Coast Guard Issues Proposed Regulations and NVIC Regarding Marine Casualty Reporting on the OCS

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            In the continuing regulatory response - even more than three years after the fact - to the DEEPWATER HORIZON disaster, the United States Coast Guard (USCG) has led off 2014 with proposed regulations that significantly change the reporting requirements for incidents on the Outer Continental Shelf (OCS). Most importantly, these new regulations broaden the types of reportable incidents for foreign-flagged vessels/units/facilities operating on the OCS.

            It bears noting at the outset that these newly proposed USCG regulations once again raise the thorny issue of the overlapping jurisdiction of the USCG and the Bureau of Safety and Environmental Enforcement (BSEE). Generally speaking, BSEE regulates OCS "facilities," which encompasses all installations and devices permanently or temporarily attached to the seabed. See 30 C.F.R. 250.105 (2011). For its part, the USCG regulates "OCS facilities, vessels, and other units engaged in OCS activities." 33 C.F.R. §140.3; 79 Fed. Reg. 1780, 1781 (Jan. 10, 2014). Thus, both BSEE and USCG have regulatory authority over certain OCS "facilities," while the USCG's authority also extends to "units" and "vessels."

            This express overlap of regulatory spheres creates inherent confusion. For example, the two agencies apparently have joint authority to regulate and investigate "[p]ollution events involving facilities on the OCS; [i]ncidents occurring on jack up or semi-submersible rigs or drill ships that are attached to the OCS via conductors or risers; and [v]essel allisions with OCS platforms." http://www.leggefarrow.com/Newsletter%20-%20USCG%20BSEE%20MOU.pdf. Further, the USCG and BSEE ostensibly share regulatory authority over floating production, storage and offloading ("FPSO") systems, as well as floating tension-leg/Spar platforms (which are tethered to the floor of the OCS). http://www.uscg.mil/hq/cg5/cg522/cg5222/docs/ mou/MOA%20OCS%2003_FINAL_Signed_3APR12.pdf. Likewise, this dual-jurisdiction would apparently extend to drillships, which by definition are both vessels and "facilities" capable of and designed to perform drilling and downhole operations; coil tubing jobs performed from lift boats (in which equipment from a support vessel/USCG "unit" may be attached to a BSEE "facility" and thus become part of that "facility"); plug-and-abandonment (P&A) work and/or maintenance work on platforms performed from vessels; well stimulation operations from vessels; vessel-to-platform crane operations (particularly those involving heavy-lift vessels), including decommissioning work (a growth area in the Gulf of Mexico in the wake of 2010 "idle iron" regulations); and the list goes on.

            Under the newly proposed USCG reporting regulations in the January 10, 2014 NPR, incidents on these hybrid vessels/units/facilities may be subject to both USCG and BSEE reporting regimes. The Notice of Proposed Rulemaking (NPR) for the new USCG reporting regulations recognizes and attempts to downplay this inherent overlap at the outset:

Please note that [BSEE] also requires OCS lessees and right-of-way holders to report incidents addressed in BSEE regulations at 30 CFR 250.188. The BSEE’s regulations cover only those OCS units that are permanently or semi-permanently attached to the seabed or subsoil of the OCS, not vessels. The [USCG] and the BSEE work together to ensure that duplicative reporting is not required.

79 Fed. Reg. at 1782. This assurance provides slight solace to operators who may be utilizing these hybrid types of vessels/facilities/units - i.e. those that may in fact be "semi-permanently attached to the seabed or subsoil of the OCS" - over which the USCG and BSEE ostensibly share authority.

            Putting aside the fundamental problem of overlapping authorities, the January 10, 2014 NPR proposes new regulations to extend USCG reporting requirements to foreign-flagged facilities/units/vessels operating on the OCS. Currently, there are three basic sets of slightly different USCG regulations applicable to casualty reporting - two specific to the USCG's authority over OCS operations and one specific to the USCG's more general and traditional authority over vessels on navigable waters:

·         33 C.F.R. §146.30 requires OCS facilities (other than mobile offshore drilling units, MODUs) to report any casualties involving death, injury to five or more persons in a single incident, incapacitation of any person for more than 72 hours, damage to primary lifesaving or firefighting equipment, and other property damage greater than $25,000. 79 Fed. Reg. at 1782.

·         33 C.F.R. 146.303 requires vessels (including MODUs) engaged in OCS activities to report casualties involving death or injury to five or more persons in a single incident, or incapacitation of any person for more than 72 hours. 79 Fed. Reg. at 1782.

·         46 C.F.R. 4.05-1 generally requires a U.S. flag - but not foreign-flag - vessel to report groundings, allisions, loss of propulsion or vessel maneuverability, impacts to vessel seaworthiness or fitness for service or route, loss of life, injury requiring professional medical treatment, property damage greater than $25,000 or significant harm to the environment. 79 Fed. Reg. at 1782. This reporting requirement is the underlying basis for the commonly used Form 2692 "Report of Marine Casualty" form.

Under this three-part system, foreign-flag vessels are only required (via the USCG's OCS authority) to report incidents involving death/injury/property damage, but are not required (via the USCG's more general vessel authority under Title 46) to report more minor operational incidents.

            The January 10, 2014 NPR expresses the USCG's "concern[] that some marine casualties on the U.S. OCS go unreported because, at present, much of the OCS activity on the U.S. OCS is conducted by foreign-flag OCS units." 79 Fed. Reg. at 1783. As a specific example, the USCG notes that the fully dynamically positioned (DP) DEEPWATER HORIZON MODU had two separate incidents of total power loss, which in turn incapacitated its DP system and rendered the MODU effectively dead in the water (which is particularly problematic vis-à-vis well control/blowout concerns if a MODU is connected to the drill pipe via the riser at the time it loses DP capacity). The NPR suggests that if the more general reporting requirements of Title 46 had been applicable to the foreign-flag MODU DEEPWATER HORIZON with respect to those 2008 DP incidents, "important contributing factors in the 2010 disaster could have been brought to light and remedied." 79 Fed. Reg. at 1783.

            Accordingly, proposed regulation 33 C.F.R. §150.50 would "transfer marine casualty reporting requirements for OCS units from 33 C.F.R. subchapter N to 46 C.F.R. part 4" and would refer parties to other USCG regulations applicable to incidents resulting from commercial diving operations, hazardous conditions, and oil pollution threats. Id. Likewise, the NPR proposes removal of several provisions of 33 C.F.R. relating to marine casualties and accidents. Further, proposed regulation 46 C.F.R.4.01-1 amends the former language to clarify that the reporting requirements of Part 4 apply to all OCS units, not just OCS vessels; and 46 C.F.R. §109.411 is amended to clarify that MODUs, like other OCS units, will be subject to the general marine casualty reporting requirements of 46 C.F.R. part 4. 79 Fed. Reg. at 1783-84. Otherwise, the newly proposed regulations provide for changes/clarifications in various definitions to harmonize the concept of making the general marine casualty requirements equally applicable to vessels and OCS units.

            The comment period for the NPR extends through April 10, 2014.  Additionally, the USCG has issued a contemporaneous Navigation and Vessel Inspection Circular (NVIC), dated January 14, 2014, that provides general guidance to the marine industry regarding the intricacies of marine casualty reporting under 46 C.F.R. Chapter 4. http://www.regulations.gov/ contentStreamer?objectId=090000648150757b&disposition=attachment&contentType=msw8. If the new regulations in the NPR are ultimately adopted, this NVIC will provide additional assistance to industry for navigating the USCG reporting requirements, but does not clarify the issue of shared reporting jurisdiction with BSEE.

             While the USCG's attempt to conform the reporting requires for OCS facilities and vessels is (as a general matter) perhaps commendable in a vacuum, these new regulations are yet another instance of the looming problem of overlapping jurisdiction between USCG and BSEE. If adopted, these proposed additional reporting requirements will continue to create headaches - and cost more time, effort, and money - as operators and contractors attempt to navigate their way through the rat's nest of overlapping jurisdictions on the OCS.

Topics:  Coast Guard, Deepwater Horizon, Gulf Oil Spill, Insurers, Outer Continental Shelf

Published In: Energy & Utilities Updates, Environmental Updates, Maritime Updates, Toxic Torts Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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