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Smaller operators wary of Subchapter M rules

Jun 30, 2016 03:29 PM

Some smaller U.S. tug and tow operators are concerned about the cost of vessel modifications expected under the Subchapter M regulations set for release in mid-2016.

These operators worry the Coast Guard inspection rules, if unchanged from an original version published in August 2011, will be burdensome and expensive.

“That is going to have a massive impact on the American fleet,” said Rollie Webb, senior vice president at Robert Allan Ltd., referring to the rule known as 46 CFR Subchapter M. “It is really going to cause a lot of pain for the smaller operators to start dealing with this thing.”

Wayne F. Dufrene, president of B&R Towing, a one-boat operation in Sorrento, La., said Subchapter M rules may cause him to shut down.

He estimates rewiring his 35-year-old towboat, Miss Kim, to meet the new electrical requirements would cost between $25,000 and $30,000. Rewiring the entire 60-foot vessel, which has 1,200-hp, would cost more than $100,000. 

“I’m at a stage that, in five years, I might be looking to retire,” said Dufrene, 60. “How much do I want to invest in this boat knowing that five years from now I might be getting out?”

Nearly five years after the proposed rule was published, the federal Department of Homeland Security sent the final version of Subchapter M to the White House Office of Management and Budget (OMB) on Feb. 12 for final review. The OMB finished its review May 2, according to Jennifer Carpenter, chief operating officer of American Waterways Operators (AWO). She expects the rule to be published in late May. No details of the final rule have been released before publication.

Several aspects of Subchapter M could require major vessel modifications unless the rule is changed before final release. It calls for alternative methods of maintaining propulsion, steering and related controls; significant rewiring of electrical installations; and the installation of a pilothouse alert system in case the operator is incapacitated.

Operators are expected to have up to six years from the effective date of the final rule to comply with its requirements. 

Comments from towing companies responding to the proposed rulemaking in 2011 said that installing redundant steering could cost hundreds of thousands of dollars.

Smaller operators are also worried that the cost and time to make these changes on vessels would be prohibitive. In its 2011 comments, the AWO opposed the redundancy requirement for towing vessels moving tank barges and the overall electrical requirements, writing that the proposed requirements were “not justified by towing casualty history and risk and that would impose severe financial burdens on owners of existing towing vessels,” according to the letter.

Carpenter is optimistic that the Coast Guard heeded their concerns. “I am hopeful we will see one of two things in the final rule: Either the Coast Guard will say what you said is not what we meant, or they will significantly scale it back.”

However, Subchapter M has been delayed so long that many smaller operators have chosen to wait to begin the necessary upgrades, according to Corinne Titus, owner of Baker, Lyman & Co., a New Orleans-based chart agent and provider of marine safety and navigation products.

“Until they have to implement the regulations, they are not going to spend the money,” she said. “I think we are going to see a lot of the mom-and-pops sell off equipment and just get out of the business.”

This is not the case for larger operators, Titus said. “The bigger operators are already doing it. They have been doing it because their clients require it.”

Josh Esper, senior vice president of engineering at Marquette Transportation, said his company has been preparing for years for the changes.

“Especially with the implementation of Subchapter M on the horizon, we believe it’s strategically critical to continue to invest in our towboat fleet,” he said in an email. “We’ve been fortunate to be able to work with quality shipyards Master Marine and Gulf Island to execute our new towboat construction programs in recent years.”

Capt. W. Hugh McCrory Jr., safety, security and compliance manager for Norfolk Tug Company, wrote in 2011 that the requirements for electrical systems and installing redundant steering could cost about $250,000 per tug.

He is more optimistic now. “I think it is going to be a non-event,” he said. “The industry has had so many years to prepare for it.” In the last five years, Norfolk Tug has rewired nearly all of its 16 boats. “Any older boat that has not had major rewiring could have issues under Subchapter M,” McCrory said.

He also believes the redundant steering and propulsion requirement in the final rule will be less onerous. 

“From all the tidbits of information coming from the Towing Center of Excellence and the Coast Guard and Washington, they say ‘we can’t divulge what is in the rule, but don’t worry about it,’” McCrory said. “It would be incredibly expensive and it would be an industry-shaking problem if everybody had to do that.”

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