The OSV Regs Cometh

by Baker Donelson
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As previously reported here, the offshore industry has been anxiously awaiting new United States Coast Guard (USCG) regulations for large offshore supply vessels (OSVs) in the wake of the 2010 Coast Guard Authorization Act (CGAA), which removed the prior statutory bar prohibiting US-flagged OSVs over 6,000 gross tons. Four years after the CGAA, the USCG has followed through on its promise this past winter that the long-awaited regulations would be forthcoming, and has issued an interim rule setting forth comprehensive regulations for this new class of US-flagged OSVs. 79 Fed. Reg. 48894. The new, and long overdue, interim rule for large OSVs comes at a critical time on the back of an ongoing OSV construction boom, with OSVs increasing in both size and technical capacity to meet the needs of deeper and deeper offshore exploration projects.

Notably, these new regulations have been promulgated via an interim rule without any prior notice-and-comment period, given the CGAA’s directive that the rule should be issued “as soon as is practicable and without regard” to normal rulemaking procedures. That said, the USCG has welcomed public comments on the interim rule, which will be considered during development of a final rule that will supersede the interim rule.

At a high level, the new regulations set forth comprehensive standards for large OSVs “to meet safety needs by establishing design and operation standards” for this class of vessels newly available in the US domestic fleet. To that end, the USCG has adopted certain pre-existing USCG standards for smaller OSVs and other vessel types with similar attributes to these large OSVs (i.e. tanker and cargo vessels); adopted wholesale certain standards under various international conventions; and developed certain of its own hybridized regulations derived from international standards supplemented by the USCG. Interestingly, the USCG notes that it “has never required OSVs to comply with international standards as a flag state in the past.”

As an example, the interim rule adopts certain regulations under the Safety of Life at Sea (SOLAS) convention, and includes standards taken from the Convention on Prevention of Pollution from Ships (MARPOL) and the International Convention on Load Lines (ICLL). The interim rule notes that the adoption of these international standards for US-flagged large OSVs makes good practical sense because these vessels will invariably be utilized internationally, and thus would have to comply with these standards in any event.

In short, the interim rule seeks to establish a unitary regulatory regime for large OSVs, to avoid the prior practice (before the CGAA) of certificating what were effectively large OSVs via multiple certificates under a hodge-podge of standards that applied directly to non-OSV vessel types (i.e. chemical and petroleum tank vessels). This interim rule will allow or a streamlined, single certification for multi-purpose OSVs. Moreover, in its continued quest for unitary standards in the ever-expanding oil patch, the USCG notes in the interim rule that it “may initiate a separate, broader rulemaking to address issues common to OSVs of all sizes.”

The interim rule applies only to OSVs contracted for/keels laid after the August 18, 2014 effective date, so there should be no retroactivity issues (which makes sense because these types of large OSVs were previously prohibited).

A comprehensive analysis of the interim rule is beyond the scope of this blog post; however, a few of the more notable highlights include:

  • Large OSVs will be allowed to carry more than 36 offshore workers, and as a result the USCG has adopted more sophisticated inspection and construction standards to address the hybrid nature of these OSVs as both passenger and cargo ships. Notably, the USCG reviewed several different existing domestic and international regulations (including notably the IMO Code of Safety for Special Purpose Ships, SPS Code) in an attempt to identify a “pre-packaged” set of standards for large OSVs. The SPS Code was of particular interest given its recognition that specialized vessels (like OSVs) often carry specialized personnel (such as ROV operators, anchor handling personnel, and others), in addition to the navigation crew, who are trained in safety procedures and thus do not necessarily require the more stringent protections necessary for laymen passengers on a vessel. However, because large OSVs may (and often do) carry personnel that do not actually work on the vessel (as part of the crew or as specialized vessel personnel) but will simply be transported to offshore locations, the SPS Code on its own was insufficient. As such, the new regulations at Chapters 126 and 127 use a hybridized form of SOLAS standards and pre-existing small OSV standards for large OSVs. The USCG notes, as well, that it is considering additional training requirements for OSV personnel who are not members of the navigational crew, in order to normalize the level of safety training for all personnel aboard these vessels.
  • Large OSVs will be exempted from existing domestic OSV stability requirements, in favor of a requirement for stability certification under SOLAS (see interim rule, newly added 46 C.F.R. §127.200). This is intended to avoid duplicative stability requirements, and recognizes the fact that these large OSVs will in nearly all cases be used in international commerce anyway (thus requiring SOLAS compliance in any event).
  • The interim rule notes that the USCG is “aware of larger liftboats operating overseas, and of some limited interest in developing U.S.-flagged liftboats of at least 6,000” gross tons. However, the new interim rule does not address this potential new class of “large liftboat” vessels qua OSVs, both because these types of vessels were not contemplated by the CGAA and because these liftboats are “a unique type of vessel and generally do not undertake the cargo and personnel carriage” on which the CGAA focused. That said, the interim rule allows for certification of large liftboats on a case-by-case basis, and notes that “[a]s the demand for and design requirements of large liftboats become[] clearer, the [USCG] will consider developing a regulatory framework for them.”
  • The interim rule adopts a two-watch manning protocol, subject to the hours of service requirements (in accordance with certain amendments to 46 U.S.C. §8104 in the CGAA), and notes that large OSVs will likely also be required to meet the Standards of Training, Certification and Watchkeeping (STCW) insofar as they work in international waters. Notably, the interim rule specifically points out that the USCG does not approve of what has apparently been a practice in the industry of improperly calculating the distance of voyages vis-à-vis the requirements for more mates on longer voyages. Specifically, the prior regulations stated that the distance (for manning purposes) was calculated from port of departure to port of arrival, not including stops along the way at offshore points (i.e. platforms, rigs). However, some operators have been “restarting” the voyage distance calculation using offshore stopping points. The interim rule clarifies that this is incorrect, and at odds with the purpose of the regulation (i.e. to provide more mates on longer voyages). As such, new regulation 46 C.F.R. §15.810 clarifies that a voyage is calculated by the total accrued distance between departure and arrival ports.
  • In addition, the USCG recognizes that additional regulations for mariner credentialing will be necessary for large OSVs, and thus additional rulemaking in this regard will be developed.
  • Notably absent from the interim rule is any regulatory guidance for dynamic positioning (DP) systems on this new class of large OSVs. That said, the USCG has previously indicated that it will be developing comprehensive DP regulations via future rulemaking.

Again, this brief discussion is by no means an exhaustive analysis of the detailed regulations adopted in the interim rule, but it gives an overview of the scope of the rule and the USCG’s plans going forward with this new class of domestic vessel.

However, the interim rule is conspicuously silent about the potential for overlap between these new large OSV regulations and regulations by the Bureau of Safety and Environmental Enforcement (BSEE) that may likewise apply to the new generation of large OSVs that have down-hole intervention capabilities, and that may (in certain circumstances) qualify as “facilities” subject to BSEE regulation (see prior posts, e.g., http://www.stridingthequarterdeck.com/coast-guard-issues-proposed-regulations-and-nvic-regarding-marine-casualty-reporting-on-the-ocs/).

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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