inspected vessels. While there are some requirements applicable only to
new towing vessels, these requirements do not exceed the requirements
imposed on other types of small inspected vessels and, for this reason,
we do not agree that they can be considered to be too stringent. As for
existing towing vessels, we find no requirements in this rule that
would require costly modifications to a properly maintained and
satisfactorily functioning existing towing vessel.
    Three commenters suggested that organizing vessels into two
subparts, existing vessels and new vessels, instead of three subparts,
would be easier for issues related to grandfathering. We generally
agree that the proposed regulations would benefit from reorganization,
and we have modified this part to delete requirements repeated in other
parts of the subchapter or that were too vague. Further, we agree with
the commenters with respect to organizing requirements into a format
that is more aligned with other inspection subchapters.
    A majority of the requirements are either the same or very similar
to requirements contained in the Construction and Arrangement part in
subchapter T, Small Passenger Vessels (46 CFR part 177). We aligned
part 144 with the organization, and subpart and section titles, of part
177. This organizational choice also better reflects the relatively
large number of part 144 requirements that apply to both existing and
new vessels, and the relatively small number that apply to new vessels
only. As a result of these changes, we use the term ``vessel'' when
discussing requirements that apply to both new and existing vessels,
and use the specific terms ``new'' or ``existing'' vessel to describe
those that apply only to one or the other. At the end of this
discussion of comments on part 144 and structures and stability, we
have provided a derivation table that lists part 144 section numbers in
this final rule and the proposed sections from which they derived.
Also, where appropriate, we have noted the corresponding part 177
section number or an explanation of an edit.
    We received several comments, mainly from maritime companies
suggesting revisions to Sec.  144.215. Commenters suggested that
special consideration be given to structural requirements for towing
vessels ``operating exclusively within [limited geographic areas], and
towing vessels under 65 feet in length, in addition to towing vessels
of an unusual design.''
    We agree with these commenters that the types of vessels for which
special consideration may be given in proposed Sec.  144.215 should be
clarified, and we have adopted the suggested under-65-feet-in-length
measure to define what we had described as ``small vessels'' in the
proposed rule. This rule also provides that special consideration may
be given to vessels operating exclusively within a limited geographic
area, because the OCMI is familiar with the specific hazards of the
limited geographic areas within his or zone.
    Commenters felt that proposed Sec.  144.220(a) should be edited to
ensure that routine upgrades to equipment, such as engine repowering,
would not require compliance verification. Further, towing companies
felt that proposed Sec.  144.220(a) and (b) should be revised to
clarify the intention of the terms ``major conversion or alteration''
and ``replacements in kind.''
    The Coast Guard believes that compliance verification with design
standards for upgrades to equipment, such as engine repowering, as in
proposed Sec.  144.220(a), should be retained because of possible
changes to stability and other vessel characteristics related directly
to safety. We have done so in this final rule in our redesignated
verification of compliance section, Sec.  144.135.
    With respect to the request to clarify the terms ``major conversion
or alteration'' and ``replacement in kind'' in proposed Sec.
144.220(a) and (b), in Sec.  136.110 we have clarified our proposed
definition of ``major conversion'' and added a definition of
``replacement in kind.'' We note that Sec.  144.135 uses the phrase
``major conversion or alteration'': Although ``alteration'' is not
defined in this rule, we use the term as it currently used in 46 CFR
91.55-10 to mean an alteration that involves the safety of the vessel.
Separately, we have reformatted the text of Sec.  144.135 in tabular
form to make this section easier to read.
    The term ``verification of compliance'' in part 144 addresses
verifying that the design of a vessel meets the standards used. To
distinguish this activity from the compliance verification required in
part 137 under the TSMS option, we have added the words ``with design
standards'' to this term. We also removed from this section the
provision that a verification of compliance be performed upon request
of the Coast Guard because this is covered by part 136.
    To provide more options for the qualifications in proposed Sec.
144.225, now re-designated Sec.  144.140, we have extended the group of
entities able to verify compliance with design standards to include the
Coast Guard and certain authorized classification societies, not just
ABS. For the purposes of this verification, the authorized
classification society must have been delegated the authority to issue
a SOLAS Cargo Ship Safety Construction Certificate and the employee who
performs the verification must have the proper qualifications. Similar
references to ABS with respect to a verification of compliance with
design standards have been revised accordingly. Regardless of the
inspection option chosen, the verification of compliance with design
standards can be performed by any one of the persons or entities
identified in Sec.  144.140.
    Some commenters discussed the costs of developing plans for review.
Two maritime companies suggested that proposed Sec.  144.230,
Procedures for verification of compliance with construction and
arrangement standards, would be costly for companies with older vessels
that were constructed without plans produced by a naval architect. A
maritime company suggested alternatives for hull structure

and piping, electrical, machinery systems and stability reviews that it
viewed as more cost-effective.
    Proposed Sec.  144.230, now re-designated Sec.  144.145, was
intended for vessels undergoing a major conversion or alteration to the
hull, machinery, or equipment--as described in proposed Sec.  144.135.
A major conversion often results in an extension of the vessel's
service life. Therefore, the procedures in Sec.  144.145, would not be
invoked unless required by Sec.  144.135. Because Sec.  144.135 does
not require a verification of compliance with design standards for an
existing vessel, we do not envision that an owner or operator would
need to provide plans to ensure the existing vessel complies with the
standards used. A new towing vessel will need to undergo a verification
of compliance with design standards.
    We have clarified procedures for verification of compliance with
design standards to require copies of verified plans be provided to the
third-party organization that conducts a survey, if applicable, in
addition to the OCMI.
    Two commenters suggested that because naval architects are well
qualified, a P.E.'s signature is not needed for vessel construction.
While many naval architects are also licensed P.E.s in the jurisdiction
in which they reside or conduct their business, not all are. The
benefits of P.E. licensure are well documented and accepted in the
United States. The requirement for a P.E.'s seal on vessel construction
plans may be considered commensurate with that required for buildings
within a municipality. Accordingly, we clarified in Sec.  144.145 that
the documents must be stamped with the seal authorized for use by the
individual performing the verification, whether that is the P.E. or a
representative of the recognized classification society or the Coast
Guard. We acknowledge that there may be gaps in documentation of
smaller vessels, so we have clarified that the term ``plan'' means
drawings, calculations, schematics, diagrams or other documents and
provide a list of what those plans may include, based mostly on 46 CFR
177.202.
    We have clarified and revised the provisions for sister vessels in
proposed Sec.  144.235, now re-designated Sec.  144.155, to be
consistent with Sec. Sec.  144.135, 144.140, and 144.145.
    Two commenters said that the marking requirements in proposed Sec.
144.240 should include the same basic colors used to mark piping for
flammable liquid, seawater cooling, and firefighting systems proposed
in Sec.  143.270(c). We do not agree that piping marking requirements
in part 143 need to be repeated in part 144. We made no changes from
the proposed rule based on these comments.
    Both proposed Sec.  144.310(a) for existing vessels and proposed
Sec.  144.405 for new vessels specified that a vessel classed by ABS
would meet the structural standards of part 144, because ABS rules
include stability standards that generally meet those contained in
Coast Guard regulations. We have consolidated those sections into Sec.
144.120, stating that a vessel that is classed by a recognized
classification society is in compliance with subparts B and C of part
144. In accordance with proposed Sec.  136.210(c), as well as similar
changes in this rule, we have acknowledged that structural and
stability standards contained in the rules of other recognized
classification societies are commensurate with ABS rules, and have
extended this provision to class by a recognized classification
society.
    In a similar way, we recognized that proposed Sec.  136.210(d)
deemed a vessel with a valid load line certificate to be in compliance
with structural and stability standards, among others, and since
proposed Sec.  144.310(b) repeated this, Sec.  144.125 contains this
text.
    In proposed Sec. Sec.  144.305 and 144.310, we proposed structural
standards for an existing vessel. These are now contained in Sec.
144.200, which has been aligned with Sec. Sec.  144.120 and 144.125 to
avoid repetition. As provided in proposed Sec.  144.305(a), an existing
vessel to which no construction standard was applicable would need only
show that it has been in satisfactory service and its service history
does not cause the structure of the vessel to be questioned. Similarly,
structural standards for new vessels that we proposed in Sec.  144.410
are now contained in Sec.  144.205. The use of alternate design
standards is covered by Sec.  136.115 as discussed elsewhere in this
preamble.
    Because the requirements of proposed Sec. Sec.  142.220(c) and
144.350(a) were so similar, we have merged them into Sec.  144.415.
    A commenter said that proposed Sec.  144.315 and Sec.  144.415
regarding stability standards would not apply to all vessels and was
concerned about grandfathering a number of vessels that may be unstable
and remain uninspected. As discussed in more detail elsewhere in this
preamble, this final rule focuses on the towing vessels presenting the
greatest risk. Further, several commenters stated that stability is not
a problem on inland towing vessels. The Coast Guard notes that casualty
records generally support this view. For an existing vessel that will
be inspected, the stability standards for an existing vessel in Sec.
144.300 will require the vessel to show it has a history of
satisfactory service that does not cause its stability to be
questioned, or meet a similar standard that ensures adequate stability.
Stability standards for a new vessel in Sec.  144.305 will require the
vessel to show it complies with minimum standards that are applied to
other inspected vessels. One commenter suggested that a minimum
freeboard of ``like 24 inches'' for all vessels would improve stability
standards. While the Coast Guard agrees that a requirement for such a
freeboard may improve stability, both the degree of the stability
improvement and its benefit are unknown and, for this reason, a
freeboard requirement of this amount was not included in this final
rule.
    An association commented that that the proposed regulation (Sec.
144.355) does not contain size requirements and specifications for
accommodation spaces for the crew. The commenter recommended several
specifications to be included in the regulations.
    The Coast Guard declines to adopt the suggested specifications. Our
proposed requirements for accommodation spaces for the crew on towing
vessels subject to inspection under this subchapter were contained in
proposed Sec.  144.355 and were generally taken from subchapter T--
small passenger vessels. In response to comments, we have amended
proposed part 144 to include a subpart dedicated to crew spaces. Crew
space requirements in this final rule, as we proposed in the NPRM, are
based on performance standards rather than prescriptive size
requirements.
    With respect to proposed storm rail requirements in proposed Sec.
144.340, now re-designated Sec.  144.810, we added the option of hand
grabs but removed the requirement for storm rails on both sides of a
passageway more than 6 feet wide because there are no towing vessels to
which this subchapter would apply that would have such a wide
passageway.
    An individual suggested the removal of proposed Sec.  144.345,
Guards in dangerous places, because of its similarity to proposed Sec.
143.230. We decided to keep this requirement, now designated Sec.
144.820, in part 144 and delete the similar requirement in part 143.
    With respect to insulation of hot piping, we retain the requirement
for existing vessels in proposed Sec.  144.350(b), now redesignated
Sec.  144.830, and for new vessels we provide a similar but more
specific requirement that aligns with an existing requirement in 46 CFR
177.970.

    In reference to a collision event involving the tug Caribbean Sea
and a ``Duck'' tour boat in Philadelphia in 2010, a commenter
recommended that the NPRM include ``height of eye'' guidelines for
towing vessels. The commenter also suggested that the Coast Guard
consider including the ``transmissivity of light'' through glazing
materials on towing vessels in proposed Sec.  144.325 or Sec.  144.425.
    The Coast Guard notes that while ``height of eye'' requirements are
not specifically addressed in this rule, the regulations in subpart I
require windows and other openings at the operating station to be
properly located to provide a clear field of vision. As proposed in
both Sec. Sec.  144.325 and 144.425, the visibility of the windows
immediately forward of the operating station in the pilothouse must
allow for adequate visibility regardless of weather conditions. In
response to the idea to include a ``transmissivity of light''
requirement, the Coast Guard notes that 46 CFR 177.1030(b) includes
such a standard for operating station visibility for small passenger
vessels and we decided to include this same requirement at what is now
Sec.  144.905(e).

        Table 2--Derivation of Sections of Part 144 From the NPRM
------------------------------------------------------------------------
                            NPRM Section
 Final rule  section No.       No.(s)           Notes (if necessary)
------------------------------------------------------------------------
144.100..................         144.100  Revised text referring to
                                            ``plan review and approval''
                                            to ``verification of
                                            compliance'' for clarity.
144.105..................        144.200,  Created general applicability
                                 144.300,   section, Sec.   144.105,
                                 144.305,   after removing definition
                                  144.400   section. Our revisions to
                                            part 144 eliminated subparts
                                            specifically for all
                                            vessels, existing vessels,
                                            and new vessels, so we
                                            combined applicability
                                            sections for those subparts
                                            into Sec.   144.105. In
                                            paragraph (b) that refers to
                                            alterations or
                                            modifications, text similar
                                            to that contained in SOLAS
                                            Chapter II-1/1.3, ``. . .
                                            insofar as is deemed
                                            reasonable and practicable''
                                            is added to reflect actual
                                            process that will be
                                            addressed in the
                                            verification of compliance
                                            with design standards.
                                  144.105  Removed Sec.   144.105,
                                  144.110   Definitions; added
                                            definition of ``length
                                            between perpendiculars or
                                            LBP'' to Sec.   136.110.
                                            Derived definition for LBP
                                            term, used in final rule
                                            Sec.  Sec.   144.155 and
                                            144.315, from Sec.
                                            170.055. We moved the
                                            content of the former Sec.
                                            144.110 to a consolidated
                                            central incorporation by
                                            reference section for the
                                            entire subchapter, Sec.
                                            136.112.
144.120..................     144.310(a),  While proposed Sec.
                                 144.405,   144.310(a) addressed only
                               136.210(c)   structural adequacy,
                                            proposed Sec.   136.210(c)
                                            was broader and referred to
                                            compliance with the entire
                                            subchapter. This section
                                            reflects the general
                                            satisfaction of subparts B
                                            and C of part 144 by vessels
                                            currently classed by a
                                            recognized classification
                                            society.
144.125..................     144.310(b),  While proposed Sec.
                               136.210(d)   144.310(b) addressed only
                                            structural adequacy,
                                            proposed Sec.   136.210(d)
                                            was broader and referred to
                                            compliance with the
                                            structural, drydocking, and
                                            stability requirements of
                                            the subchapter. This section
                                            reflects the satisfaction of
                                            structural, stability, and
                                            watertight integrity
                                            requirements by a vessel
                                            holding a valid load line
                                            certificate.
144.130..................      136.115(b)  Vessel in compliance with
                                            SOLAS is considered to be in
                                            compliance with part 144.
144.135..................         144.220  Verification of compliance
                                            requirements are placed into
                                            a table for clarity.
144.140..................         144.225  Qualifications revised into a
                                            table for clarity.
144.145..................         144.230  Procedures for verification
                                            are clarified with minor
                                            revisions that include a
                                            clarification that
                                            ``stamped'' means the
                                            imprint of the seal of the
                                            P.E. and that ``plans''
                                            include a list of drawings,
                                            diagrams, calculations,
                                            schematics and other similar
                                            documents.
144.155..................         144.235  Sister vessel verification
                                            clarified with general
                                            revisions. Among these is a
                                            change of ``same plans'' to
                                            ``verified plans'' and
                                            ``equipped with same
                                            machinery as the first
                                            vessel'' to ``equipped with
                                            machinery of the same make
                                            and model as the original
                                            vessel.''
144.160..................         144.240  General marking requirements
                                            clarified with general
                                            revisions including a more
                                            appropriate reference to
                                            draft mark required in
                                            subchapter I at 46 CFR 97.40-
                                            10.
                                  144.205  Proposed section on TSMS
                                            deleted because the proposed
                                            TSMS requirements are
                                            contained in parts 137 and
                                            138.
                                  144.210  Proposed section with general
                                            requirements deleted because
                                            the general requirement is
                                            repeated from parts 136 and
                                            137.
144.200..................         144.310  Structural standards for
                                            existing vessels are
                                            contained in this section.
144.205..................         144.410  Structural standards included
                                            for new vessels including
                                            rules and alternatives.
144.215..................         144.215  This section is revised to
                                            clarify conditions under
                                            which OCMIs may act on
                                            special consideration.
144.300..................         144.315  Retains proposed stability
                                            requirements for an existing
                                            vessel with a stability
                                            document and added
                                            satisfactory service,
                                            operational tests, or a
                                            satisfactory stability
                                            assessment as standards for
                                            an existing vessel without a
                                            stability document; weight
                                            and moment history moved to
                                            Sec.   144.315.
144.305..................         144.415  Contains stability
                                            requirements for new
                                            vessels; lifting
                                            requirements moved to Sec.
                                            144.310; weight and moment
                                            history moved to Sec.
                                            144.315
144.310..................      144.415(d)  New section for lifting
                                            requirements.
144.315..................     144.315(c),  Weight and moment history
                               144.415(e)   requirements consolidated
                                            into one section.
144.320..................      144.320(a)  Revised to refer to both new
                                            and existing vessels;
                                            section title changed to
                                            also refer to weathertight
                                            integrity.
144.330..................         144.320  Revised section to provide
                                            OCMI authority to require
                                            review of a vessel's
                                            watertight or weathertight
                                            integrity. Proposed
                                            paragraphs (a)(1), (2), and
                                            (3) are deleted as
                                            repetitions of requirements
                                            in Sec.  Sec.   140.610(a)
                                            and (f) and Sec.   143.270,
                                            respectively.
144.400..................      144.435(a)  Fire protection requirements
                                            applied to a new vessel,
                                            except Sec.   144.415 which
                                            applies to each new and
                                            existing vessel.
144.405..................      144.435(a)  Section title taken from Sec.
                                              177.405(a) with the
                                            requirements unchanged from
                                            the proposed rule.
144.410..................      144.435(b)  Section title taken from Sec.
                                              177.405(c) with the
                                            requirements unchanged from
                                            the proposed rule.
144.415..................     144.350(a),  Section title taken from Sec.
                              144.435(c),     177.405(b) with the
                               142.220(c)   requirements in three
                                            proposed sections merged.
                               144.435(d)  The provisions in proposed
                                            Sec.   144.435(d) are
                                            covered in Sec.   142.225,
                                            Storage of flammable or
                                            combustible products.
144.425..................      144.435(e)  Section title taken from Sec.
                                              177.405(f) with the
                                            requirements unchanged from
                                            the proposed rule.

144.430..................      144.435(f)  Section title taken from Sec.
                                              177.405(g) with the
                                            requirements unchanged from
                                            the proposed rule.
144.500..................     144.330(a),  Requirements similar to Sec.
                               144.330(e)    177.500(a)
144.505..................      144.330(b)  Requirements similar to Sec.
                                             177.500(b) and (c)
144.510..................      144.330(c)  Requirements similar to Sec.
                                             177.500(n)
144.515..................      144.330(d)  Requirements similar to Sec.
                                             177.500(o)
144.600..................      144.360(a)  .............................
144.605..................      144.360(c)  .............................
144.610..................      144.360(b)  .............................
144.700..................  144.355(b),(c)  .............................
144.710..................      144.355(a)  .............................
144.720..................      144.355(d)  .............................
144.800..................         144.335  .............................
144.810..................         144.340  Added hand grabs as an option
                                            to storm rails and removed
                                            requirement for storm rails
                                            on both sides of a
                                            passageway more than 6 feet
                                            wide.
144.820..................        144.345,  Proposed requirements for
                                  143.230   guards for exposed hazards
                                            in part 143 is merged with
                                            part 144 proposed
                                            requirement.
144.830..................      144.350(b)  Hot piping insulation
                                            requirement for an existing
                                            vessel is retained and a
                                            more specific requirement
                                            for a new vessel is based on
                                            Sec.   177.970.
144.905..................        144.325,  Proposed requirements for
                                  144.425   operating station visibility
                                            for both existing and new
                                            vessels are merged.
144.920..................         144.430  Changed ``porthole'' to
                                            ``portlight'' to match our
                                            intent for this requirement.
                                            In practice, this change is
                                            a nonsubstantive
                                            clarification because the
                                            requirement is only relevant
                                            to portholes with
                                            portlights.
------------------------------------------------------------------------

O. Miscellaneous Comments

    In the NPRM we discussed comments submitted in response to seven
questions we posed in a December 30, 2004, Inspection of Towing Vessels
notice. Some commenters commented on those questions and that
discussion. One person stated that uninspected towing vessels have been
running efficiently for more than a century and that they have no
problems that need to be addressed by a TSMS. In response to a
discussion of grandfathering, another commenter stated that many
existing towing vessels have operated in excess of 40 to 60 years
without a major accident.
    While towing vessels may be running efficiently, and many may not
be involved in a major casualty, as we noted in the NPRM, towing vessel
casualties continue to occur. Each year,\6\ there is an average of 18
fatalities, 35 injuries, $66 million in property damages, and 446,000
gallons of oil spilled. Additional damages occur after towing vessel
casualties in the form of delays from lock and waterway closures. A
primary objective of this rulemaking is to reduce fatalities, injuries,
property damaged, and oil spilled, by reducing the risk of towing
vessel casualties.
---------------------------------------------------------------------------

    \6\ Casualty consequences are from MISLE for accidents from
2002-2007.
---------------------------------------------------------------------------

    Others who commented on our discussion of these questions from 2004
focused on specific subject areas intended to be addressed by our
proposed regulatory text and the reasoning we provided in the preamble
of the NPRM for that proposed text:
     Machinery and Electrical: A commenter noted that space
constraints and crew abilities should be considered before requiring
new equipment on small vessels.
     Applicability: Three commenters suggested that existing
vessels should be ``grandfathered'' to minimize the expense and
potential closing of businesses that will not be able to comply with
new regulations. One commenter felt that few vessels other than those
under 26 feet, or those used for commercial recreational vessel towing
assistance, should be exempted from the regulation, and that fleeters
should be exempted on a case-by-case basis.
     Construction & Arrangement, Fire Protection, and TSMS: One
of those commenters would only apply grandfathering to equipment, hull
construction and structural fire-protection requirements, but
recommended that all vessels should comply with the proposed SMS rules
within one year.
     TSMS: The same commenter suggested that using the ISM Code
from 2002 as a guideline in developing the SMS requirements will allow
for a number of operators using the AWO RCP to be compliant.
     Fire Protection: The commenter also felt that existing
vessels should be treated differently from newly constructed vessels
because of the likelihood that fire standards will make it difficult to
retrofit existing vessels.
    While these comments are not in direct response to the regulatory
text we proposed, we have addressed these comments in the same section
of the preamble where we discuss comments on the corresponding proposed
regulatory text. For example, for a response to the comment regarding
whether existing and new vessels should be treated differently
(``grandfathered'') with respect to fire protection standards, see the
Fire Protection discussion of comments section.
    A towing company requested that the Coast Guard consider issuing a
supplemental NPRM so the public and industry will be able to review the
revisions to the rule before it is final. A maritime company suggested
that the Coast Guard urge towing companies to become familiar with
tried and tested engineering guides and standards. The commenter also
suggested that the Bridging Program remain functioning until all towing
vessels are found to be compliant with the rule.
    We disagree with this commenter about issuing a supplemental NPRM.
This final rule reflects consideration of the thousands of comments we
received on the NPRM we published in 2011.
    Regarding urging towing companies to become familiar with tried and
tested engineering guides and standards, we encourage towing companies
to obtain knowledge from such guides and standards, but the purpose of
this final rule is to establish specific requirements. This rule
provides some flexibility (e.g., the option to choose a

TSMS or Coast Guard inspection regime) but it is not a guidance
document: it imposes requirements for which penalties may be applied if
the requirements are not met. We have not made changes from the
proposed rule based on this comment.
    As for the Bridging Program, we are currently in Phase 2 of that
program. During Phase 1, we conducted Industry Initiated Examinations
for companies taking advantage of the opportunity to participate in
this Coast Guard program. Phase 2 is focused on Risk-Based Targeted
Examinations and is scheduled to continue until this final rule becomes
effective. Phase 3 will commence with the implementation of the new
subchapter M towing vessel inspection regulations and issuance of
Certificates of Inspection (COIs).
    A commenter suggested that towing vessel officers and officer
candidates be tested on the new towing vessel inspections that appear
in the final rule. The commenter said the Coast Guard provides only one
opportunity to test the ``professional knowledge'' of candidates for
Apprentice Mate/Steersman, Mate/Pilot, and Master of Towing Vessels,
and that for years, it tolerated insufficient knowledge of existing
regulations throughout the towing industry by licensed officers,
management, and even Coast Guard personnel assigned to boarding
parties. He noted that the Coast Guard's Towing Vessel ``Bridging''
program has done a commendable job trying to reverse this trend.
    Before imposing training requirements on those credentialed under
46 CFR subchapter B, we would want to receive comments in a separate
rulemaking on such proposed requirements. As for Coast Guard personnel
conducting inspections under subchapter M, it is our normal process to
draft a specific Performance Qualification Standard to ensure that
inspectors are properly trained and fully capable of performing such
inspections. Also in our oversight of TPOs, we will be sure to assess
the TPO personnel's comprehension of subchapter M requirements.
    One commenter felt that there is a lack of adequately trained
lookouts and that providing the Master and Pilot with a trained, well-
rested lookout can avoid many significant and costly towing accidents.
    We agree that a trained, well-rested lookout would be more likely
to help avoid towing accidents than a tired lookout who is not
adequately trained. The rule does not contain specific training or
hours of work requirements for lookouts, although such training and
fatigue management may be part of a TSMS. We are considering developing
a separate rulemaking for hours of service and crew endurance
management based on our authority under 46 U.S.C. 8904(c). If we do so,
we will publish a separate document in the Federal Register. We have
made no changes from the proposed rule based on these comments.
    Two commenters urged the Coast Guard to include a regulation that
requires companies to provide mariners with a ``letter of sea service''
when the mariner is renewing their credentials.
    We believe this suggestion is outside the scope of this rulemaking.
We would want to receive comments on this suggestion in a separate
rulemaking before imposing such a requirement.
    An individual and an association felt that the ``Bridging'' book,
updated with regulations from this final rule and other related
regulations, should be provided in electronic format to provide a clear
regulatory and policy statement to the towing industry and thereafter
the Coast Guard should require the book or an updated electronic copy
be carried aboard each towing vessel. One of these commenters noted
that when the Coast Guard promulgated new oil pollution regulations in
1973, they provided an explanatory pamphlet and a required completion
of an ''open-book'' test on the new regulations.
    The Coast Guard notes that the Coast Guard's Bridging Program will
cease to be applicable to towing vessels once this final rule becomes
effective. We have prepared a Small Entities Guide which is available
in the docket. With respect to an electronic form of subchapter M and
other related regulations, we note that this final rule and subchapter
M regulations that will become part of the CFR will be available
through www.gpo.gov/fdsys.
    An association commented on the need for vessel route restrictions
on a COI to be done on a vessel-by-vessel basis based upon reasonable
safety considerations, and the need for adequate sea anchors and ground
tackle for towing vessels that service oceans and coastwise routes.
    A Coast Guard OCMI will make vessel-specific determinations
regarding a vessel's route and other operating conditions which will be
identified in the vessel's COI. Towing vessels come in a variety of
shapes, sizes, and services, some of which could utilize anchors and
other ground tackle as appropriate. An anchor that is appropriate for
the towing vessel would not necessarily be adequate to accommodate the
tow. It is incumbent upon the towing vessel owner or managing operator
to examine their operating conditions and decide if having an anchor
and other ground tackle is appropriate.
    Two commenters suggested that doubler plating is not acceptable as
a longstanding repair policy and recommended that the use of doubler
plating be prohibited in regulation for vessels that have been
inspected, unless it is approved by a Commandant.
    The Coast Guard has not adopted this recommendation. Second, since
this comment was submitted, ASTM has issued a national consensus
standard for the use of doubler plates as a permanent repair for
vessels in all services. We have made no changes from the proposed rule
based on these comments.
    A commenter suggested that the NFPA standards referenced in the
NPRM be updated to the current editions. This commenter also requested
that we correct our references to NFPA 70, the National Electrical Code
(NEC), which are listed incorrectly as ``National Electric Code'' in
proposed Sec. Sec.  136.110, 136.112, 143.120; 143.340(b)(6);
143.350(b); and Section II, Abbreviations.
    The Coast Guard believes it is not necessary to update to the
current editions of the NFPA standards at this time; in this final rule
we have maintained the NFPA editions that we proposed in our NPRM. We
have, however, corrected the error in our citations to NFPA 70,
National Electrical Code (NEC).
    A maritime company felt that the terminology used in the proposed
rule is broad and could be interpreted differently depending on the
reader. The commenter gave ``major defects'' and ``substantial'' as
examples of items totally left up to the opinion of the individual
auditor, and suggested that more precise terms be included to ensure
consistency in the application of the regulations.
    The Coast Guard notes that we did not use the term ``major
defects'' in the NPRM. We did, however, use the term ``major non-
conformity,'' which we also defined. We also note that we have added or
amended definitions based on many comments on our proposed rule.
    In this final rule we do use the word ``substantial,'' or a version
of it, in our definition of ``major conversion'' in Sec.  136.110 and
in our revocation of TPO approval section, Sec.  139.150. We agree that
using more precise terms is appropriate when one is available, but
sometimes a more flexible term is the only appropriate term to use. We
believe this is true of our uses of the term ``substantial'' in this
final rule and that the common understanding and

definition of that term, combined with Coast Guard interpretation of
that term in other regulations, does place restrictions on how
individual auditors may interpret it. We have made no changes from the
proposed rule based on this comment.
    Lastly, a commenter suggested that the Coast Guard implement a
notification system to remind vessel owners of deadlines that are
approaching for their fleets.
    The Coast Guard notes that it has a system that is currently used
for other inspected vessels to provide owner and managing operators
with notification of impending compliance deadlines and plans to use
this same system for towing vessels inspected under this subchapter.
However, owners and managing operators are still ultimately responsible
for meeting these deadlines and the associated inspection requirements
including notification of the cognizant OCMI as required in part 136.

P. Crew Endurance Management Systems (CEMS)

    We thank those who commented in response to our Hours of Service
(HOS) and CEMS preamble discussion in the NPRM (76 FR 49991-49997, Aug.
11, 2011). These comments have helped to inform our consideration of
HOS and CEMS issues confronting the maritime community.
    As we stated in the NPRM, the Coast Guard would later request
public comment on specific hours-of-service or crew-endurance-
management regulatory text if it seeks to implement such requirements.
We are considering developing a separate rulemaking for HOS and CEM
based on our authority under 46 U.S.C. 8904(c). If we do so, we will
publish a separate document in the Federal Register.
    We have summarized HOS and CEM comments below as a means of sharing
the valuable input we received on this topic we discussed in the NPRM,
but we have limited our responses because we are not proposing HOS or
CEM requirements in this document. In general, we have only responded
to these comments when we want to refer to what we said in the NPRM or
point to currently available guidance or resources to address an issue
raised. We have attempted to sort these comment summaries based on the
questions we asked in the NPRM.
    Some commenters wondered why, despite assembling sufficient data,
the Coast Guard seeks additional information on potential requirements
to increase uninterrupted sleep duration, while others described the
Coast Guard's efforts to address hours of service as minimal and in
need of revision. Another commenter said mariners resent the Coast
Guard's failure to take a stand on maximum work hours and safe minimum
manning requirements.
    In the NPRM, the Coast Guard shared its views on potential HOS and
CEMS program standards and requirements, and sought additional data and
other information that we solicited through specific questions because,
as we stated, we are ``considering establishing hours of service
standards and requirements for managing crew endurance, the ability for
a crewmember to maintain performance within safety limits while
enduring job-related physiological and psychological challenges.'' (76
FR 49991, Aug. 11, 2011.)
    We received several comments suggesting that the traditional 2-
watch system be replaced by a 3-watch system that provides more
opportunity for increased uninterrupted sleep. One commenter said work
durations should be reduced to a maximum of 21 days, with a phase-in of
the 3-watch system within 10 years. Another commenter recommended that
the Coast Guard develop a NVIC to provide one or more specific 2-watch
rotation models that would meet the work hour limitations and minimum
rest hour standards.
    Several commenters noted that a ``6-on, 6-off'' schedule is unsafe
or insufficient for allowing adequate rest. One commenter said an ``8-
hour on, 4-hour off; then 4-hour on, 8-hour off'' schedule would
achieve the maximum hours of rest while maintaining the current amount
of crew. However, another commenter said an ``8:8:4:4'' schedule may
allow for less total sleep over 24 hours than a ``6:6:6:6'' schedule.
    We received several comments referencing crew manning with respect
to potential work hour requirements. Some commenters said any towing
vessel operating over 12 hours in any 24-hour period should be manned
with two full crews, not just with two licensed officers. One commenter
recommended a safe manning level that would support a 3-watch system
for vessels towing laden tank barges containing oil or hazardous
material in bulk. Another commenter stated that the Coast Guard should
require a relief pilot or three pilots onboard vessels (captain, after
watch pilot, and swing pilot). Several commenters noted that crews are
increasingly undertaking administrative duties, which can impact
appropriate manning and mariners' opportunity for rest.
    An element of a CEMS that might improve the awareness of the lack
of opportunity for crew members to obtain adequate sleep would be to
keep a record of each crew members' work and rest schedule. We note
that NVIC 02-08, Enclosure (4), provides a CEM program evaluator
checklist to capture areas that need improvement and ways to go about
addressing those areas. Page 4 of Enclosure (4) provides an example of
how a crew member might analyze their current work/rest schedule to
identify any associated risks involving fatigue.
    Several commenters suggested regulations that limit the workday to
12 hours in a 24-hour period for all mariners. One commenter said the
NPRM should mandate maximum work-hour limitation for unlicensed
personnel and maximum allowable work days and rotations.
    We received numerous other comments. One commenter said that
without clear and enforced work-hour regulations and independent third-
party inspections, towing boat companies will continue to exploit crews
who are eager to remain employed.
    One commenter urged the Coast Guard to promulgate HOS regulations
consistent with NTSB Safety Recommendation M-99-1. A maritime company
recommended minimum hours of rest similar to those set forth in the
latest STCW (Manila) amendments (STCW 2010, Chapter VIII, Section A-
VIII/1).
    One association noted that the Coast Guard should have decided this
issue ever since that association first presented it in May 2000 in
National Mariners Association Report #R-201 titled ``Mariners Speak Out
on Violations of the 12-Hour Work Day.''
    We received several comments supporting the implementation of an
HOS rule that would allow for sufficient time off to obtain at least 8
uninterrupted hours of sleep, or at least 7 hours of uninterrupted
sleep and an additional sleep period in every 24 hour period. However,
some commenters said the current statutory requirements in 46 U.S.C.
8104(g) are sufficient.
    Several commenters opposed a requirement for a minimum of 7 to 8
hours of uninterrupted sleep for personnel on towing vessels. A
maritime company responded that requirements should consist of a
minimum of one 6-hour period of uninterrupted rest within a 24-hour
period and a minimum of 10 hours per day of total rest. Two commenters
stated that the NPRM's focus on a minimum of 8 hours of uninterrupted
sleep fails to acknowledge that a long sleep period in conjunction with
a nap of shorter duration during a 24-hour period do not result in a
compromised mental and physical state. Similarly, a commenter

said it is not the number of uninterrupted hours of sleep per day that
is important for performance and maintenance of alertness, but rather
the total hours of sleep per 24 hours. Also, the commenter said data
indicates that shift workers who work 8 hours and have 16 hours off to
sleep only obtain 5 to 6 hours of sleep when sleep occurs at the
``wrong'' circadian time.
    We received one comment saying the best method is to allow for
anchor sleep to occur during one sleep opportunity and a nap sleep to
occur during the second sleep opportunity. A maritime company responded
that a Safe Manning Document, with prescribed watch requirements taking
into account the vessels route and service requirements, would be the
best way to ensure that sufficient qualified personnel are available
for 12 hours of work per day.
    A maritime company responded that the direct financial impact on
its company would be minimal, as most of its vessels are already manned
to allow for 7 or 8 hours of uninterrupted sleep (three in each
department). However, the commenter noted that the company would lose
some level of oversight and daily productivity in performing, for
example, inspections and maintenance.
    One commenter stated that sufficient uninterrupted sleep for vessel
crew is the best insurance a vessel owner or managing operator can have
against casualties. A maritime company stated that there would be a
benefit to managing work periods in relation to safety, but setting a
minimum number of consecutive hours without changing the 12-hour work
period may make it difficult to manage vessel operations in a 24-hour
period.
    One commenter responded that allowing crews a 7- to 8-hour sleep
opportunity does not mean crewmembers will routinely obtain 7 to 8
hours of uninterrupted sleep because it is impossible to mandate sleep.
    We agree that a mandate to provide an opportunity for a sufficient
number of hours of uninterrupted sleep will not guarantee that
crewmembers sleep for the desired number of hours. But as we suggested
in the NPRM, providing the opportunity ``to increase uninterrupted
sleep duration to a threshold of at least 7 consecutive hours in one of
the two available off periods in the two-watch system [would] increase
the probability that crewmembers will have the opportunity to restore
the cognitive abilities necessary to maintain situational awareness,
even if the sleep environment is not optimal.'' 76 FR 49996, Aug. 11,
2011. As noted above, log-keeping could be an effective way to gauge
work and rest schedules throughout daily onboard operations.
    A maritime company responded that while 7 hours of sleep is ideal,
this does not work well in a 12-hour work schedule, and is still
controversial even within the pioneering companies that initially
implemented and tested the CEMS practices. The commenter concluded that
the CEM training teaches that this--getting 7 hours of sleep--is the
last and one of the least important facets of the program.
    Another maritime company responded that, when given a 7- to 8-hour
sleep opportunity, mariners cannot obtain 7-8 hours of uninterrupted
sleep. Thus, it is common in the towing vessel industry to allow for
two sleep opportunities where each opportunity allows for significant
sleep such as on a ``6:6:6:6'' square watch schedule.
    We received many comments, mostly from maritime companies, opposing
a potential requirement for a minimum of 7 to 8 hours of uninterrupted
sleep for personnel on towing vessels because no current watchstanding
system meets this standard. Several commenters, including maritime
companies, said the ``6 on/6 off'' watch schedule has worked for many
years and should not be altered. A maritime company responded that the
traditional ``6 on/6 off'' watch schedules would have to be changed to
a ``5/7/7/5,'' or'' 4/8/8/4,'' and a ``12/12'' schedule may even need
to be worked depending on vessel operations. Another commenter
expressed concern about the difficulty that operators would have in
finding experienced personnel to meet the proposed watch standing
standards.
    One commenter responded that it is impossible to mandate that
mariners ``obtain a required number of hours of uninterrupted sleep,
such as 7-8 hours.'' Instead, what is needed is to change mariner
culture such that sufficient sleep is understood to be important for
optimal performance, safety, and health.
    A maritime company said a mandate would undoubtedly change the
entire operation onboard, including meal hours, voyage planning, etc.
    Another maritime company responded that a mandate that required
mariners to obtain 7 to 8 hours of uninterrupted sleep would require
the use of pharmacological agents or behavioral therapies (e.g.,
exercise, sleep hygiene, cognitive behavioral therapy for insomnia)
that would enable mariners to achieve the mandated hours of
uninterrupted sleep.
    One commenter noted that many factors, including electronic
gadgets, noise in the berthing spaces, and dietary considerations can
have an adverse impact on a mariner's ability to obtain adequate sleep.
    We received one comment that said requiring 7 to 8 hours of
uninterrupted sleep would require one-third more crewmembers than the
company presently can accommodate on board.
    One commenter stated that recent data on sleep make it unlikely
that crews on a ``7:7:5:5'' or an ``8:8:4:4'' watch schedule could
obtain close to 7 or 8 hours of sleep, even when the endogenous drive
to sleep coincided with a 7- or 8-hour rest period.
    Two commenters said focus on nutrition and hydration has helped
employees, but the companies have not changed watch schedules. Two
other commenters responded that they have implemented CEMS, but one
noted that it does not require that mariners receive 7 to 8 hours of
uninterrupted sleep.
    An association and another commenter said a CEMS program alone
cannot account for the fatigue caused by the existing 2-watch system on
vessels in 24-hour service. The commenters stated that many mariners
are unwilling to adjust their lives to fulfill the requirements of the
system, and employers who force the program upon their mariners will
encounter resentment and retention problems.
    A maritime company responded that if a CEMS program enabled crews
to obtain 7 to 8 hours of total sleep over a 24-hour period, such a
program could be effective in combating fatigue. Another maritime
company responded that any operation can benefit from CEM practices
absent of work/rest changes. Diet, exercise, and environmental factors
are all critical to improving operations and reducing fatigue.
    Another maritime company responded that there is no evidence HOS
restrictions reduce casualties and injuries, although this may be
possible if crews can achieve 7 to 8 hours of total sleep on a day-to-
day basis.
    A maritime company commented that no existing programs could be
considered equivalent to the Coast Guard CEMS program. The alternative
would be a traditional ship ``4/8'' watch schedule, which would require
manning increases for most companies.
    One commenter responded that, yes, a mandate would cause burden to
smaller companies with limited resources. Another commenter said
requiring a crew management program would increase the already large
financial burden of implementing these proposed regulations on mid-
sized and smaller companies, as well as an increased cost to the end
consumer due to the necessity of larger crews.

    A maritime company responded that for a full CEMS program, a 4- to
5-year period would be appropriate to allow for training,
implementation, and auditing. Another maritime company responded that
there is no appropriate phase-in period or method until evidence is
provided that implementation of a new HOS requirement is effective.
    In their comment to the docket (USCG-2006-24412-0187), the National
Transportation Safety Board indicated they were pleased with the
comprehensiveness, relevance, and timeliness of the literature that the
Coast Guard cited in the NPRM, and believes that this literature aptly
summarizes the state-of-the-art of human factors and physiological
research on the effects of fatigue on human performance. The commenter
went on to cite several maritime and transportation accidents in which
operator fatigue was identified as a contributing factor.
    A maritime company noted that Coast Guard cites the Fatigue
Avoidance Scheduling Tool (FAST) algorithm and produces nine figures
(Figs 2-10) for assessing the effects of work and rest schedules on
human health and performance, but there is no evidence in the FAST
model that mariners will be able to obtain 7 to 8 hours of
uninterrupted sleep on a ``7:7:5:5'' or ``8:8:4:4'' rectangular watch.
Another maritime company disagreed with scientific studies that have
indicated that uninterrupted sleep of less than 8 hours gives a worker
a response time equivalent to someone with blood alcohol content of
0.05-0.08. Other commenters recommended a study on sleep requirements
strictly related to inland waterways vessels.
    We received a few comments supporting the structure of a CEMS
program, and stating that before work hours or watchstanding practices
are changed, a program including crew physical wellness and fatigue
education and training must be put into place. One commenter supported
additional training for crew members in the area of crew member fatigue
and work and rest periods.
    There are currently several opportunities to learn more about CEMS
and mariner fatigue. We recommend talking with your company safety
officer for training options, or visit http://www.uscg.mil/hq/cg5/cg5211/cems.asp for more information on CEM.
    One commenter said the concept of crew endurance is in effect a
``Band-Aid'' for a system that is broken, and that the Coast Guard has
objective scientific evidence to take clear and definitive actions for
establishing maximum work-hour limitations.
    We received several comments stating that the Coast Guard's
emphasis on uninterrupted sleep differs from the description of CEMS in
NVIC 02-08, Criteria for Evaluating the Effectiveness of Crew Endurance
Management System Implementation. Further, the commenters said NPRM's
emphasis on 7 to 8 hours of uninterrupted sleep is troubling not only
because of its inconsistency with prior Coast Guard publications
describing the purpose of CEMS, but more importantly because it
reflects an incomplete and selective treatment of the science behind
sleep and watchstanding.
    As discussed in NVIC 02-08, components of a CEMS that improve the
safety culture and sleep quality include education, environmental
changes, light management, trained coaches, and schedule changes. As
indicated in Enclosure (4) of NVIC 02-08, a crew's watch schedule
should be evaluated based on the opportunity for each member to achieve
a sufficient amount of uninterrupted sleep.
    A maritime company stated that the CEMS demonstration project did
not provide any data to support any changes in HOS or any endurance
management standards.
    We received several comments complaining about the Coast Guard's
inaction regarding HOS and crew endurance. However, many commenters,
mostly maritime companies, said the towing vessel inspection rule is
not the proper place for requirements regarding fatigue management,
which has implications for the entire maritime industry and that it
would be more appropriate to address the issues raised in the NPRM
relating to periods of rest and watchstanding in a separate rulemaking
project particularly as it pertains to the marine industry as a whole.
One commenter said any additional CEMS requirements should be
identified in a company's TSMS and not in regulation.
    Several commenters said emphasis on minimum required hours of sleep
is not justified by science or data. One commenter said the NPRM is
confusing and lead a reader and, more importantly, an inspector to draw
the wrong conclusions about how a vessel watch should be set up. A
maritime company said there is a need for literature that explores
anchor sleep/nap sleep strategies; compares sleep times on different
watch schedules where the total amount of sleep and work opportunities
are equivalent; evaluates the effectiveness of educational programs to
change the culture of crews on board towing vessels; documents why
mariners do not obtain 7 to 8 hours of sleep per 24 hours; and
evaluates effective strategies for the treatment of sleep disorders.
    One commenter said any requirement for hours of service standards
and crew endurance management requirements should apply to double-
crewed overnight boats and should not apply to ``dinner bucket'' or
harbor boats.
    We received two comments stating that the Coast Guard should
withdraw its proposal until the following issues are addressed: current
abuses of existing hours-of-service regulations for towing vessel
officers; the lack of any hours-of service regulations for deckhands,
engineers and unlicensed crewmembers; fatigue resulting from these
abuses; and the undermanning of towing vessels as previously
documented.
    Another commenter said the NPRM included no mention of previous
recommendations made by the Towing Safety Advisory Committee (TSAC) on
CEMS and seeks comment on a different approach that was not previously
brought to TSAC's attention.
    We received several comments stating that the CEMS research being
conducted by Northwestern University on inland towing vessels should
influence the Coast Guard's direction on watchstanding and CEMS.

Q. Economic Analysis Comments

    The Coast Guard received numerous comments from organizations and
individuals regarding the costs and benefits associated with our
proposed subchapter M regulations.
    When we published the NPRM in 2011, we were particularly interested
in the economic impact of implementing a TSMS, and whether there were
alternatives to the TSMS and Coast Guard inspection options that could
provide similar benefits at a lower cost.
    Many commenters provided details and opinions regarding the costs
and benefits of implementing the new subchapter M requirements. The
comments involved the overall and specific costs and benefits of the
requirements, the economic impact on small entities, and the requests
for flexibilities that could provide relief to towing vessel owners and
operators. We appreciate these comments and have attempted to integrate
them into our Regulatory Analysis (RA). We address the specific topics
in the sections of this preamble below.
1. Costs
    We received numerous comments from towing vessel industry
stakeholders regarding the specific costs

of subchapter M parts as well as general remarks on overall costs of
the new requirements. Many commenters expressed concern over subchapter
M requirements imposing undue costs on vessel owners and operators
without providing any information or further discussion.
    One commenter stated the cost of hiring a naval architect for
stability calculations would be in the tens of thousands of dollars per
vessel to comply with construction and arrangement standards, and
verification of compliance with those requirements.
    As noted above in section IVI.N, the Coast Guard has added
additional options for verification of compliance with part 144.
Section 144.300(b) now offers three options for an existing vessel
without a stability document to meet part 144 requirements: findings
based on the vessel's operation or a history of satisfactory service,
successful performance on operational tests, or a satisfactory
stability assessment. None of these options would cost this operator
tens of thousands of dollars. For example, the findings based on the
vessel's operation or history of satisfactory service is a
documentation activity that the Coast Guard estimates will require 4
hours of time to compile at a cost of approximately $200. Operational
tests are undertaken as part of a standard inspection if needed at no
additional cost to the operator.
    The commenter also believed that additional equipment and
redundancy systems--specifically propulsion, steering and related
controls, electrical installations, pilothouse alerter system and
towing machinery--required by part 143 are unnecessary.
    As discussed earlier, part 143 no longer requires redundancy
propulsion or steering for existing vessels, and has eliminated
deferred electrical requirements in proposed Sec. Sec.  143.340 through
143.360 for existing vessels. This final rule does retain a pilothouse
alerter system requirement for towing vessels with overnight
accommodations and alternating watches (shift work), but we have
limited this requirement to towing vessels more than 65 feet in length.
We also retained a requirement for towing machinery (e.g., capstans and
winches) to be designed and installed to maximize control of the tow.
Both the pilothouse alerter system and towing machinery requirements
have a delayed implementation period for existing vessels: 5 years
after the issuance of the first COI for the vessel. For a more detailed
discussion of these two requirements, please see section IV.M above.
    One commenter stated that the Coast Guard estimated that bringing a
single towing vessel into compliance with general requirements for
propulsion, steering, and related controls, which appeared in Sec.
143.405 in the NPRM, would cost $20,000 and said that his company spent
$200,000 to replace steering and propulsion systems of a single vessel.
The commenter estimated that to bring his company's 130 vessels into
compliance under subchapter M, they would need to spend millions of
dollars. The commenter also said that several thousand towing vessels
would be affected, as opposed to the Coast Guard estimate of 26 towing
vessels being affected by the Sec.  143.405 requirements.
    As discussed earlier, the Coast Guard acknowledges the potential
for higher costs to retrofit existing vessels. In this final rule, the
relevant requirements have been moved to Sec.  143.585 and the
applicability of these requirements has been reduced to only apply to
new vessels (estimated at 88 per year) or those undergoing a major
conversion (estimated at 13 per year) that move tank barges carrying
oil or hazardous materials in bulk. We estimate the incremental cost to
comply with Sec.  143.585 during the design and construction stage for
new vessels or those undergoing major conversion to be $10,000 per
vessel.
    Another commenter, referencing the previous commenter's remarks,
estimated that company would incur a cost of $40 million to comply with
subchapter M. This commenter also suggested that subchapter M costs
will be passed along to all the consumers in the U.S. economy thereby
putting the U.S. economy at a disadvantage compared to other world
economies.
    The Coast Guard has considered the potential cost impact on
individual companies and the economy in formulating the final rule. We
balanced costs against the beneficial impacts of the rule in reducing
the risk of towing vessel accidents and the resulting consequences,
including fatalities, injuries, and oil spills. Based on information
provided in the comments from the public on the costs of some
requirements, we have revised the applicability of some those
requirements to only newly constructed or refurbished vessels to
mitigate the need for costly retrofits of existing vessels. We have
also added alternative compliance options, such as allowing service
history in lieu of stability tests for some vessels. We believe the
resulting final rule fulfills Congress' mandate to bring towing vessels
under an inspection system to ensure and improve safety, while
minimizing costs and potential impacts on the U.S. economy.
    Another commenter expressed concern about the cost of the rule to
vessel owners and operators and stated that the annual user fee could
be ``in the $1,000 to $2,000 range'' for each vessel. The annual fee
for towing vessels inspected under subchapter M will be $1,030. As we
note in section IV.D above, this is the existing annual inspection fee
in 46 CFR 2.10-101 for any inspected vessel not listed in Table 2.10-
101. This will be charged starting a year after the initial COI is
issued and will remain the annual inspection fee until a specific
annual inspection fee for towing vessels is promulgated through a
separate rulemaking.
    The same commenter also estimated that the negative impact on the
economy, of (river-canal) lock delays due to towing vessel accidents,
is only $13.89 million of annual economic impact and 0.13 percent of
total downtime, compared to an estimated total negative economic impact
of $10.8 trillion for all downtime on the lock.
    The Coast Guard acknowledges that lock delays from towing accidents
may only make up a small fraction of total lock delays. However, that
does not negate the benefit that could be realized through the rule by
improving towing vessel safety, and reducing accidents and the
resulting delays. Analyzing all causes of lock delays and methods for
mitigating those delays not related to towing vessel accidents is
outside the scope of this rulemaking.
    One commenter submitted a number of comments on the additional
operational costs due to subchapter M requirements that included the
impact of periodic drydocking which may leave the work force idle,
additional recordkeeping-staff requirements, the limited supply of
shipyards which may increase the amount of time needed for repairs and
drydocking, and increases in lending rates for marine loans from
financial institutions due to actual or perceived risks.
    With respect the impact of drydocking, according to a 2013 report,
``For smaller vessels, routine drydocking can be done in the course of
a single day.'' \7\ The Coast Guard assumes 2 days of for each drydock
inspection and has added an estimate of potential lost revenues during
that period. Drydocking can be scheduled in advance with shipyards to
coincide with rest requirements of crew, minimizing the

potential for workforce idleness or longer waits times.
---------------------------------------------------------------------------

    \7\ ``Study of Engineering and Naval Architecture Costs for Use
in Regulatory Analysis'', 17 April 2013 by ABS Consulting, page 30.
---------------------------------------------------------------------------

    The provisions of the rule are intended to improve safety of towing
vessel operations, which over time should reduce actual risks.
    One commenter asked for more detail on how the Coast Guard
estimated the annual government costs at $1.4 million. He interpreted
this figure as a need to hire 14 new full time employees.
    Coast Guard man-hours are calculated based on assuming only a few
hours per vessel, although it might amount to a large number of hours
considering that the affected population is more than 5,500 towing
vessels. The Coast Guard is flexible with respect to meeting resource
needs and may not hire new full time employees to implement the new
subchapter M program.
    Several commenters stated that the preliminary RA underestimated
the various costs of subchapter M. In particular, one commenter
believed that for existing vessels cost in man-hours needed to develop
vessel plans is much higher than the estimate presented in the RA. The
commenter estimated that cost of plan development alone will be as high
as $80,000, as opposed to the Coast Guard estimate of $20,000. In
addition to these costs, the commenter included an estimate of up to
$30,000 for stability review, and $100,000 to verify vessel compliance
with requirements in parts 140 through 144.
    The Coast Guard acknowledges the potential for higher costs for
plan development and stability review. As a result, this final rule
does not require an existing vessel to undergo a verification of
compliance with design standards, so there is no plan development cost
for an existing vessel unless that vessel either undergoes a major
conversion or involves a new installation that is not a replacement-in-
kind. In the case of a major conversion, the plans and documentation
needed would be directly related to the scope of the conversion. In the
case of an installation that is not a replacement-in-kind, the plans
needed would be limited to the scope of the installation and to prove
that the vessel meets stability standards. Moreover, the documentation
required is not restricted to traditional drawings; sketches,
schematics, diagrams, specifications, and photographs can be used to
the degree needed to ensure the vessel complies with the standards
used.
    The same commenter suggested an alternative approach to these plans
that they estimated would cost no more than $30,000 per vessel: Having
a P.E. conduct a ship check to approve hull structure, piping,
electrical machinery systems and stability test by using in-house
sketches and reviewing vessel structure and systems. The total costs of
the program suggested by this commenter ranged from $150,000 to
$180,000 when added to the other vessel plan costs. The Coast Guard
views the suggested alternative approach to be similar to the surveys
required under the TSMS option and, therefore, to be redundant.
Further, the alternative approach suggested is not really an
alternative since sketches, photographs, and similar documents are
included in the group of sufficient documents needed for review in the
case of either a major conversion or a new installation that is not a
replacement-in-kind on an existing vessel.
    Another commenter estimated that the cost of retrofitting an
existing towing vessel to comply with subchapter M ranges from $180,000
to $300,000. This commenter also pointed out the additional cost of a
TSMS, which he noted we estimated to be from $61,000 to $150,000 per
company. The commenter added that none of these estimates accounts for
the economic impact of time spent out of service while a vessel is
being retrofitted.
    The Coast Guard acknowledges that the costs to retrofit vessels to
meet certain proposed requirement may have been higher than estimated
in the NPRM. As a result of these higher costs, the Coast Guard has
removed those requirements for existing vessels, although the
requirements are retained for new vessels as the incremental costs for
a new vessel are lower. Removing certain requirements for existing
vessels in Part 143 has the potential to reduce most, or perhaps all,
of the $180,000 to $300,000 costs noted in the comment. With regards to
the TSMS costs, the rule provides the Coast Guard inspection option as
an alternative if developing and implementing a TSMS is deemed too
costly by a vessel owner. In response to this and other comments, the
Coast Guard has included an estimate of lost revenue in the Regulatory
Analysis for the final rule for drydock inspections and activities to
correct deficiencies that exceed 1 day in duration. We have made
certain requirements no longer apply to existing vessels and has made
many other changes to address that concern, as discussed in previous
sections.
    One commenter stated that subchapter M would require his company to
change electrical systems on existing vessels at a cost of more than
$75,000 per vessel, and would potentially cost the company $2,700,000
to comply.
    While the Coast Guard finds it unlikely that it would cost over
$75,000 to bring a vessel in active service under normal engineering
practice into compliance with subchapter M, the Coast Guard
acknowledges that some of the requirements proposed for electrical
systems that required retrofitting of existing towing vessels could
result in higher costs. In this final rule, we have made many of those
requirements only applicable to new vessels. For more details, see
discussion of electrical systems in section IV.M above.
    One commenter estimated his company's average compliance cost to be
$225,000 per vessel or $3.375 million for his entire fleet. A second
commenter, relying on an AWO figure, estimates the cost of the proposed
requirements to be as much as $100,000 per towing vessel. A third
commenter, representing a group of offshore towing vessel owners and
operators, quoted previous comments on compliance costs and provided an
average cost of $180,000 to $300,000 per vessel.
    The Coast Guard appreciates the information from commenters on the
potential costs of the proposed requirements in the NPRM. Given the
potential for higher cost impacts, we have re-evaluated the
requirements in the proposal to identify opportunities to minimize
costs while still achieving risk reduction. As described previously, we
have provided opportunities for lower-cost compliance options for some
requirements and changed the applicability of some requirements so that
existing vessels would not have to undergo costly retrofits. The Coast
Guard estimates that the average cost of compliance per vessel during
the phase-in period is $16,267 with an additional $5,045 cost per
company. The deficiency data from the Bridging Program and towing
vessel boardings, which represents over 99 percent of the towing vessel
fleet, indicates that many deficiencies are relatively rare (5 percent
or less of vessels), making it unlikely that a vessel would incur the
cost of every regulatory requirement.
    Finally, other commenters stated that there are many hidden or
unaccounted-for costs that the Coast Guard did not incorporate into its
preliminary RA. These hidden costs are the same costs mentioned by a
previous commenter: Lost revenues and wages due to periodic inspections
and repairs (including travel to inspection locations), crew costs to
prepare for the inspection and undergo the questioning during the audit
or survey, and management costs to oversee the TSMS and inspection
scheduling.

    Based on these and other comments, the Coast Guard acknowledges
that potential for lost revenue and has added an estimate of lost
revenues for drydocking and certain repairs (please see Section 2.5 of
the Regulatory Analysis for details).
    With respect to costs to prepare for and undergo inspections, the
Coast Guard estimates 40 hours of time to prepare for and undergo an
inspection, which could be accomplished by the owner, operator, crew,
or a combination. We have used the owner or operator wage rate to value
the opportunity cost, which would be a slight over-estimate if crew
instead performed the activities, which includes scheduling the
inspections.
    With regard to management costs to oversee a TSMS, the NPRM
regulatory analysis provided an overall cost estimate for a TSMS that
included management costs. For the final rule, the Coast Guard does not
expect management costs for a TSMS to be incrementally different than
management costs for an existing Safety Management System.
    Additionally, one commenter believed that the preliminary RA did
not account for increased shipping rates and transportation costs for
industries dependent on river transportation.
    The Coast Guard has added an evaluation of the potential for
increased shipping rates and transportation costs in Appendix J of the
Regulatory Analysis. The average cost per vessel of the final rule on a
daily basis represents an increase of 0.7 percent to 2.75% of barge
daily operating costs, exclusive of fuel costs. The ability of towing
vessel owners to pass along these cost increases to shippers will
depend on many factors that make up the elasticity of demand, which
will vary depending on the cargo, route, and transportation
alternatives available. Towing vessels and barges typically carry
commodities in bulk, including coal, petroleum, crude materials (such
as forest products, sand, gravel, ores, scrap, and salt), and food and
farm products (Figure J-1). The analysis of the impact of the increase
in towing vessel daily operating costs on the shippers will be
different for each commodity and route. An analysis of shipping rates
for grain indicates that barge shipping rates are volatile, sometimes
doubling from one year to the next, reacting quickly to sudden changes
in export demand, weather constraints on the rivers, or larger-than-
expected crops. The final rule requirements are expected to represent
average increases in operating costs of 0.7 to 2.75 percent, only a
small fraction of normal variability in rate. The market and shippers
have adapted to fluctuations in shipping rates, so that increases of
the size that may result from the final rule are within normal
variations.
    Further, the amount of increase in costs will vary from company to
company. For example, many companies already have a TSMS, so this
regulation would have a lesser impact on those companies cost structure
than those companies that don't have one. The final rule brings all
towing companies up to a minimum standard of safety and erodes the
competitive advantages of those companies underinvesting in safety
measures. By reducing accidents, incidents and casualties and resulting
impacts including delays, the final rule may also increase the
dependability and timeliness of shipping by barge and perhaps mitigate
some limited aspects of the volatility of rates.
2. Benefits
    We received many comments in support of the proposed rule. Many
commenters said that SMSs are cost-beneficial and might lead to
quantifiable benefits. Commenters suggested that SMSs might lead to
benefits such as fewer vessel accidents and personal injuries, which
would mean cost savings from reduced insurance premiums and avoidance
of expenses such as vessel repairs and time out of service. However, no
commenter provided any data or analysis that would directly quantify or
monetize such benefits.
    Numerous commenters, while agreeing with the proposed requirements
in principle, expressed a concern that the costs of complying with
subchapter M would exceed the benefits and should be either avoided
altogether or mitigated by following a risk-based approach. The
majority of these commenters felt that benefits should be justified by
each towing vessel's individual casualty history and risk. For example,
a vessel that has not been involved in any accident but is not
compliant with some or all of the requirements of subchapter M should
not be considered a risk to the maritime industry and should be granted
exemption or grandfathered from some or all of subchapter M
requirements.
    The Coast Guard agrees in part. The regulatory impact analysis we
provide in the docket discusses at length why and how owners and
operators of regulated entities will benefit from the requirements of
the final rule. The fact that no incident has occurred yet on a
particular vessel, especially one that does not comply with the
requirements of the final rule, does not mean that the vessel does not
present any risk to the maritime industry. In the next comment section,
we addressed requests to obtain relief from certain costs commenters
deemed unnecessary and will point to accomodations and flexibilities
this final rule provides.
3. Flexibilities To Provide Relief to Towing Vessel Owners and
Operators
    We received numerous comments from the towing vessel owners and
operators requesting greater flexibility in the rule to reduce its
costs to them. They varied from full exemption from all subchapter M
regulations to grandfathering on specific requirements. These comments
are addressed in this section.
    One commenter requested that the Coast Guard grant his company
either an exemption from all requirements of subchapter M or an
extension of 20 years of grandfathering on existing equipment on board
his towing vessels. Another commenter requested some form of
grandfather clause for existing fleets from proposed Sec. Sec.  143.340
through 143.360 electrical system requirements citing complete rewiring
costs at $150,000 to $210,000 for each vessel. Similarly, one
commenter, without being specific, suggested that many requirements
relating to mechanical and electrical equipment and structural
standards for small operators should be relaxed or eliminated. Also,
the AWO recommended that the Coast Guard delete sections on electrical
system requirements in the final rule. Another commenter argued that
subchapter M regulations are unnecessary and asked for an exemption or
extension for longtime existing companies that have always operated in
full compliance with existing regulations because these new regulations
may force them out of business.
    The Coast Guard believes it inappropriate to grant an exemption
from all new requirements under subchapter M or grandfathering of 20
years for existing equipment. However, the Coast Guard agrees that some
of the requirements for machinery and electrical systems in part 143
may have been too burdensome and were unnecessary for existing vessels,
so they have been removed from this final rule.
    One commenter suggested that coal and grain barge handlers, which
are generally small businesses, should not have the same TSMS
requirements as larger companies. Another commenter asked Coast Guard
to provide a template for a scaled-down version of a TSMS that might be
less overwhelming for small towing vessel operations. A third

commenter suggested that small operators should not be required to
implement and maintain certain parts of the TSMS, such as the
Behavioral-Based Safety program.
    In the final rule, TSMS requirements are neither modified for
different classes of towing vessels nor scaled down or exempted for
small towing vessel operators. However, as previously noted, the TSMS
is scalable. It can be tailored to the operation of a small company and
simplified to address a limited set of assets, process, and personnel.
For a small business operator with a fleet of one or two vessels the
TSMS may be a short document. Further, owners and operators can choose
the Coast Guard inspection option.
    Behavior-based safety has been described as an approach that
focuses on what people do, analyzes why people take these actions, and
then applies a research-supported intervention strategy to obtain a
more desired outcome. (Geller, E. Scott, 2004). Subchapter M does not
specifically prescribe the use of behavior-based safety to address
specific elements of the TSMS, however some companies have chosen to
use this approach to help modify employees behaviors to enhance safety
within their organization.
    We do not believe a template is needed to comply with TSMS
requirements. As discussed in previous sections, we have clarified TSMS
requirements in this rule and we intend to issue guidance documents
related to TSMSs and TPOs as necessary, and these guides may contain
examples of such documents.
    One commenter stated that the TSMS should be the only approved
method (to obtain a Certificate of Inspection) under the final rule and
recommended that the Coast Guard option be removed because a TSMS is
scalable and can be developed in a cost-effective manner that many
small companies can adapt to.
    The Coast Guard disagrees that the TSMS should be mandatory.
Although we recognize that the TSMS is scalable and can be developed in
a cost-conducive manner, some towing companies may lack the resources
or expertise to develop and implement a TSMS. The Coast Guard
inspection option is intended to provide greater regulatory flexibility
to such companies, or any that may not want to use a TSMS for other
reasons. As noted above in section IV.B, offering this option is
consistent with one of ABSG Consulting's recommendations in its 2006
final report to the Coast Guard. See docket submission USCG-2006-24412-
0017.
4. Small Business Impacts
    We received several comments from small business owners and
operators on the economic impact of subchapter M requirements. Some
were opposed to the new requirements, but did not provide specific
information or data about how they would be impacted. Others requested
either an exemption or grandfathering from some or all of the
requirements, so that they could avoid or mitigate the economic impacts
and continue to serve the towing vessel industry. A discussion of
comments received on small business impacts follows.
    Many commenters felt that subchapter M requirements would hurt
small business owners and their employees and could put many small
entities out of business. However, they did not provide specific data
as to how much of an economic burden they expected the new requirements
to place on their operational costs. The most specific comment was that
new recordkeeping requirements alone would mean that the owner or
operator would have to hire one or more new full time workers. Other
commenters estimated the overall costs of subchapter M requirements in
a range of $100,000 to $250,000 per vessel and several million dollars
per company.
    Other commenters expressed concern that their companies would not
be able to pay for these unspecified subchapter M requirements, and
therefore, either be forced out of business or be acquired by larger
entities in the towing vessel industry. One commenter argued that
lenders will delay lending and review existing ship mortgages to
reassess their collateral positions, because many owners and operators
of small towing vessel fleets will not be able to afford the costs to
comply with subchapter M requirements. Another commenter stated that
his company would lose the ability to borrow against their boats if
they cannot comply with the new regulations. One commenter estimated
that no less than 20 percent of the aggregate U.S. towing fleet would
be put out of business if the NPRM, as written, is published as a final
rule. However, these commenters did not provide specific data or
information to support their concerns.
    The Coast Guard appreciates these comments on the potential
economic impact of the proposed rule on small businesses. Based on
these comments and other comments on the range of compliance costs, we
have re-evaluated the requirements in the proposal to identify
opportunities to minimize impacts on small businesses while still
achieving risk reduction. As described previously, we have provided
opportunities for lower-cost compliance options for some requirements
and changed the applicability of some requirements so that existing
vessels would not have to undergo costly retrofits. The Coast Guard
estimates that the average cost of compliance per vessel during the
phase-in period is $16,267, with an additional $5,045 cost per company.
The deficiency data from the Bridging Program and towing vessel
boardings (which represents over 99 percent of the towing vessel fleet)
indicates that many deficiencies are relatively rare (5 percent or less
of vessels), making it unlikely that a vessel would incur the cost of
every regulatory requirement.

V. Regulatory Analyses

    We developed this final rule after considering numerous statutes
and executive orders related to rulemaking. Below, we summarize our
analyses based on these statutes or executive orders.

A. Regulatory Planning and Review

    E.O.s 12866 (``Regulatory Planning and Review'') and 13563
(``Improving Regulation and Regulatory Review'') direct agencies to
assess the costs and benefits of available regulatory alternatives and,
if regulation is necessary, to select regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety effects, distributive impacts, and equity).
E.O. 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility.
    This final rule is a significant regulatory action under section
3(f) of E.O. 12866. The Office of Management and Budget (OMB) has
reviewed it under that Order. It requires an assessment of potential
costs and benefits under section 6(a)(3) of E.O. 12866. A final
assessment is available in the docket, and a summary follows.
    A Final Regulatory Analysis (RA) is available in the docket where
indicated under the ``Public Participation and Request for Comments''
section of this preamble. A summary of the RA follows:
    This rulemaking implements section 415 of the Coast Guard and
Maritime Transportation Act of 2004. The intent of the final rule is to
promote safer work practices and reduce casualties on towing vessels by
ensuring that

inspected towing vessels adhere to prescribed safety standards and
adopted safety management systems. The Coast Guard recognizes that
establishing minimum standards for the towing vessel industry is
necessary. Vessel operation, maintenance, and design must ensure the
safe conduct of towing vessels. The final rule improves the safety and
efficiency of the towing vessel industry.
    In this final rule, the Coast Guard requires towing vessels subject
to this rulemaking to undergo annual Coast Guard inspections or, in the
alternative, be part of a safety management system. If the safety
management system option is chosen, the rule requires companies that
operate inspected towing vessels to create a TSMS, continue with
existing systems that comply with the provisions of the International
Safety Management (ISM) Code, or continue under another system the
Coast Guard determines to be equivalent to the TSMS.
    This final rule would allow each towing vessel organization to
customize its approach to meeting the requirements of the regulations,
while it provides continuous oversight using audits, surveys,
inspections, and reviews of safety data. This would improve the safety
of towing vessels and provide greater flexibility and efficiency for
towing vessel operators. As a result of this rulemaking, operators
would be able to call upon third parties or the Coast Guard to conduct
compliance activities when and where they are needed.
    Although the 2004 Act added towing vessels to the list of vessels
subject to Coast Guard inspection and the 2010 Act directed the
Secretary to issue a final rule on the inspection of towing vessels
containing towing safety management system provisions, they did not
prescribe how this inspection program must be designed, developed and
implemented. Therefore, we consider all the new parts under the new
subchapter M as discretionary, but integral to the safe operations of
towing vessels and necessary to fulfill Congress' intent in the 2004
and 2010 Acts.
    Additionally, when towing vessels receive their Certificates of
Inspection this will trigger the following requirements outside of
subchapter M for inspected vessels:
     Part 136, Certification will require the assessment of
user fees, per 46 U.S.C. 2110 and 46 CFR 2.10-101, Table 2.10-101;
(requiring user fee for vessel inspection services and certifications).
     46 CFR 15.820(a) requires a Chief Engineer on certain
inland towing vessels.
     33 CFR 155.710(e)(1) requires a Person-in-Charge (PIC) for
certain fuel transfers on towing vessels to be credentialed officer or
to hold an MMC with a Tankerman-PIC endorsement.
    See the ``Discussion of Final Rule'' section for a detailed
discussion of this final rule and see the RA for a detailed discussion
of costs, benefits and alternatives considered. Table 3 summarizes the
impacts of this rulemaking.

       Table 3--Summary of Affected Population, Costs and Benefits
------------------------------------------------------------------------
             Category                            Final rule
------------------------------------------------------------------------
Populations:
    Applicability.................  All U.S. flag towing vessels engaged
                                     in pushing, pulling, or hauling
                                     alongside, with exceptions for work
                                     boats and limited service towing
                                     vessels.
    Affected Population...........  5,509 vessels.
                                    1,086 companies.
Costs:
    Total Costs ($ millions, 7%     $41.5 (annualized).
     discount rate).                $291.2 (10-year).
    Industry Costs ($ millions, 7%  $32.7 (annualized).
     discount rate).                $229.6 (10-year).
    Net Government Costs ($         $8.8 (annualized).
     millions, 7% discount rate).   $61.6 (10-year).
Benefits:
    Benefits ($ millions, 7%        $46.4 (annualized, millions).
     discount rate).                $325.6 (10-year).
    Unquantified Benefits.........  Reduced congestion and delays from
                                     lock, bridge and waterway closures.
                                    Reduced risk of low and medium
                                     severity towing vessel accidents
                                     and accidents with limited
                                     information in the case report.
------------------------------------------------------------------------

    Table 4 summarizes the changes in the final rule as we moved from
the NPRM to this final rule, and Table 5 below summarizes the changes
in the RA. These changes to the RA came from either policy changes,
public comments received after the publication of the NPRM, or simply
from updating the data and information that informed our regulatory
analysis.

                           Table 4--Summary of Notable Changes from NPRM to Final Rule
----------------------------------------------------------------------------------------------------------------
                                                                                Impact on regulatory
     NPRM  Section No.       FR Section No.                   Summary                           analysis
----------------------------------------------------------------------------------------------------------------
                                    1.03-55  Added section: ``Appeals from decisions   Added costs for appeals.
                                              or actions under subchapter M of this
                                              chapter''.
15.535.....................          15.535  Clarified that the requirements of Sec.   Included cost of
                                               15.515 apply in addition to those of     compliance with Sec.
                                              this section, and that the requirements   15.515.
                                              of this section apply regardless of
                                              assistance towing or being under 200
                                              GRT.
                                    136.172  Maintains current requirements for        Maintains existing costs
                                              existing towing vessels for 2 years or    for existing vessels.
                                              until the vessel obtains a COI,
                                              whichever period is shorter.
138.310....................         138.310  Added ISO 9001-2008 as an option for      No change--adds
                                              auditor/assessor compliance.              compliance flexibility.

138.505....................         138.505  Edited section to specify where in the    No change--clarifies who
                                              Coast Guard audits should be sent.        receives reports.
139.110....................         139.110  Introduced delineation that recognized    No change--adds
                                              classification societies qualify to do    compliance flexibility.
                                              TPO audits and authorized
                                              classification societies to do as TPO
                                              surveys.
139.120....................         139.120  Changed address to which applications     No change--clarifies who
                                              should be sent, added paragraph           receives reports and
                                              requiring applications to include         assures availability of
                                              information about the organization's      personnel.
                                              means of assuring the availability of
                                              its personnel.
139.130....................         139.130  For auditors, added ``licensed mariner''  No change--adds
                                              to a list of types of relevant marine     compliance flexibility.
                                              experience, and added ISO 9001-2008 as
                                              an option in addition to ISO 9001-2000.
139.160....................         139.160  Removed paragraph saying that the Coast   No change--adds
                                              Guard may require a replacement of a      compliance flexibility.
                                              third-party auditor.
140.435....................         140.435  Deleted requirements for certain vessels  Removed costs of AEDs.
                                              to carry automatic external
                                              defibrillators and train crewmembers in
                                              their use.
140.505 and 140.520........         140.505  Eliminated Sec.   140.520 requirements    Greatly reduced costs for
                                              for maintaining personnel hazard          keeping records on
                                              exposure and medical records and          crewmember health by
                                              revised Sec.   140.505 requirement to     limiting them to those
                                              keep records of health and safety         associated with
                                              incidents, including any medical          incidents, added costs
                                              records associated with the incidents.    for records of safety
                                                                                incidents.
140.605....................         140.605  Clarified requirements associated with    Revised costs to include
                                              stability letter are only applicable to   alternative methods of
                                              vessels that already have a stability     compliance.
                                              letter, added paragraph requiring all
                                              owners or operators to maintain
                                              watertight integrity and stability.
140.645....................         140.645  Added paragraph accepting credentialed    No change--adds
                                              mariners as meeting the requirements of   compliance flexibility.
                                              this section.
140.915....................         140.915  Added examinations and tests, and fire-   Revised costs for TVR.
                                              detection and fixed fire-extinguishing
                                              systems to the list of items that must
                                              be recorded in the TVR, and specified
                                              requirements for items recorded
                                              electronically.
141.305....................         141.305  Changes to Table 141.305: Removed         No change--improves
                                              buoyant apparatus and life float          readability and
                                              references in cold water operation;       referencing;
                                              removed life float and inflatable         substitution allowance
                                              buoyant apparatus references in warm      provides compliance
                                              water operation; moved inflatable         flexibility.
                                              liferaft with SOLAS A pack to bottom of
                                              both cold and warm water operation to
                                              delineate increasing level of safety
                                              hierarchy; and inserted the term
                                              ``rigid'' in front of buoyant apparatus
                                              so as not to confuse with inflatable
                                              buoyant apparatus. Added additional
                                              substitution options for survival craft
                                              in Sec.   141.305(d)(2)(ii)-(iv) based
                                              on increasing level of safety hierarchy
                                              of same.
141.330....................         141.330  Removed reference to Table 141.305 and    No change--adds
                                              limitations on approval of survival       compliance flexibility.
                                              craft starting in 2015, added the
                                              option of using a skiff for towing
                                              vessels that only operate within 3
                                              miles of shore, rephrased section.
141.340....................         141.340  Replaced reference to 46 CFR 199.620(c)   No change--adds
                                              with a reference to several approval      compliance flexibility.
                                              series, specified and rephrased
                                              requirements for lifejackets in TSMS.
141.360....................         141.360  Replaced reference to 46 CFR 199.70 with  No change--adds
                                              a reference to several approval series,   compliance flexibility.
                                              specified and rephrased requirements
                                              for lifebuoys in TSMS.
142.215....................         142.215  Rephrased for clarity, added paragraph    No change--adds
                                              allowing approval by the Coast Guard,     compliance flexibility.
                                              OCMI, TPO, or a NRTL of new
                                              installations of fire-extinguishing or
                                              fire-detection equipment.
142.225....................         142.225  Rephrased for clarity, added FM 6050 as   No change--adds
                                              an acceptable standard for storage        compliance flexibility.
                                              cabinet design.
143.200....................         143.200  Delayed implementation of part 143        Removed certain costs for
                                              requirements for existing vessels,        existing vessels, delays
                                              consolidated applicability and            other costs.
                                              grandfathering requirements from other
                                              subparts into one section.
143.245....................         143.230  Rephrased for clarity, added              Added costs for alarms at
                                              requirements for alarms at operating      additional operating
                                              stations, removed language describing     stations.
                                              possible exceptions.
143.420....................         143.595  Renamed, deleted requirements for         Removed costs for
                                              propulsion engine fuel lines and          existing vessels.
                                              independent auxiliary steering systems.
144.315....................        144.300,  Added possible standards for an existing  Revised costs to include
                                    144.315   vessel without a stability document to    alternative methods of
                                              meet.                                     compliance.
----------------------------------------------------------------------------------------------------------------

     Table 5--Changes in Regulatory Analysis From NPRM to Final Rule
------------------------------------------------------------------------
Element of regulatory analysis    Reason changed   Explanation of change
------------------------------------------------------------------------
Credentialing requirements      Public comment...  Added cost estimate
 under part 15.                                     for requirements in
                                                    part 15 that are
                                                    triggered when
                                                    vessel becomes
                                                    ``inspected''. 10-
                                                    year undiscounted
                                                    estimated at $2.8
                                                    million.

Parts 141 Lifesaving and 142    Public comment...  Added cost estimates
 Fire Protection.                                   for requirements in
                                                    Parts. 10-year
                                                    undiscounted
                                                    estimated at $27.8
                                                    million for Part 141
                                                    and $7.0 million for
                                                    Part 142.
Part 136 Certification and      Policy change....  Added cost estimates
 Part 137 Vessel Compliance.                        for appeals.
Part 140 Operations...........  Public comment...  Added costs for
                                                    certain operational
                                                    requirements,
                                                    including navigation
                                                    assessments.
Machinery and electrical        Policy change....  Grandfathering of
 systems equipment under part                       existing vessels or
 143.                                               vessels whose
                                                    construction began
                                                    before the effective
                                                    date of the final
                                                    rule for Sec.  Sec.
                                                     143.555, 143.560,
                                                    143.565, 143.570,
                                                    143.575, 143.585,
                                                    143.605. 10-year
                                                    undiscounted
                                                    estimated cost is
                                                    $41.4 million in the
                                                    final rule and could
                                                    exceed $300 million
                                                    if not grandfathered
                                                    (see Alternative 3).
Construction and arrangement    Policy change....  Grandfathering of
 under part 144.                                    existing vessels or
                                                    vessels whose
                                                    construction began
                                                    before the effective
                                                    date of the final
                                                    rule for Sec.  Sec.
                                                     144.135 and
                                                    144.145(b). 10-year
                                                    undiscounted
                                                    estimated cost is
                                                    $5.4 million in the
                                                    final rule.
Affected population...........  Update to reflect  Reviewed current data
                                 current fleet      sources on towing
                                 composition and    vessel fleet and
                                 more               ownership and
                                 comprehensive      increased affected
                                 data sources.      population estimate
                                                    to 5,509 (from 5,208
                                                    in the NPRM).
Costs of equipment or           Update to reflect  Collected current
 activities.                     current prices.    price data or
                                                    updated prices used
                                                    in NPRM by CPI.
                                Public comment...  Incorporated public
                                                    estimates for
                                                    drydock inspections
                                                    in the range of
                                                    costs. Added
                                                    estimate for lost
                                                    revenues during
                                                    certain activities.
Wages.........................  Updated BLS data.  Revised labor cost by
                                                    using May 2013 BLS
                                                    data.
Benefit valuation.............  Updated value of   Updated VSL and
                                 a statistical      injury valuation to
                                 life (VSL) and     reflect current
                                 injuries values.   guidance.
Accident analysis.............  Updated data from  Reflected most recent
                                 recent years.      12 years of accident
                                                    history (2002 to
                                                    2013).
Impacts of Rule Requirements    Public comment...  Added assessment of
 on Cost to Shippers.                               cost to shippers in
                                                    Appendix J.
------------------------------------------------------------------------

Affected Population
    We estimate that 1,086 owners and managing operators (companies)
would incur additional costs from this rulemaking. The rulemaking would
affect a total of 5,509 vessels owned and operated by these companies.
Our cost assessment includes existing and new vessels.
Costs
    We estimated costs resulting from the addition of subchapter M and
costs in other subchapters that result from the inclusion of towing
vessels as inspected vessels, to industry and government. During the
initial phase-in period (years 1 and 2), we estimate the annual cost to
industry from subchapter M requirements of the rulemaking to range from
$15.8 million to $26.5 million (non-discounted). After the initial
phase-in, the annual costs to industry from subchapter M requirements
range from $19.2 million to $56.4 million (non-discounted). We estimate
the total present value cost to industry from subchapter M requirements
over the 10-year period of analysis is $227.7 million, discounted at 7
percent, and $286.8 million, discounted at 3 percent. Over the period
of analysis, we estimate the annualized costs to be $32.4 million at 7
percent and $33.6 million at 3 percent. Table 6 summarizes the costs of
this final rule to industry for subchapter M requirements.

                               Table 6--Summary of Subchapter M Costs to Industry
                                                  [$ Millions]
----------------------------------------------------------------------------------------------------------------
                                                                                Discounted
                              Year                                 Undiscounted  -------------------------------
                                                                                7%              3%
----------------------------------------------------------------------------------------------------------------
1...............................................................           $26.5           $24.8           $25.7
2...............................................................            15.8            13.8            14.9
3...............................................................            19.2            15.7            17.6
4...............................................................            22.6            17.2            20.1
5...............................................................            33.0            23.6            28.5
6...............................................................            35.7            23.8            29.9
7...............................................................            44.5            27.7            36.2
8...............................................................            56.4            32.8            44.5
9...............................................................            46.0            25.0            35.3
10..............................................................            45.8            23.3            34.1
                                                                 -----------------------------------------------
    Total *.....................................................           345.6           227.7           286.8
Annualized......................................................                            32.4            33.6
----------------------------------------------------------------------------------------------------------------
* Values may not total due to rounding.

    Additional costs to industry for requirements outside of subchapter
M will result from the triggering of certification for persons in
charge during oil transfer requirements by designating towing vessels
as ``inspected''. We estimate the total present value cost of the
industry non-subchapter M requirements over the 10-year period of
analysis to be $1.9 million, discounted at 7 percent, and $2.4 million,
discounted at 3 percent. Over the period of analysis, we estimate the
annualized industry costs for requirements outside of subchapter M to
be $0.3 million at 7 percent and 3 percent. Table 7 summarizes the
costs of this final rule to industry.

                  Table 7--Summary of Cost to Industry for Requirements Outside of Subchapter M
                                                  [$ Millions]
----------------------------------------------------------------------------------------------------------------
                                                                                Discounted
                              Year                                 Undiscounted  -------------------------------
                                                                                7%              3%
----------------------------------------------------------------------------------------------------------------
1...............................................................            $0.0            $0.0            $0.0
2...............................................................             0.0             0.0             0.0
3...............................................................             0.4             0.4             0.4
4...............................................................             0.4             0.3             0.4
5...............................................................             0.4             0.3             0.3
6...............................................................             0.4             0.3             0.3
7...............................................................             0.0             0.0             0.0
8...............................................................             0.4             0.3             0.3
9...............................................................             0.4             0.2             0.3
10..............................................................             0.4             0.2             0.3
                                                                 -----------------------------------------------
    Total *.....................................................             2.8             1.9             2.4
Annualized......................................................  ..............             0.3             0.3
----------------------------------------------------------------------------------------------------------------
* Values may not total due to rounding

    We estimate the total cost to industry over the 10-year period of
analysis to be $229.6 million, discounted at 7 percent, and $289.1
million, discounted at 3 percent. Over the period of analysis, we
estimate the annualized costs to industry to be $32.7 million at 7
percent and $33.9 million at 3 percent. Table 8 shows these estimates.

                                   Table 8--Summary of Total Cost to Industry
                                                  [$ Millions]
----------------------------------------------------------------------------------------------------------------
                                                                                Discounted
                              Year                                 Undiscounted  -------------------------------
                                                                                7%              3%
----------------------------------------------------------------------------------------------------------------
1...............................................................           $26.5           $24.8           $25.7
2...............................................................            15.8            13.8            14.9
3...............................................................            19.7            16.1            18.0
4...............................................................            23.0            17.5            20.4
5...............................................................            33.4            23.8            28.8
6...............................................................            36.1            24.0            30.2
7...............................................................            44.5            27.7            36.2