Tides Are Turning: The Arrival of Subchapter M

*This article was prepared by our summer law clerk, Ridge Miguez.

 

On June 20, 2016 the U.S. Coast Guard posted a preview of the final version of the long-awaited Subchapter M regulation, which will extend inspection requirements to the majority of tugs and towboats for the first time. In 2004, Congress reclassified towing vessels as vessels subject to inspection, and consistent with 46 U.S.C. 3305, this rule sets out the scope and standards of inspection. Now with the implementation of Subchapter M the U.S. Coast Guard has created a comprehensive safety system that includes company compliance, vessel compliance, vessel standards, and oversight in a new Code of Federal Regulations (CFR) subchapter dedicated to towing vessels. This rule, which generally applies to all U.S. flag towing vessels 26 feet or greater, and those less than 26 feet moving a barge carrying oil or hazardous material in bulk, lays out both inspection mechanisms as well as new equipment, construction, and operational requirements for towing vessels.

 

To provide flexibility, vessel operators will have the choice of two inspection regimes. Under the Towing Safety Management System (TSMS) option, routine inspections of towing vessels will primarily be performed by third-party organizations (TPOs), including certain classification societies, and this rule creates a framework for oversight and audits of such TPOs by the Coast Guard. The TSMS will provide operators with the flexibility to tailor their safety management system to their own needs, while still ensuring an overall level of safety acceptable to the Coast Guard. Alternatively, under the Coast Guard inspection option, routine inspections would be conducted by the Coast Guard, providing an option for those operators who choose not to develop and implement their own TSMS.

 

Subchapter M also creates many new requirements for design, construction, equipment, and operation of towing vessels. Those requirements are typically based on industry consensus standards or existing Coast Guard requirements for similar vessels.

 

The most important change to the final revision of Subchapter M has been the changes made to the Coast Guard’s proposal in the NPRM. They have clarified the system for Coast Guard oversight and inspection of towing vessels that complements the TPO system. To address concerns about the cost impact of the rule, they have added “grandfathering” provisions to several requirements, so the requirements will not apply to existing vessels or vessels whose construction began before the effective date of the rule. Also, they have reorganized several parts for greater clarity or to better align with the existing text of other parts of the CFR. As noted in the NPRM (7 FR 49985), the Coast Guard still plans to promulgate a separate rulemaking for an annual inspection fee for towing vessels that will reflect the specific program costs associated with the TSMS and Coast Guard inspection options. As of now the Coast Guard is establishing the existing fee of $1,030 in 46 CFR 2.10-101 for any inspected vessel not listed in Table 2.10-101, as the annual inspection fee for towing vessels subject to Subchapter M. Furthermore, this fee will not be charged for a vessel being inspected for the initial issuance of a certificate of inspection (COI), however the fee will be charged annually starting the following year.

 

The Coast Guard released a statement that Subchapter M will affect approximately 5,509 U.S. flag towing vessels engaged in pushing, pulling, or hauling alongside, and the 1,096 companies that own or operate them. Towing vessels exempt from this rule include towing vessels inspected under Subchapter I, work boats, and recreational vessel towing vessels.

 

The estimate for total industry and net government costs is $41.5 million annualized at a 7 percent discount rate over a 10 –year period of analysis. The estimate for monetized benefits is $46.4 million annualized at a 7 percent discount rate, based on the mitigation of risks from towing vessel accidents in terms of lives lost, injuries, oil spilled, and property damage. Thus, a net benefit of $4.9 million is estimated from implementing Subchapter M.

 

The new rule became effective July 20, 2016. However, certain existing towing vessels subject to this rule will have an additional 2 years before having to comply with most of its requirements. It will be interesting to see how small operators are affected by the changes Subchapter M brings their way. Only time will tell, but it seems the rule change is in the greater interest of the industry as a whole.

 

OSHA Delays Implementation of Recording and Reporting Requirements for Occupational Injuries and Illnesses

The Occupational Safety and Health Administration (“OSHA”) previously implemented new rules whereby certain employers would be required to electronically submit injury and illness data to OSHA.  Under these new rules, employers are required to inform workers of their right to report work-related injuries and illnesses without fear of retaliation.  Employers are also mandated to implement procedures for reporting injuries and illnesses that are reasonable and which do not deter workers from reporting accidents.

 

OSHA recently announced that it will delay enforcement of the anti-retaliation provisions to the new injury and illness tracking rule to conduct additional outreach and provide further educational guidance to employers.  Enforcement of these regulations will now begin on November 1, 2016.

OWCP Gives Notice of Increased Penalties

Implementing the Federal Civil Penalties Inflation Adjustment Act Improvements Act, signed into law by President Obama on November 2, 2015, OWCP has announced adjustments to certain penalties under the Longshore and Harbor Workers Compensation Act, 33 U.S.C. §901, et seq., that will become effective August 1, 2016. The notice from the Federal Reigster can be found at https://www.federalregister.gov/articles/2016/07/01/2016-15378/department-of-labor-federal-civil-penalties-inflation-adjustment-act-catch-up-adjustments.

The penalties that will be increased are:

Failure to file first report of injury or filing a false statement or misrepresentation in first report:

Former maximum penalty: $11,000
New maximum penalty: $22,587

Failure to report termination of benefits:

Former maximum penalty: $110
New maximum penalty: $275

Discrimination against employees who claim compensation or testify in a longshore proceeding:

Former minimum/maximum penalty: $1,100/$5,500
New minimum/maximum penalty: $2,259/$11,293

Additional information can be found at:
https://www.dol.gov/sites/default/files/2016-inflation-faq.pdf
https://www.dol.gov/sites/default/files/2016-inflation-factsheet.pdf

OSHA Revises Rules and Regulations on Recording and Reporting Occupational Injuries and Illnesses

The Occupational Safety and Health Administration (“OSHA”) has implemented new rules with respect to its recording and reporting regulations under 29 CFR 1904.  The new rule requires certain employers to electronically submit injury and illness data to OSHA that these employers are already required to keep under OSHA regulations.  The new regulations also:  (1) require employers to inform employees of their right to report work-related injuries and illnesses free from retaliation; (2) clarify the existing implicit requirement that an employer’s procedure for reporting work-related injuries and illnesses must be reasonable and not deter or discourage employees from reporting; and (3) incorporate the existing statutory prohibition on retaliating against employees for reporting work-related injuries or illnesses.

 

Although existing law prohibits employers from discharging or otherwise discriminating against an employee who reports an injury, OSHA may not act unless an employee files a complaint within 30 days of the act of retaliation.  This new authority gives OSHA the ability to protect workers who have been subject to retaliation without a complaint filed by the employee.

 

These new rules also prohibit employers from using drug testing, or the threat of drug testing, as a form of retaliation against employees who report injuries or illnesses.  However, according to the United States Department of Labor’s website, the new rules do not prohibit drug testing per se.  If an employer conducts drug testing to comply with the requirements of a state or federal law or regulation, the employer’s motive would not be retaliatory and this rule would not prohibit such testing.