The Coast Guard Office of Commercial Vessel Compliance (CG-CVC) has received public inquiry regarding “replacement in kind” determinations and design verification for towing vessel inspected under 46 CFR subchapter M.
The Coast Guard Marine Safety Center (MSC) and CG-CVC would like to provide the following information.
First, due to the unique conditions and systems on inspected towing vessels, no two modifications or replacements will be identical. For this reason, owners and managing operators should work directly with the cognizant USCG Officer in Charge, Marine Inspections (OCMI) when modifications to a vessel are made. The OCMI will review the standards for a repair proposal, modification, or upgrade based on its own individual merits, because each decision is based on the individual evidence presented for a particular vessel. Individual decisions are not intended to be used as a basis for broad-sweeping requirements to the towing industry or to disincentivize upgrades to existing vessels in the interest of improved safety.
To better understand the intent of the “replacement in kind” definition in the 46 CFR subchapter M – towing vessel regulations, it is important to review the history of the term. In the 2011 Notice of Proposed Rule Making for 46 CFR subchapter M, there were requirements for towing vessels that push tank barges carrying oil and/or hazardous materials in bulk to update their machinery and electrical systems within 5 years of being issued an initial COI. These requirements were outlined in 46 CFR part 143, subpart C, “Deferred Requirements for Existing Towing Vessels.”(Inspection of Towing Vessels, 76 Fed. Reg. 50042 (Aug. 11, 2011), 2011-18989.pdf (govinfo.gov)). Subsequently, 46 CFR part 143, subpart C was relabeled to “Requirements for New Towing Vessels” and the associated requirements to upgrade machinery and electrical systems on existing vessels was removed after comments from industry cited the cost to retrofit an existing vessel. (See Inspection of Towing Vessels, 81 Fed Reg. 40067 (Jun. 20, 2016), 2016-12857.pdf (govinfo.gov)).
In the final rule for the Inspection of Towing Vessels, the additional requirements for towing vessels pushing tank barges carrying oil and/or hazardous materials in bulk were only required for new vessels; however, the final rule added a definition for “replacement in kind.” The regulatory history makes several issues clear:
- The reasoning and clarification of the term “replacement in kind” was: “When equipment needs to be replaced, it may be replaced by the same or similar equipment, or it may be upgraded. It is certainly acceptable to upgrade, but an upgrade is not considered a replacement in kind because the maintenance and operation of the new equipment may require operator training, new maintenance schedules, OCMI approval of equipment arrangement, and an update to the vessel’s TSMS.” (Inspection of Towing Vessels, 81 Fed. Reg. 40061.)
- When asked to “clarify that replacements mandated by regulation will not trigger the referenced follow-on regulations,” the Coast Guard disagreed, stating, “If equipment requires replacement and the owner or managing operator chooses not to make a replacement in kind, it is considered an upgrade and subpart C may apply.” (Inspection of Towing Vessels, 81 Fed. Reg. 40062 (emphasis added).
- The Coast Guard explained the reasoning for removing the 5-year phase-in requirement to upgrade equipment in the original rule: “Applying subpart C to replacement equipment will not result in the same cost as applying subpart C to existing equipment and is appropriate because the maintenance and operation of the new equipment may differ.” Therefore, this was a way to bring existing vessels up to new vessel standards as “replacement in kind” equipment becomes unavailable, or the owner makes the decision to upgrade. (See Inspection of Towing Vessels, 81 Fed. Reg. 40062).
Additionally, as explained in the Inspection for Towing Vessels final rule, “If equipment requires replacement and the owner or managing operator chooses not to make a replacement in kind, it is considered an upgrade and subpart C may apply. Depending on the significance of the replacement (whole system versus one particular piece), newer standards may be applicable.” (Inspection of Towing Vessels, 81 Fed. Reg. 40062). Therefore, if the system being replaced is covered in subpart C and the installation is determined to be an upgrade by the OCMI, then the system shall be installed in accordance with the requirements in subpart C. Systems or components covered by the “replacement in kind” discussion are those within 46 CFR part 143, subpart C. The term “similar” equipment is up to local OCMI discretion. (See Inspection of Towing Vessels, 81 Fed. Reg. 40061). Therefore, if an owner or managing operator is unsure if the new instillation is a “replacement in kind” or an upgrade, they should contact their cognizant OCMI to request a determination.
Lastly, as per 46 CFR § 144.145, verification of compliance with design standards must include review and analyses of sufficient plans, drawings, schematics, calculations, and other documents to ensure the vessel complies with the standards used. This should be done before any work begins to prevent unnecessary delays or costly modifications and shall be completed in accordance with 46 CFR table 144.140. TPOs are not authorized to conduct Design Verifications. Therefore, a TPO cannot conduct a survey and oversight to verify plans per 46 CFR § 144.145(d). In addition, per § 144.145(d), the OCMI shall be provided a copy of the verified plan unless the verification was completed by an authorized classification society. However, the OCMI should still be notified, before the alteration is affected, of the installation of any equipment which is not a “replacement in kind” because, under § 137.120(a), the owner/managing operator is responsible for ensuring that a towing vessel is in compliance with 46 CFR subchapter M and other applicable laws and regulations at all times.
Additionally, per 46 CFR § 138.220 (TSMS Option), “procedures and documentation must be in place to ensure that each towing vessel complies with the operational, equipment, and personnel requirements” of 46 CFR subchapter M”. All documentation within the TSMS affected by a modification, upgrade, or repair, should be verified by the TPO to ensure that the vessel complies with subchapter M.
To prevent possible uninspected delays and/or change costs, it is advised that the owner or managing operators work with the OCMI or TPO to verify before, during, and after that the modification, upgrade, or repair, is completed in accordance with the design plan. Delay in reporting by months (i.e., only prior to a scheduled exam via the CG-3752 or annual TSMS survey), may result in additional unscheduled repairs if it was done incorrectly.
The cognizant OCMI will review every modification, upgrade, or repair proposal based on its own individual merits and apply the applicable standards. However, there is no expectation that an OCMI will conduct full plan review, as it should be verified by those within 46 CFR table 144.140. OCMIs do have the discretion upon final comparison of the completed repair to the verified plan, to forward any further questions to the MSC. It is imperative that complete system upgrades receive verification of compliance for the planned installation before the repairs are made to remove any ambiguity on the applicable compliance standards. (See 46 CFR § 144.135).
CG-CVC, in coordination with the MSC, has developed a flow chart CVC-FM-002(1) – USCG Subchapter M Equipment Upgrade or Replacement Flow Chart, to outline the steps for design verification requests. It is available via https://www.dco.uscg.mil/Our-Organization/Assistant-Commandant-for-Prevention-Policy-CG-5P/Inspetions-Compliance-CG-5PC/Commercial-Vessel-Compliance/CVCmms/
For any questions regarding this blog post, please contact CGCVC@uscg.mil. For questions regarding design verification and replacement in kind determination procedures, please contact MSC@uscg.mil and utilized the MSC Design Verification Guidelines E1-36, E2-31 and Marine Safety Center Technical Note (MTN) No. 1-17, Ch-1 : Guidance on Design Verification for Subchapter M Towing Vessels.
