[Federal Register Volume 62, Number 247 (Wednesday, December 24, 1997)]
[Rules and Regulations]
[Pages 67492-67515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33528]



[[Page 67491]]

_______________________________________________________________________

Part V





Department of Transportation





_______________________________________________________________________



Coast Guard



_______________________________________________________________________



33 CFR Part 96



46 CFR Part 2, et al.



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

  Federal Register / Vol. 62, No. 247 / Wednesday, December 24, 1997 / 
Rules and Regulations  

[[Page 67492]]



DEPARTMENT OF TRANSPORTATION

Coast Guard

33 CFR Part 96

46 CFR Parts 2, 31, 71, 91, 107, 115, 126, 175, 176, and 189

[CGD 95-073]
RIN 2115-AF44


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

AGENCY: Coast Guard, DOT.

ACTION: Final rule.

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

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

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

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

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

SUPPLEMENTARY INFORMATION:

Regulatory History

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

Background and Purpose

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

[[Page 67493]]

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

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

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

Discussion of Comments and Changes

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

Comments Requesting Public Hearings

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

[[Page 67494]]

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

Comments Relating to Specific CFR Sections

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

[[Page 67495]]

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

[[Page 67496]]

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

[[Page 67497]]

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

[[Page 67498]]

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

[[Page 67499]]

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

[[Page 67500]]

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

[[Page 67501]]

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

General Comments (Non-CFR Specific)

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

[[Page 67502]]

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

[[Page 67503]]

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

Incorporation by Reference

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

Regulatory Evaluation

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

[[Page 67504]]

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

Costs

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

Total Costs

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

Benefits

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

Cost-Benefit

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

Small Entities

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

[[Page 67505]]

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

Assistance for Small Entities

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

Collection of Information

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

Federalism

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

[[Page 67506]]

Federal Preemption

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

Environment

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

List of Subjects

33 CFR Part 96

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

46 CFR Part 2

    Marine safety, Reporting and recordkeeping requirements, Vessels.

46 CFR Part 31

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

46 CFR Part 71

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

46 CFR Part 91

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

46 CFR Part 107

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

46 CFR Part 115

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

46 CFR Part 126

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

46 CFR Part 175

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

46 CFR Part 176

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

46 CFR Part 189

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

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

TITLE 33--NAVIGATION AND NAVIGABLE WATERS

    1. Add part 96 to read as follows:

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

Subpart A--General

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

Subpart B--Company and Vessel Safety Management Systems

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

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

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

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

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

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

Subpart A--General


Sec. 96.100  Purpose.

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

[[Page 67507]]

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

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


Sec. 96.110  Who does this subpart apply to?

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


Sec. 96.120  Definitions.

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


Sec. 96.130  Incorporation by reference.

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

[[Page 67508]]

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

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

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

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

Subpart B--Company and Vessel Safety Management Systems


Sec. 96.200  Purpose.

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


Sec. 96.210  Who does this subpart apply to?

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


Sec. 96.220  What makes up a safety management system?

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


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

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


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

    The functional requirements of a safety management system must 
include--
    (a) A written statement from the responsible person stating the 
company's safety and environmental protection policy;
    (b) Instructions and procedures to provide direction for the safe 
operation of the vessel and protection of the environment in compliance 
with the applicable U.S. Code of Federal Regulations, and international 
conventions to which the U.S. is a party (SOLAS, MARPOL, etc.);
    (c) Documents showing the levels of authority and lines of 
communication between shoreside and shipboard personnel;
    (d) Procedures for reporting accidents, near accidents, and non-
conformities with provisions of the company's and vessel's safety 
management system, and the ISM Code;
    (e) Procedures to prepare for and respond to emergency situations 
by shoreside and shipboard personnel;
    (f) Procedures for internal audits on the operation of the company 
and vessel(s) safety management system; and
    (g) Procedures and processes for management review of company 
internal audit reports and correction of non-conformities that are 
reported by these or other reports.


Sec. 96.250  What documents and reports must a safety management system 
have?

    The documents and reports required for a safety management system 
under Sec. 96.330 or Sec. 96.340 must include the written documents and 
reports itemized in Table 96.250. These documents and reports must be 
available to the company's shore-based and vessel(s)-based personnel:

[[Page 67509]]



      Table 96.250.--Safety Management System Documents and Reports     
------------------------------------------------------------------------
     Type of documents and reports            Specific requirements     
------------------------------------------------------------------------
(a) Safety and environmental policy      (1) Meet the objectives of Sec.
 statements.                               96.230; and                  
                                         (2) Are carried out and kept   
                                          current at all levels of the  
                                          company;                      
(b) Company responsibilities and         (1) The owners name and details
 authority statements.                    of responsibility for         
                                          operation of the company and  
                                          vessel(s);                    
                                         (2) Name of the person         
                                          responsible for operation of  
                                          the company and vessel(s), if 
                                          not the owner;                
                                         (3) Responsibility, authority  
                                          and interrelations of all     
                                          personnel who manage, perform,
                                          and verify work relating to   
                                          and affecting the safety and  
                                          pollution prevention          
                                          operations of the company and 
                                          vessel(s); and                
                                         (4) A statement describing the 
                                          company's responsibility to   
                                          ensure adequate resources and 
                                          shore-based support are       
                                          provided to enable the        
                                          designated person or persons  
                                          to carry out the              
                                          responsibilities of this      
                                          subpart.                      
(c) Designation in writing of a person   (1) Have direct access to      
 or persons to monitor the safety         communicate with the highest  
 management system for the company and    levels of the company and with
 vessel(s).                               all management levels ashore  
                                          and aboard the company's      
                                          vessel(s);                    
                                         (2) Have the written           
                                          responsibility to monitor the 
                                          safety and environmental      
                                          aspects of the operation of   
                                          each vessel; and              
                                         (3) Have the written           
                                          responsibility to ensure there
                                          are adequate support and shore-
                                          based resources for vessel(s) 
                                          operations.                   
(d) Written statements that define the   (1) Carry out the company's    
 Master's responsibilities and            safety and environmental      
 authorities.                             policies;                     
                                         (2) Motivate the vessel's crew 
                                          to observe the safety         
                                          management system policies;   
                                         (3) Issue orders and           
                                          instructions in a clear and   
                                          simple manner;                
                                         (4) Make sure that specific    
                                          requirements are carried out  
                                          by the vessel's crew and shore-
                                          based resources; and          
                                         (5) Review the safety          
                                          management system and report  
                                          non-conformities to shore-    
                                          based management.             
(e) Written statements that the Master   (1) Ability to make decisions  
 has overriding responsibility and        about safety and environmental
 authority to make vessel decisions.      pollution; and                
                                         (2) Ability to request the     
                                          company's help when necessary.
(f) Personnel procedures and resources   (1) Masters of vessels are     
 which are available ashore and aboard    properly qualified for        
 ship..                                   command;                      
                                         (2) Masters of vessels know the
                                          company's safety management   
                                          system;                       
                                         (3) Owners or companies provide
                                          the necessary support so that 
                                          the Master's duties can be    
                                          safely performed;             
                                         (4) Each vessel is properly    
                                          crewed with qualified,        
                                          certificated and medically fit
                                          seafarers complying with      
                                          national and international    
                                          requirements;                 
                                         (5) New personnel and personnel
                                          transferred to new assignments
                                          involving safety and          
                                          protection of the environment 
                                          are properly introduced to    
                                          their duties;                 
                                         (6) Personnel involved with the
                                          company's safety management   
                                          system have an adequate       
                                          understanding of the relevant 
                                          rules, regulations, codes and 
                                          guidelines;                   
                                         (7) Needed training is         
                                          identified to support the     
                                          safety management system and  
                                          ensure that the training is   
                                          provided for all personnel    
                                          concerned;                    
                                         (8) Communication of relevant  
                                          procedures for the vessel's   
                                          personnel involved with the   
                                          safety management system is in
                                          the language(s) understood by 
                                          them; and                     
                                         (9) Personnel are able to      
                                          communicate effectively when  
                                          carrying out their duties as  
                                          related to the safety         
                                          management system.            
(g) Vessel safety and pollution          (1) Define tasks; and          
 prevention operation plans and          (2) Assign qualified personnel 
 instructions for key shipboard           to specific tasks.            
 operations..                                                           
(h) Emergency preparedness procedures..  (1) Identify, describe and     
                                          direct response to potential  
                                          emergency shipboard           
                                          situations;                   
                                         (2) Set up programs for drills 
                                          and exercises to prepare for  
                                          emergency actions; and        
                                         (3) Make sure that the         
                                          company's organization can    
                                          respond at anytime, to        
                                          hazards, accidents and        
                                          emergency situations involving
                                          their vessel(s).              
(i) Reporting procedures on required     (1) Report non-conformities of 
 actions..                                the safety management system; 
                                         (2) Report accidents;          
                                         (3) Report hazardous situations
                                          to the owner or company; and  
                                         (4) Make sure reported items   
                                          are investigated and analyzed 
                                          with the objective of         
                                          improving safety and pollution
                                          prevention.                   

[[Page 67510]]

                                                                        
(j) Vessel maintenance procedures.       (1) Inspect vessel's equipment,
 (These procedures verify that a          hull, and machinery at        
 company's vessel(s) is maintained in     appropriate intervals;        
 conformity with the provisions of       (2) Report any non-conformity  
 relevant rules and regulations, with     or deficiency with its        
 any additional requirements which may    possible cause, if known;     
 be established by the company.).        (3) Take appropriate corrective
                                          actions;                      
                                         (4) Keep records of these      
                                          activities;                   
                                         (5) Identify specific equipment
                                          and technical systems that may
                                          result in a hazardous         
                                          situation if a sudden         
                                          operational failure occurs;   
                                         (6) Identify measures that     
                                          promote the reliability of the
                                          equipment and technical       
                                          systems identified in         
                                          paragraph (j)(5), and         
                                          regularly test standby        
                                          arrangements and equipment or 
                                          technical systems not in      
                                          continuous use; and           
                                         (7) Include the inspections    
                                          required by this section into 
                                          the vessel's operational      
                                          maintenance routine.          
(k) Safety management system document    (1) Procedures which establish 
 and data maintenance.                    and maintain control of all   
                                          documents and data relevant to
                                          the safety management system. 
                                         (2) Documents are available at 
                                          all relevant locations, i.e., 
                                          each vessel carries on board  
                                          all documents relevant to that
                                          vessels operation;            
                                         (3) Changes to documents are   
                                          reviewed and approved by      
                                          authorized personnel; and     
                                         (4) Outdated documents are     
                                          promptly removed.             
(l) Safety management system internal    (1) Periodic evaluation of the 
 audits which verify the safety and       safety management system's    
 pollution prevention activities.         efficiency and review of the  
                                          system in accordance with the 
                                          established procedures of the 
                                          company, when needed;         
                                         (2) Types and frequency of     
                                          internal audits, when they are
                                          required, how they are        
                                          reported, and possible        
                                          corrective actions, if        
                                          necessary;                    
                                         (3) Determining factors for the
                                          selection of personnel,       
                                          independent of the area being 
                                          audited, to complete internal 
                                          company and vessel audits; and
                                         (4) Communication and reporting
                                          of internal audit findings for
                                          critical management review and
                                          to ensure management personnel
                                          of the area audited take      
                                          timely and corrective action  
                                          on non-conformities or        
                                          deficiencies found.           
------------------------------------------------------------------------
Note: The documents and reports required by this part are for the       
  purpose of promoting safety of life and property at sea, as well as   
  protection of the environment. The documents and reports are intended 
  to ensure the communication and understanding of company and vessel   
  safety management systems, which will allow a measure of the systems  
  effectiveness and its responsible person to continuously improve the  
  system and safety the system provides.                                

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


Sec. 96.300  Purpose.

    This subpart establishes the standards for the responsible person 
of a company and its vessel(s) to obtain the required and voluntary, 
national and international certification for the company's and vessel's 
safety management system.


Sec. 96.310  Who does this subpart apply to?

    This subpart applies:
    (a) If you are a responsible person who owns a vessel(s) registered 
in the U.S. and engaged on a foreign voyage(s), or holds certificates 
or endorsement of such voyages;
    (b) If you are a responsible person who owns a vessel(s) registered 
in the U.S. and volunteer to meet the standards of this part and 
Chapter IX of SOLAS;
    (c) To all foreign vessels engaged on a foreign voyage, bound for 
ports or places under the jurisdiction of the U.S., and subject to 
Chapter IX of SOLAS; or
    (d) If you are a recognized organization authorized by the U.S. to 
complete safety management audits and certification required by this 
part.


Sec. 96.320  What is involved to complete a safety management audit and 
when is it required to be completed?

    (a) A safety management audit is any of the following:
    (1) An initial audit which is carried out before a Document of 
Compliance certificate or a Safety Management Certificate is issued;
    (2) A renewal audit which is carried out before the renewal of a 
Document of Compliance certificate or a Safety Management Certificate;
    (3) Periodic audits including--
    (i) An annual verification audit, as described in Sec. 96.330(f) of 
this part, and
    (ii) An intermediate verification audit, as described in 
Sec. 96.340(e)(2) of this part.
    (b) A satisfactory audit means that the auditor(s) agrees that the 
requirements of this part are met, based on review and verification of 
the procedures and documents that make up the safety management system.
    (c) Actions required during safety management audits for a company 
and their U.S. vessel(s) are--
    (1) Review and verify the procedures and documents that make up a 
safety management system, as defined in subpart B of this part.
    (2) Make sure the audit complies with this subpart and is 
consistent with IMO Resolution A.788(19), Guidelines on Implementation 
of the International Safety Management (ISM) Code by Administrations.
    (3) Make sure the audit is carried out by a team of Coast Guard 
auditors or auditors assigned by a recognized organization authorized 
to complete such actions by subpart D of this part.
    (d) Safety management audits for a company and their U.S. vessel(s) 
are required--
    (1) Before issuing or renewing a Document of Compliance 
certificate, and to keep a Document of Compliance certificate valid, as 
described in Secs. 96.330 and 96.340 of this part.
    (2) Before issuing or renewing a Safety Management Certificate, and 
to maintain the validity of a Safety

[[Page 67511]]

Management Certificate, as described in Sec. 96.340 of this part.

However, any safety management audit for the purpose of verifying a 
vessel's safety management system will not be scheduled or conducted 
for a company's U.S. vessel unless the company first has undergone a 
safety management audit of the company's safety management system, and 
has received its Document of Compliance certificate.
    (e) Requests for all safety management audits for a company and its 
U.S. vessel(s) must be communicated--
    (1) By a responsible person directly to a recognized organization 
authorized by the U.S.
    (2) By a responsible person within the time limits for an annual 
verification audit, described in Sec. 96.330(f) of this part, and for 
an intermediate verification audit, described in Sec. 96.340(e)(2) of 
this part. If he or she does not make a request for a safety management 
annual or verification audit for a valid Document of Compliance 
certificate issued to a company or a valid Safety Management 
Certificate issued to a vessel, this is cause for the Coast Guard to 
revoke the certificate as described in Secs. 96.330 and 96.340 of this 
part.
    (f) If a non-conformity with a safety management system is found 
during an audit, it must be reported in writing by the auditor:
    (1) For a company's safety management system audit, to the 
company's owner; and
    (2) For a vessel's safety management system audit, to the company's 
owner and vessel's Master.


Sec. 96.330  Document of Compliance certificate: what is it and when is 
it needed?

    (a) You must hold a valid Document of Compliance certificate if you 
are the responsible person who, or company which, owns a U.S. vessel 
engaged on foreign voyages, carrying more than 12 passengers, or is a 
tanker, bulk freight vessel, freight vessel, or a self-propelled mobile 
offshore drilling unit of 500 gross tons or more.
    (b) You may voluntarily hold a valid Document of Compliance 
certificate, if you are a responsible person who, or a company which, 
owns a U.S. vessel not included in paragraph (a) of this section.
    (c) You will be issued a Document of Compliance certificate only 
after you complete a satisfactory safety management audit as described 
in Sec. 96.320 of this part.
    (d) All U.S. and foreign vessels that carry more than 12 passengers 
or a tanker, bulk freight vessel, freight vessel, or a self-propelled 
mobile offshore drilling unit of 500 gross tons or more, must carry a 
valid copy of the company's Document of Compliance certificate onboard 
when on a foreign voyage.
    (e) A valid Document of Compliance certificate covers the type of 
vessel(s) on which a company's safety management system initial safety 
management audit was based. The validity of the Document of Compliance 
certificate may be extended to cover additional types of vessels after 
a satisfactory safety management audit is completed on the company's 
safety management system which includes those additional vessel types.
    (f) A Document of Compliance certificate is valid for 60 months. 
The company's safety management system must be verified annually by the 
Coast Guard or by an authorized organization acting on behalf of the 
U.S. through a safety management verification audit, within three 
months before or after the certificate's anniversary date.
    (g) Only the Coast Guard may revoke a Document of Compliance 
certificate from a company which owns a U.S. vessel. The Document of 
Compliance certificate may be revoked if--
    (1) The annual safety management audit and system verification 
required by paragraph (f) of this section is not completed by the 
responsible person; or
    (2) Major non-conformities are found in the company's safety 
management system during a safety management audit or other related 
survey or inspection being completed by the Coast Guard or the 
recognized organization chosen by the company or responsible person.
    (3) The Coast Guard or an authorized organization acting on its 
behalf is denied, or restricted access to, any vessel, record or 
personnel of the company, at any time necessary to evaluate the safety 
management system.
    (h) When a company's valid Document of Compliance certificate is 
revoked by the Coast Guard, a satisfactory safety management audit must 
be completed before a new Document of Compliance certificate for the 
company's safety management system can be reissued.


Sec. 96.340  Safety Management Certificate: what is it and when is it 
needed?

    (a) Your U.S. vessel engaged on a foreign voyage must hold a valid 
Safety Management Certificate if it carries more than 12 passengers, or 
if it is a tanker, bulk freight vessel, freight vessel, or a self-
propelled mobile offshore drilling unit of 500 gross tons or more.
    (b) Your U.S. vessel may voluntarily hold a valid Safety Management 
Certificate even if your vessel is not required to by paragraph (a) of 
this section.
    (c) Your U.S. vessel may only be issued a Safety Management 
Certificate or have it renewed when your company holds a valid Document 
of Compliance certificate issued under Sec. 96.330 of this part and the 
vessel has completed a satisfactory safety management audit of the 
vessel's safety management system set out in Sec. 96.320 of this part.
    (d) A copy of your company's valid Document of Compliance 
certificate must be on board all U.S. and foreign vessels which carry 
more than 12 passengers, and must be onboard a tanker, bulk freight 
vessel, freight vessel, or a self-propelled mobile offshore drilling 
unit of 500 gross tons or more, when engaged on foreign voyages or 
within U.S. waters.
    (e) A Safety Management Certificate is valid for 60 months. The 
validity of the Safety Management Certificate is based on--
    (1) A satisfactory initial safety management audit;
    (2) A satisfactory intermediate verification audit requested by the 
vessel's responsible person, completed between the 24th and 36th month 
of the certificate's period of validity; and
    (3) A vessel's company holding a valid Document of Compliance 
certificate. When a company's Document of Compliance certificate 
expires or is revoked, the Safety Management Certificate for the 
company-owned vessel(s) is invalid.
    (f) Renewal of a Safety Management Certificate requires the 
completion of a satisfactory safety management system audit which meets 
all of the requirements of subpart B in this part. A renewal of a 
Safety Management Certificate cannot be started unless the company 
which owns the vessel holds a valid Document of Compliance certificate.
    (g) Only the Coast Guard may revoke a Safety Management Certificate 
from a U.S. vessel. The Safety Management Certificate will be revoked 
if--
    (1) The vessel's responsible person has not completed an 
intermediate safety management audit required by paragraph (e)(2) of 
this section; or
    (2) Major non-conformities are found in the vessel's safety 
management system during a safety management audit or other related 
survey or inspection being completed by the Coast Guard or the 
recognized organization chosen by the vessel's responsible person.

[[Page 67512]]

Sec. 96.350  Interim Document of Compliance certificate: what is it and 
when can it be used?

    (a) An Interim Document of Compliance certificate may be issued to 
help set up a company's safety management system when--
    (1) A company is newly set up or in transition from an existing 
company into a new company; or
    (2) A new type of vessel is added to an existing safety management 
system and Document of Compliance certificate for a company.
    (b) A responsible person for a company operating a U.S. vessel(s) 
that meets the requirements of paragraph (a) of this section, may send 
a request to a recognized organization authorized to act on behalf of 
the U.S. to receive an Interim Document of Compliance certificate that 
is valid for a period up to 12 months. To be issued the Interim 
Document of Compliance certificate the vessel's company must--
    (1) Demonstrate to an auditor that the company has a safety 
management system that meets Sec. 96.230 of this part; and
    (2) Provide a plan for full implementation of a safety management 
system within the period that the Interim Document of Compliance 
certificate is valid.


Sec. 96.360  Interim Safety Management Certificate: what is it and when 
can it be used?

    (a) A responsible person may apply for an Interim Safety Management 
Certificate when--
    (1) A responsible person takes delivery of a new U.S. vessel; or
    (2) Takes responsibility for the management of a U.S. vessel which 
is new to the responsible person or their company.
    (b) An Interim Safety Management Certificate is valid for 6 months. 
It may be issued to a U.S. vessel which meets the conditions of 
paragraph (a) of this section, when--
    (1) The company's valid Document of Compliance certificate or 
Interim Document of Compliance certificate applies to that vessel type;
    (2) The company's safety management system for the vessel includes 
the key elements of a safety management system, set out in Sec. 96.220, 
applicable to this new type of vessel;
    (3) The company's safety management system has been assessed during 
the safety management audit to issue the Document of Compliance 
certificate or demonstrated for the issuance of the Interim Document of 
Compliance certificate;
    (4) The Master and senior officers of the vessel are familiar with 
the safety management system and the planned set up arrangements;
    (5) Written documented instructions have been extracted from the 
safety management system and given to the vessel prior to sailing;
    (6) The company plans an internal audit of the vessel within three 
months; and
    (7) The relevant information from the safety management system is 
written in English, and in any other language understood by the 
vessel's personnel.


Sec. 96.370  What are the requirements for vessels of countries not 
party to Chapter IX of SOLAS?

    (a) Each foreign vessel which carries more than 12 passengers, or 
is a tanker, bulk freight vessel, freight vessel, or self-propelled 
mobile offshore drilling unit of 500 gross tons or more, operated in 
U.S. waters, under the authority of a country not a party to Chapter IX 
of SOLAS must--
    (1) Have on board valid documentation showing that the vessel's 
company has a safety management system which was audited and assessed, 
consistent with the International Safety Management Code of IMO 
Resolution A.741(18);
    (2) Have on board valid documentation from a vessel's Flag 
Administration showing that the vessel's safety management system was 
audited and assessed to be consistent with the International Safety 
Management Code of IMO Resolution A.741(18); or
    (3) Show that evidence of compliance was issued by either a 
government that is party to SOLAS or an organization recognized to act 
on behalf of the vessel's Flag Administration.
    (b) Evidence of compliance must contain all of the information in, 
and have substantially the same format as a--
    (1) Document of Compliance certificate; and
    (2) Safety Management Certificate.
    (c) Failure to comply with this section will subject the vessel to 
the compliance and enforcement procedures of Sec. 96.380 of this part.


Sec. 96.380  How will the Coast Guard handle compliance and enforcement 
of these regulations?

    (a) While operating in waters under the jurisdiction of the United 
States, the Coast Guard may board a vessel to determine that--
    (1) Valid copies of the company's Document of Compliance 
certificate and Safety Management Certificate are on board, or evidence 
of the same for vessels from countries not party to Chapter IX of 
SOLAS; and
    (2) The vessel's crew or shore-based personnel are following the 
procedures and policies of the safety management system while operating 
the vessel or transferring cargoes.
    (b) A foreign vessel that does not comply with these regulations, 
or one on which the vessel's condition or use of its safety management 
system do not substantially agree with the particulars of the Document 
of Compliance certificate, Safety Management Certificate or other 
required evidence of compliance, may be detained by order of the COTP 
or OCMI. This may occur at the port or terminal where the violation is 
found until, in the opinion of the detaining authority, the vessel can 
go to sea without presenting an unreasonable threat of harm to the 
port, the marine environment, the vessel or its crew. The detention 
order may allow the vessel to go to another area of the port, if 
needed, rather than stay at the place where the violation was found.
    (c) If any vessel that must comply with this part or with the ISM 
Code does not have a Safety Management Certificate and a copy of its 
company's Document of Compliance certificate on board, a vessel owner, 
charterer, managing operator, agent, Master, or any other individual in 
charge of the vessel that is subject to this part, may be liable for a 
civil penalty under 46 U.S.C. 3318. For foreign vessels, the Coast 
Guard may request the Secretary of the Treasury to withhold or revoke 
the clearance required by 46 U.S.C. App. 91. The Coast Guard may ask 
the Secretary to permit the vessel's departure after the bond or other 
surety is filed.


Sec. 96.390  When will the Coast Guard deny entry into a U.S. port?

    (a) Except for a foreign vessel entering U.S. waters under force 
majeure, no vessel shall enter any port or terminal of the U.S. without 
a safety management system that has been properly certificated to this 
subpart or to the requirements of Chapter IX of SOLAS if--
    (1) It is engaged on a foreign voyage; and
    (2) It is carrying more than 12 passengers, or a tanker, bulk 
freight vessel, freight vessel, or self-propelled mobile offshore 
drilling unit of 500 gross tons or more.
    (b) The cognizant COTP will deny entry of a vessel into a port or 
terminal under the authority of 46 U.S.C. 3204(c), to any vessel that 
does not meet the requirements of paragraph (a) of this section.

[[Page 67513]]

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


Sec. 96.400  Purpose.

    (a) This subpart establishes criteria and procedures for 
organizations recognized under 46 CFR part 8, subparts A and B, to be 
authorized by the Coast Guard to act on behalf of the U.S. The 
authorization is necessary in order for a recognized organization to 
perform safety management audits and certification functions delegated 
by the Coast Guard as described in this part.
    (b) To receive an up-to-date list of recognized organizations 
authorized to act under this subpart, send a self-addressed, stamped 
envelope and written request to the Commandant (G-MSE), 2100 Second 
Street SW., Washington, DC 20593-0001.


Sec. 96.410  Who does this regulation apply to?

    This subpart applies to all organizations recognized by the U.S. 
under 46 CFR part 8, subpart A and B, who wish to seek authorization to 
conduct safety management audits and issue relevant international 
safety certificates under the provisions of the ISM Code and voluntary 
certificates on behalf of the U.S.


Sec. 96.420  What authority may an organization ask for under this 
regulation?

    (a) An organization may request authorization to conduct safety 
management audits and to issue the following certificates:
    (1) Safety Management Certificate;
    (2) Document of Compliance certificate;
    (3) Interim Safety Management Certificate; and
    (4) Interim Document of Compliance certificate.
    (b) [Reserved]


Sec. 96.430  How does an organization submit a request to be 
authorized?

    (a) A recognized organization must send a written request for 
authorization to the Commandant (G-MSE), Office of Design and 
Engineering Standards, 2100 Second Street SW, Washington, DC 20593-
0001. The request must include the following:
    (1) A statement describing what type of authorization the 
organization seeks;
    (2) Documents showing that--
    (i) The organization has an internal quality system with written 
policies, procedures and processes that meet the requirements in 
Sec. 96.440 of this part for safety management auditing and 
certification; or
    (ii) The organization has an internal quality system based on ANSI/
ASQC C9001 for safety management auditing and certification; or
    (iii) The organization has an equivalent internal quality standard 
system recognized by the Coast Guard to complete safety management 
audits and certification.
    (3) A list of the organization's exclusive auditors qualified to 
complete safety management audits and their operational area; and
    (4) A written statement that the procedures and records of the 
recognized organization regarding its actions involving safety 
management system audits and certification are available for review 
annually and at any time deemed necessary by the Coast Guard.
    (b) If the organization is a foreign classification society that 
has been recognized under 46 CFR part 8, subparts A and B, and wishes 
to apply for authorization under this part, it must demonstrate the 
reciprocity required by 46 U.S.C. 3316 for ISM Code certification. The 
organization must provide, with its request for authorization an 
affidavit from the government of the country in which the 
classification society is headquartered. This affidavit must provide a 
list of authorized delegations by the flag state of the administration 
of the foreign classification society's country to the American Bureau 
of Shipping, and indicate any conditions related to the delegated 
authority. If this affidavit is not received with a request for 
authorization from a foreign classification society, the request for 
authorization will be disapproved and returned by the Coast Guard.
    (c) Upon the satisfactory completion of the Coast Guard's 
evaluation of a request for authorization, the organization will be 
visited for an evaluation as described in Sec. 96.440(b) of this part.


Sec. 96.440  How will the Coast Guard decide whether to approve an 
organization's request to be authorized?

    (a) First, the Coast Guard will evaluate the organization's request 
for authorization and supporting written materials, looking for 
evidence of the following--
    (1) The organization's clear assignment of management duties;
    (2) Ethical standards for managers and auditors;
    (3) Procedures for auditor training, qualification, certification, 
and requalification that are consistent with recognized industry 
standards;
    (4) Procedures for auditing safety management systems that are 
consistent with recognized industry standards and IMO Resolution 
A.788(19);
    (5) Acceptable standards for internal auditing and management 
review;
    (6) Record-keeping standards for safety management auditing and 
certification;
    (7) Methods for reporting non-conformities and recording completion 
of remedial actions;
    (8) Methods for certifying safety management systems;
    (9) Methods for periodic and intermediate audits of safety 
management systems;
    (10) Methods for renewal audits of safety management systems;
    (11) Methods for handling appeals; and
    (12) Overall procedures consistent with IMO Resolution A.739(18), 
``Guidelines for the Authorization of Organizations Acting on Behalf of 
the Administration.''
    (b) After a favorable evaluation of the organization's written 
request, the Coast Guard will arrange to visit the organization's 
corporate offices and port offices for an on-site evaluation of 
operations.
    (c) When a request is approved, the recognized organization and the 
Coast Guard will enter into a written agreement. This agreement will 
define the scope, terms, conditions and requirements of the 
authorization. Conditions of this agreement are found in Sec. 96.460 of 
this part.


Sec. 96.450  What happens if the Coast Guard disapproves an 
organization's request to be authorized?

    (a) The Coast Guard will write to the organization explaining why 
it did not meet the criteria for authorization.
    (b) The organization may then correct the deficiencies and reapply.


Sec. 96.460  How will I know what the Coast Guard requires of my 
organization if my organization receives authorization?

    (a) Your organization will enter into a written agreement with the 
Coast Guard. This written agreement will specify--
    (1) How long the authorization is valid;
    (2) Which duties and responsibilities the organization may perform, 
and which certificates it may issue on behalf of the U.S.;
    (3) Reports and information the organization must send to the 
Commandant (G-MOC);
    (4) Actions the organization must take to renew the agreement when 
it expires; and
    (5) Actions the organization must take if the Coast Guard should 
revoke its authorization or recognition under 46 CFR part 8.

[[Page 67514]]

    (b) [Reserved]


Sec. 96.470  How does the Coast Guard terminate an organization's 
authorization?

    At least every 12 months, the Coast Guard evaluates organizations 
authorized under this subpart. If an organization fails to maintain 
acceptable standards, the Coast Guard may terminate that organization's 
authorization, remove the organization from the Commandant's list of 
recognized organizations, and further evaluate the organization's 
recognition under 46 CFR part 8.


Sec. 96.480  What is the status of a certificate if the issuing 
organization has its authority terminated?

    Any certificate issued by an organization authorized by the Coast 
Guard whose authorization is later terminated remains valid until--
    (a) Its original expiration date,
    (b) The date of the next periodic audit required to maintain the 
certificate's validity, or
    (c) Whichever of paragraphs (a) or (b) occurs first.


Sec. 96.490  What further obligations exist for an organization if the 
Coast Guard terminates its authorization?

    The written agreement by which an organization receives 
authorization from the Coast Guard places it under certain obligations 
if the Coast Guard revokes that authorization. The organization agrees 
to send written notice of its termination to all responsible persons, 
companies and vessels that have received certificates from the 
organization. In that notice, the organization must include--
    (a) A written statement explaining why the organization's 
authorization was terminated by the Coast Guard;
    (b) An explanation of the status of issued certificates;
    (c) A current list of organizations authorized by the Coast Guard 
to conduct safety management audits; and
    (d) A statement of what the companies and vessels must do to have 
their safety management systems transferred to another organization 
authorized to act on behalf of the U.S.


Sec. 96.495  How can I appeal a decision made by an authorized 
organization?

    (a) A responsible person may appeal a decision made by an 
authorized organization by mailing or delivering to the organization a 
written request for reconsideration. Within 30 days of receiving your 
request, the authorized organization must rule on it and send you a 
written response. They must also send a copy of their response to the 
Commandant (G-MOC).
    (b) If you are not satisfied with the organization's decision, you 
may appeal directly to the Commandant (G-MOC). You must make your 
appeal in writing, including any documentation and evidence you wish to 
be considered. You may ask the Commandant (G-MOC) to stay the effect of 
the appealed decision while it is under review.
    (c) The Commandant (G-MOC) will make a decision on your appeal and 
send you a response in writing. That decision will be the final Coast 
Guard action on your request.

TITLE 46--SHIPPING

PART 2--VESSEL INSPECTIONS

    2. Revise the authority citation for part 2 to read as follows:

    Authority: 33 U.S.C. 1903; 43 U.S.C. 1333; 46 U.S.C. 3103, 3205, 
3306, 3703; E.O. 12234, 45 FR 58801, 3 CFR, 1980 Comp., p. 277; 49 
CFR 1.46; Subpart 2.45 also issued under the authority of Act Dec. 
27, 1950, Ch. 1155, secs. 1, 2, 64 Stat 1120 (see 46 U.S.C. App. 
note prec.1).

    3. In Sec. 2.01-25, add paragraph (a)(1)(ix) and revise paragraph 
(a)(2) to read as follows:


Sec. 2.01-25  International Convention for Safety of Life at Sea, 1974.

    (a) * * *
    (1) * * *
    (ix) Safety Management Certificate.
    (2) The U.S. Coast Guard will issue through the Officer In Charge, 
Marine Inspection, the following certificates after performing an 
inspection or safety management audit of the vessel's systems and 
determining the vessel meets the applicable requirements:
    (i) Passenger Ship Safety Certificate.
    (ii) Cargo Ship Safety Construction Certificate, except when issued 
to cargo ships by a Coast Guard recognized classification society at 
the option of the owner or agent.
    (iii) Cargo Ships Safety Equipment Certificate.
    (iv) Exemption Certificate.
    (v) Nuclear Passenger Ship Safety Certificate.
    (vi) Nuclear Cargo Ship Safety Certificate.
    (vii) Safety Management Certificate, except when issued by a 
recognized organization authorized by the Coast Guard.
* * * * *

PART 31--INSPECTION AND CERTIFICATION

    4. Revise the authority citation for part 31 to read as follows:

    Authority: 33 U.S.C. 1321(j); 46 U.S.C. 2103, 3205, 3306, 3703; 
49 U.S.C. 5103, 5106; 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. Section 31.10-21 also issued under the authority of Sect. 
4109, Pub. L. 101-380, 104 Stat. 515.

    5. Add Sec. 31.40-30 to read as follows:


Sec. 31.40-30  Safety Management Certificate--T/ALL.

    All tankships to which 33 CFR part 96 applies on an international 
voyage must have a valid Safety Management Certificate and a copy of 
their company's valid Document of Compliance certificate on board.
    6. In Sec. 31.40-40, revise paragraph (b) to read as follows:


Sec. 31.40-40  Duration of Convention certificates--T/ALL.

* * * * *
    (b) A Cargo Ship Safety Construction Certificate and a Safety 
Management Certificate shall be issued for a period of not more than 60 
months.
* * * * *

PART 71--INSPECTION AND CERTIFICATION

    7. Revise the authority citation for part 71 to read as follows:

    Authority: 33 U.S.C. 1321(j); 46 U.S.C. 2113, 3205, 3306; 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.

    8. Add Sec. 71.75-13 to read as follows:


Sec. 71.75-13  Safety Management Certificate.

    All vessels to which 33 CFR part 96 applies on an international 
voyage must have a valid Safety Management Certificate and a copy of 
their company's valid Document of Compliance certificate on board.
    9. In Sec. 71.75-20, revise paragraph (a) to read as follows:


Sec. 71.75-20  Duration of certificates.

    (a) The certificates are issued for a period of not more than 12 
months, with exception to a Safety Management Certificate which is 
issued for a period of not more than 60 months.
* * * * *

PART 91--INSPECTION AND CERTIFICATION

    10. Revise the authority citation for part 91 to read as follows:

    Authority: 33 U.S.C. 1321(j); 46 U.S.C. 3205, 3306; 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.

    11. Add Sec. 91.60-30 to read as follows:


Sec. 91.60-30  Safety Management Certificate.

    All vessels to which 33 CFR part 96 applies on an international 
voyage must

[[Page 67515]]

have a valid Safety Management Certificate and a copy of their 
company's valid Document of Compliance certificate on board.
    12. In Sec. 91.60-40, revise paragraph (b) to read as follows:


Sec. 91.60-40  Duration of certificates.

* * * * *
    (b) A Cargo Ship Safety Construction Certificate and a Safety 
Management Certificate are issued for a period of not more than 60 
months.
* * * * *

PART 107--INSPECTION AND CERTIFICATION

    13. Revise the authority citation for part 107 to read as follows:

    Authority: 43 U.S.C. 1333; 46 U.S.C. 3205, 3306, 5115; 49 CFR 
1.45, 1.46; Sec. 107.05 also issued under the authority of 44 U.S.C. 
3507.

    14. Add Sec. 107.415 to read as follows:


Sec. 107.415  Safety Management Certificate.

    (a) All self-propelled mobile offshore drilling units of 500 gross 
tons or over to which 33 CFR part 96 applies, on an international 
voyage must have a valid Safety Management Certificate and a copy of 
their company's valid Document of Compliance certificate on board.
    (b) A Safety Management Certificate is issued for a period of not 
more than 60 months.

PART 115--INSPECTION AND CERTIFICATION

    15. Revise the authority citation for part 115 to read as follows:

    Authority: 33 U.S.C. 1321(j); 46 U.S.C. 2103, 3205, 3306; 49 
U.S.C. App. 1804; E.O. 11735, 38 FR 21243, 3 CFR, 1971-1975 Comp., 
p. 743; E.O. 12234, 45 FR 58801, 3 CFR, 1980 Comp., p. 277; 49 CFR 
1.46.

    16. Add Sec. 115.925 to read as follows:


Sec. 115.925  Safety Management Certificate.

    (a) All vessels that carry more than 12 passengers on an 
international voyage must have a valid Safety Management Certificate 
and a copy of their company's valid Document of Compliance certificate 
on board.
    (b) All such vessels must meet the applicable requirements of 33 
CFR part 96.
    (c) A Safety Management Certificate is issued for a period of not 
more than 60 months.

PART 126--INSPECTION AND CERTIFICATION

    17. Revise the authority citation for part 126 to read as follows:

    Authority: 46 U.S.C. 3205, 3306; 33 U.S.C. 1321(j); E.O. 11735, 
38 FR 21243, 3 CFR, 1971-1975 Comp., p. 793; 49 CFR 1.46.

    18. Add Sec. 126.480 to read as follows:


Sec. 126.480  Safety Management Certificate.

    (a) All offshore supply vessels of 500 gross tons or over to which 
33 CFR part 96 applies, on an international voyage must have a valid 
Safety Management Certificate and a copy of their company's valid 
Document of Compliance certificate on board.
    (b) A Safety Management Certificate is issued for a period of not 
more than 60 months.

PART 175--GENERAL PROVISIONS

    19. Revise the authority citation for part 175 to read as follows:

    Authority: 46 U.S.C. 2103, 3205, 3306, 3703; 49 U.S.C. App. 
1804; 49 CFR 1.45, 1.46; 175.900 also issued under authority of 44 
U.S.C. 3507.

    20. In Sec. 175.540, add paragraph (d) to read as follows:


Sec. 175.540  Equivalents.

* * * * *
    (d) The Commandant may accept alternative compliance arrangements 
in lieu of specific provisions of the International Safety Management 
(ISM) Code (IMO Resolution A.741(18)) for the purpose of determining 
that an equivalent safety management system is in place on board a 
vessel. The Commandant will consider the size and corporate structure 
of a vessel's company when determining the acceptability of an 
equivalent system. Requests for determination of equivalency must be 
submitted to Commandant (G-MOC) via the cognizant OCMI.

PART 176--INSPECTION AND CERTIFICATION

    21. Revise the authority citation for part 176 to read as follows:

    Authority: 33 U.S.C. 1321(j); 46 U.S.C. 2103, 3205, 3306; 49 
U.S.C. App. 1804; E.O. 11735, 38 FR 21243, 3 CFR, 1971-1975 Comp., 
p. 793; E.O. 12234, 45 FR 58801, 3 CFR, 1980 Comp., p. 277; 49 CFR 
1.46.

    22. Add Sec. 176.925 to read as follows:


Sec. 176.925  Safety Management Certificate.

    (a) All vessels that carry more than 12 passengers on an 
international voyage must have a valid Safety Management Certificate 
and a copy of their company's valid Document of Compliance certificate 
on board.
    (b) All such vessels must meet the applicable requirements of 33 
CFR part 96.
    (c) A Safety Management Certificate is issued for a period of not 
more than 60 months.
    23. Revise Sec. 176.930 to read as follows:


Sec. 176.930  Equivalents.

    As outlined in Chapter I (General Provisions) Regulation 5, of 
SOLAS, the Commandant may accept an equivalent to a particular fitting, 
material, apparatus, or any particular provision required by SOLAS 
regulations if satisfied that such equivalent is at least as effective 
as that required by the regulations. An owner or managing operator of a 
vessel may submit a request for the acceptance of an equivalent 
following the procedures in Sec. 175.540 of this chapter. The 
Commandant will indicate the acceptance of an equivalent on the 
vessel's SOLAS Passenger Ship Safety Certificate or Safety Management 
Certificate, as appropriate.

PART 189--INSPECTION AND CERTIFICATION

    24. Revise the authority citation for part 189 to read as follows:

    Authority: 33 U.S.C. 1321(j); 46 U.S.C. 2113, 3205, 3306; 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.

    25. Add Sec. 189.60-30 to read as follows:


Sec. 189.60-30  Safety Management Certificate.

    All vessels to which 33 CFR part 96 applies on an international 
voyage must have a valid Safety Management Certificate and a copy of 
their company's valid Document of Compliance certificate on board.
    26. In Sec. 189.60-40, revise paragraph (b) to read as follows:


Sec. 189.60-40  Duration of certificates.

* * * * *
    (b) A Cargo Ship Safety Construction Certificate and a Safety 
Management Certificate are issued for a period of not more than 60 
months.
* * * * *
    Dated: December 16, 1997.
R.C. North,
Rear Admiral, U.S. Coast Guard, Assistant Commandant for Marine Safety 
and Environmental Protection.
[FR Doc. 97-33528 Filed 12-19-97; 3:32 pm]
BILLING CODE 4910-14-M