[Federal Register Volume 63, Number 159 (Tuesday, August 18, 1998)]
[Rules and Regulations]
[Pages 44346-44356]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-21549]



[[Page 44345]]

_______________________________________________________________________

Part III





Department of Transportation





_______________________________________________________________________



Coast Guard



_______________________________________________________________________



49 CFR Part 8



Streamlined Inspection Program; Final Rule

  Federal Register / Vol. 63, No. 159 / Tuesday, August 18, 1998 / 
Rules and Regulations  

[[Page 44346]]



DEPARTMENT OF TRANSPORTATION

Coast Guard

46 CFR Part 8

[CGD 96-055]
RIN 2115-AF37


Streamlined Inspection Program

AGENCY: Coast Guard, DOT.

ACTION: Final rule.

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

SUMMARY: The Coast Guard is establishing an optional Streamlined 
Inspection Program (SIP) to provide owners and operators of U.S. 
documented or registered vessels an alternative method of complying 
with Coast Guard inspection requirements. Vessel owners and operators 
opting to participate in the program will maintain a vessel in 
compliance with a Vessel Action Plan (VAP) and have their own personnel 
periodically perform many of the tests and examinations conducted by 
Coast Guard marine inspectors. Coast Guard inspectors will conduct 
inspections in accordance with the approved VAP. The Coast Guard 
expects that participating vessels will continuously meet a higher 
level of safety and inspection readiness throughout the inspection 
cycle.

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

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

FOR FURTHER INFORMATION CONTACT: LT Paul Arnett, Vessel Compliance 
Division (G-MOC-2), telephone 202-267-0498, fax 202-267-4394.

SUPPLEMENTARY INFORMATION:

Regulatory History

    On April 8, 1997, the Coast Guard published a notice of proposed 
rulemaking entitled, ``Streamlined Inspection Program'' in the Federal 
Register (62 FR 17008). The Coast Guard received 27 letters commenting 
on the proposed rulemaking. No public meeting was requested, and none 
was held.

Background and Purpose

    Section 3306 of title 46 U.S. Code authorizes the Coast Guard to 
prescribe regulations necessary to carry out the inspection of vessels 
required to be inspected under 46 U.S.C. 3301. The inspection of 
vessels identified in 46 U.S.C. 3301 is required by statute; however, 
the specific procedures for conducting inspections are set out in Coast 
Guard regulations.
    In 1992, as part of its Maritime Regulatory Reform initiative, the 
Coast Guard considered a number of alternatives for inspection of U.S. 
documented or registered vessels. Two of these alternatives are the 
Alternate Compliance Program (ACP)(46 CFR part 8) and the Streamlined 
Inspection Program (SIP).
    The SIP is an optional, alternative inspection program for owners 
and operators of U.S. documented or registered vessels. The objective 
of the SIP is to have vessels participate in a constant state of 
regulatory compliance rather than the traditional cyclical readiness 
associated with vessels that must undergo Coast Guard periodic 
inspections. Under this alternative, the vessel owner or operator works 
with a Coast Guard representative to develop a Company Action Plan 
(CAP) and a Vessel Action Plan (VAP). A CAP describes the company's 
organization and its commitment to the SIP. The CAP also details how 
the company will train its employees on their specific SIP 
responsibilities. The VAP describes the Coast Guard regulations that 
apply to the vessel and the company's detailed procedures for its 
employees to maintain and examine vessel systems to ensure these 
systems operate safely. To simplify the CAP and the VAP and to provide 
consistency throughout the country, the Coast Guard will provide 
specific guidance for prospective SIP participants and Coast Guard 
personnel for each regulatory subchapter applicable to particular types 
of vessels (e.g., 46 CFR chapter I, subchapters D, H, I, K, L, O, R, T, 
and U).
    Vessel owners or operators who do not elect to participate in the 
SIP will continue to have their vessels inspected by the Coast Guard 
under traditional procedures or, if eligible, may choose to be 
inspected by a recognized classification society under the ACP.

Discussion of Comments and Changes

    The Coast Guard received 27 letters commenting on the notice of 
proposed rulemaking (NPRM). Fifteen comments generally supported the 
proposed SIP. The following paragraphs contain a discussion of comments 
received and an explanation of changes, if any, made to the proposed 
regulations. General comments on the rulemaking project are discussed 
first, followed by comments on specific sections of the regulation. 
Other changes to the proposed rule, not based on comments, are 
discussed last.

General Comments

     Several comments noted that vessels enrolled in the SIP 
should have their user fees reduced as an incentive to encourage vessel 
operators to enroll.
    As stated in the preamble to the NPRM, the Coast Guard will 
consider a regulatory project to revise user fees for enrolled vessels 
when sufficient cost data is available. Prototype programs have had 
varying degrees of Coast Guard involvement and therefore cannot be a 
basis for determining the overall costs or savings of the SIP.
     A number of comments discussed the relationship between 
the SIP and the ACP. The comments suggested combining the provisions of 
the two programs and allowing vessels enrolled in the ACP to also 
enroll in the SIP.
    The SIP and the ACP are two separate inspection programs available 
to vessel owners. The SIP and the ACP are mutually exclusive programs. 
The SIP is an alternative method for meeting Coast Guard inspection 
requirements, but all inspections are still done by Coast Guard marine 
inspectors. The ACP provides for vessel inspections using inspectors 
employed by a recognized classification society. The ACP is available 
only to vessels operating on international voyages and classed through 
a recognized classification society. The SIP alternative is available 
to any U.S. inspected vessel meeting the eligibility requirements.
     Some comments discussed personnel, staffing, and 
consistency concerns. The comments suggested using retired Coast Guard 
marine inspectors as SIP Advisors; expressed concerns that the SIP may 
cause the Coast Guard to reduce staffing at MSOs; and stated that there 
should be consistency of SIP determinations among the Officers in 
Charge, Marine Inspection (OCMI).
    Marine safety office (MSO) staffing and allocation of personnel and 
resources are internal Coast Guard matters that are not part of this 
rulemaking. The SIP should, in the long run, allow a more effective use 
of Coast Guard resources in MSO activities. The Office of Compliance, 
Vessel Compliance Division, is the Coast Guard-wide program manager for 
the SIP, and the Office of Quality Assurance/Traveling Inspectors will 
be providing the field oversight of the SIP to ensure national 
consistency in plan development and inspections.
     One comment from an individual who reviews Port State 
Information Exchange (PSIX) information to evaluate

[[Page 44347]]

vessels for carrying cargo stated that one concern is, ``there will be 
a notable drop off in 835s [CG-835, the widely used Merchant Marine 
Inspection Requirement form] issued--indeed in USCG presence 
generally.''
    Under the SIP, the Coast Guard still conducts required inspections, 
and CG-835s issued as a result of these inspections will still be 
available in the PSIX. However, repairs made by the company as a result 
of routine maintenance while complying with its VAP would be corrected 
in accordance with the VAP and documented in VAP records by the vessel 
owner. Coast Guard inspectors consider these items during required 
inspections, but they would not be entered as a CG-835 requirement in 
PSIX.
     Another comment noted certain portions of the NPRM 
mentioned vessel classes such as subchapters T and D, but neglected to 
include subchapter O. The comment asked if the applicability section of 
this regulation includes vessels inspected under subchapter O.
    This regulation does apply to vessels inspected under subchapter O. 
As previously noted in this preamble under Background and Purpose, the 
SIP is an alternative for vessels inspected under 46 CFR subchapters D, 
H, I, K, L, O, R, T, and U.
     A comment disagreed with the philosophy of self-inspection 
because no other mode of transportation is self-inspected (e.g., 
airlines and railways).
    The SIP is not a self-inspection program. Under the SIP, company 
personnel will be responsible for conducting regular tests and 
examinations of various vessel systems and recording their findings and 
initiating appropriate actions as specified in their OCMI-approved CAP 
and VAP. The Coast Guard is still required to verify compliance with 
applicable regulations and the conditions of the company's approved 
plans. The local OCMI approves the establishment of the company and 
vessel plans and Coast Guard marine inspectors provide all periodic and 
follow-on inspections.
     Some comments were concerned with the effects the SIP will 
have on small passenger vessels. One comment suggested requiring fewer 
procedures for small passenger vessels because they have fewer staff to 
do the work. Another comment suggested providing free training and 
guidance to small passenger vessels to encourage them to enroll in the 
SIP. The comment also noted that the proposed SIP did not sufficiently 
target small companies.
    Each VAP will be based on the requirements in the inspection 
subchapter applicable to a particular vessel. The Office of Compliance 
(G-MOC) and the Director of Field Activities, Quality Assurance Staff 
(G-MO-1) will provide Coast Guard oversight for the implementation of 
the SIP throughout the country. As resources are available, local OCMIs 
will provide training on the SIP to interested vessel owners and 
operators.
     One comment stated that participation in the program 
should not mean that the vessel owner would be subject to increased 
liability.
    The Coast Guard will continue to conduct inspections and issue the 
certificate of inspection (COI), and the vessel owner's compliance with 
an approved VAP will constitute compliance with applicable vessel 
inspection laws and regulations. Owner liability is not changed by 
participation in this program.
     One comment recommended the Coast Guard add language to 
ensure that this program remains voluntary because many operators do 
not have the resources, time, or incentive to participate in this 
program.
    The SIP is a voluntary program. If a company does not wish to, or 
is not eligible to, participate in this alternative inspection program, 
they will continue to be inspected under the traditional Coast Guard 
inspection program for compliance with vessel inspection laws and 
regulations. For clarity, the Coast Guard has placed the word 
``voluntary'' in front of the word ``alternative'' in Sec. 8.500(a).
     Some comments discussed the development of the SIP 
guidance documents. One comment recommended that the Towing Safety 
Advisory Committee (TSAC) help the Coast Guard to develop the SIP 
guidance for owners of vessels inspected under subchapter D. The 
comment also requested separate guidance for owners of tank vessels and 
tank barges. Another comment asked that the Coast Guard not treat oil 
spill recovery vessels (OSRV) like tank vessels when the Coast Guard 
develops the SIP guidance documents.
    The Coast Guard is already in contact with TSAC and other advisory 
committees and organizations concerning development of implementation 
guidance.

Comments on Specific Sections of the Rule

    Scope and applicability (Sec. 8.505). Three comments suggested dry-
dock exams be included in the SIP because the benefits of the SIP can 
only be fully realized when all vessel inspections are included in the 
SIP.
    As stated in the NPRM, the Coast Guard must evaluate SIP 
performance data before adding dry-dock examinations to this program.
    One comment stated that Sec. 8.505(c) is very specific regarding 
the inspections that are excluded from the program. The comment asked 
if the SIP will apply to inspections done under the Critical Area 
Inspection Program (CAIP).
    The CAIP is not a regulatory program. Currently, the Coast Guard is 
invited to attend CAIP surveys, but we are not required to witness the 
inspection. The CAIP surveys can be included as part of a CAP or VAP 
just like any other preventative maintenance program, if approved by 
the OCMI as part of the plan.
    Definitions (Sec. 8.510). One comment suggested including form CG-
835 in the definition of ``documented deficiency.'' A documented 
deficiency is broader than just a CG-835, and can also include a work 
list item issued by a marine inspector which was identified during the 
course of an inspection, re-inspection, or examination, but corrected 
prior to the issuance of a CG-835. The Coast Guard agrees that both CG-
835s and work list items are forms of documented deficiencies. The 
definition is meant to encompass all forms of Coast Guard-maintained 
documentation on a vessel's condition, including CG-835s. Therefore, we 
have not changed the wording in the definition.
    One comment recommended the Coast Guard permit the continued use of 
prototype program nomenclature for definitions in this part and, as an 
alternative, permit the use of a reference sheet or glossary that would 
define the nomenclature used in the prototype program in terms of the 
nomenclature used in the SIP regulation.
    Approved plans must be in compliance with the SIP final rule. 
Companies enrolled in locally-endorsed prototype programs have 3 years 
to bring their plans into compliance with the national standards. The 
OCMI has the flexibility and authority to accept revisions to prototype 
plans. A prototype program already in place that is also in compliance 
with the final rule with the exception of nomenclature, may include a 
cross reference glossary or index, as long as the glossary or index 
allows confirmation of a plan's compliance with the requirements of the 
national program.
    Eligibility (Sec. 8.515). Several comments expressed the position 
that newly-constructed vessels and recently-acquired, existing (i.e., 
new-to-company) vessels should be allowed to enroll in the SIP without 
regard for the

[[Page 44348]]

3-year eligibility requirement. The comment stated that newly-
constructed vessels are in the best condition they will ever be in and 
that is the best time to establish the vessel's base-line for 
enrollment. For recently-acquired existing vessels, if a company 
enrolled in the SIP takes the time to bring the vessel into full 
compliance, then a vessel's performance under the previous operator 
during the past 3 years should not be determinative of the vessel's 
eligibility for SIP enrollment with the new owner. The Coast Guard 
agrees that in many instances these vessels would be suitable for the 
SIP and companies with one or more vessels already enrolled in the SIP 
need not meet the 3-year requirement in Sec. 8.515(b)(1) for a newly-
constructed or recently-acquired vessel.
    One comment recommended that vessels older than 20 years be 
ineligible for the SIP.
    The Coast Guard's experience indicates that the age of a vessel is 
not the most reliable indicator of its condition or suitability for 
continued safe operation. Age alone is not, therefore, a singularly 
disqualifying factor for SIP eligibility. In considering a vessel for 
enrollment, the OCMI will review all aspects of a vessel's condition, 
its history, and the operational and management practices relative to 
the vessel's service.
    Two comments recommended that the SIP permit newly-formed companies 
to participate from the onset of vessel construction to give operating 
companies greater ownership of the program and better inspection 
results.
    Another comment suggested revising Sec. 8.515 to indicate that a 
vessel is eligible, if there are no outstanding deficiencies issued 
within the last 6 months. The eligibility section should recognize that 
civil penalties vary in degrees of severity, from those that affect the 
seaworthiness and safety of the vessel to those that involve relatively 
minor regulatory infractions. The OCMI should have more discretion in 
determining eligibility and in evaluating civil penalties.
    As stated previously, the 3-year history requirements provide the 
OCMI with a record of a company's commitment to the safe operation of 
its vessels. Also, in most cases, a 6-month period would not include a 
re-inspection cycle or an inspection for certification. However, under 
the waiver provision in the final rule, the OCMI may consider enrolling 
a company or vessel that does not meet all the eligibility 
requirements. The OCMI evaluation of the company's eligibility will 
take into consideration all factors, including the severity of any 
civil penalties noted by the Coast Guard in the last 3 years.
    OCMI review and action (Sec. 8.525). One comment suggested adding a 
paragraph that states, if the vessel operates in more than one OCMI 
zone, all OCMIs must accept the SIP. Another comment suggested that all 
OCMIs in the area where a vessel operates should agree to an SIP 
inspection conducted in another OCMI zone.
    For companies with vessels in more than one OCMI inspection zone, 
the CAP will be approved by the cognizant OCMI in the zone where the 
initial application for the SIP enrollment is made. The same 
requirements that regulate the operation and inspection of any vessel 
in more than one OCMI zone apply to the SIP vessels. The Coast Guard's 
internal implementation guidance will ensure consistent implementation 
of the SIP.
    Plan development and approval (Sec. 8.530). Four comments suggested 
allowing the use of a highly experienced surveyor (including the 
American Bureau of Shipping) to inspect and certify inspected equipment 
and correct any deficiencies.
    The intent of the SIP is to have company personnel conduct 
examinations to provide a sense of ownership and improve safety 
awareness. Using a third party surveyor, hired by the Company SIP Agent 
as a ``designated SIP support person'' is subject to approval by the 
OCMI. Maintenance or examination of certain shipboard systems may be 
beyond the expertise of a company's vessel or shoreside personnel. In 
that case, outside expertise may be appropriate and could be included 
in the VAP. Section 8.530(a)(4) requires that the CAP identify the 
responsibilities of those individuals who examine and maintain 
equipment and how their satisfactory performance will be verified and 
recorded.
    One comment wanted the Coast Guard to incorporate a process into 
the final rule, allowing companies with vessels that are sufficiently 
alike in multiple ports to undergo the procedure of developing CAPs and 
VAPs with a single OCMI. Companies can then use the original CAP and 
VAP as a model for vessels in other OCMI zones. The comment stated that 
incorporating this procedure would provide the consistency and 
standardization required in maintaining and inspecting a large fleet of 
similar vessels. The comment also stated that developing the CAP and 
VAP would be simple for a company with a single vessel or multiple 
vessels that are similar within the same OCMI zone. However, the 
procedure becomes more complex for companies with similar vessels in 
multiple OCMI zones.
    The Coast Guard agrees that a single OCMI will be able to approve 
an owner's CAP, however, the VAP is vessel- and area-specific. 
Companies with multiple vessels in more than one OCMI zone should start 
their enrollment process with a single vessel, or series of vessels and 
a single OCMI. Once the CAP has been developed and approved for the 
first vessel, it can be used as part of the application to the next 
OCMI zone. Subsequent OCMI review should focus on the revision of the 
CAP as it pertains to their zone. Section 8.530(a)(3) requires that the 
CAP contain information on designated SIP support personnel responsible 
for implementation and oversight of the program. Adding new ports and 
vessels to a CAP will require revisions to the CAP only as it pertains 
to operations under the SIP in the new location.
    Three comments stated that developing a separate plan for each 
vessel poses a significant administrative burden for a large barge 
fleet. The comments suggested that companies develop a VAP for each 
barge series where the construction, piping, and configuration are 
consistent. The comment also stated that the Coast Guard should not 
require VAPs to be maintained on board unmanned barges. Rather, VAPs 
should be available to the Coast Guard upon request.
    The Coast Guard agrees that a single VAP for each barge series may 
be accepted by the OCMI. However, a VAP needs to be on board an 
unmanned barge. Inspection certificates and company documents are 
routinely maintained on board unmanned vessels. Coast Guard inspection 
documents are required to be on board. The VAP is an inspection 
document that the company and the Coast Guard may need to access at any 
time. Having the VAP maintained on board the vessel ensures 
availability.
    One comment questioned if documents and plans created for the 
Responsible Carrier Program (RCP) could be used as ``credit'' for the 
CAP since the elements of the CAP are similar to the charter of the RCP 
and to approved vessel response plans. Another comment suggested 
allowing vessel owners to use documents developed for the International 
Safety Management (ISM) Code as CAP and VAP documents.
    The Coast Guard agrees that there may be some documentation 
redundancy between a CAP and other required or voluntary documents and 
plans. For example, companies with vessels that

[[Page 44349]]

are ISM Code compliant should have the necessary documentation 
developed to apply for the SIP. If ISM Code documents are sufficiently 
detailed, then they may also be suitable for use in a CAP or VAP. The 
use of ISM documentation or other documents as part of a CAP or VAP 
must be approved by the OCMI. In such cases, companies should submit 
copies of what they already have in place to the OCMI for review and 
possible use in development of its CAP and VAPs.
    One comment stated that the Coast Guard should consider waiving the 
extensive training requirements for a company that has implemented a 
recognized quality management program such as an ISM or American 
Waterways Operators (AWO) RCP.
    The OCMI may accept evidence that the training conducted pursuant 
to an approved quality management program is the same as the training 
required under the SIP. The Coast Guard doesn't intend to impose a 
redundant burden on companies that have already implemented a quality 
management system. For those companies that have such a system in 
place, the OCMI may consider accepting in the CAP and VAP those quality 
management components that meet the specific requirements for a CAP and 
VAP.
    One comment asked, to what extent will outside vendors who repair 
and service certain equipment be able to serve as SIP examiners and 
under whose training program will they be accredited.
    The use of outside vendors is common. The approved VAP should 
answer these questions on the use of vendors, but the company's SIP 
Agent will still be responsible for verifying that the work is 
completed by approved facilities and qualified personnel where 
required, that the equipment is installed and functioning properly, and 
the work has been properly documented.
    One comment requested that the Coast Guard reword Sec. 8.530(b) to 
state, ``* * * Each VAP shall include at least the following or its 
functional equivalent:''. The comment noted that the regulations must 
allow flexibility in the method of documentation. If specific written 
forms are required by these regulations, companies who develop 
effective computer-based inspection scheduling systems will then have 
to maintain a duplicate manual driven system.
    The Coast Guard agrees in principle with the comment; however, we 
made no regulatory changes. The OCMI has the discretion to approve any 
appropriate recordkeeping system, including computer-based systems, as 
part of a vessel's VAP. As stated previously in discussing comments to 
Sec. 8.510, the Coast Guard must be able to verify compliance with the 
requirements in the final rule and measure the effectiveness of the 
program.
    One comment wanted the Coast Guard to delete the organizational 
commitment statement in paragraph (a)(2) of Sec. 8.530 in light of the 
requirements in paragraphs (a)(3) through (a)(5) of this section.
    The Coast Guard disagrees with this comment. The need for an 
organizational commitment statement is not satisfied by the inclusion 
of the items specified in paragraphs (a)(3) through (a)(5). Instead, it 
is complemented by those requirements. The commitment statement defines 
the company's philosophical position and goals. The items in 
Sec. 8.530, paragraphs (a)(3) through (a)(5), specifically identify how 
that philosophical commitment will be put into effect.
    One comment stated that there is no guidance in Sec. 8.530 for the 
handling of inspection criteria discrepancies. The comment recommended 
that in Sec. 8.530, paragraphs (a)(4) and (a)(5) be revised to 
incorporate the mechanism used in the offshore prototype programs for 
handling vessel deficiencies. Prototype programs classified 
deficiencies as ``urgent'' and ``routine,'' and assigned a time for 
correction of the deficiency.
    In Sec. 8.530, paragraph (a)(5) allows for flexibility when 
determining corrective action. It is up to the company and the OCMI to 
determine the time frame associated with corrective action. In 
addition, the implementation guidance provided by the Coast Guard in 
the inspection criteria references (ICR) includes information on 
corrective action. The Coast Guard did not make the suggested change to 
paragraphs (a)(4) and (a)(5).
    Another comment stated that paragraph (a)(10) of Sec. 8.530 implies 
that a CAP must have appendices that contain each approved VAP. For a 
company with numerous vessels enrolled, this could become a very 
unwieldy document. The comment recommended this section be revised to 
require an appendix that lists each VAP approved under the CAP.
    The CAP and VAPs are interdependent documents. It is necessary that 
each VAP be accessible to the company SIP Agent, as well as having a 
vessel-specific copy maintained on the vessel. Paragraph (a)(10) is not 
revised in the final rule.
    One comment suggested deleting paragraph (b)(2) of Sec. 8.530 
because it appears to repeat the requirements of paragraph (a)(5).
    The Coast Guard disagrees. The VAP and CAP are separate documents 
and are not redundant in their function. Paragraph (b)(2) will remain 
unchanged in the final rule.
    Training and operational evaluation (Sec. 8.535). One comment 
requested further clarification on what constitutes an SIP training 
program. Many hours of training and apprenticeship are required for 
designation as a Coast Guard ``barge inspector.'' There is concern that 
training expectations may exceed training resource capabilities.
    Vessel owners, through their SIP Agent, and the OCMI's SIP Advisor 
must work closely to develop the SIP training requirements, based on 
vessel type and operating requirements. Vessel-specific ICRs should be 
used extensively as training aids to develop and maintain consistent 
and efficient procedures under the VAP.
    One comment discussed manning and crew fatigue. The comment stated 
that the crew would be required to conduct additional tests and 
examinations as a result of the SIP. The comment wanted to know how the 
increase in work would be reflected in the manning scale on the 
vessel's COI since there are work-hour restrictions and required rest-
hour periods mandated by law and international convention.
    The regulations governing maximum work hours in a 24-hour period 
and required rest intervals are not affected by this regulation; they 
remain unchanged. Part of the CAP and VAP development process will be 
incorporating the periodic system examinations contained in the VAP 
into regular vessel routines.

Enrollment in SIP (Sec. 8.540). One comment suggested that the OCMI 
enrollment letter be a mandatory requirement.

    The Coast Guard agrees and has revised Sec. 8.540 to indicate that 
once the company and its vessel(s) have successfully completed the 
training and evaluation phase, and the OCMI concurs with the Coast 
Guard SIP Advisor's recommendation, the OCMI will issue an enrollment 
letter and endorse the COI.

Scope of Inspection for Enrolled Vessels (Sec. 8.545). Four comments 
discussed an alternative to annual inspections. They recommended that 
rather than annual inspections, vessels--especially unmanned tank 
barges--should only be subject to periodic random inspections like the 
current MARPOL checks.

[[Page 44350]]

    The SIP is an alternative to traditional Coast Guard inspections. A 
particular vessel inspection interval is determined by the regulations 
contained in the applicable subchapter. It is beyond the scope of the 
SIP rulemaking to adjust inspection intervals. To clarify the 
inspection interval requirement and allow for any future changes within 
the inspection subchapters, we have changed the word ``annual'' to 
``periodic'' in paragraph (a) of Sec. 8.545.
    One comment asked why an approved VAP is needed if the marine 
inspector might conduct additional tests or examinations of a vessel.
    The OCMI remains responsible for ensuring the safe operation of 
vessels within that inspection zone. Marine inspectors under the SIP 
will conduct their examinations in accordance with the VAP. The marine 
inspector will only expand the examination parameters if discrepancies 
are discovered or there is otherwise cause for concern. These would be 
instances where the marine inspector believes the vessel is not being 
operated in complete compliance with the approved VAP. This, if found 
to be the case, is cause for disenrollment. There is nothing in the SIP 
that diminishes the OCMI's authority or responsibility to ensure the 
safety of life, property, the environment, and facilitation of maritime 
commerce within that zone.
    One comment expressed concerns that an audit or a spot check 
boarding may not focus on compliance with the approved VAP. Once a VAP 
is approved, that document becomes the primary guide for the owner or 
operator to follow in determining inspection compliance issues. Coast 
Guard inspections will focus on the condition of the vessel and 
maintenance of the vessel in accordance with the VAP.
    One comment suggested revising paragraph (b) of Sec. 8.545 to 
indicate ``A Coast Guard inspector from the OCMI staff'' will conduct 
the inspection. It should be made clear that the local inspection staff 
conducts the inspections.
    The SIP is designed so that any Coast Guard marine inspector should 
be able to verify compliance with a VAP, regardless of whether the 
vessel was enrolled in that particular OCMI zone or not. This 
regulation establishes a uniform, nationwide program, in which marine 
inspectors for the OCMI zone where the SIP inspection is scheduled will 
conduct the examination. Only marine inspectors from ``the OCMI staff'' 
will be conducting inspections. Therefore, no changes to the regulation 
have been made.
    One comment recommended that Sec. 8.545 be revised to provide 
guidance regarding the scope of an SIP audit, and that a sample audit 
be included.
    The scope of an SIP inspection is covered in Sec. 8.545, paragraphs 
(b)(1) through (b)(4). Additional detailed guidance may be provided by 
the OCMI. The intent of an SIP inspection is for the marine inspector 
to verify compliance with the VAP.
    One comment recommended that the VAP list specific inspections that 
will be conducted by the qualified crewmember, operators, or Coast 
Guard inspectors and stated that there are too many critical 
inspections that require the presence of a marine inspector.
    The ICR sheets provide information on the level of inspection 
required. Since the VAP will contain ICRs, no further clarification is 
required in the regulation.
    Plan review and revisions (Sec. 8.550). One comment recommended a 
change from a 2-year to a 5-year review cycle, unless the owner or 
operator's performance record indicates needed oversight. Annual review 
is time consuming and costly.
    There is no required annual review of SIP documentation by the 
company unless the company itself has established such an interval. The 
requirement to review the CAP every 2 years is a quality control 
measure that ensures that the plan contents are up to date. Properly 
maintained plans will normally be revised as the need arises. There 
may, in fact, be no changes necessary at the time of the review--it is 
simply a company check for accuracy.
    Three comments suggested eliminating the mandatory review and 
revision for ISM compliant companies. The ISM process calls for the 
continual review and revision of manuals and procedures when non-
conformities are identified. The internal and external audit programs 
required by the ISM system also provide assurance that manuals will not 
become obsolete.
    The Coast Guard agrees that ISM compliant companies will probably 
be able to prove to the OCMI that their review processes are meeting 
the regulations. However, this method of continuous compliance needs to 
be submitted to the cognizant OCMI for approval and incorporation into 
the VAP during the application and VAP approval process.
    One comment stated that requiring a company to submit a revised 
plan to the OCMI each time that a revision is made could place an 
unnecessary administrative burden on the local MSOs. The comment also 
recommended periodic review or audit for operations that are ISM 
compliant.
    The Coast Guard must be kept informed of changes that affect a 
company's CAP or VAP. The company SIP Agent and OCMI's SIP Advisor 
should coordinate the manner in which this process is to be 
accomplished, and the Coast Guard has not changed this requirement in 
the final rule.
    Disenrollment (Sec. 8.555). In Sec. 8.555(a), one comment suggested 
adding the words ``that issued the Certificate of Inspection'' after 
the words ``cognizant OCMI''. The OCMI that issued the COI should be 
the one that voluntarily disenrolls the vessel.
    The Coast Guard does not find this change necessary. As SIP is a 
nationwide program, disenrollment requests through any cognizant OCMI 
(defined as the OCMI responsible for the zone in which the vessel is 
currently operating) will satisfactorily disenroll the vessel.
    One comment asked the Coast Guard to clarify the parameters for re-
enrollment once a vessel has been disenrolled.
    Once a vessel or company has been disenrolled either voluntarily or 
involuntarily, the company must reapply for enrollment in accordance 
with subpart E.
    Waiver (Sec. 8.560). One comment had several questions concerning 
waivers. The comment asked when a waiver can be requested; who can 
request the waiver, the OCMI or the vessel operator; and is the waiver 
the equivalent of an appeal for a marine inspection requirement.
    A company may request a waiver at any time. The company will 
request the waiver through its SIP Agent for any procedural requirement 
in subpart E, such as eligibility. Waiver of substantive inspection 
requirements should be submitted in accordance with procedures in the 
subchapter containing the requirement.
    One comment recommended that Sec. 8.560 be revised to provide 
guidance on the discretionary authority of the District Commander to 
grant waivers. The comment noted that this is necessary because the 
preamble, which provides an explanation of the regulation will 
disappear once the regulations are final. Two comments noted the waiver 
section is a key provision and should be kept as is.
    The Coast Guard agrees with these latter comments that no revisions 
are needed.
    Interim approval of prototype company vessel plans (Sec. 8.570). 
One comment noted that prototype programs were based on ISM and 
International

[[Page 44351]]

Organization for Standardization (ISO) standards. The comment stated 
that the SIP regulations must permit companies participating in the SIP 
some degree of flexibility with respect to the format of the CAP and 
VAP to allow companies to structure the program for their individual 
needs. This is consistent with the general provisions of the ISM Code 
and ISO 9000 standards. The comment also noted that companies with 
approved prototype programs should not have to revise their CAP and 
VAP.
    For the SIP to be uniformly applied there must be consistency 
nationwide in its implementation. A prototype program vessel examined 
in an OCMI zone that did not endorse that prototype program might 
encounter needless difficulty during the SIP inspection. The extra 
effort necessary to bring Coast Guard inspectors up to speed with all 
possible prototype programs would nullify some of the benefits of the 
SIP. In addition, some prototype programs lack disenrollment and other 
important criteria. Therefore, companies and vessels in a prototype SIP 
program will have 3 years from the effective date of the final rule to 
bring their existing program into full compliance. As discussed 
previously, the Coast Guard will consider equivalents and appropriate 
cross-referencing to required documentation. This should provide the 
needed flexibility for prototype programs to make a smooth transition.
    One comment suggested that vessels of unique design only be 
considered for this program after the 3-year period.
    That determination is up to the OCMI. Therefore, the Coast Guard 
made no changes based on this comment.

Other Changes to the Proposed Regulations

    In addition to the changes made to the regulations as a result of 
the comments, the Coast Guard has revised the definition of Exam 
Checklists to accommodate a variety of documents. In the revised 
definition, Exam Checklists may be any document or form approved in the 
VAP to record the periodic examinations of vessel systems by vessel 
personnel. For example, copies of the Inspection Schedule and 
Verification (ISV) sheets could be used as Examination Checklists.
    The Coast Guard has also revised the definition of ``prototype 
vessel plan'' by removing the word ``vessel'' and adding the word 
``SIP'' in its place. In addition, the heading and the first sentence 
in paragraph (a) of Sec. 8.570 has been revised to include prototype 
SIP company or vessel plans. This will provide consistency and account 
for prototype SIP company or vessel plans.

Regulatory Evaluation

    This rule is not a significant regulatory action under section 3(f) 
of Executive Order 12866 and does not require an assessment of 
potential costs and benefits under section 6(a)(3) of that order. It 
has not been reviewed by the Office of Management and Budget under that 
order. It is not significant under the regulatory policies and 
procedures of the Department of Transportation (DOT) (44 FR 11040; 
February 26, 1979).
    The Coast Guard expects the economic impact of this rule to be so 
minimal that a full Regulatory Evaluation under paragraph 10e of the 
regulatory policies and procedures of DOT is unnecessary. The Coast 
Guard expects this rule to provide an economic benefit to the owners 
and operators of U.S. documented or registered vessels.
    Currently, 11,800 U.S. documented or registered vessels may be 
eligible to participate in this optional SIP. Entrance into the SIP is 
voluntary. Because the program is new, it is difficult to estimate how 
many vessel owners will choose to develop a VAP and seek enrollment. 
Some Coast Guard offices have been working with company owners on 
prototype programs that are similar to the SIP.
    Over the next 3 years, the Coast Guard estimates that the following 
number of vessels will voluntarily enroll in the SIP:
     274 small passenger vessels (subchapter T).
     78 small passenger vessels (subchapter K).
     48 large passenger vessels (subchapter H).
     131 offshore supply vessels (subchapter L).
     29 cargo vessels (subchapter I).
     4 tank ships (subchapter D).
     942 tank barges or OSRVs (subchapter D or O).
    These estimates of vessel enrollment reflect both the number of 
vessels presently in prototype programs similar to the SIP and the 
number of vessels that could enroll for the first time in the SIP 
within the next 3 years.

Industry Cost

    The Coast Guard based the cost estimates for the SIP on the 
incremental costs company owners and operators have incurred 
participating in prototype programs similar to the SIP. Company owners 
and operators will have different economic impacts from this program 
depending on the number, class, and size of the vessels that they 
enroll in the program. The time and resources an owner or operator may 
spend developing the VAP will vary depending on the vessel's system 
complexity (simple tank barge systems or multi-faceted large passenger 
vessel systems), the current company management infrastructure 
(availability of support staff, system expertise, and strength of 
organizational policies), and the number of crewmembers or employees 
involved with the plan's implementation.
    For a company to submit the application required to enroll its 
vessels in the SIP, the Coast Guard estimates that--
     Preparation of the application will take a senior staff 
official 1 hour at $60 per hour; and
     401 companies will apply for the program during the first 
3 years at an industry cost of $8,040 annually over the first 3 years.
    For a company to develop a CAP, the Coast Guard estimates that--
     It will require 80 hours of senior staff time at a cost of 
$60 per hour; and
     401 companies will develop CAPs during the first 3 years 
at an industry cost of $641,580 annually over the first 3 years.
    For a company to develop a VAP, the Coast Guard estimates that--
     It will require 40 hours of senior staff time at a cost of 
$60 per hour; and
     VAPs will be prepared for 1,506 vessels during the first 3 
years at an industry cost of $1,204,800 annually over the first 3 
years.
    For a company to make the required updates to the plans, the Coast 
Guard estimates that each company will devote 10 hours annually at $60 
per hour for an industry cost of $80,220.
    Additional costs associated with these plans include $25,100 in 
printing and copying costs. We estimate the total industry cost 
associated with plan development and approval to be $1,959,740.
    Under this rule, vessel owners and operators will incur some SIP 
implementation training costs. These costs reflect a slight increase in 
existing crew or employee training costs to ensure responsible 
personnel have the skills needed to conduct maintenance and 
examinations of vessel equipment and systems required by the VAP.
    One small passenger vessel owner (regulated under subchapter K) 
currently in a prototype program estimated that VAP training took 
approximately 35 hours to train each of four employees to properly 
conduct and record the tests and examinations under the VAP. Based on 
an hourly salary of $16 for the trainer and an average hourly salary of 
$13 for each of the four

[[Page 44352]]

employees, we estimate a one-time training cost of $2,380 for a similar 
passenger vessel.
    A tank barge owner currently in a prototype program estimated that 
VAP training took approximately 40 days to train 16 employees to 
conduct and record examinations under the VAP for a 200-barge fleet. 
Based on an 8-hour training day, an hourly salary of $33.65 for the 
trainer, and an average hourly salary of $25 for each of the employees, 
we estimate a training cost of $138,770 for a similar size barge fleet.
    The Coast Guard estimates that the one-time training costs for 
personnel on vessels in the SIP will range from $700 ($138,770 divided 
by a 200-simple-system fleet) to $3,000 (for one large multi-system 
vessel) per vessel. The Coast Guard assumes that once the VAP is 
approved and the vessel is enrolled in the SIP, any further training 
will be incorporated into established company training and vessel 
maintenance programs at little or no additional cost. Therefore, we did 
not include recurring training costs in the cost estimates for this 
rule.
    Some owners and operators participating in prototype programs 
purchased computers and other administrative items to help with 
collation of plan information. A computer could reduce the 
administrative time spent developing the VAP; however, this rule does 
not require a company to have a computer. Because a company could meet 
all of the SIP criteria without a computer, the Coast Guard did not 
include equipment costs in the cost estimates for this rule.

Industry Benefits

    Benefits from the SIP are expected to vary and are not currently 
quantifiable. Participants in prototype programs stated that the cost 
to participate and maintain this type of voluntary program has been 
partially offset by an increased availability of their vessels for 
profit-making ventures. Some Coast Guard marine inspectors have noted 
as much as a 50 percent reduction in their onboard inspection time on 
vessels participating in a prototype program. Prototype program 
participants have also reported other benefits. These participants 
reported that they have experienced the following benefits:
     The vessel's material condition was kept at a consistently 
high level and there were fewer major repairs.
     The company's cost of maintaining the vessel in regulatory 
compliance was reduced and expenses were more evenly distributed over 
time.
     The licensed mariners recognized their role in regulatory 
compliance and welcomed the empowerment to conduct the procedures 
specified in the VAP.
     The unlicensed crew experienced more rapid professional 
growth as they were trained and became familiar with conducting the 
step-by-step verification procedures.
     The communication between the company and the Coast Guard 
was open and problem-solving.
     The vessel's working environment was better than it had 
been under the traditional inspection program.
     There were fewer insurance claims and personnel injuries.
     The vessel's maintenance records provide more information 
and are better than the records the company required on its own.
There were no monetary estimates for the value of these benefits.

User Fees

    The Coast Guard expects that once implemented, the SIP will result 
in fewer onboard Coast Guard inspection hours required to inspect and 
certify participating vessels. This rule, however, will not change 
existing vessel inspection user fees. When sufficient data exists 
regarding the Coast Guard costs required to administer the new program, 
the Coast Guard plans to review the existing user fee structure to 
determine if a reduction in fees is warranted.

Government Costs

    This rule has short-term costs to the Coast Guard but, in the long-
term, will save resources. In the initial implementation of the SIP, 
Coast Guard inspectors will need to review company applications, assist 
companies in plan development, and oversee the operational 
implementation of the plan. The time required by this program varies 
depending on the type of vessel and the current company management 
infrastructure. It may take the Coast Guard as little as 3 hours to 
verify a tank barge company's eligibility, 18 hours to assist in 
developing and reviewing its plan, and 8 hours to oversee its operation 
prior to a favorable assessment of the VAP by the Coast Guard marine 
inspector. However, the Coast Guard may take significantly more time to 
assist in developing, reviewing, and overseeing the plans and operation 
of a large passenger vessel because of its complex onboard systems and 
the large number of company personnel involved in managing the CAP and 
VAP. After the initial investment of Coast Guard resources (time and 
training) to assist vessel personnel with their plans, the Coast Guard 
expects to reduce the amount of time taken to inspect and certify 
vessels enrolled in the SIP.

Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. 601-612), the Coast 
Guard must consider whether this rule will have a significant economic 
impact on a substantial number of small entities. ``Small entities'' 
include small businesses, not-for-profit organizations that are 
independently owned and operated and are not dominant in their fields, 
and governmental jurisdictions with populations of less than 50,000.
    The Coast Guard expects this rule to have a positive economic 
impact for owners and operators who choose to participate in the SIP. 
Of the 1,506 vessels which owners may submit for SIP enrollment, we 
estimate that small entities will own 334 small passenger vessels, 52 
offshore supply vessels, and 94 tank barges or OSRVs. Under Section 601 
of the Regulatory Flexibility Act, the Coast Guard has provided a 
flexible approach that meets the needs of each company and its vessels 
and will benefit any small businesses choosing to enter the program. 
This rule will have no impact on vessel owners who do not choose to 
participate in the program.
    This rule provides an optional way of complying with existing 
inspection regulations and will only have an economic impact if the 
vessel owner enrolls in the SIP instead of the existing Coast Guard 
scheduled inspection program. For a small entity, plan development may 
be too large an initial investment recoverable after too long a time 
for them to see the benefits. To assist small entities in plan 
development, the Coast Guard will provide detailed guidance tailored to 
the small passenger vessel operator and to other small entities that 
operate other vessel types. This rule also provides for one-on-one time 
with Coast Guard inspectors to assist in plan development. Benefits 
from the SIP are expected to be especially positive to those small 
entities with more than one vessel in the program because after 
developing the first CAP and VAP, costs will be minimal for developing 
VAP(s) for the remaining vessels.
    The SIP is a voluntary program; it provides benefits to small 
entities willing to invest the time and training needed for enrollment. 
Therefore, the Coast Guard certifies under section 605(b) of the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.) that this final rule 
will not have a significant economic impact on a substantial number of 
small entities.

[[Page 44353]]

Assistance for Small Entities

    In accordance with section 213(a) of the Small Business Regulatory 
Enforcement Fairness Act of 1996 (Pub. L. 104-121), the Coast Guard 
wants to assist small entities in understanding this rule so they can 
better evaluate its effects on them and participate in the rulemaking 
process. If your small business or organization is affected by this 
rule and you have questions concerning its provisions or options for 
compliance, please contact LT Paul Arnett at the numbers listed under 
FOR FURTHER INFORMATION CONTACT.

Collection of Information

    This final rule provides for a collection of information under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
    The information collections associated with this rule concern the 
application for enrollment, development of the VAP, development of the 
CAP, and updates to the CAP and VAP. The costs and hour-burdens 
associated with these procedures are outlined in the Industry Costs 
section. A total information collection hour-burden of 32,244 is 
estimated for this program.
    One comment noted that the collection of information section of the 
NPRM states ``* * * reports must be submitted whenever a company 
representative performs activities required by the VAP.'' The comment 
was concerned that this requirement could create a paperwork burden for 
industry and the Coast Guard. For example, a company may require a 
deckhand to check void spaces several times a day and record those 
checks.
    Under the frequency of response section of the NPRM, the Coast 
Guard did not state that all documentation should be sent to the Coast 
Guard. It is true that if the VAP requires certain activities to be 
documented, then company personnel will do that documenting. The 
documentation will be kept by the company or on the vessel and will be 
made available to the Coast Guard. But these recordkeeping requirements 
should not be confused with reporting requirements. This rule does not 
require the documentation to be submitted to the Coast Guard.
    As required by 5 U.S.C. 3507(d), the Coast Guard submitted a copy 
of this rule to the Office of Management and Budget (OMB) for its 
review of the collection of information. Originally, the Coast Guard 
submitted to OMB requests for additions to four existing collection-of-
information requests--OMB Approval Numbers 2115-0025, 2115-0071, 2115-
0578, and 2115-0592. These requests added SIP collection hours to 
existing programs and all but 2115-0071 were approved by OMB. The 
Office of Management and Budget did not approve 2115-0071, titled 
Official Logbook, because a public comment expressed confusion over the 
inclusion of SIP collection hours in that particular request. To 
eliminate confusion, the Coast Guard submitted a consolidated, SIP-
exclusive, collection-of-information request to OMB. This consolidated 
request presents the numbers in a form that is easier to understand and 
makes it easier for the Coast Guard to renew when it expires.
    The Office of Management and Budget has approved the consolidated 
collection. The section numbers are Secs. 8.520, 8.530, 8.535, and 
8.550, and the corresponding approval number from OMB is OMB Control 
Number 2115-0633, which expires on July 31, 2001.

Federalism

    The Coast Guard has analyzed this rule under the principles and 
criteria contained in Executive Order 12612 and has determined that 
this rule does not have sufficient federalism implications to warrant a 
Federalism Assessment.
    The authority to regulate safety requirements of U.S. vessels is 
delegated to the Coast Guard by statute. Furthermore, because these 
vessels tend to move from port to port in the national market place, 
these safety requirements need to be national in scope to avoid 
numerous, unreasonable and burdensome variances. Therefore, this action 
preempts State action addressing the same matter. One comment stated 
disagreement with the Coast Guard's determination that the regulations 
would preempt state or local regulations involving inspection of 
vessels, citing the decisions of the Supreme Court in Ray v. ARCO and 
of the District Court for the Western District of Washington in 
INTERTANKO v. Lowery, as affirmed in part by the Ninth Circuit Court of 
Appeals for the premise that Federal preemption is limited to 
regulations relating solely to the design, equipment, and construction 
of vessels. The Coast Guard disagrees with this limited interpretation 
of the Supreme Court precedent in the Ray case and the ruling of the 
Ninth Circuit Court of Appeal in the INTERTANKO case that adopts this 
limited interpretation. The Coast Guard has historically inspected 
vessels for their compliance with Federal regulations that address the 
safety of vessels and protection of the marine environment. The 
certificate of inspection issued to vessels as a result of these 
inspections indicates that the vessels are safe for the service in 
which they are engaged. It is the Coast Guard's opinion that the 
Supremacy Clause preempts state and local regulations that seek to 
impose different or higher standards governing the inspection of U.S. 
vessels.

Environment

    The Coast Guard considered the environmental impact of this rule 
and concluded that, under figure 2-1, paragraph (34)(d) of Commandant 
Instruction M16475.1C, this rule is categorically excluded from further 
environmental documentation. This rule is excluded based on its 
inspection and equipment aspects. A Categorical Exclusion Determination 
is available in the docket for inspection or copying where indicated 
under ADDRESSES.

List of Subjects in 46 CFR Part 8

    Administrative practice and procedures, Organization and functions 
(Government agencies), Reporting and recordkeeping requirements.

    For the reasons set out in the preamble, the Coast Guard amends 46 
CFR part 8 as follows:

PART 8--VESSEL INSPECTION ALTERNATIVES

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

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

    2. Subpart E, consisting of Secs. 8.500 through 8.570, is added to 
read as follows:

Subpart E--Streamlined Inspection Program

Sec.
8.500  Purpose.
8.505  Scope and applicability.
8.510  Definitions.
8.515  Eligibility.
8.520  Application.
8.525  OCMI review and action.
8.530  Plan development and approval.
8.535  Training and operational evaluation.
8.540  Enrollment in SIP.
8.545  Scope of inspection for enrolled vessels.
8.550  Plan review and revisions.
8.555  Disenrollment.
8.560  Waiver.
8.565  Appeal.
8.570  Interim approval of prototype SIP company or vessel plans.

Subpart E--Streamlined Inspection Program


Sec. 8.500  Purpose.

    (a) This subpart establishes the Streamlined Inspection Program 
(SIP) which is a voluntary alternative

[[Page 44354]]

inspection program for U.S. documented or registered vessels required 
to maintain a valid certificate of inspection (COI).
    (b) This subpart sets out the eligibility and application 
requirements and the plan development and approval procedures for 
enrollment of companies and their vessels in the SIP.


Sec. 8.505  Scope and applicability.

    (a) This subpart applies to U.S. documented or registered vessels 
that have a valid COI.
    (b) A vessel enrolled in the SIP will be inspected in accordance 
with its approved Vessel Action Plan (VAP).
    (c) The SIP includes all inspections required to renew and maintain 
a valid COI. The SIP does not include dry-dock examinations, 
unscheduled inspections related to vessel casualties, equipment repair 
or replacement, or vessel modifications. Those inspections will be 
conducted in accordance with the subparts applicable to the vessel.


Sec. 8.510  Definitions.

    The following definitions apply to this subpart:
    Civil penalty means a final assessment under the provisions of 33 
CFR part 1, subpart 1.07 or part 20 of this chapter.
    Coast Guard SIP Advisor means the Coast Guard marine inspector 
assigned by the Officer in Charge, Marine Inspection (OCMI), to assist 
in the development of an action plan.
    Company means the owner of the vessel or any other organization or 
person, such as the manager or the bareboat charterer, who operates a 
vessel under the SIP.
    Company Action Plan (CAP) means the document describing a company's 
organization, policies, and responsibilities required for participation 
in the SIP.
    Company SIP Agent means the individual who is responsible for the 
Company Action Plan and the Vessel Action Plan development and 
implementation and who has the authority to bind the company to the 
terms of these plans.
    Correction Report means a document which sets out specific vessel 
deficiencies and is used to record their correction by the company.
    Documented deficiency means an incident documented in a Coast Guard 
record in which the condition of a vessel, its equipment, or its 
operation was not in compliance with Coast Guard regulations.
    Examination Checklist means any document or form approved in the 
VAP, that may be used by company employees to record the periodic 
examinations required by the VAP.
    Inspection Criteria References (ICR) means the individual pages in 
the VAP that list each item on the vessel required by regulation to be 
periodically inspected.
    Inspection Schedule and Verification (ISV) means the document that 
lists the items to be inspected and the intervals for their inspection, 
and on which is recorded the completion of required examinations and 
tests conducted by designated company employees.
    Prototype SIP plan means the SIP plans developed for a company or 
vessel participating in a Coast Guard District-or OCMI-endorsed SIP 
before August 18, 1998.
    Reportable casualty means a marine casualty or accident required to 
be reported under 46 CFR part 4, subpart 4.05 of this chapter.
    Streamlined Inspection Program (SIP) means the alternative 
inspection program set out in this subpart.
    Vessel Action Plan (VAP) means the document that prescribes 
procedures for maintenance, examination, and inspection of a vessel 
enrolled in the SIP.


Sec. 8.515  Eligibility.

    (a) The company must--
    (1) Have owned or operated at least one U.S. documented or 
registered vessel for a minimum of 3 consecutive years before the SIP 
application date; and
    (2) Have paid all civil penalties and user fees.
    (b) Except as allowed by paragraph (c) of this section, each vessel 
must--
    (1) Have been in operation with an eligible owner or operator for 
at least 3 consecutive years before the SIP application date;
    (2) Have had no revocation of its COI during the 3 years before the 
SIP application date; and
    (3) Have no documented deficiency for any of the following in the 3 
years before the SIP application date:
    (i) Any vessel operation inconsistent with the operating details 
specified on its COI.
    (ii) Operating without the required amount of lifesaving appliances 
on board the vessel or with inoperable survival craft.
    (iii) Operating without the required firefighting equipment on 
board the vessel or with an inoperable fire pump(s).
    (iv) Unauthorized modifications to the vessel's approved systems or 
structure, such as fixed firefighting systems, pollution prevention 
arrangements, overcurrent protection devices, or watertight boundary 
arrangements.
    (v) Operating without the required navigation equipment on board 
the vessel or with inoperable navigation equipment.
    (c) A vessel constructed for, or acquired by, a company with one or 
more vessels enrolled in the SIP need not meet the requirement in 
paragraph (b)(1) of this section for enrollment in the SIP, provided 
that the vessel holds a valid COI issued by the OCMI where the vessel 
will principally operate.


Sec. 8.520  Application.

    To apply for SIP enrollment, a company will submit an application, 
in writing, to the cognizant OCMI. The application must contain the 
following:
    (a) A statement that the company and prospective vessel(s) meet the 
requirements of Sec. 8.515.
    (b) A summation of the company's current status in relation to 
Sec. 8.530(a).
    (c) The name and official number of the vessel(s) the company 
intends to enroll in the SIP.
    (d) The name and contact information for the Company SIP Agent.


Sec. 8.525  OCMI review and action.

    (a) The cognizant OCMI will review Coast Guard records for the 3 
years before the SIP application date to verify the eligibility of the 
company and each vessel listed in the SIP application.
    (b) If the company and one or more of its vessels meets the 
eligibility requirements contained in Sec. 8.515, the cognizant OCMI 
will notify the company of its eligibility and assign a Coast Guard SIP 
Advisor.
    (c) If, according to Coast Guard records, a company or vessel does 
not meet the eligibility requirements contained in Sec. 8.515, the 
cognizant OCMI will notify the company in writing of its ineligibility 
stating each reason for not accepting the company or a vessel.


Sec. 8.530  Plan development and approval.

    The Company SIP Agent will develop the CAP and VAP with guidance 
from the Coast Guard SIP Advisor for OCMI approval.
    (a) Company Action Plan. The CAP shall include at least the 
following:
    (1) A copy of the OCMI CAP approval letter (once the CAP is 
approved).
    (2) An organization commitment statement.
    (3) A company organization chart that includes the name(s) of the 
designated SIP support personnel who will be responsible for 
implementation and oversight of the approved CAP and VAP(s).
    (4) A statement describing the responsibilities and authorities of 
personnel involved in the examination and maintenance of the vessel(s) 
for the company.

[[Page 44355]]

    (5) A description of the method the company will use to integrate 
the applicable subpart regulations into its SIP and the method or 
system used to initiate corrective action.
    (6) A description of the company's safety program.
    (7) A description of the company's environmental protection 
program.
    (8) A description of the company's training infrastructure, the 
method used to track and record training for individual employees, and 
the training required for the designated SIP support personnel to 
implement the CAP and the VAP.
    (9) A master list of all SIP documents and ICRs that the company 
intends to use in its VAP(s).
    (10) Appendices for each approved VAP.
    (b) Vessel Action Plan. Each VAP shall include at least the 
following:
    (1) A copy of the OCMI VAP approval letter (once the VAP is 
approved).
    (2) A description of the method that will be used to integrate the 
VAP into the vessel's regular operations.
    (3) Vessel-specific ICRs.
    (4) Vessel-specific ISV forms.
    (5) Vessel-specific examination checklists.
    (6) Correction reports.
    (c) Plan Approval. The Company SIP Agent will submit the CAP and 
each VAP to the cognizant OCMI for approval. Once approved, a copy of 
the VAP shall be kept on board the vessel.


Sec. 8.535  Training and operational evaluation.

    When the CAP and VAP(s) have been approved by the cognizant OCMI, 
the company may begin training and operating under the plans. This 
evaluation phase includes the following:
    (a) The company shall provide the designated SIP support personnel 
with training as required by the CAP.
    (b) The vessel must operate and be examined under the VAP for a 
period of at least 3 months.
    (c) During the operational periods, the Coast Guard SIP Advisor 
will conduct an ongoing evaluation of the vessel's operation, the 
training records, and the ability of all designated persons to perform 
their assigned functions under the VAP. The Coast Guard SIP Advisor 
will report periodically to the cognizant OCMI and the Company SIP 
Agent on the vessel's performance, and make recommendations, if needed.
    (d) Revisions recommended under paragraph (c) of this section, or 
any additional operational periods under a revised CAP or VAP as may be 
required by the cognizant OCMI must be completed prior to enrollment.


Sec. 8.540  Enrollment in SIP.

    Upon successful completion of the training and evaluation phase, 
the Coast Guard SIP Advisor will recommend to the OCMI that the company 
or vessel be enrolled in the SIP. If the OCMI concurs with the 
recommendation, he or she will issue an enrollment letter and endorse 
the vessel's COI. Subsequent inspections covered under this subpart 
will be conducted in accordance with the approved VAP.


Sec. 8.545  Scope of inspection for enrolled vessels.

    (a) A Coast Guard marine inspector will conduct required periodic 
and follow-on inspections necessary to ensure compliance with Coast 
Guard regulations.
    (b) A Coast Guard marine inspector will conduct the inspections in 
paragraph (a) of this section in accordance with the procedures set out 
in the VAP. These inspections will normally include the following:
    (1) Administrative review. This portion of the inspection consists 
of a review of prior Coast Guard SIP inspection forms, the contents of 
the VAP, and other certifications of equipment and vessel systems.
    (2) SIP performance review. This portion of the inspection consists 
of a review of vessel SIP documentation and records, review of the SIP 
procedures, and a company evaluation of their SIP.
    (3) Materiel review. This portion of the inspection consists of a 
general examination of the vessel, witnessing the examination of 
selected items under the VAP by company designated SIP support 
personnel, inspection of selected items, and witnessing crew 
performance in drills.
    (4) Conclusion and recommendations. This portion of the inspection 
contains the Coast Guard marine inspector's evaluation of regulatory 
compliance of the vessel under its VAP.
    (c) A Coast Guard marine inspector may conduct any additional tests 
or examinations of vessel equipment or systems necessary to ensure 
compliance with Coast Guard regulations during an inspection covered in 
paragraph (a) of this section.


Sec. 8.550  Plan review and revisions.

    (a) Mandatory reviews and revisions. The CAP and VAP(s) must be 
reviewed and revised as follows:
    (1) Every 2 years after the plan approval date, the company shall 
review the CAP and update all information required by Sec. 8.530.
    (2) Every 5 years after the plan approval date, the Coast Guard SIP 
Advisor and the Company SIP Agent will review the VAP.
    (3) If a reportable casualty occurs, the cognizant OCMI will review 
the portions of the VAP related to equipment, training, personnel, and 
systems involved in the casualty and determine whether revisions to the 
VAP are appropriate.
    (4) When statutes or regulations change, the appropriate sections 
of the CAP and VAP(s) will be revised.
    (b) Discretionary reviews and revisions. The CAP and VAP(s) may be 
reviewed and revised by the company at any time. The revisions must be 
submitted to the cognizant OCMI for approval.


Sec. 8.555  Disenrollment.

    (a) Voluntary disenrollment. A company may request SIP 
disenrollment (which includes all of its vessels) or may request 
disenrollment of a specific vessel from the SIP by writing to the 
cognizant OCMI. The OCMI will then issue a letter disenrolling the 
vessel or company. Disenrolled vessels will be inspected in accordance 
with the requirements of 46 CFR part 2, subpart 2.01 of this chapter.
    (b) Company disenrollment. The OCMI may issue a letter disenrolling 
the company if the company no longer has at least one enrolled vessel 
or if the company fails to continue to meet the eligibility 
requirements in Sec. 8.515.
    (c) Vessel disenrollment. The OCMI may issue a letter disenrolling 
a vessel if any one or more of the following occurs:
    (1) The sale of the vessel.
    (2) A finalized letter of warning or assessment of a civil penalty 
for--
    (i) Operating outside the scope of the vessel's COI or Stability 
Letter;
    (ii) Not reporting a personnel or material casualty required to be 
reported under 46 CFR part 4; or
    (iii) A material deficiency listed in Sec. 8.515(b)(3).


Sec. 8.560  Waiver.

    (a) A Coast Guard District Commander may waive any requirement of 
this subpart--
    (1) If good cause exists for granting a waiver; and
    (2) If the safety of the vessel and those on board will not be 
adversely affected.
    (b) Requests for waiver of any requirement of this subpart must be 
submitted in writing to the cognizant OCMI for review before forwarding 
to the Coast Guard District Commander for action.
    (c) A copy of each waiver granted under this section shall be 
maintained at all times in the VAP.

[[Page 44356]]

Sec. 8.565  Appeal.

    A company may appeal any decision or action taken under this 
subpart in accordance with 46 CFR part 1, subpart 1.03 of this chapter.


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

    (a) A company operating under an approved prototype SIP company or 
vessel plan must apply in writing by November 1, 1998, to the cognizant 
OCMI for approval to continue operating under the plans while revisions 
are developed to bring the prototype SIP company or vessel plan into 
conformance with this subpart. The OCMI may approve the request for a 
period of up to 3 years.
    (b) A company that does not request approval as required by 
paragraph (a) of this section or does not obtain approval to continue 
operating under a prototype SIP company or vessel plan by February 1, 
1999, may no longer operate under the plans and will be inspected in 
accordance with the requirements of 46 CFR part 2, subpart 2.01 of this 
chapter.

    Dated: August 5, 1998.
Joseph J. Angelo,
Acting Assistant Commandant for Marine Safety and Environmental 
Protection.
[FR Doc. 98-21549 Filed 8-17-98; 8:45 am]
BILLING CODE 4910-15-P