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For Want of a Rule? The Evolution of a New Regulatory Environment Chad N. Fuhrmann, Business Director, Americas Maritime Assurance & Consulting Ltd. 10375 Richmond Ave, Suite 1300 Houston, Texas 77042 920 750 8844 [email protected] Evolution of a Self-Regulated Industry Through the issuance of its Notice of Proposed Rule Making (NPRM), the US Coast Guard (USCG) is set to become the first regulatory body in the world to develop regulations directly affecting the dynamic positioning sector. As the USCG and Class societies gain more experience in DP and further gain confidence in regulating it, the offshore industry can expect increased cooperation between regulatory bodies. This will foreshadow significant changes in the US offshore sector that carry global ramifications. The NPRM however is an example of the sort of precedent that has been consistently set by the industry itself over the last several decades. The DP sector had its origins in groundbreaking technology and continued to evolve in an environment of internally developed operating guidelines without strict regulatory oversight. In doing so, the industry became efficiently self-regulated and maintained an admirable safety record at the same time. The first dynamically positioned vessels, Cuss 1 and Eureka were introduced in 1961 to meet the increasing demands of deep water exploration and drilling. The DP technology these vessels pioneered was revolutionary, exploiting the opportunities created by the limitations of existing assets. Deep water operations, outside the reach of anchored assets and jack-ups, represented a new frontier for the offshore industry. This new territory also tested the capacity of existing regulations and practices. Having no real precedent, this burgeoning sector of the offshore industry had no guidance on which to rely.

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Page 1: For Want of a Rule

For Want of a Rule?The Evolution of a New Regulatory Environment

Chad N. Fuhrmann, Business Director, AmericasMaritime Assurance & Consulting Ltd.

10375 Richmond Ave, Suite 1300 Houston, Texas 77042920 750 8844

[email protected]

Evolution of a Self-Regulated Industry

Through the issuance of its Notice of Proposed Rule Making (NPRM), the US Coast Guard (USCG) is set to become the first regulatory body in the world to develop regulations directly affecting the dynamic positioning sector. As the USCG and Class societies gain more experience in DP and further gain confidence in regulating it, the offshore industry can expect increased cooperation between regulatory bodies. This will foreshadow significant changes in the US offshore sector that carry global ramifications.

The NPRM however is an example of the sort of precedent that has been consistently set by the industry itself over the last several decades. The DP sector had its origins in groundbreaking technology and continued to evolve in an environment of internally developed operating guidelines without strict regulatory oversight. In doing so, the industry became efficiently self-regulated and maintained an admirable safety record at the same time.

The first dynamically positioned vessels, Cuss 1 and Eureka were introduced in 1961 to meet the increasing demands of deep water exploration and drilling. The DP technology these vessels pioneered was revolutionary, exploiting the opportunities created by the limitations of existing assets. Deep water operations, outside the reach of anchored assets and jack-ups, represented a new frontier for the offshore industry. This new territory also tested the capacity of existing regulations and practices. Having no real precedent, this burgeoning sector of the offshore industry had no guidance on which to rely.

The following quarter century witnessed the slow but undeniable growth of DP technology and its utilization in offshore operations. Along with its increased application in the offshore industry multiple aspects of dynamic positioning came under scrutiny. Realizing the importance of the technology and the need for standardization, the DP Vessel Owner’s Association (DPVOA) was formed in 1990 to provide a common platform to discuss concerns and further industry interests via cooperative efforts. DPVOA merged with the Association of Offshore Diving Contractors (AODC) in 1995 to form the International Marine Contractors Association (IMCA). Through international and cross industry cooperation, IMCA grew to become the definitive source of DP operating guidance. IMCA continues providing up to date guidelines for the industry, with efforts by organizations such as the Marine Technology Society (MTS) complementing IMCA guidance with augmented operational procedures and decision support tools.

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It was an ongoing collaborative effort within the International Maritime Organization’s (IMO) Marine Safety Committee, however, that provided the first authoritative guidance for dynamic positioning vessels and operations. With its acceptance and publication in 1994, IMO MSC Circ. 645, “Guidelines for Vessels with Dynamic Positioning Systems” became what many still consider to be the sacred text of the DP sector. MSC Circ. 645 is in the early stages of update, the new revision has a tentative release scheduled for some time in 2016.

Class societies, such as American Bureau of Shipping (ABS) and Det Norske Veritas (DNV) addressed the design of DP vessels, beginning in the 1980s. ABS’ “Guide for the Certification of Thrusters” (1984) was followed by the more specific “Guide for Thrusters and Dynamic Positioning Systems” ten years later. In 1990, DNV followed suit in its Steel Vessel Rules, “Dynamic Positioning Systems.” Germanischer Lloyd, Lloyd’s Register, the Royal Institute of Naval Architects (RINA), and others issued specific Class rules in the years that followed.

As dynamic positioning technology and its applications progressed, so too did the expertise and competence demands on operational personnel. The first certification scheme for DP operators was created in the mid-1980s by the Nautical Institute (NI). NI continued to be the only training body with a recognized scheme until the release of the DNV (now DNV GL) training and certification system in 2012. The Offshore Vessel Dynamic Positioning Authority (OSVDPA), originating in the Gulf of Mexico in 2013, is fast becoming a third provider of personnel certification. All three programs offer similar training and certification programs but there is currently no common acceptance criteria between them.

For regulatory agencies such as the USCG however, dynamic positioning was relatively slow to register. After initially ruling against the use of dynamic positioning alongside offshore structures the USCG District 8 in 2003 issued its first Policy Letter of the year with the subject line, “Use of Dynamic Positioning (DP) by Offshore Supply Vessels (OSVs) for Oil and Hazmat Transfers.” This Policy Letter permitted the use of DP on the Outer Continental Shelf (OCS) but did not clearly define any specific parameters or standards of operation.

While sanctioning the use of DP, the Coast Guard’s Policy Letter inadvertently reinforced a loophole created by vague Nautical Institute guidance surrounding qualifications and manning. The NI had few prerequisites for personnel seeking DP Operator certification. Anyone with a desire and opportunity to earn a certificate could do so including engineers, ordinary seamen, and others – personnel lacking a nautical science background and navigational experience. In an oversight that would not be corrected for almost a decade, the USCG’s policy on dynamic positioning equated its use with moored vessels, allowing for DP systems on certain assets to be operated by personnel of dubious nautical qualifications, although appropriately certified by the Nautical Institute.

With all of this varied guidance in place and no officially recognized and overarching standard, the operational requirements that developed in the DP sector of the offshore industry were negotiated and agreed upon commercially and were maintained on a regional level. Varied and fluid criteria were determined primarily by the commercial interests of the stakeholders involved in a given project or operation. These criteria

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extended at times into other operating areas but were still based on principal agreements from the region of origin.

The adopted operating standards were generally based on IMCA and later MTS guidance. These guidelines were increasingly being recognized as the standard practices for the industry and would eventually form the basis for the NPRM. Recommended practices and operating critera that were developed and improved upon through years of experience became the standard for charterer agreements. These criteria worked their way into company and asset specific operating guidelines, demonstrating the natural evolution of operational standards – recommended practice becomes operating guidelines and those guidelines then become the contractual obligations a vessel or asset must meet.

For Want of a Rule?

The final step in the process is the adoption of standards as rules and regulations. While the process followed (and continues to follow) its expected course, the pace of its progress was significantly accelerated as a result of extenuating circumstance. It would be an additional seven years after the release of the District 8 Policy Letter, and with renewed fervor, that the USCG would again specifically address dynamic positioning. In 2009 a task statement requesting DP guidance was presented to the National Offshore Safety Advisory Committee (NOSAC), a voluntary organization consisting of representatives from various sectors of the offshore industry. NOSAC presented its recommendations to the USCG in July of 2010 citing the need for the establishment of minimum DP reliability standards. It also provided, as reference, an early draft of MTS DP guidance, which was undergoing concurrent development.

The explosion and sinking of the Transocean drilling rig, Deepwater Horizon in April of 2010 became the “event horizon” that motivated the USCG to take an accelerated approach in its regulatory efforts. Although the Deepwater Horizon’s DP capability had nothing to do with the incident, the ensuing 2011 Deepwater Horizon Report on Investigation revealed gaps in the USCG’s approach to the DP sector. Appendix I of the report (entitled, “Potential legal issues associated with vessels employing dynamic positioning systems”) highlighted several issues, including the lapse within its earlier District 8 Policy Letter noted above. This loophole was then closed with specific definitions of “On Station,” “Underway,” and “Self-Propelled” that in effect restricted the use of DP Operators that lacked nautical or engineering licenses.

Two years after the initial task statement to NOSAC, the USCG published dual notices of recommended interim voluntary guidance, the first in May 2012 addressing Mobile Offshore Drilling Units (MODUs) and the second in October 2012 focusing on logistics and construction vessels on the OCS. Finally, in November 2014, the USCG issued its NPRM subject to public review and comment. As with the voluntary guidance issued two years earlier, the NPRM followed the recommendations of NOSAC by directly referencing MTS guidance on design, operations, and personnel.

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Proposed Rules – Concepts & Deficiencies

Industry Origins

The proposed rules outlined in the NPRM are based directly on guidance generated by various industry groups. Along with references to applicable STCW requirements and publications from the American National Standards Institute (ANSI), the primary sources of guidance are IMO MSC/Circ. 645 Guidelines for Vessels with Dynamic Positioning Systems (1994) and MTS DP Operations Guidance for MODUs (March 2012), Project Construction Vessels (July 2012), and Logistics Vessels (July 2012).

By referencing industry-generated guidance, the USCG recognizes the great strides made by the offshore industry in the development of those guidelines and acknowledges the standard that has been successfully set in their application.

To reduce the likelihood of a DP incident causing loss of position and the resulting consequences, many large offshore lease-holding corporations require MODUs and other vessels using DP systems while performing Critical OCS Activities on their leases to meet a minimum DP system design standard. Additionally, they require these vessels to implement operating guidelines and employ procedures and decision support tools to ensure the DP system is operated within its design limits. They also require Dynamic Positioning Operators (DPOs) and other essential personnel to be well trained.

Despite the achievements of the largely self-regulated DP sector, incidents still occur, serving as a constant reminder that risk is still present and the consequences of an incident could be catastrophic. Further, despite its wide use in the industry, dynamic positioning is still an unknown to many stakeholders. These stakeholders take on a sometimes unreasonable level of risk without understanding the potential consequences.

In proposing DP-specific regulation based on existing industry-generated guidance, the USCG aims to capitalize on the undeniable success of the industry to date. At the same time, the goal of any regulation will be to establish a clear, auditable standard by which all stakeholders may gauge their policies, procedures, and overall operational strategies. In keeping with their own mission, the stated goal of the USCG in proposing DP regulation is to “improve the safety of people and property involved in such operations, and the protection of the environment in which they operate.” More specifically, the purpose of the NPRM is to decrease “the risk of a loss of position by a dynamically-positioned MODU or other vessel that could result in a fire, explosion, or subsea spill.”

We are proposing DP standards for MODUs and other vessels that use DP to engage in OCS activities because of the risks described above; the ongoing trend of more operators moving further offshore for mineral exploration and production; the expanded use of DP, which is driven in part by the trend of moving operations further offshore and resultant mooring challenges; the difficulty of responding to incidents further offshore, as illustrated by the 2010 DEEPWATER HORIZON incident; the need to update outdated or outmoded Coast Guard regulations to align with changes in the technology and operations that have transpired since these regulations were last updated; and the need to establish appropriate measures that consistently assess DP system capabilities and improve DP system reliability for each OCS activity. These DP standards include operation, design, training, manning, and watchkeeping components.

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The Coast Guard took great pains in referencing industry guidance throughout the NPRM. The guidance selected is comprehensive, particularly in the preamble pages of the document, which take up the bulk of the text (pp. 70944 – 70985). Some of the critical guidance, however, is missing from the “Incorporation by reference” section of the proposed rules section of the document (pp. 70985 – 70994). By specific example, IMCA M117 is referenced multiple times in the lengthy preamble to the rules but then is not referenced in the proposed rules themselves.

Risk Based Approach

Five overarching categories comprise the general theme of the proposed rules. Similar in scope to the guidance provided by MTS (addressing Design, Operations, and People), the proposed DP standards include operation, design, training, manning, and watchkeeping components. These components are then applied (overlapping as necessary) across five stages of progressive requirements that must be satisfied for an asset to perform specific DP-related activities on the OCS. These five stages consist of No Requirements, Minimum, Intermediate, Standard, and Enhanced. The requirement level to be met is dependent on the level of risk associated with the activity.

This risk-based approach underpins the whole structure of the proposed rulemaking. The five levels of requirements outlined in the NPRM are based firstly upon whether dynamic positioning is required for the task. The level is further ascertained by scrutinizing the proposed activity, the type of asset to be used, its size, and the age of the DP system.

The basic premise behind this risk-based process is that for any defined “critical activity” the higher level assets (DP Class 2 or 3) provide greater reliability. As a result, the NPRM requires that DP 2 or DP 3 assets are used for critical OCS activities exclusively. A list of included activities is provided in the NPRM along with a general definition of critical OCS activities as being “OCS Activities where maintaining station is critical because a loss of position could cause a personal injury, environmental pollution, or catastrophic damage.” While defined, the written explanation of critical activities is purposefully vague and the list noted as “non-exhaustive,” thereby allowing for further definition as operations require.

The risk based approach as defined within the NPRM may prove to be advantageous when considering the application of stated requirements gradually across the industry and the wide array of new and old assets. However, the general definition of “risk” is questionable and there are potentially dangerous assumptions throughout the proposed rules that the Class and size of an asset directly indicates its level of risk.

A significant misunderstanding of DP class is signified by the NPRM’s use of the word “reliability” when comparing DP Class 1, 2, and 3. The DP class of an asset is intended to be a direct reference to its level of redundancy and has little to do with reliability unless considered in conjunction with an asset’s Worst Case Failure Design Intent (WCFDI). Reliability is, first and foremost, derived from the diligence in operating and maintaining an asset using recommended practices and with rigorous consideration of the vessel's design.

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An example might be an unclassed, DP-capable vessel operating next to an offshore structure. If the operation is well planned and the vessel is set up with due consideration of both the environmental conditions and operated within its capabilities, most of the projects within the vessel’s intended service function can be carried out safely – perhaps more safely and reliably than a larger DP 2 vessel that is set up on position with an assumed level of redundancy that may have been defeated by complacency.

Recommended practices, while varying between DP classes, operations, etc. are generally developed to be applicable at any time a vessel is operating in DP mode regardless of other factors. If these practices are adhered to, the level of risk can be reasonably mitigated across an array of assets, operations, and capabilities.

Documentation, Analyses, & Decision Support Tools

The influence of risk mitigation practices on operational reliability receives due consideration, as well. Failure Modes and Effects Analyses (FMEAs) and subsequent FMEA Proving Trials are required, as are annual DP trials. Conducted every five years, FMEA verification testing (noted as a “Periodic Survey”) is also compulsory, though the requirements are not specifically laid out. These requirements incorporate by reference the guidance provided in IMO MSC/Circ. 645.

Additionally, various decision support tools are required as part of the asset-specific DP Operations Manual. As evidenced by the now global application of the Critical Activity Mode of Operation (CAMO) and Activity Specific Operating Guidelines (ASOG), the decision support tools generated by MTS have been adopted by stakeholders across the globe. The USCG has likewise determined that these specific tools should be developed in conjunction with the FMEA and Proving Trials and provided as part of an asset’s specific DP Operations Manual.

Personnel Qualifications & Manning Levels

Competent personnel continue to be the single most critical factor in safe and successful DP operations. Qualifications and competence of DP operational personnel are issues that have been the focus of much attention in the industry over the last few years. The USCG again addresses these topics on a platform of existing industry training structures and organizations. It is again noted that IMCA M117, though referenced in the preamble to the document, is omitted from this portion of the actual NPRM.

The Nautical Institute is an organization that has long championed the cause of dynamic positioning training and qualifications and is the only training provider that is directly referenced in the NPRM. The training regimen that is outlined within the proposed rule is general and intended to mirror the overall structure of the NI program. While mimicking the long established Nautical Institute scheme, there are additional intimations of parallel training programs such as that enacted by DNV GL and OSVDPA. In these schemes, all DP operating personnel are required to have some level of experience in the type of operation being undertaken, the type of vessel being used, the type of DP system employed, and they must also maintain all documentation as necessary in an auditable format. All recorded experience, training, certifications, and qualifications are subject to regulatory review in the event of an investigation.

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The NPRM does utilize a previously unused designation – DP Operator, Qualified (DPOQ) to signify a DP operator in training who has not yet completed the full training cycle to receive certification. In accordance with the proposed rule, the DPOQ can operate the DP system if vetted by the Master and DPO and endorsed by them in writing.

The issue of training, certification, and competence also relates to manning levels and watchstanding. As noted earlier, ambiguity led to liberal interpretation of manning requirements following the 2003 District 8 Policy Letter. That ambiguity was clarified in 2011 with distinct definitions of “underway,” “on station,” and “self-propelled” provided by the USCG. The NPRM further clarifies, stating that a vessel using DP is defined as “underway” and therefore subject to all appropriate requirements including, but not limited to manning, training, and certification as outlined within STCW.

At the same time, however, it is stated that a DPO/DPOQ must be an adequately trained STCW credentialed mariner, navigational officer, or “a rating forming part of the engineering watch, able seafarer-engine, operational-level engineer officer, second engineer, or chief engineer” (p. 70953). This is once again in keeping with NOSAC recommendations as well as stated Nautical Institute requirements (as of 2012) but seems counter to the STCW-defined requirements for navigational watches to which dynamically positioned vessels must now adhere. While these non-navigational ratings can attain DPO certifications, the opportunities for them to see regulatory-approved utilization in such capacities are difficult to determine. As such, their experience might be limited to strictly supervised operations with minimal risk unless subject to loose interpretation of the proposed rules.

Auditing System & Application

Any endeavor toward the development of regulation for the dynamic positioning sector should be approached with regard for its unique operating environment and with due respect for the level of safety it has already achieved. Dismissing the collective experience of the wide array of industry stakeholders could set a precedent of ineffectual regulation. An effect that is far worse than what has been attained through self-regulation.

The same is true for the enforcement of regulatory standards, for which the NPRM proposes an innovative but still precarious approach. Administration of the industry’s mutable operating criteria has traditionally been provided by consolidated industry groups and independent DP assurance providers. The market demand for these services has grown alongside the industry and the slowly maturing realization of the risks and consequences involved in offshore operations. Class societies, while playing a critical role in DP engineering review, design, and classification, have largely eschewed dynamic positioning operations in favor of their more traditional roles in the maritime industry.

The USCG recognizes that the resources contained within their own agency are ill equipped both in expertise as well as sheer numbers to effectively address the needs of the DP sector on its own. To complement their own efforts and provide additional expertise and support, the USCG proposes to enlist the assistance of outside agencies and companies by designating them as Dynamic Positioning System Assurance

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Organizations (DPSAOs). By delegation of authority, responsibility for the implementation of the regulation is returned to the industry organizations that previously provided expertise in the guidelines on which that regulation is founded.

These third party industry organizations, including consulting companies, already carry the necessary experience and numbers and are likewise familiar with existing industry guidance on which the proposed regulation is based. While it is clearly stated that this designation may be earned by any assurance organization that meets the listed criteria, the proposed rules appear to heavily favor existing Class societies.

The qualification requirements for DPSAOs provided in the NPRM are based closely on the Code of Federal Regulations (CFR) minimum requirements for a recognized Classification society. So similar are these requirements, that a Class society can be designated as a DP System Assurance Organization by default. Class societies most certainly should continue to play a role in DP assurance; however, like the USCG, most of these organizations currently lack the resources, and more importantly the expertise required to fill this need.

The qualifications laid out in the NPRM are applied at an organizational level and do not address individual qualifications deferring (apparently) to the internal qualification standards of the designated DPSAO. The integrity of DP assurance services is greatly affected by the presence or lack of vetting standards for individual DP surveyors, regardless of an organization’s status. Presenting any organization as a designated DPSAO without a means of gauging the qualifications of the personnel that provide its services makes unfounded assumptions about its capabilities. The NPRM provides no guidance on individual qualifications. Instead the minimum requirements for DPSAOs are provided on an organizational level.

Administration & Incident Reporting Responsibilities

This guidance regarding DPSAOs provided in the NPRM could diminish the impact of both the independent organizations and Class societies. These organizations typically provide related but distinct expertise but are tasked with a multitude of administrative responsibilities in fulfilling their duties as DPSAOs. These responsibilities are at times a departure from customary roles and potentially dilute the expertise of both Class and independent groups. As noted, Class societies have traditionally fulfilled the role of design review and approval using Class generated design requirements as the basis for judgment. DP assurance expertise, while potentially present at an individual surveyor level, may not exist at a level necessary to provide the comprehensive expertise required of DPSAOs. Third party consulting groups, meanwhile, are arguably less capable of design approval and more adept at providing expert DP assurance services.

In effect, third party consulting companies designated as DPSAOs could be given authority over design and plan approvals, duties that normally fall under the custody of Class Societies. Liability related to such responsibilities is not discussed in the text of the NPRM, leading to a designated DPSAO potentially assuming a higher level of legal responsibility than they may be accustomed to managing and, as noted above, outside the capabilities of the organization’s resources.

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Similarly, Class societies’ potential lack of both DP operational experience and qualified resources could impact the reliability of an asset and increase the level of operational risk. Tasking Class surveyors with the duties of a DP assurance provider as an integrated package dilutes the efficacy of both services and impacts the ability of qualified Class surveyors to apply their expertise.

Such is also the case with incident reporting. There is a heavy reliance on DPSAOs for DP incident investigation and reporting. DPSAOs are required to submit annual reports to the Coast Guard outlining the number, type, and details of all DP incidents experienced by their clients. As a result, it is perceived that these third parties become part of a de facto enforcement arm of the USCG. This is a difficult mechanism to accept for assurance organizations but also for other stakeholders. Independent DP assurance providers offer services free of conflicts of interest such as having physical assets, equipment, or operational software in the field. Likewise, independent organizations make efforts to have no direct ties to Class or regulatory agencies in order to provide increased objectivity based on recommended practices and guidelines – normally over and above Class or regulatory requirements. This independence serves as a clear distinction between Class, regulatory, and independent third party service providers and establishes an effective barrier against conflicts of interest.

This notwithstanding, there are responsibilities for the investigation and reporting of incidents and faults shared between owner/operators, charterers, and DP System Assurance Organizations. With increased scrutiny of human and machinery failures manufacturers and vendors are increasingly held liable for the equipment and services that they provide their clients and industry. Requiring each stakeholder to play a part in incident investigations and reporting provides additional transparency and assurances that potential failures of any variety can be prevented or that critical lessons are learned when issues do occur.

Computer software faults pose a particular dilemma that is not thoroughly addressed in the NPRM. DPSAOs (regardless of definition) are not capable of vetting and approving software packages, updates, etc. due to lack of specific knowledge of protected commercial information. Nor is this information currently released to the industry at large by software providers, even (on many occasions) in the aftermath of DP incidents. System manufacturers and software providers are the only entities with access to their own proprietary data that accurately demonstrates the robustness and fault tolerance of their system software and the due diligence in its development and analysis.

Once the vessel is fully vetted by a DPSAO, a Dynamic Positioning Verification and Acceptance Document (DPVAD) will be issued to the vessel by the DPSAO which must be renewed every five years. Previously, a classed DP vessel was surveyed and issued a Flag State Verification and Acceptance Document (FSVAD) as outlined in the IMO MSC Circ. 645 guidance. The two documents do not appear to be different in purpose although any unique function of the DPVAD in comparison to the FSVAD is not stated. Ostensibly, the two documents are the same with the change in name indicating that it can be issued by a non-flag state entity, such as a DPSAO.

The US Coast Guard’s approach to DP System Assurance Organizations and their duties creates what is arguably the most contentious portion of the proposed rulemaking and begs considerable clarification (based on the feedback reviewed on the docket’s

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website). Among the confusing aspects, it is unclear how a vessel or company’s designated DPSAO is determined. A vessel’s Class society could be assumed to be the default DPSAO. Alternatively, a contract to perform a DP related service (e.g., annual DP trials, suitability survey, or OVID/CMID) may be assumed to indicate the default DPSAO, leading to confusion regarding responsibilities for incident reports, etc.

Conclusions – Welcome to the New Normal

Advances in dynamic positioning and its increasingly varied applications drive the industry to constantly reevaluate safety and reliability, productivity, and commercial viability. Regulatory agencies have likewise been forced to reexamine their approach to DP operations in a highly specialized sector that has a far more advanced grasp of the technology’s capabilities and limitations than those obliged to regulate it.

For the last five decades since the inception of dynamic positioning technology, authority over its operational requirements has been maintained on a regional level, with varied and fluid criteria determined primarily by the commercial interests of the stakeholders involved. Charterers and owner/operators in each region have enjoyed a certain level of autonomy within their own territorial waters, extending at times into other operating areas but based on agreements from the region of origin.

It is in this environment of self-regulation that recent US Coast Guard efforts foreshadow a potential sea change, promising – or by some perspectives, threatening – to transform the industry with the first set of regulatory standards applied specifically to DP. These efforts though unprecedented are certainly not unexpected. Compelled by the proliferation of DP technology and motivated by tragedy and recognized risk, regulatory agencies such as the USCG feel obligated to set a regional precedent in the dynamic positioning sector. As a result, the industry generated guidelines that have gradually developed into the governing criteria for offshore operations are now employed as regulatory standards.

Like the guidance and recommended practices that preceded it, this proposed regulation will transit across oceans and regions along with vessels, companies, and charterers as the industry continues its trend toward homogeneity. The collective reaction of the US offshore industry and regional market to this seminal moment will set the precedent for the global offshore regulation that will follow.

By design of the rulemaking process, US stakeholders have already had a significant impact on the development of the proposed rules. Beginning with the task statement presented to the National Offshore and Safety Advisory Committee in 2009, industry stakeholders have been instrumental in formulating a cohesive response and in the concurrent development of the industry guidelines on which the proposed rulemaking is based. While the cumulative effect of the industry’s response on the final regulation can only be speculated, the impact and importance of the industry’s efforts leading up to the determination cannot be overstated.

Neither can the significance of the international offshore industry response be exaggerated. How the global industry prepares for similar changes to its own regulatory environment can determine the type of impact those changes will have on regional

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companies and their assets, operations, and operational personnel, as well as the industry at large. As the proposed rules become regulation on the US Outer Continental Shelf, the response of the international DP sector will define the next waypoints in the evolution of the greater offshore industry.

The USCG’s NPRM signifies a regional paradigm shift with international implications. By taking a proactive approach and establishing an early, open discourse across the global dynamic positioning sector, stakeholders can assist the industry in evolving and improving by affecting the development of judicious rules and regulations.

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REFERENCES

United States Coast Guard. 2013 Meeting Minutes with Industry: http://www.uscg.mil/hq/cg5/cg521/docs/2013.01%20OCS%20Minutes.pdf.

United States Coast Guard. Deepwater Horizon, Report of Investigation. www.brymar-consulting.com/wp-content/.../Misc/JIT_Report_Vol_I.pdf 22 April 2011.

United States Coast Guard. DP NPRM FAQs: http://www.uscg.mil/hq/cg5/cg521/docs/DP_FAQs.pdf.

United States Coast Guard. US Coast Guard Outer Continental Shelf Center of Expertise DP Links, http://www.uscg.mil/hq/cg5/ocsncoe/DPguidance.asp.

United States Coast Guard. 79 FR USCG Design and Engineering Standards (CG-ENG) Web Site: http://www.uscg.mil/hq/cg5/cg521/.

Various, Responses to NPRM. http://www.regulations.gov, Docket number USCG–2014–0063.