4.........................................................           382,700           291,960           340,024
5.........................................................           409,808           292,187           353,504
6.........................................................           436,068           290,570           365,200
7.........................................................           608,143           378,721           494,476
8.........................................................           645,120           375,466           509,264
9.........................................................           683,585           371,825           523,911
10........................................................           785,380           399,247           584,396
                                                           -----------------------------------------------------
    Total.................................................         4,555,270         2,935,991         3,744,096
                                                           -----------------------------------------------------
Annualized................................................           418,019           438,922
----------------------------------------------------------------------------------------------------------------

    The 10-year discounted present value cost to the Government of this
NPRM is approximately $2.936 million based on a 7-percent discount
rate, and $3.744 million based on a 3-percent discount rate. The
annualized cost to industry is approximately $0.418 million, based on a
7-percent discount rate, and $0.439 million, based on a 3-percent
discount rate.
    Table 7 summarizes, by requirement, the total 10-year present value
cost of this NPRM to the Government.

                Table 7--Total Marginal and Annualized Government Costs for NPRM by Risk Profile
----------------------------------------------------------------------------------------------------------------
                                                   10-Year cost                             Annualized
           Requirement           -------------------------------------------------------------------------------
                                   Undiscounted         7%              3%              7%              3%
----------------------------------------------------------------------------------------------------------------
                                         Minimum DP Manning Requirements
----------------------------------------------------------------------------------------------------------------
Cost to Review Proof of Training        $245,453        $174,317        $210,238         $24,819         $24,646
                                 -------------------------------------------------------------------------------
    Total.......................         245,453         174,317         210,238          24,819          24,646
----------------------------------------------------------------------------------------------------------------
                                       Intermediate DP System Requirements
----------------------------------------------------------------------------------------------------------------
Cost to Review Annual DP                 763,350         476,475         619,304          67,839          72,601
 Incident Investigation Report..
Cost to Review Emergency                  15,100           9,728          12,413           1,385           1,455
 Disconnect and Serious Marine
 Incidents......................
Cost to Record and Attend DP           3,091,568       1,929,724       2,508,182         274,749         294,035
 Surveys........................
                                 -------------------------------------------------------------------------------
    Total.......................       3,870,018       2,415,928       3,139,899         343,974         368,092
----------------------------------------------------------------------------------------------------------------
                                         Standard DP System Requirements
----------------------------------------------------------------------------------------------------------------
No Cost to Government...........  ..............  ..............  ..............  ..............  ..............
                                 -------------------------------------------------------------------------------
    Total.......................               0               0               0               0               0
----------------------------------------------------------------------------------------------------------------
                                         Enhanced DP System Requirements
----------------------------------------------------------------------------------------------------------------
Cost to Review DP System Plans..         432,000         339,849         387,093          48,387          45,379
                                 -------------------------------------------------------------------------------
    Total.......................         432,000         339,849         387,093          48,387          45,379
----------------------------------------------------------------------------------------------------------------
                                               Other Requirements
----------------------------------------------------------------------------------------------------------------
Cost to Review DPSAO                       7,800           5,523           6,866             786             805
 Applications...................
                                 -------------------------------------------------------------------------------
    Total.......................           7,800           5,523           6,866             786             805
----------------------------------------------------------------------------------------------------------------

    We estimate that the combined total 10-year present value cost of
this NPRM to industry and Government is $144.669 million ($74.991
million for domestic owners or operators), discounted at 7 percent, and
$179.434 million ($93.665 million for domestic owners or operators),
discounted at 3 percent. We estimate that the combined annualized cost
to industry and government is $20.598 million ($10.677 million for
domestic owners or operators), based on a 7-percent discount rate, and
$21.035 million ($10.980 million for domestic owners or operators),
based on a 3-percent discount rate.
    Table 8 summarizes the combined 10-year cost of this NPRM to
industry and the Government.

                                           Table 8--Total Cost of NPRM
                                                   [Per year]
----------------------------------------------------------------------------------------------------------------
                                                                                Discounted costs
                           Year                               Undiscounted   -----------------------------------
                                                                  costs              7%                3%
----------------------------------------------------------------------------------------------------------------
1.........................................................        13,581,195        11,879,832        12,809,668
2.........................................................        13,736,938        11,998,374        12,948,382
3.........................................................        11,066,145         9,033,271        10,127,091
4.........................................................        44,843,194        34,210,658        39,842,597
5.........................................................        13,369,939         9,532,582        11,533,027
6.........................................................        13,395,049         8,925,687        11,218,143
7.........................................................        41,148,868        25,625,447        33,457,795
8.........................................................        15,822,770         9,208,996        12,490,640
9.........................................................        16,649,124         9,056,020        12,760,167
10........................................................        29,897,840        15,198,546        22,246,801
                                                           -----------------------------------------------------
    Total.................................................       213,511,062       144,669,412       179,434,311
                                                           -----------------------------------------------------
Annualized................................................        20,597,670        21,035,175
----------------------------------------------------------------------------------------------------------------

Benefits
    As offshore drilling industry operations move farther offshore,
maintaining vessel position and height becomes an increasingly more
difficult task, especially as water depth precludes mooring. The
vessel's position and height depend on an understanding of many
variables, such as the speed and direction of waves and the wind, both
of which can be very irregular at distances farther offshore. DP
systems not only remove this uncertainty, they can also predict future
changes in wave speed and direction based on current conditions.
    However, despite this advanced technology (and in some cases,
because of this technology) a loss of position can still occur while
operating under DP. Due to the high-risk environment that OSVs and
MODUs work in, such a loss of position could result in catastrophic
consequences. Property damage, environmental damages, and human
casualties could occur in the event of a loss of position or
propulsion.
    Table 9 presents the range of potential consequences at risk in the
event of a DP loss of position or propulsion on a MODU, OSV, or
crewboat.

      Table 9--Potential Monetary Consequences at Risk That Could Result From a DP System Loss of Position
----------------------------------------------------------------------------------------------------------------
            Consequence category                               Range of potential consequences
----------------------------------------------------------------------------------------------------------------
Property Damage from Collision.............  $5 million to $1 billion.
Environmental Pollution....................  $5 million to $500 million.
Riser Lost on Seabed.......................  $7 million to $70 million.
Pipe Bent or Buckled.......................  $3 million to $30 million.
Downtime from Production...................  Up to $500 thousand per day.
Loss of Life...............................  $9.1 million per statistical life.
----------------------------------------------------------------------------------------------------------------

    At this time, the Coast Guard does not have a comprehensive source
of information on changes in DP status and the resulting loss of
position incidents, as vessels of all types currently do not have to
report DP failures to the Coast Guard. A provision of this NPRM seeks
to gather this data.
    The following incidents illustrate the potential consequences at
risk if a position is lost during DP operations. In April 2010, the
MODU DISCOVERER CLEAR LEADER experienced a DP system failure that
resulted in a loss of position while conducting well control operations
on the U.S. OCS. During the incident, the DPO was able to initiate a
cease operations response, however, an emergency disconnect was
required. Although the MODU's blow-out preventer was able to prevent a
spill that could potentially have been on the magnitude of the
DEEPWATER HORIZON incident, the subsea gear of the MODU suffered
damages as a result of the MODU's loss of position. The Coast Guard's
MISLE database lists property damages of $760,000 as a result of this
incident. Further, the vessel experienced a loss of revenue during the
time when its operations were suspended.
    In September 2012, a DP incident involving the construction OSV
BIBBY TOPAZ occurred off the coast of Scotland. During dive support
activities, the BIBBY TOPAZ suffered a DP system failure that resulted
in a loss of position. At the time of the incident, three divers were
in the water, and when the vessel experienced a loss of position, the
umbilical cord of one of the divers was severed. The diver was unable
to return to the diving bell and had to instead rely on his standby air
tank for almost 40 minutes. When the rescue team found the diver, he
was unconscious, although the team was able to revive him. While

this incident did not result in any fatalities, the vessel's loss of
position put the lives of three divers at risk. The VSL of the lives
that could have been lost as a result of this incident is $27,300,000.
Although this incident did not take place in U.S. waters, dive support
activities while operating under DP are regularly conducted on the U.S.
OCS, with similar consequences at risk.
    Neither of these incidents capture fully the potential worst-case
consequences of a loss of position that results from a collision under
power of a MODU, OSV, or crewboat. The allision of the logistics OSV
SAMUDRA SURAKSHA with a drilling platform illustrates the types and
potential magnitude of worst-case consequences that could result from
an OSV loss of position. In July 2005, the SAMUDRA SURAKSHA was
transferring personnel off the coast of India when the vessel
experienced a loss of position \54\ and collided with a platform,
severing a gas riser in the process. Although an emergency shut-off of
the gas riser was initiated, gas was released, resulting in an
explosion and massive fire. Twenty-two crewmen lost their lives or went
missing as a result of the explosion, which, when monetized at
$9,100,000, amounts to $200,200,000. We use the fatalities as a
reasonable worst-case scenario of the potential consequences at risk
from a loss of position and resulting collision between vessels or
platforms. The incident also had environmental damage, property damage
and loss of production impacts.
---------------------------------------------------------------------------

    \54\ The vessel was equipped with DP but was not operating under
DP at the time of the loss of position.
---------------------------------------------------------------------------

    This NPRM mitigates the risk of a DP loss of position in several
ways. This NPRM provides other guidance on design and operation
standards for all DP vessels. The development of decision support tools
such as CAMOs and ASOC or WSOC would provide DPOs and DPOQs with a
summarized and easy to understand guide on the limits to safe operating
conditions, which would help DPOs and DPOQs react quicker to prevent or
mitigate a loss of position while operating DP systems.
    Furthermore, requiring owners or operators of vessels using DP
systems to examine DP failures and submit documents describing the
time, location, and reason for why a system failure occurred will
enable industry and the Coast Guard to better understand the causes of
these failures and, in time, develop programs to prevent these same
failures from occurring in the future. Additionally, this information
can provide assistance to manufacturers and operators of DP systems in
order to contribute to more efficient and safer DP systems and
practices in the future.
    To better understand how many DP system incidents occur per year,
we reviewed reports from the International Marine Contractors
Association (IMCA), which collects and reports incidents of DP station-
keeping incidents provided on a voluntary basis by its members. From
2004 through 2010, the IMCA lists 429 reported DP system incidents.
However, this figure likely underestimates the number of DP system
incidents that occurred because during that time period, members of the
IMCA were not required to report station-keeping incidents. As a result
of this under-reporting, we use the average rate per year at which DP
system incidents occurred per vessel during that same time period,
instead of the average number of DP incidents reported per year, since
the rate is less likely to be influenced by the number of vessels
reporting. Figure 1 displays the trend in the number of DP incidents
reported to the IMCA from 2004 through 2010.
[GRAPHIC] [TIFF OMITTED] TP28NO14.001

    Although reporting to the IMCA is voluntary, and therefore may not
represent the true population mean of the entire affected population's
DP incident rate, the IMCA data show that the rate of DP system
incidents has remained relatively stable throughout the 7-year period
studied, even as the number of vessels reporting has increased.\55\
This suggests that DP system incidents occur on a relatively

consistent basis (one to two times per vessel per year).
---------------------------------------------------------------------------

    \55\ Because this information was voluntarily provided to the
IMCA, the reporting population may not be representative of the
population as a whole. However, as the IMCA is the only organization
that currently collects this data, it is the best data available at
this time.
---------------------------------------------------------------------------

    The IMCA's report then categorizes the cause of each DP system
incident that was reported as the fault of either: Environmental force,
power/thrust equipment, DP equipment, or operator error. Figure 2
summarizes the categories as a percentage of the total number of DP
system incidents that occurred from 2004 through 2010 (429 total).
[GRAPHIC] [TIFF OMITTED] TP28NO14.002

    Although Figure 2 shows that only 13 percent of all DP system
incidents are directly linked to operator error, nearly 94 percent
could have been mitigated by attention to human factors--environmental
faults could have been reduced through the development of a well
defined ASOC or WSOC, power/thrust faults could have been mitigated
through the development of a properly defined CAMO, DP system faults
could have been reduced through the development of a well defined ASOC
or WSOC, and operator faults could have been diminished through DPOs
and DPOQs becoming more familiar and experienced with a vessel's ASOC
or WSOC.\56\
---------------------------------------------------------------------------

    \56\ International Marine Contractors Association. ``Dynamic
Positioning Station Keeping Incidents: Incidents reported for 2008
(DP system 19)''. Pg. 2.
---------------------------------------------------------------------------

    With regard to the nonhuman, factor-related elements of this NPRM,
DP system incidents resulting from power generation or thrust faults
could have been mitigated through the redundancy provided by DP-2, and
by developing and maintaining a vessel's CAMO. A CAMO would ``identify
the equipment configuration and methods of operation that ensure the
vessel meets its maximum level of redundancy, functionality and
operation and that no single fault will exceed the identified worst
case failure.'' \57\ Additionally, a CAMO would define the most robust
configuration for the vessel's power plant set-up, thrusters, power
management, etc., thereby diminishing the likelihood that an incident
could occur as a result of human negligence in designing the vessel's
operating systems.
---------------------------------------------------------------------------

    \57\ International Marine Contractors Association. ``Guidance on
Operational Activity Planning''. November 2012. Pg. 9.
---------------------------------------------------------------------------

    Furthermore, the development and maintenance of an ASOC or WSOC
could reduce the probability that a DP system incident occurs as a
result of a DP reference or DP computer fault. The ASOC or WSOC would
define, among other things, ``maximum environmental operating
conditions, maximum offsets permissible from the set point position,
position reference systems, and auxiliary systems performance limits
and failures.'' \58\ These guidelines would program the DP computer to
signal to the DPO or DPOQ to cease operations whenever the vessel
diverged from the maximum limits set in the ASOC or WSOC.
---------------------------------------------------------------------------

    \58\ IMCA. ``Guidance on Operational Activity Planning''.
November 2012. Pg. 11.
---------------------------------------------------------------------------

    While the majority of DP system incidents are correctly identified
and resolved through the DPO or DPOQ manually taking control of the
system, inaction or delayed action can have immense consequences. If
left unchecked, a DP incident could result in a loss of position or
propulsion, a short circuit of the electrical equipment, and/or an
emergency disconnect. These events could result in major property
damage to the vessel and/or any surrounding vessels and facilities,
lost revenue as a result of any downtime caused by damages, injury or
loss of life, and/or environmental damage as a result of released oil
or other chemicals.
    Table 10 provides greater detail on how each NPRM provision
supports one of the four below categories:
     Design Standards and Classification;
     Operations;
     Manning and Training; and
     Reporting.

                                                      Table 10--Description of Benefits of the NPRM
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Design standards &                         Manning &                                           How provision reduces
          Key provision              classification        Operations          training        Reporting         Description               risk
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    33 CFR Part 140--Navigation and Navigable Waters
--------------------------------------------------------------------------------------------------------------------------------------------------------
140.310 DP system personnel       ...................  ..................  ...............  ...............  Requires all        Codifies industry
 requirements.                                                                                vessels that use    standards that each
                                                                                a DP system to      DPO and DPOQ must
                                                                                conduct OCS         follow while
                                                                                activities to       performing duties,
                                                                                have a DPO or       which reduces the
                                                                                DPOQ who is         likelihood of
                                                                                properly trained    casualties occurring
                                                                                and has no other    from operator fatigue,
                                                                                responsibilities    inattention or
                                                                                outside of DP.      inexperience.
140.315 Minimum DP system         ...................  ..................  ...............  ...............  Defines the         Codifies industry
 training requirements.                                                                                minimum training    standards that each
                                                                                requirements that   DPO and DPOQ must
                                                                                each DPO and DPOQ   follow while
                                                                                must have before    performing duties,
                                                                                operating a DP      which reduces the
                                                                                system.             likelihood of
                                                                                casualties occurring
                                                                                from inexperience.
                                                                                Requires owners or  Enables compliance
                                                                                operators to make   verification for this
                                                                                available their     critical area to
                                                                                DPO's or DPOQ's     ensure that each DPO
                                                                                course completion   and DPOQ has received
                                                                                certificates for    the proper training
                                                                                DP training.        and has the necessary
                                                                                experience required to
                                                                                correctly operate a DP
                                                                                system in routine and
                                                                                emergency operations.
140.320 DP system Manning         ...................  ..................  ...............  ...............  Defines the         Codifies industry
 requirements.                                                                                minimum manning     standards that each
                                                                                requirements to     DPO and DPOQ must
                                                                                which all MODUs     follow while
                                                                                must adhere while   performing duties.
                                                                                using DP to         Ensures that each DPO
                                                                                conduct OCS         and DPOQ is
                                                                                activities.         sufficiently rested
                                                                                and prepared to handle
                                                                                the challenges of
                                                                                operating a DP system.
                                                                                Ensures that each DPO
                                                                                or DPOQ is in direct
                                                                                communication with a
                                                                                licensed master and
                                                                                navigational watch at
                                                                                all times while a MODU
                                                                                is using dynamic
                                                                                positioning to conduct
                                                                                OCS activities,
                                                                                enabling correct
                                                                                actions for routine
                                                                                and emergency
                                                                                situations and thus
                                                                                reduce the likelihood
                                                                                of casualties
                                                                                occurring from
                                                                                personnel
                                                                                miscommunication.
140.325 Operations..............  ...................  ..................  ...............  ...............  Requires all        Provides a uniform
                                                                                vessels that use    operating standard to
                                                                                a DP system to      which all flag DP
                                                                                conduct OCS         vessels must adhere.
                                                                                activities to       This would reduce the
                                                                                meet the DP         probability of
                                                                                Operation           operator faults
                                                                                Standards in        occurring as a result
                                                                                paragraph 4.4 IMO   of a lack of
                                                                                MSC/Circ. 645.      familiarity or
                                                                                experience with a DP
                                                                                operating system.
140.330 Minimum design standards  ...................  ..................  ...............  ...............  Requires all        Provides design
 and testing.                                                                                vessels that use    standards to ensure a
                                                                                a DP system to      fault tolerant, fault
                                                                                conduct OCS         resistant DP vessel
                                                                                activities to       that minimizes risk of
                                                                                meet the DP         loss of position if
                                                                                Design Standards    one component fails.
                                                                                in paragraph
                                                                                3.4.1 of IMO MSC/
                                                                                Circ. 645.
140.335 Intermediate DP system    ...................  ..................  ...............  ...............  Requires all        Ensures that specifics
 requirements.                                                                                applicable          of system design,
                                                                                vessels to          construction and
                                                                                conduct vessel      operation are
                                                                                surveys and         developed and tested
                                                                                maintain an FMEA,   to ensure that
                                                                                FMEA proving test   redundancy is actually
                                                                                document, and a     achieved and systems
                                                                                CAMO.               function as intended.

                                                                                In addition to      Ensures that all
                                                                                meeting the         vessels and MODUs have
                                                                                minimum DP          well documented course-
                                                                                Operating           of-action and DP
                                                                                Requirements, all   incident emergency
                                                                                MODUs and           response plans for all
                                                                                applicable non-     OCS activities.
                                                                                drilling vessels    Reduces the
                                                                                must also           probability that
                                                                                maintain a CAMO     significant casualties
                                                                                and ASOC or WSOC,   or property damage
                                                                                respectively, as    could occur, since the
                                                                                described in the    DP system would be
                                                                                MTS DP Operation    programmed, following
                                                                                Guidelines.         rigorous testing
                                                                                during the FMEA, to
                                                                                recognize maximum
                                                                                environmental
                                                                                conditions, maximum
                                                                                offsets permissible
                                                                                from the set position,
                                                                                position reference
                                                                                systems, and auxiliary
                                                                                systems.
                                                                                All applicable      Provides Coast Guard
                                                                                vessels must        officials with
                                                                                report a DP         information on how
                                                                                system status       often DP station-
                                                                                change from green   keeping incidents
                                                                                to red or yellow    occur and why, and
                                                                                to a DPSAO.         enables the Coast
                                                                                Guard to ensure that
                                                                                operations can be
                                                                                resumed safely.
                                                                                All applicable      Ensures that FMEAs,
                                                                                vessels must        CAMOs, and ASOC or
                                                                                conduct a DP        WSOC are updated based
                                                                                investigation       on casualties to
                                                                                whenever the DP     prevent similar DP
                                                                                status changes      incidents from
                                                                                from green to       occurring in the
                                                                                yellow or red and   future. This would
                                                                                submit a summary    reduce the probability
                                                                                from the            that significant
                                                                                investigation to    casualties or property
                                                                                the DPSAO           damage could occur in
                                                                                indicating          the future.
                                                                                whether the cause
                                                                                of the DP
                                                                                incident was
                                                                                addressed in the
                                                                                vessel's FMEA,
                                                                                CAMO, and ASOC or
                                                                                WSOC.
                                                                                All applicable      Provides Coast Guard
                                                                                vessels must have   officials with
                                                                                the DPSAO           information on how and
                                                                                complete an         why DP failures occur.
                                                                                annual DP           This information
                                                                                incident            provides valuable
                                                                                investigation       feedback to ensure
                                                                                report. This        that future such
                                                                                report would be     incidents do not
                                                                                reviewed annually   occur, which would
                                                                                by the OCS NCOE.    reduce the probability
                                                                                of significant
                                                                                casualties or property
                                                                                damage from occurring
                                                                                in the future.
                                                                                All applicable      Ensures that the Coast
                                                                                vessels must        Guard is notified
                                                                                report a DP         immediately of DP
                                                                                incident that       incidents that result
                                                                                resulted in an      in catastrophic
                                                                                emergency           damages and/or
                                                                                disconnect and/or   injuries and
                                                                                serious marine      fatalities. This would
                                                                                incident to the     allow the Coast Guard
                                                                                cognizant OCMI.     to take immediate
                                                                                action if a serious
                                                                                event occurred, and to
                                                                                ensure that operations
                                                                                are not resumed until
                                                                                the cause of the
                                                                                incident has been
                                                                                addressed.
                                                                                Creates a new       Ensures safe design and
                                                                                document, a         operation for all
                                                                                DPVAD, which        vessels that use a DP
                                                                                would be issued     system while
                                                                                by DPSAO to MODUs   conducting Critical
                                                                                and applicable      OCS Activities.
                                                                                vessels other       Ensures that FMEA and
                                                                                than MODUs that     CAMO are developed and
                                                                                use a DP system     maintained, which
                                                                                while conducting    would reduce the
                                                                                Critical OCS        likelihood of
                                                                                Activities. This    significant casualties
                                                                                document would be   or property damage
                                                                                issued after the    from occurring in the
                                                                                vessel has          future.
                                                                                completed its DP
                                                                                surveys.

140.340 Standard DP system        ...................  ..................  ...............  ...............  Requires all        Reduces probability of
 requirements.                                                                                applicable          a DP system failure
                                                                                vessels to obtain   occurring by adding
                                                                                DP notation         second component that
                                                                                equivalent to       would be required to
                                                                                Equipment class 2   fail before system
                                                                                or higher from an   failure.
                                                                                authorized
                                                                                classification
                                                                                society.
140.345 Enhanced DP system        ...................  ..................  ...............  ...............  In addition to      Provides increased
 requirements.                                                                                meeting the         assuredness of safe
                                                                                design and          design and operation
                                                                                operating           for all vessels that
                                                                                requirements        use a DP system to
                                                                                found in 140.335    conduct Critical OCS
                                                                                and 140.340, all    Activities by
                                                                                MODUs and new       requiring independent
                                                                                vessels other       third party
                                                                                than MODUs of at    verification of design
                                                                                least 6,000 GT      and planned
                                                                                ITC must also       operations. Ensures
                                                                                submit, and have    that FMEA and CAMO are
                                                                                approved, the       developed and
                                                                                vessel's design     maintained, which
                                                                                and operating       would reduce the
                                                                                plans by the        likelihood of
                                                                                DPSAO that          significant casualties
                                                                                conducted the       or property damage
                                                                                vessel's initial    from occurring in the
                                                                                survey.             future.
140.350 Operational control.....  ...................  ..................  ...............  ...............  Permits the         Ensures safe design and
                                                                                cognizant OCMI to   operation for all
                                                                                suspend an          vessels that use a DP
                                                                                applicable vessel   system while
                                                                                from using DP, if   conducting Critical
                                                                                the vessel is       OCS Activities. This
                                                                                found to be not     will reduce the
                                                                                in compliance       likelihood of
                                                                                with the            significant casualties
                                                                                requirements in     or property damage
                                                                                this part.          from occurring in the
                                                                                future.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     46 CFR Part 61--Periodic Tests and Inspections
--------------------------------------------------------------------------------------------------------------------------------------------------------
61.50-2 Surveys.................  ...................  ..................  ...............  ...............  Requires all MODUs  Ensures safe design and
                                                                                and applicable      operation for all
                                                                                vessels other       vessels that use a DP
                                                                                than MODUs that     system to conduct
                                                                                use a DP system     Critical OCS
                                                                                while conducting    Activities by
                                                                                Critical OCS        requiring independent
                                                                                Activities, to      evaluation of systems.
                                                                                complete DP         Periodic surveys
                                                                                surveys conducted   ensure that FMEA and
                                                                                by a DPSAO.         CAMO are maintained,
                                                                                which would reduce the
                                                                                likelihood of
                                                                                significant casualties
                                                                                or property damage
                                                                                from occurring in the
                                                                                future.
                                                                                Requires the DPSAO  Allows Coast Guard
                                                                                conducting the      officials the
                                                                                vessel's DP         opportunity to
                                                                                survey to notify    participate in DP
                                                                                the OMCI at least   system surveys
                                                                                30 days prior to    providing government
                                                                                the survey.         oversight and quality
                                                                                control for third
                                                                                parties. The Coast
                                                                                Guards presence will
                                                                                verify and complement
                                                                                the findings of a
                                                                                third-party surveyor,
                                                                                thereby ensuring that
                                                                                DP system equipment is
                                                                                operational and
                                                                                properly maintained,
                                                                                which would reduce the
                                                                                likelihood of a loss
                                                                                of position occurring
                                                                                in the future.
61.50-3 Acceptance of dynamic     ...................  ..................  ...............  ...............  Creates             Ensures that DPSAOs are
 positioning system assurance                                                                                specifications      highly qualified at
 organizations.                                                                                that DPSAO must     conducting an FMEA,
                                                                                meet in order to    testing a vessel's
                                                                                receive approval    CAMO and ASOC or WSOC,
                                                                                from the Coast      and conducting DP
                                                                                Guard Outer         failure
                                                                                Continental Shelf   investigations. This
                                                                                National Center     would reduce the
                                                                                of Expertise (OCS   likelihood that
                                                                                NCOE) to conduct    significant casualties
                                                                                DP surveys, FMEA    or property damage
                                                                                testing, and plan   occur because of a
                                                                                reviews.            poorly created CAMO or
                                                                                ASOC or WSOC.

61.50-4 Oversight of dynamic      ...................  ..................  ...............  ...............  All applicable      Provides Coast Guard
 positioning system assurance                                                                                vessels must have   officials with
 organizations.                                                                                the DPSAO           information on how and
                                                                                complete an         why DP failures occur.
                                                                                annual DP failure   This information
                                                                                investigation       provides valuable
                                                                                report. This        feedback to ensure
                                                                                report would be     that future such
                                                                                reviewed annually   incidents do not
                                                                                by the OCS NCOE.    occur, which would
                                                                                reduce the probability
                                                                                of significant
                                                                                casualties or property
                                                                                damage from occurring
                                                                                in the future.
                                                                                Further, this
                                                                                information would
                                                                                allow the Coast Guard
                                                                                to determine whether
                                                                                the DPSAO is still
                                                                                under compliance with
                                                                                the requirements
                                                                                necessary of an
                                                                                authorized DPSAO
                                                                                specified in 61.50-3.
61.50-5, 61.50-10, 61.50-15       ...................  ..................  ...............  ...............  Requires all        Ensures safe design and
 Initial, periodic, and annual                                                                                vessels that use    operation for all
 surveys of DP systems.                                                                                a DP system to      vessels that use a DP
                                                                                conduct Critical    system to conduct
                                                                                OCS Activities to   Critical OCS
                                                                                have surveys to     Activities. Tests a
                                                                                ensure compliance   vessel's FMEA and CAMO
                                                                                with DP system      to ensure that they
                                                                                requirements.       are developed and
                                                                                Additionally,       maintained, which
                                                                                these sections      would reduce the
                                                                                require that the    likelihood of
                                                                                authorized DP       significant casualties
                                                                                assurance           or property damage
                                                                                organization        from occurring in the
                                                                                conducting the      future. Allows Coast
                                                                                survey notify the   Guard officials the
                                                                                Coast Guard on      opportunity to
                                                                                the location and    participate in DP
                                                                                time of the         system surveys. The
                                                                                survey.             Coast Guards presence
                                                                                will verify and
                                                                                complement the
                                                                                findings of a third-
                                                                                party surveyor,
                                                                                thereby ensuring that
                                                                                DP system equipment is
                                                                                operational and
                                                                                properly maintained,
                                                                                which would reduce the
                                                                                likelihood of a loss
                                                                                of position occurring
                                                                                in the future.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         46 CFR Part 62--Vital System Automation
--------------------------------------------------------------------------------------------------------------------------------------------------------
62.20-2 Required plans for DP     ...................  ..................  ...............  ...............  Requires all MODUs  Ensures safe design for
 systems.                                                                                that conduct        all vessels that use a
                                                                                Critical OCS        DP system to conduct
                                                                                Activities and      Critical OCS
                                                                                all other vessels   Activities by
                                                                                of at least 6,000   requiring that systems
                                                                                GT ITC that have    be verified by
                                                                                installed a DP      independent third
                                                                                system on or        party, which would
                                                                                after the           reduce the probability
                                                                                effective date of   of significant
                                                                                this final rule     casualties or property
                                                                                to submit a DP      damage.
                                                                                system plan to      Classification, plan
                                                                                assurance DPSAO.    review and
                                                                                certification
                                                                                requirements serves as
                                                                                a fundamental building
                                                                                block for safe DP
                                                                                operations by ensuring
                                                                                a minimum level of
                                                                                reliability for a DP
                                                                                system verified by a
                                                                                qualified third party,
                                                                                particularly for
                                                                                higher risk vessels.
                                                                                Requires the DPSAO  The Coast Guard's
                                                                                to submit a copy    oversight would verify
                                                                                of the approved     and complement the
                                                                                DP system plan,     findings of a third-
                                                                                as well as the      party surveyor,
                                                                                Annual Survey       thereby ensuring that
                                                                                Document in         DP system equipment is
                                                                                subsequent years,   operational and
                                                                                to the commanding   properly maintained,
                                                                                officer of the      which would reduce the
                                                                                Marine Safety       likelihood of a loss
                                                                                Center.             of position occurring
                                                                                in the future. It
                                                                                would further provide
                                                                                for government
                                                                                oversight.
62.25-40 Environmental design     ...................  ..................  ...............  ...............  Incorporates IEC    Reduces the risk of
 standards on OCS units.                                                                                environmental       pollution or a subsea
                                                                                standards into      spill by ensuring that
                                                                                Title 46.           design of DP system
                                                                                equipment meets
                                                                                environmental
                                                                                standards.

62.40-3, and 62.40-5, 62.40-10    ...................  ..................  ...............  ...............  Requires all        Reduces probability of
 Design standards and                                                                                vessels that use    a DP system failure
 classification for DP systems                                                                                a DP system to      occurring, because a
 on OCS.                                                                                conduct Critical    DP-2 system must
                                                                                OCS Activities to   maintain position at
                                                                                meet the DP         all times, excluding
                                                                                Operation           incidents involving
                                                                                Standards in IMO    the loss of a
                                                                                MSC/Circ. 645 and   compartment.
                                                                                recommend
                                                                                following the MTS
                                                                                DP Operation
                                                                                Guidelines.
                                                                                Requires all
                                                                                applicable
                                                                                vessels to obtain
                                                                                DP notation
                                                                                equivalent to
                                                                                Equipment class 2
                                                                                or higher from an
                                                                                authorized
                                                                                classification
                                                                                society.
                                                                                All applicable      Ensures that all
                                                                                vessels must        vessels and MODUs meet
                                                                                maintain an FMEA    their maximum level of
                                                                                that demonstrates   redundancy,
                                                                                compliance with     functionality, and
                                                                                the applicable      operation, and that no
                                                                                provisions of IMO   single fault would
                                                                                MSC/Circ.645 for    exceed the identified
                                                                                DP equipment        worst-case failure.
                                                                                class 2 or higher.  This would reduce the
                                                                                likelihood of
                                                                                significant casualties
                                                                                or property damage,
                                                                                since the DP system
                                                                                would alert the DPO or
                                                                                DPOQ before a worst-
                                                                                case failure occurs.
62.40-15, 62.40-20 FMEA and FMEA  ...................  ..................  ...............  ...............  Requires vessel     Ensures that each
 proving test documents.                                                                                owners or           vessels' and MODUs' DP
                                                                                operators to        system failure modes
                                                                                create and          are assessed and
                                                                                maintain a          tested to ensure that
                                                                                vessel's FMEA and   limits are understood
                                                                                FMEA test proving   and in compliance with
                                                                                document.           regulations.
62.40-25 Critical Activity Mode   ...................  ..................  ...............  ...............  Requires owners or  Ensures that all
 of Operation (CAMO).                                                                                operators to        vessels and MODUs meet
                                                                                develop and         their maximum level of
                                                                                maintain a CAMO.    redundancy,
                                                                                functionality, and
                                                                                operation and that no
                                                                                single fault would
                                                                                exceed the identified
                                                                                worst-case failure.
                                                                                This would reduce the
                                                                                likelihood of
                                                                                significant casualties
                                                                                or property damage,
                                                                                since the DP system
                                                                                would alert the DPO or
                                                                                DPOQ before a worst-
                                                                                case failure occurs.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Because DP is an emerging technology and there are no existing
requirements for reporting DP incidents, we have casualty reports of
uncertain quality, constraining our ability to conduct a casualty
review. However, we attempt to quantify the potential benefits that are
expected to result from the requirements in this NPRM using the best
available information that we have gathered from various segments of
industry. These benefits focus on damages only, and not on fatalities,
injuries or environmental damage given the limitations in data noted.
    In publicly available documents (2004 through 2010), the IMCA
estimates that an average of 1.45 DP incidents occur per vessel every
year.\59\ Next, we estimate the number of DP incidents that are
expected to occur given the forecasted population figures and the
average DP incident rate per vessel per year.
---------------------------------------------------------------------------

    \59\ Although reporting to the IMCA is voluntary, we accept this
average rate, as it is the best available data currently available.
---------------------------------------------------------------------------

    Next, we calculate the number of DP incidents that resulted in a
loss of position and damages using IMCA station keeping incident
reports provided from 2004 through 2010. The average percentage of
incidents that resulted in vessel damages from 2004 through 2010 was 6
percent for non-drilling vessels and 4 percent for drilling vessels.
    Using the average percentage of incidents that result in vessel
damage and the total number of incidents forecasted to occur during the
10-year period of our study, we then calculate the total cost that
would occur to industry as a result of DP incidents. According to the
MTS ``Reliability and Risk Analysis,'' for DP incidents that result in
damages, ``the average incident cost for drilling is estimated to be $2
million, which includes rig downtime, possible damage, the possibility
of a fishing job, and even the remote possibility of lost well
control.'' \60\ We note that this cost does not take into account the
possibility of injuries or loss of life that could result from DP
incidents, and, therefore, is likely an underestimate. We then adjust
this estimate to $2,902,891 to account for inflation that occurred
between 1997 and 2013.\61\ For non-drilling vessels, we estimate that
the cost per DP incident

that results in damages is $132,991.\62\ We calculated this figure by
estimating the percentage difference between day rates for non-drilling
vessels and drilling vessels, and then multiplying that percentage by
the inflation adjusted total damages provided in the MTS ``Reliability
and Risk Analysis.'' \63\
---------------------------------------------------------------------------

    \60\ Marine Technology Society. ``Reliability and Risk
Analysis,'' Dynamic Positioning Conference. October 21-22, 1997.
Page 29.
    \61\ Inflation Adjustment Calculation = > 2013 value =. The
average annual CPI-U data was obtained from the BLS at http://stats.bls.gov/cpi/cpifiles/cpiai.txt.
    \62\ Calculation used = > x $2,902,891.
    \63\ Day rate for non-drilling vessel = $23,818. ``Dynamic
Positioning System Research Task Order,'' by Rolling Bay, LLC August
2012. The average day rate for drilling vessels = $527,506.
---------------------------------------------------------------------------

    For DP incidents that do not result in damages, we calculate the
cost to investigate the incident, as well as the lost revenue that
would occur while the investigation was taking place. According to a
Coast Guard Subject Matter Expert, it was determined that it would take
an engineer 10 hours on average to investigate a DP incident, at an
hourly loaded wage of $57.\64\ Further, the Coast Guard estimates that
a non-drilling vessel would lose $10,070 of revenue per DP incident
that does not result in any damages, and a drilling vessel would lose
$219,794 of revenue per DP incident that does not result in any
damages.\65\ This lost revenue would occur as a result of operations
having to be stopped while the engineer conducts the DP incident
investigation.
    Following this calculation (our baseline), we then calculate the
cost of DP incidents following the effective date of our final rule.
First, we needed to calculate the rate of DP incidents that are
expected to occur after publication of a final rule. Based on
roundtable conversations with owners and operators of DP vessels that
operate on the U.S. OCS, we estimate that DP incidents would be reduced
by 95 percent after adopting the MTS DP Operations guidance.\66\ If we
assume that the vessels were experiencing the industry average number
of incidents per year, 1.45, prior to adopting the MTS guidance, then a
95-percent reduction in DP incidents would equate to vessels
experiencing only 0.0725 DP incidents per year following adoption of
the MTS guidance.\67\ Using this new figure, we recalculated the number
of DP incidents that are expected to occur given the forecasted
population figures. However, we continue to use the original DP
incident rate (1.45 incidents per vessel per year) for vessels that
would not benefit from this proposed rule, or would not benefit from
the proposed rule until the applicable phase-in date.
---------------------------------------------------------------------------

    \66\ This reduction is based on a decrease in the frequency of
DP position-loss incidents, from a frequency of six DP position-loss
incidents in 6 months prior to adoption of the MTS DP Operations
guidance, to five position-loss incidents in 8 years following the
adoption of the guidance.
    \67\ New DP incident rate per vessel per year = 1.45 x 0.05.
---------------------------------------------------------------------------

    After implementation of the NPRM, we estimate that 2,926 DP
incidents for vessels other than MODUs (OSVs and crewboats) and 361 DP
incidents for drilling vessels (MODUs) would be prevented over the 10-
year period of our analysis.
    Using the same methodology that we used to calculate the cost of DP
incidents that would occur without this proposed rule, we then estimate
the total cost of DP incidents after implementation of this proposed
rule. We assume that the average percentage of DP incidents that result
in damages remains the same.
    We estimate that the reduction in the occurrence of DP failures
would result in avoided damages of $115.849 million ($28.375 million to
owners or operators of domestic vessels), discounted at a 7-percent
rate, and $146.289 million ($37.050 million to owners or operators of
domestic vessels), discounted at a 3-percent rate, over the 10-year
period of our analysis. The annualized benefits are estimated to be
$16.494 million ($4.040 million to owners or operators of domestic
vessels), discounted at a 7-percent rate, and $17.150 ($4.343 million
to owners or operators of domestic vessels), discounted at a 3-percent
rate.
    Table 11 summarizes the total damages avoided that would accrue to
industry from issuing this NPRM. These avoided damages would accrue
from a reduction in the frequency of DP failures, which would reduce
vessel downtime, possible damage, and the possibility of lost well
control. These benefits do not reflect the potential reduction in the
risk of injuries or fatalities that would likely occur after
implementation of this NPRM. Figure 3 supplements Table 11 by providing
a graphical representation of the difference between the cumulative
total costs incurred by noncompliant vessels prior to the issuance of a
final rule, and the cumulative total costs incurred by noncompliant
vessels after issuance of a final rule.

                                                    Table 11--Total 10-Year Avoided Damages From NPRM
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Undiscounted benefits                    Discounted benefits             Annualized benefits
                                         ---------------------------------------------------------------------------------------------------------------
               Time period                 Vessels other     Drilling
                                            than MODUs        vessels          Total            7%              3%              7%              3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Damages from DP Incidents prior to    $105,234,662    $126,218,084    $231,452,746    $157,200,830    $194,581,898     $22,381,862     $22,810,935
 DP System Rule.........................
Total Damages from DP Incidents after DP      51,101,224       3,746,191      54,847,415      41,351,452      48,293,037       5,887,517       5,661,417
 System Rule............................
Estimated Benefits from Following MTS         54,133,438     122,471,893     176,605,331     115,849,378     146,288,861      16,494,345      17,149,517
 Guidance...............................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers may not add due to rounding.
* Dollar figures are in 2013 terms.

[GRAPHIC] [TIFF OMITTED] TP28NO14.003

Request for Comment
    We request additional comments on our benefit model assumptions.
Information is specifically requested on the following:
    (1) Frequency of changes in DP status from green to red, and green
to yellow;
    (2) The rate of DP incidents that result in damages and the type
and amount of these damages;
    (3) The effectiveness of the proposed rule in reducing DP
incidents, loss of position, and resulting consequences; and
    (4) Case studies on DP incidents that resulted in a loss of
position.

DATES:  Comments and related material must be submitted to the online
docket via http://www.regulations.gov or reach the Docket Management
Facility on or before February 26, 2015. Comments sent to the Office of
Management and Budget (OMB) on collection of information must reach OMB
on or before February 26, 2015.

ADDRESSES:  Submit comments using any one of the listed methods, and
see SUPPLEMENTARY INFORMATION for more information on public comments.
     Online--http://www.regulations.gov following Web site
instructions.
     Fax--202-493-2251.
     Mail--Docket Management Facility (M-30), U.S. Department
of Transportation, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590-0001.
     Hand delivery--mail address, 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays (telephone<PHONE_NUMBER>).
Comparison of Costs vs. Benefits
    We estimate that the total annualized net cost of this NPRM is
$4.219 million ($6.680 million to domestic owners or operators),
discounted at a 7-percent rate, and $3.930 million ($6.653 million to
domestic owners or operators), discounted at a 3-percent rate. Tables
12 and 13 summarize the net costs that would be incurred as a result of
the publication of this NPRM. Figure 4 then compares the cumulative net
present value, using a 7-percent discount rate, as a result of
publication of this NPRM to the net present value of not requiring the
provisions in this NPRM (i.e., the baseline).

                                                 Table 12--Total Cumulative Net Present Value From NPRM
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                Discounted costs                     Discounted benefits                     Net present value
                Year                 -------------------------------------------------------------------------------------------------------------------
                                              7%                 3%                 7%                 3%                 7%                  3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................        $11,879,832        $12,809,668         $8,008,721         $8,319,739        ($4,683,985)        ($4,865,887)
2...................................         23,878,206         25,758,050         16,568,099         17,556,832         (8,122,981)         (8,577,177)
3...................................         32,911,477         35,885,141         25,319,946         27,368,422         (8,404,405)         (8,892,677)
4...................................         67,122,135         75,727,738         36,404,432         40,277,695        (31,530,576)        (35,826,001)
5...................................         76,654,716         87,260,764         49,473,907         56,089,844        (27,993,683)        (31,546,879)
6...................................         85,580,403         98,478,907         62,079,796         71,933,404        (24,313,481)        (26,921,461)
7...................................        111,205,850        131,936,702         75,965,563         90,063,319        (36,053,161)        (42,249,341)
8...................................        120,414,846        144,427,343         89,321,957        108,179,291        (31,905,763)        (36,624,010)
9...................................        129,470,866        157,187,510        102,476,664        126,714,614        (27,807,076)        (30,848,853)
10..................................        144,669,412        179,434,311        115,849,378        146,288,861        (29,632,908)        (33,521,407)
                                     -------------------------------------------------------------------------------------------------------------------
    Total...........................        144,669,412        179,434,311        115,849,378        146,288,861        (29,632,908)        (33,521,407)
                                     -------------------------------------------------------------------------------------------------------------------
Annualized..........................         20,597,670         21,035,175         16,494,345         17,149,517          4,219,059           3,929,732
--------------------------------------------------------------------------------------------------------------------------------------------------------

                Table 13--Comparison of Annualized Benefits and Costs to Industry and Government
                                            [7-Percent discount rate]
----------------------------------------------------------------------------------------------------------------
                        Rule                           Cost to industry     Total benefits       Net benefits
----------------------------------------------------------------------------------------------------------------
DP System NPRM......................................        $20,597,670         $16,494,345        ($4,219,059)
----------------------------------------------------------------------------------------------------------------
* Numbers may not add due to rounding.
* Dollar figures are in 2013 terms.

[GRAPHIC] [TIFF OMITTED] TP28NO14.004

    These net benefits do not include the potential reduction in the
number of injuries or fatalities that would likely occur after
publication of this NPRM. As a result, these net benefits are likely to
be underestimated.
Breakeven Analysis
    Based on monetized benefits from reduction in property damage and
lost productivity, the NPRM would not result in positive net benefits.
However, our monetized estimates do not include benefits that would
accrue to society from reducing the risk of fatalities or environmental
damage from an oil spill that could result from a catastrophic DP
event, such as a collision with a MODU during drilling operations
caused by a DP-related loss of position. It is likely then, that we
have underestimated the total benefits that would result from this
proposed rule. Unfortunately, because of data limitations, we are
unable to calculate the risk of a catastrophic event causing fatalities
or oil spills that would be prevented as a result of requiring the
provisions in this proposed rule. Instead, we estimate the number of
fatalities that would need to be prevented per year in order for this
proposed rule to be cost neutral, by using the value of a statistical
life (VSL).\68\ Using the VSL to monetize the value of fatalities and
fatalities prevented, the NPRM would need to prevent 0.5 fatalities per
year from occurring during the 10-year period for net benefits to equal
the net cost of this NPRM.
---------------------------------------------------------------------------

    \68\ Value of a statistical life is currently measured at $9.1
million. ``Guidance on Treatment of the Economic Value of a
Statistical Life,'' prepared for the U.S. Department of
Transportation, April 2013. http://www.dot.gov/sites/dot.dev/files/docs/VSL%20Guidance%202013.pdf.
---------------------------------------------------------------------------

    Table 14 summarizes this breakeven analysis.

       Table 14--Expand DP Systems in OCS NPRM, Breakeven Analysis
                         [7 percent, annualized]
------------------------------------------------------------------------
                                                            Fatalities
           NPRM requirement              Annualized net    prevented to
                                              cost          breakeven
------------------------------------------------------------------------
Total for NPRM requirements...........    ($4,219,059)             0.46
------------------------------------------------------------------------

    The consequences of a loss of position while using DP can be high.
In order to put this breakeven analysis in perspective, we consider and
compare the impacts of two events to illustrate potential worst case
scenarios that could result from a DP-related loss of position. First,
as an example of the fatalities that could result from a loss of
position and subsequent collision, we use the SAMUDRA SURAKSHA incident
as a reasonable worst case scenario. In order

for this proposed rule's benefits to equal its costs, one worst case
event on the magnitude of the SAMUDRA SURAKSHA which resulted in 22
fatalities, would need to be prevented approximately every 48 years to
breakeven.\69\
---------------------------------------------------------------------------

    \69\ We acknowledge that the SAMUDRA SURAKSHA incident would not
be avoided or its consequences mitigated as a result of this
proposed rule since it involved a foreign flag vessel operating in
foreign waters.
---------------------------------------------------------------------------

    A loss of position and collision could result in a catastrophic oil
spill if a MODU is involved and the blowout preventer does not engage
or fails (as was the case during the DEEPWATER HORIZON). The DEEPWATER
HORIZON oil spill illustrates the potential environmental damage that
could result from an oil spill from an uncontrolled well. The DEEPWATER
HORIZON incident resulted in an estimated 4.9 million barrels of oil
spilled. To date, the responsible party has spent $14 billion on
cleanup costs alone. This estimate of cleanup costs does not include
additional restoration costs under the Natural Resource Damage
Assessment process or other liabilities or settlements.\70\ Assuming a
$14 billion cleanup cost for a reasonable worst case catastrophic oil
spill, the proposed rule would have to prevent one such event every
1,000 years to breakeven.
---------------------------------------------------------------------------

    \70\ ``Active Shoreline Cleanup Operations from Deepwater
Horizon Accident End'', press release from BP, 15 April 2014,
available at: http://www.bp.com/en/global/corporate/press/press-releases/active-shoreline-cleanup-operations-dwh-accident-end.html.
---------------------------------------------------------------------------

Alternatives
    We examined several alternatives with varying degrees of vessel
applicability and required provisions. Of the alternatives examined, we
selected the alternative that provided industry with the largest amount
of flexibility without sacrificing maritime safety. The Coast Guard
considered the following alternatives:
     Proposed Alternative (NPRM);
     Alternative 2: Grandfathering all existing non-drilling DP
vessels;
     Alternative 3: No Grandfathering and No Phase-in Period;
     Alternative 4: Proposed Alternative Plus Additional DP
Manning Requirements for non-drilling vessels with new or upgraded DP
systems; and
     Alternative 5: Alternative 3 Plus Additional DP Manning
Requirements.
    Because of the frequency of DP-related incidents, as well as the
potential for severe consequences that could occur as the result of an
incident, the Coast Guard decided that the benefits that would be
gained through requiring compliance from existing OSVs and crewboats
would outweigh any additional costs that would be incurred by industry.
    In order to minimize the impact on existing OSVs and crewboats, the
Coast Guard developed the proposed alternative, which uses a phase-in
schedule to provide existing non-drilling vessels with some flexibility
in meeting the provisions of this proposed alternative. Further, the
Coast Guard decided to grandfather existing non-drilling vessels from
being required to comply with the most costly provisions in this
proposed rule--the provisions that would require a vessel using DP to
use a DP-2 system or higher and obtain a DP-2 or high class notation.
    Through providing flexibility to existing OSVs and crewboats, the
proposed alternative minimizes costs, without sacrificing benefits that
could accrue from a larger population of vessels.
    Table 15 summarizes the alternatives considered. The costs and
benefits displayed are for both total 10-year costs and benefits and
the annualized cost and benefits discounted at a 7 percent annual rate.
Because the net benefits do not include the potential reduction in the
number of injuries or fatalities that are likely to occur after
issuance of a final rule, Table 15 also includes the number of
fatalities that would need to be prevented for the costs of this
proposed rule to equal the benefits.

                                                          Table 15--Comparison of Alternatives
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Annualized cost       Annualized       Annualized net     Number of fatalities
               Proposal                    (7% discount      benefits  (7%    cost (7% discount   needed to be prevented       Impact of alternative
                                              rate)          discount rate)         rate)          per year to breakeven
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed Alternative..................        $20,597,670        $16,494,345       ($4,219,059)  1 fatality per year.....   Offers protection
                                                                                for 91% of crew from risk of
                                                                                DP failure.
                                                                                Mitigates risk for
                                                                                462 vessels.
                                                                                Reduces costs by
                                                                                allowing continued use of
                                                                                existing DP-1 systems as
                                                                                long as they meet good
                                                                                operational practices.
                                                                                Minimizes burden by
                                                                                allowing phase-in of
                                                                                operational requirements
                                                                                based on risk.
Alternative 2.........................         13,307,230         13,688,325          (265,983)  0 fatalities per year...   Offers protection
                                                                                for 51% of crew from risk of
                                                                                DP failure.
                                                                                Mitigates risk for
                                                                                205 vessels.
                                                                                Minimizes burden by
                                                                                grandfathering non-drilling
                                                                                vessels that have installed
                                                                                a DP system prior to the
                                                                                effective date of a final
                                                                                rule.
Alternative 3.........................         25,718,386         21,699,818        (4,896,965)  1 fatality per year.....   Offers protection
                                                                                for 100% of crew from risk
                                                                                of DP failure.
                                                                                Mitigates risk for
                                                                                528 vessels.
                                                                                Requires non-
                                                                                drilling vessels that have
                                                                                installed a DP system prior
                                                                                to the effective date of a
                                                                                final rule to comply with
                                                                                all operational requirements
                                                                                before issuance of final
                                                                                rule.
Alternative 4.........................        137,508,218         16,494,345      (121,332,655)  14 fatalities per year..   Offers protection
                                                                                for 91% of crew from risk of
                                                                                DP failure.

                                                                                Mitigates risk for
                                                                                462 vessels.
                                                                                Minimizes burden by
                                                                                allowing phase-in of
                                                                                operational requirements
                                                                                based on risk.
                                                                                Requires additional
                                                                                manning requirements for new
                                                                                builds that industry is
                                                                                unlikely to meet on its own.
Alternative 5.........................        625,109,533         21,699,818      (608,728,065)  67 fatalities per year..   Offers protection
                                                                                for 100% of crew from risk
                                                                                of DP failure.
                                                                                Mitigates risk for
                                                                                528 vessels.
                                                                                Requires non-
                                                                                drilling vessels that have
                                                                                installed a DP system prior
                                                                                to the effective date of a
                                                                                final rule to comply with
                                                                                all operational requirements
                                                                                before issuance of final
                                                                                rule.
                                                                                Requires additional
                                                                                manning requirements for all
                                                                                vessels using DP that
                                                                                industry is unlikely to meet
                                                                                on its own.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Net Cost does not include avoided fatalities or other benefits of this proposed rule.
* Numbers may not add due to rounding.
* Dollar figures are in 2013 terms.

    Although Table 15 shows that Alternative 2, which would grandfather
all existing non-drilling vessels from having to comply with this
proposed rule, minimizes net costs, Alternative 2 would reduce the risk
of a fatality the least out of all of the alternatives. This is because
fewer vessels would benefit from the proposed requirements, and thus
the probability of a DP incident, which could result in a fatality,
would remain at its current rate for a majority of existing vessels
using DP on the U.S. OCS. Furthermore, given the catastrophic damage
potential of DP-related incidents from non-drilling vessels, the
additional costs are relatively small. In Table 16, we summarize the
risk of fatality addressed and the cost to address that risk in each of
the alternatives.

                      Table 16--Comparison of the Risk of Fatality Addressed by Alternative
----------------------------------------------------------------------------------------------------------------
                                                                      Percentage
                                                         Crew with        of
                                    Total crew subject    risk of     potential     Annualized       Cost per
             Proposal                   to risk of        fatality     fatality        cost        fatality risk
                                    fatality--baseline   addressed       risk                        addressed
                                                                      addressed
----------------------------------------------------------------------------------------------------------------
Alternative 1.....................            5,119           4,675           91     $20,179,651       $4,316.50
Alternative 2.....................            5,119           2,623           51      13,072,297        4,983.72
Alternative 3.....................            5,119           5,119          100      24,990,468        4,881.90