The federal Coast Guard and Maritime Transportation Act of 2004 authorizes the U.S. Coast Guard to devise and carry out mandatory safety inspections of towing vessels. On June 20, 2016, after extensive industry input, the Coast Guard published Inspection of Towing Vessels, which contains regulations setting forth inspection requirements for towing vessels. The final regulations, which are part of the newly created Subchapter M within Title 46 of the Code of Federal Regulations (CFR), are intended to improve the safety, security, and environmental friendliness of towing vessel operations.
Subchapter M has nine parts and creates a comprehensive safety system that includes company compliance, vessel standards, and oversight. Most importantly, it prescribes procedures for towing vessel compliance and for obtaining a Certificate of Inspection (COI) from the Coast Guard’s Officer in Charge, Marine Inspection (OCMI).
The regulations generally apply to all U.S.-flag towing vessels 26 feet long or longer and to those shorter than 26 feet moving a barge carrying oil or hazardous material in bulk. However, exempt from the regulations are certain towing vessels whose services are limited, such as vessels engaged in assistance towing or vessels transporting recreational vessels within or between marinas.
A new towing vessel must obtain a COI before it enters into service. For existing towing vessels, Subchapter M will not take effect until either July 20, 2018 or the date the towing vessel obtains a COI, whichever is earlier. There will be two inspection regimes, inspection by the Coast Guard itself or by the Towing Safety Management System (TSMS), which will be administered by third party inspection organizations. Vessel operators will be able to choose which inspection scheme they wish to use.
All owners or managing operators of more than one existing towing vessel must ensure that those vessels are issued valid COIs according to the following schedule:
- By July 22, 2019, at least 25% of the towing vessels must have valid COIs
- By July 20, 2020, at least 50 % of the towing vessels must have valid COIs
- By July 19, 2021, at least 75% of the towing vessels must have valid COIs
- By July 19, 2022, 100% of the towing vessels must have valid COIs
An existing towing vessel must have a COI by July 20, 2020 if the vessel’s owners or managing operators own only that one towing vessel.
A COI for a towing vessel is valid for five years from the issue date. It may be suspended, withdrawn, or revoked by the OCMI at any time for noncompliance with the requirements of Subchapter M.
The original COI must be posted onboard the towing vessel. It may be framed under glass and conspicuously posted or, if that is impractical, kept on board in a weather-tight container. Although the original COI must be onboard the vessel, copies may be kept elsewhere.
The new regulations present many challenges for lenders making marine loans secured by towing vessels, not the least of which is determining whether a lender's vessel collateral is subject to inspection or not. Moreover, vessels which by their size, class, and service might be subject to inspection may be temporarily exempt based on the fleet size of the borrower.