WJ Editorial
WJ Editorial

Questions About Subchapter M Fee Schedule

The U.S. Coast Guard has been working on a fee schedule for Subchapter M since 2016. As you’ll read in this issue, on January 13 it announced new annual fees for vessels to maintain their certificates of inspection. The proposed fees, for which the Coast Guard is accepting comments through April, are $973 for vessels using a third-party organization (TPO) and towing safety management system, and $2,184 for vessels that opt for a direct Coast Guard inspection.  These are annual fees per vessel, even though vessels using a TPO get a Coast Guard inspection once every five years to maintain their certificates, whereas vessels choosing a direct Coast Guard option get a vessel inspection every year. The fees are supposed to reflect the Coast Guard’s total actual costs for administering the program. 

At first glance, it may seem as if the proposed fee structure is encouraging vessels to use the TPO option. The Coast Guard has spoken in several communications about its need to partner with TPOs to spread the burden of Subchapter M monitoring and has expressed gratitude for the burden-sharing. But since companies using a TPO are already paying fees to them, using the Coast Guard option is still likely to be less expensive overall—at least in the short run.

But it will probably make those operators that haven’t already chosen a TPO think long and hard about how they plan ahead. Which option offers the greatest likelihood of consistency and reliability? Is it better to have vessel inspections every year or spend the money for a TPO?  According to one TPO, at least a few small operators have decided to fold their tents rather than continue with Sub M documentation. That was perhaps not completely unexpected. According to reports, most towing companies seem to be on track to meet all the documentation deadlines of Sub M.

The American Waterways Operators says it has some questions about how the Coast Guard arrived at its cost estimate and is planning to file a lengthy comment questioning to what extend it reflects real conditions. At a time when towing operators are still recovering from a whipsawing market, it’s worthwhile asking whether fees that will be a real burden for some operators have a sound rationale.

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