Operational Excellence through Leadership and Compliance

Maritime Compliance Report

Welcome. Staying in compliance takes dedication, diligence and strong leadership skills to stay on top of all the requirements which seem to keep coming at a rapid pace. With this blog I hope to provide visitors with content that will help them in their daily work of staying in compliance. I hope you find it a resource worthy of your time and I look forward to your feedback, questions, comments and concerns. Thanks for stopping by. To avoid missing critical updates, don’t forget to sign up by clicking the white envelope in the blue toolbar below.

Lessons Learned from a Cruise Ship Fire

According to news sources, Coast Guard investigators have explained that the cause of the engine room fire on the Carnival Triumph was a leaking fuel return line. There is a lesson to be learned for all vessel operators, especially towing vessel operators considering adopting a towing safety management system (TSMS) under Subchapter M.

Back in the late 1980s I served aboard the Coast Guard Cutter Wedge. She was a 75 foot push boat with a 68 foot crane barge known as a construction tender. Even though it was a small crew with a relaxed atmosphere, I had been trained on my previous cutters to make a round every hour when on duty. During one round of the engine room I noticed the fluid in the bilge ripple from a drip. I found that the source was diesel dripping from the bottom of the generator. I traced the stream of diesel around the generator to the top of the engine but could not tell where it was originating.  As I stared at the components for a while it finally came into focus. It was a thread of diesel, barely visible to the naked eye, shooting out of a pin hole in one of the fuel lines. The engineers replaced the fuel line quickly and the Wedge, I am happy to say, is still in operation today.

When we set up companies with a safety management system we proved a number of vessel inspection job aids. Conducting proactive inspections of equipment in order to uncover problems before they become major is a basic concept of safety management. In some cases we have had the inspection job aids hard-laminated, to be used in the engine room with a grease pencil. After all, the idea is not to generate paper to cover our behinds. The idea is to ensure that nothing is missed during the inspection. During one of our quarterly visits to a client's boat, the engineer informed me that he didn't use the job aid, he went from memory. I said Okay, and asked him to imagine going through the engine room as he does, and to explain all the things he checks. When he was done remembering everything he could, I did some quick math and wrote in the inspection report that his failure to use the job aids provided by the company resulted in him checking only 14 percent of the items on the job aid. He got the point, and now makes sure to use the job aids. We get complacent because the likely hood that a similar situation will happen to us is extremely small, but the severity of the consequence in this type of scenario dictates that the threat must be mitigated.

There is a lot of chatter these days about what is the best and easiest path forward for Subchapter M compliance. There should be more focus on the quality of the TSMS itself, and the training on what safety management is really all about, rather than focusing on convenient and easy solutions. The easiest way is not always the best way to go. It takes hard work to be excellent. As a wise man once said, "If you do what is easy in life, your life will be hard; but if you do what is hard in life, your life will be easy." 

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Critical Decisions for Vessel Operators and Third Parties

It seems that whenever a new rule making is in progress an entire new industry evolves. This was the case with Oil Pollution Act (OPA) of 90, as well as the Maritime Transportation Security Act (MTSA) of 2002. But both may pale in comparison to the economic opportunity provided by Subchapter M, which may be seen as a potential gold mine for some professional services companies and maritime entrepreneurs. Unfortunately, for towing vessel operators, the amount of information being levied upon them may add to their confusion and stress when trying to make the best decisions for their companies. 

Major Point of Confusion - Subchapter M is the subchapter of Title 46 of the Code of Federal Regulations (CFR) which has been established by the U.S. Coast Guard to regulate the inspection of U.S. flagged towing vessels. In addition to the standard protocol of having the Coast Guard send a marine inspector to inspect and certify a towing vessel, the proposed rule for Subchapter M offers an option for towing vessel operators to adopt a Towing Safety Management System (TSMS). Vessel operators should understand that this is only an option. There is no requirement in the proposed rule for any towing vessel to have a safety management system of any kind, including a TSMS. Even if a company already operates under a safety management system, there is no requirement in the proposed rule for such a company to choose that option for their Subchapter M compliance. Such companies can continue to operate under their safety management system, but choose the standard Coast Guard vessel inspection option in order to obtain their certificates of inspection (COIs).

Liability - The TSMS option in Subchapter M allows for certain third party organization to conduct audits and surveys on behalf of the government. There are some unanswered questions regarding the liability of third party organizations and surveyors under the Subchapter M. While there have been some interesting discussions, we are far from having an answer. Those answers are best left to the attorneys. But as a non-attorney, I offer these few recent instances to consider: after ten years of litigation, American Bureau of Shipping (ABS) was cleared of liability in the case of the M/V Prestige, a vessel that broke apart creating a large oil spill on the coast of Spain; a case was dismissed against the U.S. Coast Guard, where the Coast Guard was being sued for alleged errors made during certification of a vessel which eventually capsized resulting in loss of life; but a third party flag surveyor was sentenced to prison for making false statements and certifying a vessel as safe, which was subsequently found to be deficient by the Coast Guard. So what will be the liability issues for third party organizations acting on behalf of the government? I hope that Coast Guard headquarters will come forth with some guidance on this issue.

It remains to be seen if Subchapter M will be a gold mine, or a land mine, for third parties. But one thing is certain, towing vessel operators should proceed with caution and understand all the facts before choosing their course action. 

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Written in Blood

It's Mardi Gras time once again in New Orleans. If you have been to New Orleans' Mardi Gras parades you know that the edges of the curbs along the parade route are lined with ladders. These ladders are no ordinary ladders. They have three foot long bench seats attached to the very top where we precariously place our precious babies. It's enough to give an OSHA inspector a heart attack. How could this be legal?  On very rare occasion a cop will tell people they need to move their ladders back away from the curb. Of course, the parents respond that they do this every year and it has never been a problem before. They are reluctant to move because they will lose their spot and someone else will quickly place their ladder on the edge of the same curb. It is highly unlikely that another cop will come along and tell them to move. This causes a little deja vu for me. As a Coast Guard inspector, I was that cop. I always enforced the regulations accurately and consistently. I encountered much of the same arguments and resistance. One inspector training me had told me that the regulations were written in blood. That is, some catastrophe had happened that caused the regulations to be written.  I took that to heart. Even though I didn't know what the catastrophe was for each regulation, I enforced them all. After all, that's what the tax payers were paying me to do. Maybe those few New Orleans cops that occasionally tell confused parents to move their ladders back from the curb remember the story of Christian Lambert. According to a recent article in local Gambit newspaper, it turns out that putting our ladders on the curb is not legal. In 1985 the New Orleans City Council passed an ordinance which requires all ladders to be "placed as many feet back from the curb as the ladder is high." That's because of a tragedy that occurred in 1981 at the Krewe of Orleanians parade. Christian was an eight year old boy who was launched from his ladder and was crushed under float number 48 when the crowd surged forward. Accurate and consistent enforcement is a critical component to ensuring compliance. Understanding the origin and intent of regulations is an essential motivator. 

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Striving for Excellence - A New Year’s Resolution

Compliance is something that many only think of when forced to. At the Workboat Show many representatives from good companies pass by our booth and say hello, but when asked if they have any compliance questions or issues we can help with, the response is usually, "No thanks we've got all that under control." Perhaps they do, but chances are their issues just haven't risen to the surface yet. Many good companies pass inspections and audits and assume that they are in full compliance. They may be, or they may find out at the next inspection, audit or accident that they were not as compliant as they had assumed. But an excellent company has a proactive compliance management program as part of their regular routine and does not rely upon inspectors' and auditors' interpretations and opinions to determine their level of compliance.

With the coming of a new year, an opportunity arises to take your company from "good" to "excellent" in terms of compliance. If striving for excellence is part of your company culture, here are a few things to consider in the new year:

TWICs are expiring en masse this year. Don't procrastinate in getting those TWICs renewed. Even with the new 30 day grace period, there could be serious repercussions.

The effective anniversary date of the EPA VGP is February 19th. Each year a comprehensive VGP annual inspection is required to be done and any instances of noncompliance with the permit must be reported to the EPA. This annual inspection includes record keeping. For example, if there are not 52 weekly inspections on file, or records of all graywater discharges, or records of any painting and deck maintenance conducted, that may constitute noncompliance with the permit. Be aware that the permit also dictates who is qualified to conduct the annual VGP inspections.

Your uninspected towing vessel examination sticker may expire this year. While you are not required to renew it, if you do, you should be prepared for a much more knowledgeable batch of examiners who may find a number of deficiencies that were not addressed in the first go round. A comprehensive regulatory compliance survey is a good way to prepare for the Coast Guard.

Subchapter M may be published this year. When it is, companies will be scrambling to determine the best path forward. You can get ahead of the curve by discussing the compliance options for each vessel, and by getting captains and crews ready by intensive drills, as well as training on what operating a vessel according to safety management system really means. A thorough internal audit or assessment by an objective third party is a good way to prepare.


 

Good companies may choose to wait and see if any of what I have addressed rises to the surface this year. Excellent companies will not take that gamble and will leave nothing to chance. Have an excellent and prosperous New Year. 

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Strategic Partnership with Boatracs

We are proud to announce a strategic partnership with Boatracs to provide an electronic Subchapter M compliance product. Please click here to read the full article: Maritime Executive.

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BP Indictments and Subchapter M

 As I read the indictment of two BP officials, Robert Kaluza and Donald Vidrine, on 11 counts of seaman's manslaughter and involuntary manslaughter, I couldn't help but think about Subchapter M and the future of the towing vessel industry. Mr. Vidrine and Kaluza were Well Sight Leaders on the Deepwater Horizon rig the day of the explosion which resulted in the deaths of 11 people. According to the indictment, these Well Sight Leaders were responsible for, among other things, "supervising the implementation of BP's drilling plan." To draw an analogy, under Subchapter M, should a company operate under a Towing Safety Management System (TSMS), the captain will be responsible for "supervising the implementation of the company TSMS."

The indictment explains that Vidrine and Kaluza were grossly negligent in their duties for not doing what they were supposed to do, specifically: failing to call the BP engineers ashore during the negative testing about the multiple readings that the well was not secure, failing to adequately account for those abnormal readings, and for accepting a nonsensical explanation for those readings. They were not following the plan, and an explosion resulted in many deaths.

A few years back the towing industry experienced a number of accidents when tows hit bridges. Bridge transit procedures were added to many safety management systems. The idea is, as with any written safety plan, if you follow it you will minimize the risk of human error. Many captains that I talk to can't explain the bridge transit procedures. Many protest that they don't need some book to tell them how to drive a boat. But what if one day a captain fails to account for wind and leeway on a big tow, and as a result he takes the bridge out and cars drive into the river? I'm sure Mr. Vidrine and Kaluza relied on their experience as well, and did not think that the rig would blow up, but it did. Had they followed the plan, perhaps those people would not have died, and they might not be looking at jail time.

If your towing company chooses a TSMS for Subchapter M, take the opportunity to make sure you have the best possible procedures and that your captains know they must follow them at all times. As a wise man once said, smart people learn from their mistakes, but really smart people learn from other people's mistakes.
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A Military Approach to Seafaring

 If a company hired a new captain for a new vessel, and shortly thereafter that captain was asked what challenges he faces on his new vessel, what do you think he might say? I can't imagine him saying that the biggest hurdle he faced was that there was not enough established doctrine or written procedures for him to follow! Perhaps if International Safety Management (ISM) systems had been implemented as intended, to minimize human error by following written procedures that represent best practices, he might have said such a thing. But that culture, to my knowledge, has not been established on the civilian side of seafaring. While working with companies to implement ISM and other safety management programs, I often use the example of serving on a number of Coast Guard cutters, where there was a right way to do everything, and it was written down in manuals. There were almost no checklists used either, because everything had to be learned, practiced, memorized and drilled. From this perspective, I believe a real safety culture is one where the word "safety" is never mentioned. I can't remember ever hearing it on any Coast Guard cutter: there was only the right way to do things. In watching Dale DuPont's interview with LCDR Craig Allen, Commanding Officer of the USCGC William Flores, on Workboat.com recently, I was pleased to see that some things never change. Listen to what the Captain says when asked what challenges he faces on his new vessel… (Video interview) That's right; he says that their biggest hurdle is that there is not enough established doctrine or procedures to follow. He explains they will have to make them from scratch based upon lessons learned and best practices. This is an example of what the Coast Guard's "safety culture" looks like. The operational Coast Guard is not an excellent organization by accident. How excellent is your operation?

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Expirations and Renewals

 Time flies. It's hard to believe that many TWICs are reaching their expiration date. Thankfully, there is an alternative process to renew a TWIC for those whose cards are now expiring. As long as you are a U.S. citizen or U.S. national and your TWIC is expiring before December 31, 2014, all you have to do is call 1-866-347-8942 and pay $60, to order a new TWIC which will be good for another three years.  A client recently did this over the phone with all their employees and found it to be a very simple process. Of course, once the TWIC is ready, it will require a trip to a TWIC center to pick it up and activate it.

Another expiration which is coming up is the first batch of Bridging Program Uninspected Towing Vessel (UTV) examination stickers. Some vessel operators are under the impression that they must renew their examination sticker. This is not the case. UTVs are still uninspected until the Final Rule of Subchapter M goes into effect. The UTV examination program had been around for many years before the Bridging Program, a program which is similar to the commercial fishing vessel voluntary examination program. The Coast Guard decided to use the UTV examination program as part of the Bridging Program to ease the transition to inspected towing vessel status. Once a towing vessel has been examined and has received a sticker, it has fulfilled its obligation under the Bridging Program and there is no further requirement to have the sticker renewed.

A vessel operator may request that the Coast Guard re-examine their vessel, which is a prudent course to take. However, operators should consider that the intent of the Bridging Program was to increase vessel compliance while getting Coast Guard examiners familiar with towing vessels and their respective regulations. So, operators should not be surprised when the same vessel now ends up with a number of deficiencies which may not have been identified the first time around. That should only serve as an indication of the success of that program goal, which was to increase the proficiency Coast Guard personnel.
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Resources for Uninspected Towing Vessel Operators

There are still a significant number of towing vessel that have not been examined under the Coast Guard's Bridging Program. As the Coast Guard trains more examiners and becomes more proficient in conducting uninspected towing vessel (UTV) exams, the bar for operators is steadily rising. In their continuing effort to help the industry demonstrate full compliance the Coast Guard has published a new edition of "United States Coast Guard Requirements for Uninspected Towing Vessels." This is the best comprehensive reference for a particular class of vessel that has ever been published by the Coast Guard. In addition to the excellent explanation of the regulations, there are useful appendixes which include frequently asked questions, and a collection of those ever-elusive Policy Letters which contain a wealth of information. Whether your company is still struggling to get their vessels examined, or you consider yourself an expert on the topic, this publication deserves a serious look. There is something for even the most experienced among us to learn.

Additionally, a client of mine recently returned for the UTV examiner course at the Coast Guard Training Center in Yorktown, VA. The week-long course is mainly for Coast Guard personnel, but a number of seats are dedicated for industry personnel. The course was reportedly, very informative and the binder of training material I reviewed contained a great deal of useful information. My client said one of the most important things that he got out of the course was to witness the Coast Guard's approach compliance which was a real eye opener. If you can get into one of these courses it will definitely be worth the trip. 

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Maritime Compliance Management – “Understanding”

 When I was training to become a Coast Guard marine inspector years ago, I noticed the doorway on a crewboat was 28 inches wide. When I looked up the regulation, I found that the door for a passenger compartment is required to be 32 inches wide. The other inspector breaking me in was reluctant to make the owner enlarge the doorway.  All I could imagine was some very large passengers getting stuck in the capsized boat that we had certified.

Some say that regulations are written in blood. To have an effective compliance program, there must be an understanding of the intent of the regulations. Research is often necessary, but some owner/operators don't have the time, manpower, or desire to figure out if a certain regulation applies, or what the intent of the regulation is. As a result, many companies end up "chasing their tails" by relying solely on others' opinions and interpretations.

Compliance is a complicated business, but not an impossible one. Here are a few insider secrets. When a company becomes aware of a regulation, the first step should be to review the applicability in the regulations and ensure the regulation applies and that there are no exceptions. The next step should be to review the policy guidance on the topic. When dealing with the U.S. Coast Guard, policy guidance comes in a number of forms, such as: the Marine Safety Manual; Navigation and Vessel Inspection Circulars (NVICs); Headquarters policy letters; District policy letters; and local Captain of the Port policies. Additionally, the Federal Register can be reviewed for the date the regulation was published because it is footnoted at the end of each regulatory citation. The Federal Register has explanations for the regulations as well as the public comments and the Coast Guard's responses. This provides excellent insight into the intent of the regulations. These resources are all available online these days, so there is no good excuse for not preparing yourself before problems arise. Stay ahead of the curve and, in the words of my old Chief Quartermaster, who thankfully never answered my questions, "Look it up."
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Maritime Compliance Management – “Acceptance”

 Did you know that vessel owners are required to manage rain run-off? That crewmembers are required to screen their shore-side bosses if they come aboard a vessel? That push-boats are required to have a bell of a certain size in case they anchor or run aground in the fog? This is only the tip of the regulatory iceberg. Some regulations seem so ridiculous that vessel owners have a hard time believing that they could be true, or that they will ever be enforced, or that someone won't come to their senses and make them go away. A common strategy used once a vessel owner becomes aware of a regulation is to call around to some friendly competitors to see what they are doing. They may end up convincing each other to adopt a "wait and see" approach. After all, the Coast Guard always gives 30 days to correct a deficiency, right? Some companies call the Coast Guard to ask about a particular issue, and because the Coast Guard person who answers the phone isn't familiar with the particular requirement, the company may say, "The Coast Guard doesn't even know about this," and use that as an excuse to do little or nothing to comply. This is not good.

Acceptance is the second component to maritime compliance management. This is where the company management "buy-in" discussion has its roots. If the company ignores a regulation, or does something half-way to at least look like it was trying and hope for the best, it will not be perceived as having bought in to the program by its employees.  Captains of vessels are charged with ensuring compliance with the majority of vessel regulations.  From a leadership standpoint, if the captain knows, or perceives, that the company is not taking a regulation or program seriously, why would they?  A basic principle of leadership is, "In order to be a good leader, you must first be a good follower."  That doesn't mean just doing what your boss says.  It applies to following all rules and regulations. If your company is having trouble getting captains to be proactive about compliance issues, examine your own company's attitude toward the regulations. Why would crews put forth an effort if they know the company thinks it's all "crap?" Unless a company accepts a regulation, for better or for worse, it will be plagued with problems over the long term.
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Maritime Compliance Management – “Awareness”

 I got a ticket within the past year for "running a red light." I never saw the light turn red as I drove through the yellow light traveling under the speed limit. However, the officer issuing me the ticket explained that if any portion of my vehicle remained in the intersection when the light turned red, then that constituted running a red light. I paid the ticket and then did a little research. I now know the legal definition of running a red light in my town. But, why didn't I research that before? Because, I have a general knowledge of traffic rules, I don't have a history of violations, and if I ever get a ticket, I'll just pay it and move on. It's all a matter of risk assessment. What is the risk to my peace of mind and my wallet? The answer is: minimal. There is no reason to proactively manage my compliance with traffic laws. However, when it comes to running my business, the risk is much greater and therefore, I make sure that I am compliant with whatever applicable laws and regulations I become aware of.

Awareness is the first component to maritime compliance management. You can't comply with regulations if you're not aware of them. Some ostriches reading this are thinking, "Exactly!" But we all know how the government feels about "ignorance of the law…" When your business is at risk, you can't afford not to be aware of regulations. There are many sources of information these days. There is really no good excuse for not being aware of all the regulations coming at a fast rate. It should be someone's job in the organization to subscribe to newsletters and check the appropriate websites to stay on top of all the latest developments. For example, the North American ECA goes into effect on Wednesday, August 1, 2012. Accordingly, the Coast Guard has published a10-page policy letter and a 16-page job aid for Coast Guard inspectors to make sure vessel companies are compliant. Vessel companies should make it a point to study those two documents. Don't manage your vessel compliance the way I manage my traffic compliance; the risks are not the same.
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Conclusion - Towing Vessel Operators Must Choose Wisely

A properly implemented safety management system (SMS) can be a tool for operational excellence, and companies should not be steered away from adopting one. More than one person have expressed some confusion about why I would write a four part blog that appears to discourage the adoption of a Towing Safety Management System (TSMS), since producing safety management systems is a large part of our consulting business. The answer is simple; we're in the business of helping clients by giving them all the facts, both good and bad, and helping them arrive at the decisions which will be best for their business, not ours. We are just explaining the implications and potential consequences of adopting an SMS and not fully implementing it. In future blogs I will outline the steps required to develop and implement an excellent safety management system. One point about the TSMS option in the Subchapter M proposed rule requires clarification. One of my clients was under the impression that since the company had already adopted a safety management system that it would have to use the TSMS option in Subchapter M. That is not the case. A company may have been operating under an SMS for many years, but that company can still choose straight Coast Guard inspections to obtain its Certificate of Inspection (COI).  According to the proposed rule, the company will fill out an application for inspection and designate the compliance option for each vessel. The company may choose the TSMS option for some vessels and straight Coast Guard inspections for its other vessels. When Coast Guard inspectors show up to do the inspection, if they see an SMS on the bookshelf, they will not say, "Oh, you're on an SMS, we're outta here. Call a third party auditor." That option belongs to the company. We'll have to wait and see if that option survives in the final rule. 

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Towing Vessel Operators Must Choose Wisely - Part 4

Subchapter M makes a distinction between surveys and audits. A very simple explanation I like to use is: a survey is an inspection of the vessel, while an audit is an inspection of the people. Under the TSMS option, third party auditors will verify compliance with the TSMS on behalf of the government. Third party auditors will be managed by a third party organization. It remains to be seen how this process will work.  Will vessel operators be able to use the auditor of their choice, or will an auditor be assigned by the third party organization, with no input from the company? Will third party auditors be paid directly by the towing company, creating a potential conflict of interest, or will auditor fees be passed through the third party organization?  These are critical issues which may be resolved in the final rule or through guidance documents.

 


The Coast Guard will provide the check and balance for this program to ensure that the audits have been conducted thoroughly and accurately. There may be consequences for an auditor who is found to have conducted a less than adequate audit resulting in a Towing Safety Management Certificate being issued to a non-compliant vessel. For example, consider the recent case of Mr. Alejandro Gonzalez. According to a Department of Justice press release, Mr. Gonzalez, a Miami-based surveyor working on behalf of the flag of Bolivia, certified the M/V Cosette safe for sea. Shortly thereafter, when the vessel arrived in New York, Coast Guard inspectors found "fuel and exhaust pouring into the engine room." Since Mr. Gonzalez had certified the vessel safe for sea and the Coast Guard determined it was not, he was convicted by a federal jury on May 24 for "making a false statement."  Mr. Gonzalez had other charges, but for this conviction he faces a maximum of five years in prison. He will be sentenced on August 2. Subchapter M auditors and surveyors could face the same fate as Mr. Gonzalez if the Coast Guard determines that "false statements" have been made. While this is a remote possibility, the take-away should be that, presumably auditors will be aware of their own exposure and therefore owners and operators should prepare for more stringent audits under Subchapter M.


Besides the auditor's exposure, attorneys Marc Hebert and Barrett Rice, in their paper, "Subchapter M from a Defense Lawyer's Perspective," weighed in on the importance of choosing an auditor with regards to owners' legal liabilities. "… For those vessel owners opting for the TSMS option, consider all theses legal implications when choosing your auditor or surveyor. What if the third party auditor fails to identify a portion of the TSMS plan which is not effectively being implemented? What if the surveyor misses an unsafe condition on the vessel, the knowledge of which will ultimately be attributed to you? While many vessel owners will seek out the auditor or surveyor who helped them obtain their certificate of insurance or certificate of compliance as quickly as possible, we urge you to find that third party auditor and/or surveyor who will scrutinize any aspect of your business and present you with the brutal truth." I couldn't agree more. 

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Towing Vessel Operators Must Choose Wisely - Part 3

If you have read the first two parts of this series you understand that during litigation, when there is a violation of a Subchapter M regulation or TSMS policy or procedure, that the burden of proof may be shifted against you, or that it may be more difficult to use the defense of contributory negligence, but you may be thinking at least you can still limit your liability… maybe not.

 


The concept of limitation of liability under maritime law stems from a law passed in 1851 known as the Limitation of Shipowners Liability Act which was designed to protect U.S. shipping by allowing owners to limit their liability to the value of the vessel in instances where the company had no control. Today, many limitation of liability proceedings come down to whether the company had "privity or knowledge" of the circumstances which led to the incident in question. This becomes problematic when a company is operating under a safety management system such as the Towing Safety Management System (TSMS) under Subchapter M, where it could be argued that the intent of the regulations is to ensure that the company has "privity or knowledge" of almost all situations on the vessel at all times. Marc Hebert, in his previously referenced paper "Subchapter M from a Defense Lawyer's Perspective," writes, "In our opinion Subchapter M, particularly through a TSMS option, essentially requires that vessel owners/operators make themselves aware, through the implementation of a safety management system, of the daily minutia on each and every vessel. It may be argued that, by statute, your knowledge is mandated."


We have recently seen an example play out in the courts in the unfortunate case of the duck boat being run over by the tug and barge near Philadelphia, which resulted in two deaths. The mate on watch at the time of the incident, who is currently serving a one-year sentence for involuntary manslaughter, according to the Philadelphia Inquirer, May 7, 2012, was on his cell phone handling a family emergency. The towing company attempted to limit its liability due to the fact that it had a cell phone policy, but argued that the mate had simply disobeyed the policy. However, according to the Workboat.com blog by Dale DuPont on May 14, 2012, the plaintiff attorney successfully argued that, "… the policy never worked, not once, not with a single person on this voyage, ever. Every single one of them used their cell phone on watch every single day. That is the definition of a failed policy." According to DuPont's blog post, two days later the sides in a trial that was expected to last for months, agreed to a $17 million dollar settlement for the victims and their families.


Choosing the TSMS option and establishing written policies and procedures, which must be followed, increases that probability that vessel operators will not be able to limit their liability as easily as those who do not choose the TSMS. Marc Hebert in his paper asks the question "… with Subchapter M, will the Limitation Act continue to be of use to the inland towing vessel owner?" Stay tuned for more… 

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Towing Vessel Operators Must Choose Wisely - Part 2

In Part 1 of the series we discussed the implications of choosing the Subchapter M Towing Safety Management System (TSMS) third-party compliance option in regards to inspection procedures, as well as the legal implications in regards to the "Pennsylvania Rule" under maritime law. Another legal issue raised in the previously referenced paper by attorneys Marc Hebert and Barret Rice,  "Subchapter M from a Defense Lawyer's Perspective," is the legal principle of "negligence per se."

 


The paper refers to the common defense strategy in Jones Act cases of contributory negligence on the part of the plaintiff. Hebert wrote, "In a standard answer to a Jones Act claim, every defendant pleads the affirmative defense of contributory negligence – that the accident or injury was caused, wholly or in part, by the actions or neglect of the Plaintiff." According to Hebert, with the legal principle of negligence per se, a violation of a safety law or regulation, such as those contained in Subchapter M, creates a presumption of negligence and liability which the vessel operator must overcome through evidence that the violation was not the proximate cause of the accident. This makes the defense of contributory negligence more difficult for the defense. Hebert explains in the paper, "Thus, if the personal injury attorney proves the violation of a regulation and some causal connection between the violation and injury, the vessel owner may well be absolutely liable."


Again, Subchapter M will increase the probability that a vessel will be found in non-compliance simply due to the vast number of regulations it contains. Choosing the TSMS option and establishing written policies and procedures, which must be followed, increases that probability even further. Stay tuned for more… 

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Towing Vessel Operators Must Choose Wisely - Part 1

Perhaps the most controversial section of the Subchapter M Notice of Proposed Rule Making (NPRM) is 46 CFR part 136.130, "Options for obtaining certification of a towing vessel." This part allows for an owner/operator to choose between traditional Coast Guard inspections for compliance, or to implement a Towing Safety Management System (TSMS) with third party surveyors and auditors verifying compliance on behalf of the Coast Guard. The latter may seem like an attractive option, that is, until you study the implications.

 


Hypothetically speaking, if two similar vessels were going through an inspection for certification at the same time, the one that chose the Coast Guard option would be done after the vessel itself was inspected and the captain was found to have a valid license to operate the vessel. However, for the vessel that chose the TSMS-third party option, after the vessel itself is surveyed for compliance, an auditor must come in and verify that the licensed captain is following all the company's policies and procedures. Essentially, by choosing the TSMS option, the company is betting a vessel's Certificate of Inspection on the captain's ability to follow written policies and procedures and not to rely solely on his experience to operate the vessel.


But compliance is not the only concern. Choosing the TSMS third party option will also have legal implications. Since the policies and procedures contained in a TSMS will have the force of a regulation, non-compliance may affect future litigation in a number of ways. Marc Hebert, an attorney at the Jones Walker law firm in New Orleans, along with Barrett Rice, prepared an excellent paper for the Greater New Orleans Barge Fleeting Association (GNOBFA) annual conference this year, entitled: "Subchapter M from a Defense Lawyer's Perspective." In the paper, Mr. Hebert outlines a number of legal concerns with Subchapter M and he has given me permission to discuss a few of them with you:


Pennsylvania Rule: Paraphrased from Mr. Hebert and Mr. Rice's paper: "…when a vessel violates a statute or regulation intended to protect a particular harm, that vessel is presumed to be at fault. The presumption results in a shift in the burden of proof. When an incident results, or even occurs within a short time after such a violation, the vessel owner may have to prove in court that each and every violation of a regulation could not have been a contributing factor in the incident in question." "How will the vessel owner prove, with a document, that his or her TSMS is being enforced?" "…Failure to demonstrate compliance will likely be a rule violation and under the Pennsylvania Rule, such a violation results in a presumption of liability under the law."


Subchapter M will increase the probability that a vessel will be found in non-compliance simply due to the vast number of regulations it contains. Choosing the TSMS option and establishing written policies and procedures, which must be followed, increases that probability even further. Stay tuned for more… 

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Towing Vessel Bridging Program - Phase 2

 On May 3rd Coast Guard Headquarters released an update on the Coast Guard Towing Vessel Bridging Program. Phase 1 of the Bridging Program began in June of 2009. The purpose of the program was to prepare the towing industry for the impending inspection regulations contained in Subchapter M, and at the same time familiarize Coast Guard personnel with towing vessels and their operations. The Coast Guard estimates there is a total of approximately 5,800 towing vessels. Since the beginning of Phase 1 of the Bridging Program the Coast Guard has conducted 4,200 industry initiated examinations and issued 3,200 decals to towing vessels.


 


It is important to note that these are examinations being conducted, not inspections. The towing vessels being examined are currently "uninspected vessels." The examination is to verify compliance with existing regulations which apply to uninspected towing vessels. Once Subchapter M is finalized there will be many more regulatory requirements for these towing vessels and they will be inspected for certification and receive a certificate of inspection, not an examination sticker.


According to the Coast Guard, phase 2 will commence on July 1, 2012. During phase 1 the Coast Guard relied upon industry to volunteer to have their vessels examined. Phase 2, while still allowing industry initiated exams, will also begin prioritized exams and underway law enforcement boardings and surge operations. High priority vessels under phase 2 are those vessels owned or operated by companies that have not participated in phase 1. Low priority vessels are those vessels owned or operated by companies actively participating in the Bridging Program, but not all of the company's vessels have been examined. Non-priority vessels are vessels owned or operated by a company which has participated in the bridging program and has already been examined.


Prioritized exams will be the same scope as industry initiated exams but will be at the convenience of the Coast Guard, not the company. Deficiency reports will be issued during prioritized exams and the deficiencies will have to be resolved within the allotted time frame in order to avoid civil penalty. Notice of Violations may be issued for noncompliance during law enforcement boardings. Coast Guard's phase 2 memorandum explains that while deficiencies found during industry initiated exams were not available to the public, deficiencies found during phase 2 prioritized exams will be entered into the PSIX website and will be available to viewing by the public.


Even though Subchapter M seems far of at times the Coast Guard is moving forward with their program to prepare the industry for what the future has in store. The phase 2 memo explains the "risk" associated with not achieving the goal of the Bridging Program is that, "…companies and their vessels may not be prepared for an environment where they must have a Certificate of Inspection (COI) to operate their vessel(s)." Phase 2 will certainly bring the industry closer to that reality.
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U.S. Coast Guard Appeal Process

 There is an age-old quandary in the maritime industry when it comes to dealing with the U.S. Coast Guard: to just do whatever they say, or challenge their decision? Many choose to go along with whatever a Coast Guard inspector says, even when a decision may have been made in error, or the impact to the company may be great. This is mostly due to a misconception that the Coast Guard is likely to retaliate if challenged. Another common reason for going along with whatever the Coast Guard inspector says is simply to "keep them happy and make them go away." Sometimes this can backfire and have serious consequences for a vessel owner when they realize the impact of what they have agreed to, and if they don't follow through in the future.


 


Many years ago, as a trainee Coast Guard marine inspector, I was sent out to do my first solo barge inspection. While inspecting the bunker barge I looked at the warning sign and told the company representative that I thought the sign was also supposed to read "dangerous cargo." He assured me the sign was fine, and I pushed back. I offered to look it up, but he did not want to debate the issue and told me to go ahead and write the CG835 and that he would change the sign. I should have looked it up... A few days later while reviewing cases, my boss called me into his office and made me look up the regulation. He then directed me to go back and tell the barge representative that I was incorrect, and to put the original sign back. I felt terrible at having caused this barge operator money and aggravation, but I learned a valuable lesson that day. I'm thankful for having had a boss who understood his responsibilities and was willing to hold me accountable.


While most Coast Guard inspectors are knowledgeable and conscientious, none are perfect. It's not unreasonable to ask the inspector if he would provide the regulatory citation and explain the deficiency. If the issue can't be resolved at the lowest level, industry has the right to appeal. The intent of the policy is best explained by a well respected former Commandant, ADM Thad Allen, in his message to the troops (ALCOAST 108/08): "Disruption in the normal flow of commerce impacts many parties in the supply chain. We have clearly established appeal procedures when we make a decision that could have negative impacts on a licensed mariner or on the maritime industry. The exercise of appeal is a right we strongly support. Questions, differences of professional opinion, and appeals are normal and improve the conduct of business. We must be as accepting of these as praise. Attempt to resolve problems at the lowest level possible and be resourceful in doing so."


Appeals can be challenging, but they are a necessary part of the process. When necessary, give the Coast Guard a chance to exercise its own system of checks and balances.
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Ballast Water Regulations

On March 23, 2012 the U.S. Coast Guard published the new ballast water regulations which will go into effect on June 21, 2012. It is a complicated regulation, but here are just some of the high-lights:


Preamble – The Coast Guard explains that ballast water exchange method "is not well suited" as the basis for the program required by the National Invasive Species Act, in part because studies have shown that in some vessels a large number of invasive species may remain after ballast water exchange. Further justification is provided for the Coast Guard's requiring approved Ballast Water Management Systems (BWMS) to be installed on vessels.

 


Applicability – Generally, the regulations apply to all non-recreational vessels with ballast tanks, operating in U.S. waters. There are exemptions from certain sections for certain vessels. For example, a vessel operating in one Captain of the Port (COTP) Zone is exempt from ballast water management, reporting and record keeping requirements. Keep in mind, if a vessel makes such a claim for these exemptions, the Coast Guard may place a restrictive endorsement on the vessel's certificate of inspection (COI) restricting it to one COTP Zone. Some vessels are only exempt from the ballast water management requirements, but not the other requirements such as record keeping and reporting requirements.


Ballast Water Management – There are a number of options for managing ballast water included in this section ranging from installing a Ballast Water Management System (BWMS) which is Coast Guard approved piece of equipment, or using a public water system, to name a few. However, it makes the public water option more difficult than before by requiring prior tank cleaning as well as documentation and receipts as proof. There is a phase-in schedule for vessels required to install the new equipment based upon their next drydock after a given date.


Ballast Water Management Plans and Training – 33CFR 151.2050 applies to all vessels equipped with ballast tanks and requires a vessel specific ballast water management plan and training for crews.


Port State Control – Regarding foreign flag vessels, the preamble mentions that port state control officers will serve as the final enforcement check of BWMS.


EPA Vessel General Permit (VGP) – The preamble mentions that the new EPA VGP which is out for comment and that when it is finalized the ballast water requirements contained in the VGP may differ from the Coast Guard's regulation. Attention will have to be paid to both.


Penalties - Finally, the regulation states that any person who violates this subpart is liable for a civil penalty not to exceed $35,000, and each day constitutes a separate violation. Additionally, a person who knowingly violates the regulations of this subpart is guilty of a class C felony.


There is a great deal of information in this regulation and I encourage you take the time to read through it. 

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