I got a ticket within the past year for "running a red light." I never saw the light turn red as I drove through the yellow light traveling under the speed limit. However, the officer issuing me the ticket explained that if any portion of my vehicle remained in the intersection when the light turned red, then that constituted running a red light. I paid the ticket and then did a little research. I now know the legal definition of running a red light in my town. But, why didn't I research that before? Because, I have a general knowledge of traffic rules, I don't have a history of violations, and if I ever get a ticket, I'll just pay it and move on. It's all a matter of risk assessment. What is the risk to my peace of mind and my wallet? The answer is: minimal. There is no reason to proactively manage my compliance with traffic laws. However, when it comes to running my business, the risk is much greater and therefore, I make sure that I am compliant with whatever applicable laws and regulations I become aware of.
Awareness is the first component to maritime compliance management. You can't comply with regulations if you're not aware of them. Some ostriches reading this are thinking, "Exactly!" But we all know how the government feels about "ignorance of the law…" When your business is at risk, you can't afford not to be aware of regulations. There are many sources of information these days. There is really no good excuse for not being aware of all the regulations coming at a fast rate. It should be someone's job in the organization to subscribe to newsletters and check the appropriate websites to stay on top of all the latest developments. For example, the North American ECA goes into effect on Wednesday, August 1, 2012. Accordingly, the Coast Guard has published a10-page policy letter and a 16-page job aid for Coast Guard inspectors to make sure vessel companies are compliant. Vessel companies should make it a point to study those two documents. Don't manage your vessel compliance the way I manage my traffic compliance; the risks are not the same.Maritime Compliance Report
A properly implemented safety management system (SMS) can be a tool for operational excellence, and companies should not be steered away from adopting one. More than one person have expressed some confusion about why I would write a four part blog that appears to discourage the adoption of a Towing Safety Management System (TSMS), since producing safety management systems is a large part of our consulting business. The answer is simple; we're in the business of helping clients by giving them all the facts, both good and bad, and helping them arrive at the decisions which will be best for their business, not ours. We are just explaining the implications and potential consequences of adopting an SMS and not fully implementing it. In future blogs I will outline the steps required to develop and implement an excellent safety management system. One point about the TSMS option in the Subchapter M proposed rule requires clarification. One of my clients was under the impression that since the company had already adopted a safety management system that it would have to use the TSMS option in Subchapter M. That is not the case. A company may have been operating under an SMS for many years, but that company can still choose straight Coast Guard inspections to obtain its Certificate of Inspection (COI). According to the proposed rule, the company will fill out an application for inspection and designate the compliance option for each vessel. The company may choose the TSMS option for some vessels and straight Coast Guard inspections for its other vessels. When Coast Guard inspectors show up to do the inspection, if they see an SMS on the bookshelf, they will not say, "Oh, you're on an SMS, we're outta here. Call a third party auditor." That option belongs to the company. We'll have to wait and see if that option survives in the final rule.
The Coast Guard will provide the check and balance for this program to ensure that the audits have been conducted thoroughly and accurately. There may be consequences for an auditor who is found to have conducted a less than adequate audit resulting in a Towing Safety Management Certificate being issued to a non-compliant vessel. For example, consider the recent case of Mr. Alejandro Gonzalez. According to a Department of Justice press release, Mr. Gonzalez, a Miami-based surveyor working on behalf of the flag of Bolivia, certified the M/V Cosette safe for sea. Shortly thereafter, when the vessel arrived in New York, Coast Guard inspectors found "fuel and exhaust pouring into the engine room." Since Mr. Gonzalez had certified the vessel safe for sea and the Coast Guard determined it was not, he was convicted by a federal jury on May 24 for "making a false statement." Mr. Gonzalez had other charges, but for this conviction he faces a maximum of five years in prison. He will be sentenced on August 2. Subchapter M auditors and surveyors could face the same fate as Mr. Gonzalez if the Coast Guard determines that "false statements" have been made. While this is a remote possibility, the take-away should be that, presumably auditors will be aware of their own exposure and therefore owners and operators should prepare for more stringent audits under Subchapter M.
Besides the auditor's exposure, attorneys Marc Hebert and Barrett Rice, in their paper, "Subchapter M from a Defense Lawyer's Perspective," weighed in on the importance of choosing an auditor with regards to owners' legal liabilities. "… For those vessel owners opting for the TSMS option, consider all theses legal implications when choosing your auditor or surveyor. What if the third party auditor fails to identify a portion of the TSMS plan which is not effectively being implemented? What if the surveyor misses an unsafe condition on the vessel, the knowledge of which will ultimately be attributed to you? While many vessel owners will seek out the auditor or surveyor who helped them obtain their certificate of insurance or certificate of compliance as quickly as possible, we urge you to find that third party auditor and/or surveyor who will scrutinize any aspect of your business and present you with the brutal truth." I couldn't agree more.
The concept of limitation of liability under maritime law stems from a law passed in 1851 known as the Limitation of Shipowners Liability Act which was designed to protect U.S. shipping by allowing owners to limit their liability to the value of the vessel in instances where the company had no control. Today, many limitation of liability proceedings come down to whether the company had "privity or knowledge" of the circumstances which led to the incident in question. This becomes problematic when a company is operating under a safety management system such as the Towing Safety Management System (TSMS) under Subchapter M, where it could be argued that the intent of the regulations is to ensure that the company has "privity or knowledge" of almost all situations on the vessel at all times. Marc Hebert, in his previously referenced paper "Subchapter M from a Defense Lawyer's Perspective," writes, "In our opinion Subchapter M, particularly through a TSMS option, essentially requires that vessel owners/operators make themselves aware, through the implementation of a safety management system, of the daily minutia on each and every vessel. It may be argued that, by statute, your knowledge is mandated."
We have recently seen an example play out in the courts in the unfortunate case of the duck boat being run over by the tug and barge near Philadelphia, which resulted in two deaths. The mate on watch at the time of the incident, who is currently serving a one-year sentence for involuntary manslaughter, according to the Philadelphia Inquirer, May 7, 2012, was on his cell phone handling a family emergency. The towing company attempted to limit its liability due to the fact that it had a cell phone policy, but argued that the mate had simply disobeyed the policy. However, according to the Workboat.com blog by Dale DuPont on May 14, 2012, the plaintiff attorney successfully argued that, "… the policy never worked, not once, not with a single person on this voyage, ever. Every single one of them used their cell phone on watch every single day. That is the definition of a failed policy." According to DuPont's blog post, two days later the sides in a trial that was expected to last for months, agreed to a $17 million dollar settlement for the victims and their families.
Choosing the TSMS option and establishing written policies and procedures, which must be followed, increases that probability that vessel operators will not be able to limit their liability as easily as those who do not choose the TSMS. Marc Hebert in his paper asks the question "… with Subchapter M, will the Limitation Act continue to be of use to the inland towing vessel owner?" Stay tuned for more…
The paper refers to the common defense strategy in Jones Act cases of contributory negligence on the part of the plaintiff. Hebert wrote, "In a standard answer to a Jones Act claim, every defendant pleads the affirmative defense of contributory negligence – that the accident or injury was caused, wholly or in part, by the actions or neglect of the Plaintiff." According to Hebert, with the legal principle of negligence per se, a violation of a safety law or regulation, such as those contained in Subchapter M, creates a presumption of negligence and liability which the vessel operator must overcome through evidence that the violation was not the proximate cause of the accident. This makes the defense of contributory negligence more difficult for the defense. Hebert explains in the paper, "Thus, if the personal injury attorney proves the violation of a regulation and some causal connection between the violation and injury, the vessel owner may well be absolutely liable."
Again, Subchapter M will increase the probability that a vessel will be found in non-compliance simply due to the vast number of regulations it contains. Choosing the TSMS option and establishing written policies and procedures, which must be followed, increases that probability even further. Stay tuned for more…
Hypothetically speaking, if two similar vessels were going through an inspection for certification at the same time, the one that chose the Coast Guard option would be done after the vessel itself was inspected and the captain was found to have a valid license to operate the vessel. However, for the vessel that chose the TSMS-third party option, after the vessel itself is surveyed for compliance, an auditor must come in and verify that the licensed captain is following all the company's policies and procedures. Essentially, by choosing the TSMS option, the company is betting a vessel's Certificate of Inspection on the captain's ability to follow written policies and procedures and not to rely solely on his experience to operate the vessel.
But compliance is not the only concern. Choosing the TSMS third party option will also have legal implications. Since the policies and procedures contained in a TSMS will have the force of a regulation, non-compliance may affect future litigation in a number of ways. Marc Hebert, an attorney at the Jones Walker law firm in New Orleans, along with Barrett Rice, prepared an excellent paper for the Greater New Orleans Barge Fleeting Association (GNOBFA) annual conference this year, entitled: "Subchapter M from a Defense Lawyer's Perspective." In the paper, Mr. Hebert outlines a number of legal concerns with Subchapter M and he has given me permission to discuss a few of them with you:
Pennsylvania Rule: Paraphrased from Mr. Hebert and Mr. Rice's paper: "…when a vessel violates a statute or regulation intended to protect a particular harm, that vessel is presumed to be at fault. The presumption results in a shift in the burden of proof. When an incident results, or even occurs within a short time after such a violation, the vessel owner may have to prove in court that each and every violation of a regulation could not have been a contributing factor in the incident in question." "How will the vessel owner prove, with a document, that his or her TSMS is being enforced?" "…Failure to demonstrate compliance will likely be a rule violation and under the Pennsylvania Rule, such a violation results in a presumption of liability under the law."
Subchapter M will increase the probability that a vessel will be found in non-compliance simply due to the vast number of regulations it contains. Choosing the TSMS option and establishing written policies and procedures, which must be followed, increases that probability even further. Stay tuned for more…
On May 3rd Coast Guard Headquarters released an update on the Coast Guard Towing Vessel Bridging Program. Phase 1 of the Bridging Program began in June of 2009. The purpose of the program was to prepare the towing industry for the impending inspection regulations contained in Subchapter M, and at the same time familiarize Coast Guard personnel with towing vessels and their operations. The Coast Guard estimates there is a total of approximately 5,800 towing vessels. Since the beginning of Phase 1 of the Bridging Program the Coast Guard has conducted 4,200 industry initiated examinations and issued 3,200 decals to towing vessels.
It is important to note that these are examinations being conducted, not inspections. The towing vessels being examined are currently "uninspected vessels." The examination is to verify compliance with existing regulations which apply to uninspected towing vessels. Once Subchapter M is finalized there will be many more regulatory requirements for these towing vessels and they will be inspected for certification and receive a certificate of inspection, not an examination sticker.
According to the Coast Guard, phase 2 will commence on July 1, 2012. During phase 1 the Coast Guard relied upon industry to volunteer to have their vessels examined. Phase 2, while still allowing industry initiated exams, will also begin prioritized exams and underway law enforcement boardings and surge operations. High priority vessels under phase 2 are those vessels owned or operated by companies that have not participated in phase 1. Low priority vessels are those vessels owned or operated by companies actively participating in the Bridging Program, but not all of the company's vessels have been examined. Non-priority vessels are vessels owned or operated by a company which has participated in the bridging program and has already been examined.
Prioritized exams will be the same scope as industry initiated exams but will be at the convenience of the Coast Guard, not the company. Deficiency reports will be issued during prioritized exams and the deficiencies will have to be resolved within the allotted time frame in order to avoid civil penalty. Notice of Violations may be issued for noncompliance during law enforcement boardings. Coast Guard's phase 2 memorandum explains that while deficiencies found during industry initiated exams were not available to the public, deficiencies found during phase 2 prioritized exams will be entered into the PSIX website and will be available to viewing by the public.
Even though Subchapter M seems far of at times the Coast Guard is moving forward with their program to prepare the industry for what the future has in store. The phase 2 memo explains the "risk" associated with not achieving the goal of the Bridging Program is that, "…companies and their vessels may not be prepared for an environment where they must have a Certificate of Inspection (COI) to operate their vessel(s)." Phase 2 will certainly bring the industry closer to that reality.
Most commercial vessels, including uninspected vessels, are required to conduct fire drills. A fire drill is more than testing the general alarm and the fire pump. The purpose of a drill is to understand the best possible procedure and to have a predictable response in a real emergency.
The Coast Guard and the Navy take drills very seriously. Before Guantanamo was a bad word following 9/11, we knew it as the place we went for six weeks of refresher training (REFTRA). We did nothing but every kind of drill, around the clock, for weeks. It was exhausting, but excellent. When not at "Gitmo" we did drills every day in port and every week underway. Even though it was twenty five years ago, I can still recite the fire drill from memory, and often do to impress upon commercial vessel crews the intent of the regulation. While commercial vessel crews are not expected to drill to the level required by the military, it is important to strive for excellence since it could mean the difference between life and death. The following are three major issues I have observed during commercial vessel drills which deserve some attention:
Initial action - It is critical in a fire and unfortunately, it is the part most often skipped during fire drills on commercial vessels. Commercial vessel drills are usually initiated by the wheelhouse ringing the general alarm. The drill should be started by taking one crewmember and telling him he sees fire or smoke in a certain location so he can take the appropriate initial action. After all, that's what will happen in real life. Additionally, if the crew is simply trained to muster as directed upon hearing the general alarm, they may not be able to respond adequately if a Coast Guard inspector initiates a drill as I have described.
Life jackets - Common sense is also critical formulating the appropriate response. I have seen a crew respond to a fire and enter a simulated "burning engine room" with life jackets on. This is a bad idea due to the intense heat they may encounter, their inability to move freely, and the possibility of getting trapped inside the vessel.
Emergency fuel shutdown - During my Coast Guard career I was part of a ready for operations inspection team which inspected Coast Guard vessel crews. During one fire drill on a Coast Guard patrol boat, I noticed the Fireman (junior engineer) pull the emergency fuel shutdown without notifying the bridge (wheelhouse). The Captain of the patrol boat was ultimately required to change his fire drill procedures to ensure that the command to pull the emergency fuel shutdown came from the bridge. The reason being, a small fire can be turned into a much worse situation by shutting off the fuel and rendering the vessel "dead-ship" especially in a heavy sea or a waterway where it could be run into by another vessel. The person in command of the vessel must be given the opportunity to assess all the risks prior to shutting the vessel down. If possible, the vessel must maneuver out of harm's way before the emergency fuel shutdown is pulled.
There is an age-old quandary in the maritime industry when it comes to dealing with the U.S. Coast Guard: to just do whatever they say, or challenge their decision? Many choose to go along with whatever a Coast Guard inspector says, even when a decision may have been made in error, or the impact to the company may be great. This is mostly due to a misconception that the Coast Guard is likely to retaliate if challenged. Another common reason for going along with whatever the Coast Guard inspector says is simply to "keep them happy and make them go away." Sometimes this can backfire and have serious consequences for a vessel owner when they realize the impact of what they have agreed to, and if they don't follow through in the future.
Many years ago, as a trainee Coast Guard marine inspector, I was sent out to do my first solo barge inspection. While inspecting the bunker barge I looked at the warning sign and told the company representative that I thought the sign was also supposed to read "dangerous cargo." He assured me the sign was fine, and I pushed back. I offered to look it up, but he did not want to debate the issue and told me to go ahead and write the CG835 and that he would change the sign. I should have looked it up... A few days later while reviewing cases, my boss called me into his office and made me look up the regulation. He then directed me to go back and tell the barge representative that I was incorrect, and to put the original sign back. I felt terrible at having caused this barge operator money and aggravation, but I learned a valuable lesson that day. I'm thankful for having had a boss who understood his responsibilities and was willing to hold me accountable.
While most Coast Guard inspectors are knowledgeable and conscientious, none are perfect. It's not unreasonable to ask the inspector if he would provide the regulatory citation and explain the deficiency. If the issue can't be resolved at the lowest level, industry has the right to appeal. The intent of the policy is best explained by a well respected former Commandant, ADM Thad Allen, in his message to the troops (ALCOAST 108/08): "Disruption in the normal flow of commerce impacts many parties in the supply chain. We have clearly established appeal procedures when we make a decision that could have negative impacts on a licensed mariner or on the maritime industry. The exercise of appeal is a right we strongly support. Questions, differences of professional opinion, and appeals are normal and improve the conduct of business. We must be as accepting of these as praise. Attempt to resolve problems at the lowest level possible and be resourceful in doing so."
Appeals can be challenging, but they are a necessary part of the process. When necessary, give the Coast Guard a chance to exercise its own system of checks and balances.
Preamble – The Coast Guard explains that ballast water exchange method "is not well suited" as the basis for the program required by the National Invasive Species Act, in part because studies have shown that in some vessels a large number of invasive species may remain after ballast water exchange. Further justification is provided for the Coast Guard's requiring approved Ballast Water Management Systems (BWMS) to be installed on vessels.
Applicability – Generally, the regulations apply to all non-recreational vessels with ballast tanks, operating in U.S. waters. There are exemptions from certain sections for certain vessels. For example, a vessel operating in one Captain of the Port (COTP) Zone is exempt from ballast water management, reporting and record keeping requirements. Keep in mind, if a vessel makes such a claim for these exemptions, the Coast Guard may place a restrictive endorsement on the vessel's certificate of inspection (COI) restricting it to one COTP Zone. Some vessels are only exempt from the ballast water management requirements, but not the other requirements such as record keeping and reporting requirements.
Ballast Water Management – There are a number of options for managing ballast water included in this section ranging from installing a Ballast Water Management System (BWMS) which is Coast Guard approved piece of equipment, or using a public water system, to name a few. However, it makes the public water option more difficult than before by requiring prior tank cleaning as well as documentation and receipts as proof. There is a phase-in schedule for vessels required to install the new equipment based upon their next drydock after a given date.
Ballast Water Management Plans and Training – 33CFR 151.2050 applies to all vessels equipped with ballast tanks and requires a vessel specific ballast water management plan and training for crews.
Port State Control – Regarding foreign flag vessels, the preamble mentions that port state control officers will serve as the final enforcement check of BWMS.
EPA Vessel General Permit (VGP) – The preamble mentions that the new EPA VGP which is out for comment and that when it is finalized the ballast water requirements contained in the VGP may differ from the Coast Guard's regulation. Attention will have to be paid to both.
Penalties - Finally, the regulation states that any person who violates this subpart is liable for a civil penalty not to exceed $35,000, and each day constitutes a separate violation. Additionally, a person who knowingly violates the regulations of this subpart is guilty of a class C felony.
There is a great deal of information in this regulation and I encourage you take the time to read through it.