast Guard. 
PROPOSED USE OF INFORMATION: The information will be used by the Coast 
Guard to determine if the vessel is in compliance with the requirements 
necessary for issuance of a Certificate of Inspection.
    Frequency of Response: Reports are required whenever the recognized 
classification society inspects a vessel on behalf of the Coast Guard. 
This is generally for the initial issuance of the Certificate of 
Inspection (COI) and whenever the COI must be renewed. Renewal periods 
for vessel Certificates of Inspection are not being changed by this 
proposal. For tank, cargo, and miscellaneous vessels this period is two 
years; for passenger vessels over 100 gross tons the renewal period is 
one year; and for mobile offshore drilling units the renewal period is 
two years. A separate legislative proposal currently exists that would 
harmonize inspection intervals with international requirements.
    Burden Estimate: There is no additional burden created by this

[[Page 68517]]

rulemaking. The required reports (120) are already being prepared in 
the course of business between the classification society and the 
vessel owner or operator. RESPONDENTS: The recognized classification 
societies. (60 vessels) FORM(S): None.
    Average Burden Hours Per Respondent: No additional burden is 
created by this rulemaking. The required reports (2 hours per vessel) 
are already being prepared in the course of business between the 
classification society and the vessel owner or operator.
    The Coast Guard has submitted the requirements to the OMB for 
review under section 3504(h) of the Paperwork Reduction Act (44 U.S.C. 
3501 et seq.), and OMB has approved them. The OMB approval number is 
OMB Control Number 2115-0626. Persons submitting comments on the 
requirements should submit their comments both to OMB and the Coast 
Guard where indicated under ``ADDRESSES.''

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 
committed to the Coast Guard by statute. Furthermore, since 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 
will preempt State action addressing the same matter.

Environment

    The Coast Guard considered the environmental impact of this rule 
and concluded that under paragraph 2.B.2 of Commandant Instruction 
M16475.1B, 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.
    Since the combination of classification society rules, applicable 
international conventions and the U.S. supplement to the rules have 
been determined to provide a level of safety equivalent to current 
Coast Guard regulations, the Coast Guard expects that this rulemaking 
will have no adverse environmental impact.

List of Subjects

46 CFR Part 8

    Administrative practice and procedure, Organization and functions 
(Government agencies), Reporting and recordkeeping requirements, 
Incorporation by reference.

46 CFR Part 31

    Cargo vessels, Marine safety, Reporting and recordkeeping 
requirements, Incorporation by reference.

46 CFR Part 71

    Marine safety, Passenger vessels, Reporting and recordkeeping 
requirements, Incorporation by reference.

46 CFR Part 91

    Cargo vessels, Marine safety, Reporting and recordkeeping 
requirements, Incorporation by reference.

46 CFR Part 107

    Marine safety, Oil and gas exploration, Reporting and recordkeeping 
requirements, Vessels, Incorporation by reference.

    For the reasons set out in the preamble, under the authority of 46 
U.S.C. 3306, the Coast Guard amends 46 CFR chapter I as follows:

PART 8--[ADDED]

    1. Part 8 is added to read as follows:

PART 8--VESSEL INSPECTION ALTERNATIVES

Subpart A--General

Sec.
8.100  Definitions.
8.110  Incorporation by reference.
8.120  Reciprocity.
8.130  Agreement conditions.

Subpart B--Recognition of a Classification Society

8.200  Purpose.
8.210  Applicability.
8.220  Recognition of a classification society.
8.230  Minimum standards for a recognized classification society.
8.240  Application for recognition.
8.250  Acceptance of standards and functions delegated under 
existing regulations.
8.260  Revocation of classification society recognition.

Subpart C--International Convention Certificate Issuance.

8.300  Purpose.
8.310  Applicability.
8.320  Classification society authorization to issue international 
certificates.
8.330  Termination of classification society authority.

Subpart D--Alternate Compliance Program.

8.400  Purpose.
8.410  Applicability.
8.420  Classification society authorization to participate in the 
Alternate Compliance Program.
8.430  U.S. Supplement to class rules.
8.440  Vessel enrollment in the Alternate Compliance Program.
8.450  Termination of classification society authority.

Authority: 46 U.S.C. 3306; 46 U.S.C. 3316, as amended by Sec. 607, 
Pub. L. 104-324, 110 Stat. 3901; 46 U.S.C. 3703; 49 CFR 1.45, 1.46.

Subpart A--General


Sec. 8.100  Definitions.

    Authorized Classification Society means a recognized classification 
society that has been delegated the authority to conduct certain 
functions and certifications on behalf of the Coast Guard.
    Class Rules means the standards developed and published by a 
classification society regarding the design, construction and 
certification of commercial vessels.
    Commandant means the Commandant of the Coast Guard.
    Delegated Function means a function related to Coast Guard 
commercial vessel inspection which has been delegated to a 
classification society. Delegated functions may include issuance of 
international convention certificates and participation in the 
Alternate Compliance Program under this part.
    Delegated Function Related to General Vessel Safety Assessment 
means issuance of the SOLAS Cargo Ship Safety Construction Certificate 
or issuance of the SOLAS Cargo Ship Safety Equipment Certificate.
    Gross Tons means vessel tonnage measured in accordance with the 
International Convention on Tonnage Measurement of Ships, 1969. Vessels 
not measured by this convention must be measured in accordance with the 
method utilized by the flag state administration of that vessel.
    MARPOL 73/78 means the International Convention for the Prevention 
of Pollution from Ships, 1973, as modified by the Protocol of 1978, as 
amended.
    Officer in Charge, Marine Inspection (OCMI) means any person from 
the civilian or military branch of the Coast Guard designated as such 
by the Commandant and who, under the superintendence and direction of 
the Coast Guard District Commander, is in charge of an inspection zone 
for the performance of duties with respect to the inspection, 
enforcement, and

[[Page 68518]]

administration of title 46, Revised Statutes, and acts amendatory 
thereof of supplemental thereto, and rules and regulations thereunder.
    Recognized Classification Society means the American Bureau of 
Shipping or other classification society recognized by the Commandant 
under this part.
    SOLAS means International Convention for the Safety of Life at Sea, 
1974, as amended.


Sec. 8.110  Incorporated by reference.

    (a) Certain material is incorporated by reference into this 
subchapter with the approval of the Director of the Federal Register 
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. All material is available for 
inspection 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, 2100 Second St., SW., Washington, 
DC 20593-0001, and is available from the source listed in paragraph (b) 
of this section.
    (b) The material incorporated by reference in this subchapter and 
the sections affected are as follows:

American Bureau of Shipping (ABS)

    Two World Trade Center, 106th Floor, New York, NY 10048.
    Rules for Building and Classing Steel Vessels, 1996--31.01-3(b), 
71.15-5(b), 91.15-5(b).
    U.S. Supplement to ABS Rules for Steel Vessels for Vessels on 
International Voyages, 21 October 1996--31.01-3(b), 71.15-5(b), 91.15-
5(b).

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--
8.230.


Sec. 8.120  Reciprocity.

    (a) The Commandant may delegate authority to a classification 
society that has its headquarters in a country other than the United 
States only to the extent that the flag state administration of that 
country delegates authority and provides access to the American Bureau 
of Shipping to inspect, certify and provide related services to vessels 
flagged by that country.
    (b) In order to demonstrate that the conditions described in 
paragraph (a) of this section are satisfied, a classification society 
must provide to the Coast Guard an affidavit from the government of the 
country that the classification society is headquartered in listing the 
authorizes delegated by the flag state administration of that country 
to the American Bureau of Shipping, and indicating any conditions 
related to the delegated authority.
    (c) The Commandant will not consider an application for 
authorization to perform a delegated function submitted under this part 
until the conditions described in paragraph (a) of this section are 
satisfied.
    (d) The Commandant will not evaluate a classification society for 
recognition until the conditions described in paragraph (a) of this 
section are satisfied for at least one of the authorized delegations 
being sought.
    (e) The Commandant may make a delegation regarding load lines under 
46 U.S.C. 5107 or measurement of vessels under 46 U.S.C. 14103 without 
regard to the conditions described in paragraph (a) of this section.


Sec. 8.130  Agreement conditions.

    (a) Delegated functions performed by, and statutory certificates 
issued by, an authorized classification society will be accepted as 
functions performed by, or certificates issued by, the Coast Guard, 
provided that the classification society maintains compliance with all 
provisions of its agreement with the Commandant. Any agreement between 
the Commandant and a recognized classification society authorizing the 
performance of delegated functions will be written and will require the 
classification society to comply with each of the following:
    (1) Issue any certificates related to a delegated function in the 
English language.
    (2) Maintain a corporate office in the United States that has 
adequate resources and staff to support all delegated functions and to 
maintain required associated records.
    (3) Maintain all records in the United States related to delegated 
functions conducted on behalf of the Coast Guard.
    (4) Make available to appropriate Coast Guard representatives 
vessel status information and records, including outstanding vessel 
deficiencies or classification society recommendations, in the English 
language, on all vessels for which the classification society has 
performed any delegated function on behalf of the coast Guard.
    (5) Report to the commandant (G-MOC) the names and official numbers 
of any vessels removed from class for which the classification society 
has performed any delegated function on behalf of the Coast Guard and 
include a description of the reason for the removal.
    (6) Report to the Commandant (G-MOC) all port state detentions on 
all vessels for which the classification society has performed any 
delegated function on behalf of the Coast Guard.
    (7) Annually provide the Commandant (G-MOC) with its register of 
classed vessels.
    (8) Ensure vessels meet all requirements for class of the accepting 
classification society prior to accepting vessels transferred from 
another classification society.
    (9) Suspend class for vessels that are overdue for special renewal 
or annual survey.
    (10) Attend any vessel for which the classification society has 
performed any delegated function on behalf of the Coast Guard at the 
request of the appropriate Coast Guard officials.
    (11) Honor appeal decisions made by the Commandant (G-MSE) or 
Commandant (G-MOC) on issues related to delegated functions.
    (12) Apply U.S. flag administration interpretations, when they 
exist, to international conventions for which the classification 
society has been delegated authority to certificate or perform other 
functions on behalf of the Coast Guard.
    (13) Obtain approval from the Commandant (G-MSE) prior to granting 
exemptions from the requirements of international conventions, class 
rules, and the U.S. supplement to class rules.
    (14) Make available to the Coast Guard all records, in the English 
language, related to equivalency determinations or approvals made in 
the course of delegated functions conducted on behalf of the Coast 
Guard.
    (15) Report to the Coast Guard all information specified in the 
agreement at the specified frequency and to the specified Coast Guard 
office or official.
    (16) Grant the Coast Guard access to all plans and documents, 
including reports on surveys, on the basis of which certificates are 
issued or endorsed by the classification society.
    (17) Identify a liaison representative to the Coast Guard.
    (18) Provide regulations, rules, instructions and report forms in 
the English language.
    (19) Allow the Commandant (G-M) to participate in the development 
of class rules.
    (20) Inform the Commandant (G-M) of all proposed changes to class 
rules.

[[Page 68519]]

    (21) Provide the Commandant (G-M) the opportunity to comment on any 
proposed changes to class rules and to respond to the classification 
society's disposition of the comments made by the Coast Guard.
    (22) Furnish information and required access to the Coast Guard to 
conduct oversight of the classification society's activities related to 
delegated functions conducted on behalf of the Coast Guard.
    (23) Allow the Coast Guard to accompany internal and external 
quality audits and provide written results of such audits to 
appropriate Coast Guard representatives.
    (24) Provide the Coast Guard access necessary to audit the 
authorized classification society to ensure that it continues to comply 
with the minimum standards for a recognized classification society.
    (25) Use only exclusive surveyors of that classification society to 
accomplish all work done on behalf of, or pursuant to any delegation 
from, the Coast Guard.
    (26) Allow its surveyors to participate in training with the Coast 
Guard regarding delegated functions.
    (b) Amendments to an agreement between the Coast Guard and an 
authorized classification society will become effective only after 
consultation and written agreement between parties.
    (c) Agreements may be terminated by one party only upon written 
notice to the other party. Termination will occur sixty days after 
written notice is given.

Subpart B--Recognition of a Classification Society


Sec. 8.200  Purpose.

    This subpart establishes criteria and procedures for vessel 
classification societies to obtain recognition from the Coast Guard. 
This recognition is necessary in order for a classification society to 
become authorized to perform vessel inspection and certification 
functions delegated by the Coast Guard as described in this part.


Sec. 8.210  Applicability.

    This subpart applies to all vessel classification societies seeking 
recognition by the Coast Guard.


Sec. 8.220  Recognition of a classification society.

    (a) A classification society must be recognized by the Commandant 
before it may receive statutory authority delegated by the Coast Guard.
    (b) In order to become recognized, a classification society must 
meet the requirements of Sec. 8.230.
    (c) A classification society found to meet the criteria for 
recognition will be notified in writing by the Commandant.
    (d) If the Coast Guard determines that a classification society 
does not meet the criteria for recognition, the Coast Guard will 
provide the reason for this determination.
    (e) A classification society may reapply for recognition upon 
correction of the deficiencies identified by the Coast Guard.


Sec. 8.230  Minimum standards for a recognized classification society.

    (a) In order to receive recognition by the Coast Guard a 
classification society must:
    (1) Establish that it has functioned as an international 
classification society for at least 30 years with its own class rules;
    (2) Establish that it has a history of appropriate corrective 
actions in addressing vessel casualties and cases of nonconformity with 
class rules;
    (3) Establish that it has a history of appropriate changes to class 
rules based on their application and the overall performance of its 
classed fleet;
    (4) Have a total classed tonnage of at least 10 million gross tons;
    (5) Have a classed fleet of at least 1,500 ocean-going vessels over 
100 gross tons;
    (6) Have a total classed tonnage of ocean-going vessels over 100 
gross tons totaling no less than 8 million gross tons;
    (7) Publish and maintain class rules in the English language for 
the design, construction and certification of ships and their 
associated essential engineering systems;
    (8) Maintain written survey procedures in the English language;
    (9) Have adequate resources, including research, technical, and 
managerial staff, to ensure appropriate updating and maintaining of 
class rules and procedures;
    (10) Have adequate resources and geographical coverage to carry out 
all plan review and vessel survey activities associated with delegated 
functions as well as classification society requirements;
    (11) Employ a minimum of 150 exclusive surveyors;
    (12) Have adequate criteria for hiring and qualifying surveyors and 
technical staff;
    (13) Have an adequate program for continued training of surveyors 
and technical staff;
    (14) Have a corporate office in the United States that provides a 
continuous management and administrative presence;
    (15) Maintain an internal quality system based on ANSI/ASQC Q9001 
or an equivalent quality standard;
    (16) Ensure classed vessels comply with class rules;
    (17) Ensure serviced vessels comply with all statutory requirements 
related to delegated functions;
    (18) Monitor all activities related to delegated functions for 
consistency and required end-results;
    (19) Maintain and ensure compliance with a Code of Ethics that 
recognizes the inherent responsibility associated with delegation of 
authority;
    (20) Not be under the financial control of shipowners or 
shipbuilders, or of others engaged commercially in the manufacture, 
equipping, repair or operation of ships;
    (21) Not be financially dependent on a single commercial enterprise 
for its revenue;
    (22) Not have any business interest in, or share of ownership of, 
any vessel in its classed fleet; and
    (23) Not be involved in any activities which could result in a 
conflict of interest.
    (b) Recognition will be granted when it is established that the 
classification society has an acceptable record of vessel detentions 
attributed to classification society performance under the Coast Guard 
Port State Control Program.


Sec. 8.240  Application for recognition.

    (a) A classification society must apply for recognition in writing 
to the Commandant (G-MSE).
    (b) An application must indicate which specific authority the 
classification society seeks to have delegated.
    (c) Upon verification from the Coast Guard that the conditions of 
reciprocity have been met in accordance with Sec. 8.120, the requesting 
classification society must submit documentation to establish that it 
meets the requirements of Sec. 8.230.


Sec. 8.250  Acceptance of standards and functions delegated under 
existing regulations.

    (a) Classification society class rules will only be accepted as 
equivalent to Coast Guard regulatory standards when that classification 
society has received authorization to conduct a related delegated 
function.
    (b) A recognized classification society may not conduct any 
delegated function under this title until it receives a separate 
written authorization from the Commandant to conduct that specific 
function.


Sec. 8.260  Revocation of classification society recognition.

    A recognized classification society which fails to maintain the 
minimum

[[Page 68520]]

standards established in this part will be reevaluated for possible 
revocation of its recognized status.

Subpart C--International Convention Certificate Issuance


Sec. 8.300  Purpose.

    This subpart establishes options for vessel owners and operators to 
obtain required international convention certification through means 
other than those prescribed elsewhere in this chapter.


Sec. 8.310  Applicability.

    This subpart applies to:
    (a) Recognized classification societies; and
    (b) All U.S. flag vessels that engage in international voyages and 
are classed by a recognized classification society that is authorized 
by the Coast Guard to issue the applicable international certificate as 
specified in this subpart.


Sec. 8.320  Classification society authorization to issue international 
certificates.

    (a) The Commandant may authorize a recognized classification 
society to issue certain international convention certificates. 
Authorization will be based on review of:
    (1) Applicable class rules; and
    (2) Applicable classification society procedures.
    (b) The Coast Guard may delegate issuance of the following 
international convention certificates to a recognized classification 
society:
    (1) International Load Line Certificate;
    (2) International Tonnage Certificate;
    (3) SOLAS Cargo Ship Safety Construction Certificate;
    (4) SOLAS Cargo Ship Safety Equipment Certificate;
    (5) SOLAS Certificate of Fitness for the Carriage of Dangerous 
Chemicals in Bulk;
    (6) SOLAS Certificate of Fitness for the Carriage of Liquefied 
Gasses in Bulk;
    (7) SOLAS Mobile Offshore Drilling Unit Safety Certificate;
    (8) MARPOL 73/78 International Oil Pollution Prevention 
Certificate; and
    (9) MORPOL 73/78 International Oil Pollution Prevention Certificate 
for the Carriage of Noxious Liquid Substances in Bulk.
    (c) The Coast Guard will enter into a written agreement with a 
recognized classification society authorized to issue international 
convention certificates. This agreement will define the scope, terms, 
conditions and requirements of that delegation. Conditions of these 
agreements are presented in Sec. 8.130.


Sec. 8.330  Termination of classification society authority.

    (a) The Coast Guard may terminate an authorization agreement with a 
classification society if:
    (1) The Commandant revokes the classification society's 
recognition, as specified in Sec. 8.260; or
    (2) The classification society fails to comply with the conditions 
of the authorization agreement as specified in Sec. 8.130.
    (b) Certificates issued by a classification society which has had 
its authorization terminated will remain valid until the next 
classification society survey associated with that certificate is 
required or until the certificate expires, whichever occurs first.

Subpart D--Alternate Compliance Program


Sec. 8.400  Purpose.

    This subpart establishes an alternative to subpart 2.01 of this 
chapter for certification of United States vessels.


Sec. 8.410  Applicability.

    This section applies to:
    (a) Recognized classification societies; and
    (b) All U.S. flag vessels that engage in international voyages and 
are classed by a recognized classification society that is authorized 
by the Coast Guard to participate in the Alternate Compliance Program 
(ACP) as specified in this subpart.


Sec. 8.420  Classification society authorization to participate in the 
Alternate Compliance Program.

    (a) The Commandant may authorize a recognized classification 
society to participate in the ACP. Authorization will be based on a 
satisfactory review of:
    (1) Applicable class rules; and
    (2) Applicable classification society procedures.
    (b) Authorization for a recognized classification society to 
participate in the ACP will require development of a U.S. Supplement to 
the society's class rules that meets the requirements of Sec. 8.430 of 
this part, which must be accepted by the Coast Guard.
    (c) A recognized classification society will be eligible to receive 
authorization to participate in the ACP only after it has performed a 
delegated function related to general vessel safety assessment, as 
defined in Sec. 8.100, for a two-year period.
    (d) If, after this two-year period, the Coast Guard finds that the 
recognized classification society has not demonstrated the necessary 
satisfactory performance or lacks adequate experience, the recognized 
classification society will not be eligible to participate in the ACP. 
The Coast Guard will provide the reason for this determination to the 
recognized classification society.
    (e) The Coast Guard will enter into a written agreement with a 
recognized classification society authorized to participate in the ACP. 
This agreement will define the scope, terms, conditions and 
requirements of the necessary delegation. Conditions of this agreement 
are presented in Sec. 8.130.


Sec. 8.430  U.S. Supplement to class rules.

    Prior to receiving authorization to participate in the ACP, a 
recognized classification society must prepare, and receive Commandant 
(G-MSE) approval of, a U.S. Supplement to the recognized classification 
society's class rules. This supplement must include all regulations 
applicable for issuance of a Certificate of Inspection (COI) which are 
not, in the opinion of the Commandant, adequately established by either 
the class rules of that classification society or applicable 
international regulations.


Sec. 8.440  Vessel enrollment in the Alternate Compliance Program.

    (a) In place of compliance with other applicable provisions of this 
title, the owner or operator of a vessel subject to plan review and 
inspection under this subchapter for initial issuance or renewal of a 
COI may submit the vessel for classification, plan review and 
inspection by a recognized classification society authorized by the 
Coast Guard to determine compliance with applicable international 
treaties and agreements, the classification society's class rules, and 
the U.S. Supplement prepared by the classification society and accepted 
by the Coast Guard.
    (b) A vessel owner or operator wishing to have a vessel inspected 
under paragraph (a) of this section shall submit an Application for 
Inspection of U.S. Vessel (CG-3752) to the cognizant OCMI, and indicate 
on the form that the inspection will be conducted by an authorized 
classification society.
    (c) Based on reports from an authorized classification society that 
a vessel complies with applicable international treaties and 
agreements, the classification society's class rules, and the U.S. 
Supplement prepared by the classification society and accepted by the 
Coast Guard, the cognizant OCMI may issue a certificate of inspection 
to the vessel. If the OCMI declines to issue a certificate of 
inspection even though the reports made by the authorized 
classification society indicate that the vessel meets applicable 
standards, the vessel owner or operator may appeal the

[[Page 68521]]

OCMI decision as provided in subpart 1.03 of this chapter.
    (d) If reports from an authorized classification society indicate 
that a vessel does not comply with applicable international treaties 
and agreements, the classification society's class rules, and the U.S. 
Supplement prepared by the classification society and accepted by the 
Coast Guard, the cognizant OCMI may decline to issue a certificate of 
inspection. If the OCMI declines to issue a certificate of inspection, 
the vessel owner or operator may:
    (1) Correct the reported deficiencies and make arrangements with 
the classification society for an additional inspection;
    (2) Request inspection by the Coast Guard under other provisions of 
this subchapter; or
    (3) Appeal via the authorized classification society to the Chief, 
Office of Compliance, Commandant (G-MOC), U.S. Coast Guard, 2100 Second 
St., SW., Washington, DC 20593-0001.


Sec. 8.450  Termination of classification society authority.

    (a) The Coast Guard may terminate an authorization agreement with a 
classification society if:
    (1) The Commandant revokes the classification society's 
recognition, as specified in Sec. 8.260; or
    (2) The classification society fails to comply with the conditions 
of the authorization agreement as specified in Sec. 8.130.
    (b) Owners or operators of vessels enrolled in the ACP and classed 
by a classification society that has its authority to participate in 
the ACP terminated must either:
    (1) Change the classification society for the vessel to a 
classification society that is authorized to participate in the ACP; or
    (2) Disenroll the vessel from the ACP.

PART 31--INSPECTION AND CERTIFICATION

    2. The authority citation for part 31 is revised to read as 
follows:

    Authority: 33 U.S.C. 1321(j); 46 U.S.C. 3306; 46 U.S.C. 3316, as 
amended by Sec. 607, Pub. L. 104-324, 110 Stat. 3901; 46 U.S.C. 
3703, 5115, 8105; 49 U.S.C. App 1804; E.O. 12234, 45 FR 58801, 3 
CFR, 1980 Comp., p. 277; E.O. 11735, 38 FR 21243, 3 CFR, 1971-1975 
Comp., p. 793; 49 CFR 1.46.


Sec. 31.01-3  [Added]

    3. Section 31.01-3 is added to read as follows:


Sec. 31.01-3  Alternate compliance.

    (a) In place of compliance with other applicable provisions of this 
subchapter, the owner or operator of a vessel subject to plan review 
and inspection under this subchapter for initial issuance or renewal of 
a Certificate of Inspection may comply with the Alternate Compliance 
Program provisions of part 8 of this chapter.
    (b) For the purposes of this section, the following classification 
societies are authorized by the Coast Guard, and their class rules and 
supplements are accepted:

American Bureau of Shipping

    Two World Trade Center, 106th Floor, New York, NY 10048.
    Accepted Class Rules: Rules for Building and Classing Steel 
Vessels, 1996.
    Accepted U.S. Supplements: U.S. Supplement to ABS Rules for 
Steel Vessels for Vessels on International Voyages, October 21, 
1996.

PART 71--INSPECTION AND CERTIFICATION

    4. The authority citation for part 71 is revised to read as 
follows:

    Authority: 33 U.S.C. 1321(j); 46 U.S.C. 2113, 3306; 46 U.S.C. 
3316, as amended by Sec. 607, Pub. L. 104-324, 110 Stat. 3901; E.O. 
12234, 45 FR 58801, 3 CFR, 1980 Comp., p. 277; E.O. 12777, 56 FR 
54757, 3 CFR 1991 Comp., p. 351; 49 CFR 1.46.


Sec. 71.15-5  [Added]

    5. Section 71.15-5 is added to read as follows:


Sec. 71.15-5  Alternate compliance.

    (a) In place of compliance with other applicable provisions of this 
subchapter, the owner or operator of a vessel subject to plan review 
and inspection under this subchapter for initial issuance or renewal of 
a Certificate of Inspection may comply with the Alternate Compliance 
Program provisions of part 8 of this chapter.
    (b) For the purposes of this section, the following classification 
societies are authorized by the Coast Guard, and their class rules and 
supplements are accepted:

American Bureau of Shipping

    Two World Trade Center, 106th Floor, New York, NY 10048.
    Accepted Class Rules: Rules for Building and Classing Steel 
Vessels, 1996.
    Accepted U.S. Supplements: U.S. Supplement to ABS Rules for 
Steel Vessels for Vessels on International Voyages, October 21, 
1996.

PART 91--INSPECTION AND CERTIFICATION

    6. The authority citation for part 91 is revised to read as 
follows:

    Authority: 33 U.S.C. 1321(j); 46 U.S.C. 3306; 46 U.S.C. 3316, as 
amended by Sec. 607, Pub. L. 104-324, 110 Stat. 3901; E.O. 12234, 45 
FR 58801, 3 CFR, 1980 Comp., p. 277; E.O. 11735, 38 FR 21243, 3 CFR, 
1971-1975 Comp., p. 793; 49 CFR 1.46.


Sec. 91.15-5  [Added]

    7. Section 91.15-5 is added to read as follows:


Sec. 91.15-5  Alternate compliance.

    (a) In place of compliance with other applicable provisions of this 
subchapter, the owner or operator of a vessel subject to plan review 
and inspection under this subchapter for initial issuance or renewal of 
a Certificate of Inspection may comply with the Alternate Compliance 
Program provisions of part 8 of this chapter.
    (b) For the purposes of this section, the following classification 
societies are authorized by the Coast Guard, and their class rules and 
supplements are accepted:

American Bureau of Shipping

    Two World Trade Center, 106th Floor, New York, NY 10048.
    Accepted Class Rules: Rules for Building and Classing Steel 
Vessels, 1996.
    Accepted U.S. Supplements: U.S. Supplement to ABS Rules for 
Steel Vessels for Vessels on International Voyages, October 21, 
1996.

PART 107--INSPECTION AND CERTIFICATION

    8. The authority citation for part 107 is revised to read as 
follows:

    Authority: 43 U.S.C. 1333; 46 U.S.C. 3306; 46 U.S.C. 3316, as 
amended by Sec. 607, Pub. L. 104-324, 110 Stat. 3901; 46 U.S.C. 
5115; 49 CFR 1.45, 1.46; Sec. 107.05 also issued under authority of 
44 U.S.C. 3507.


Sec. 107.205  [Added]

    9. Section 107.205 is added to read as follows:


Sec. 107.205  Alternate compliance.

    (a) In place of compliance with other applicable provisions of this 
subchapter, the owner or operator of a vessel subject to plan review 
and inspection under this subchapter for initial issuance or renewal of 
a Certificate of Inspection may comply with the Alternate Compliance 
Program provisions of part 8 of this chapter.
    (b) For the purposes of this section, the following classification 
societies are authorized by the Coast Guard, and their class rules and 
supplements are accepted:

(No classification societies are authorized at this time)


[[Page 68522]]


    Dated: December 11, 1996.
J.C. Card,
Rear Admiral, U.S. Coast Guard, Assistant Commandant for Marine Safety 
and Environmental Protection.
[FR Doc. 96-32801 Filed 12-26-96; 8:45 am]
BILLING CODE 4810-14-M