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Survey: US-flag regulations don’t add much to operational costs

May 27, 2016 04:34 PM

Costs of complying with U.S. Coast Guard regulations are a very small fraction of the overall increased expense of vessels registering under the U.S. flag, according to a Transportation Research Board committee report. However, the committee calls for the process of reflagging foreign-registered vessels to be made faster and easier.

The report estimates that Coast Guard regulatory costs account for only 0.8 percent of average annual operating expenses, or $60,000. Compared with a foreign registry, operating costs average an additional $5 million a year for the U.S. flag, mostly in crew costs.   

Most of the report is devoted to suggestions for aligning Maritime Security Program (MSP) regulations with those of Alternative Class Societies (ACS) and links with the Alternative Compliance Program (ACP).

“Jones Act ships are allowed to use the ACP,” Keith Michel, chairman of the committee that produced the report, told Professional Mariner, “but MSP ships have to apply and that creates challenges.”

The prime recommendation of the nine suggestions is for MSP vessels from companies with “proven safety records” to be allowed to enroll under the MSP Select program. One of the main complaints from ship operators to the committee was that MSP ships do not benefit from the Alternative Compliance Program, which shortens the time and reduces the paperwork for enrollment. 

“A vessel is eligible to enroll in MSP Select only after three years of operation, including one intervening dry dock or underwater survey, and after completion of a hand-over survey,” the report said.

A second recommendation calls for flexibility in allowing the installation of replacement equipment that conforms to international standards and class societies’ requirements.

The third-most important proposal recommends that the Coast Guard should allow reflagged ships to operate in PUMS mode (partly unmanned machinery space) after 1,000 hours of being in fully manned mode if they have “a documented history of safe and reliable operation using PUMS.” The report said rules have been inconsistent and confusing, with some vessels having to be manned for up to 3,000 hours before getting PUMS clearance.

Michel said the El Faro disaster could change Coast Guard thinking about a recommendation to pay more attention to class society regulations. “The Coast Guard is taking a closer look at the class societies and they have concerns about how that is working out,” he said.

The Offshore Marine Service Association, which gave evidence at a meeting of the committee, said it is “disappointed” by the report.  

“It is considerably more expensive to get the requirements from the Coast Guard than in the rest of the world,” said association Vice President Richard Wells, “and we are perplexed the opposite conclusion was reached. It is often very difficult to buy equipment that meets Coast Guard standards when you are in, say, West Africa, where that equipment is not available and you have to get it from the U.S.”

The Chamber of Shipping of America said it agrees entirely with the findings. 

“We were generally aware of some of the disconnects between the MSP and ACP programs, but this report provides much greater detail on the specific areas which could be improved,” said Kathy Metcalf, the chamber’s chief executive officer. “It is important to keep in mind that the USCG is in a position where they are being asked to facilitate the reflagging of vessels to the U.S. flag while at the same time subject to increased scrutiny by the public at large to ensure that U.S.-flag vessels are operating consistent with our domestic safety and environmental principles.”

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