Subchapter M

Subchapter M Documentation Deadline Looms

The deadline for all inland towing vessels to be compliant with all the provisions of Subchapter M regulations was July 20, 2018. But that deadline came with a window to show and document compliance and earn a certificate of inspection, and that final COI deadline—July 20, 2022—is fast approaching. 

That means the actual deadline for operators who have not yet scheduled their Coast Guard inspections is April 19.  “If you schedule your inspection by then, and for some reason the Coast Guard doesn’t do the inspection by July 20, then the operator should have a candid conversation at the unit level about the Coast Guard’s enforcement posture,” according to Tava Foret, president of the Towing Vessel Inspection Bureau, one of the oldest of the third-party organizations that have been helping towing companies become and remain compliant with Subchapter M. 

Both Foret and Caitlyn Stewart, vice president of regulatory affairs for The American Waterways Operators, say that inspections and documentation have, in general, been proceeding smoothly. Among TVIB’s clients, said Foret, about a quarter have reached 100 percent compliance and documentation of their vessels, and three-quarters have reached the current 75 percent documentation requirement.  

Both Foret and Stewart urge operators not to wait until April. Foret points out that operators have to schedule an inspection at least 30 days before they file a CG-3752, which is the form to apply for a vessel inspection. “We’re encouraging our members [who haven’t already been inspected] to schedule inspections now, and not to wait until April,” Stewart said. “The spring is a very busy time for the Coast Guard. In addition to towing vessel inspections, it’s ‘transfer season’ for Coast Guard personnel. It’s also when inspections of seasonal operators like small passenger vessels ramp up.”

Fee Differential Proposed, Industry Concerned

One complicating factor that has concerned the towing industry is a Coast Guard fee proposal that was made public January 11. Back in 2016, the Coast Guard said it would study its fee structure and establish fees for the costs of vessel inspections under Subchapter M. It had a default fee in place inherited from the 1990s, of $1,030, that predated towing vessel inspection and was “not based on a specific analysis,” according to Stewart. 

The Coast Guard’s January 11 proposal landed as something of a bombshell on the industry, especially so close to the final documentation deadline, because it is proposing a change in fees for both the TPO and direct Coast Guard inspection options, to $973 per year for the TPO (TSMS) option and a whopping $2,184 per year for the option of direct Coast Guard inspections, more than doubling the previous fee. Stewart notes that these are annual fees per vessel, not just fees paid for the inspection itself.  While Coast Guard option vessels do get annual Coast Guard inspections, a vessel with a TSMS operated by a TPO gets one Coast Guard inspection within a five-year window, with intermediate audits conducted by a TPO.

The Coast Guard is supposed to base its fees on its costs to administer the inspections. Although the statute allows it to consider other factors as well, such as public interest, Stewart said the Coast Guard only mentioned cost in the study it submitted attached to the fee change proposal. While the fee differential between the TPO and Coast Guard option might make it appear that the Coast Guard is encouraging operators to use the TPO route, operators probably won’t save money that way, since they are already incurring extra costs by paying the third-party organizations. Most AWO members have already been conducting their own internal audits, or having TPOs do them, many since before 2018. 

The fee proposal is currently undergoing a comment period that ends April 11, and the AWO is having conversations with members and preparing a lengthy comment, Stewart said. The AWO plans to question the cost study rationale. “We think the Coast Guard included some activities that are not part of towing vessel inspections and over-estimated time to travel and time to inspect,” she said. 

In addition to concerns about whether the cost study accurately reflects the Coast Guard’s true costs, Stewart added that the increased fees could impose undue burdens on an industry that is still rebounding from the market swings resulting from COVID-19. “We don’t think it’s the right time to increase costs,” she said. 

Avoiding Drydock Bottlenecks

After the final documentation deadline in July, a new concern looms over scheduling drydock appointments. Rob Keister, vice president of Sabine Surveyors, another TPO that has been helping operators, said, “Drydock schedules are our next concern. Beginning this fall, a lot of operators are going to start renewing their TSMS. We tell our clients that they really need to do a good, thorough pre-drydock survey so they know the scope of the work needed prior to going to the drydock.”

He adds that management audits for TSMS renewal will be thorough. The programs are more mature, and management audits might be a little different. “We really need to make sure these companies are doing what they say they are doing,” he said.

Keister said most companies are well on their way to achieving full documentation and earning their COIs by the July deadline. “We already have some companies that are 100 percent compliant, and 100 percent documented.” But he said he knows of a few small operators that have decided to close up shop instead.