Why Should The Words "Substantial Alteration" Or "Major Modification" Scare Vessel Owners

Each U.S. Coast Guard (USCG) ruling that a vessel has undergone a substantial alteration or major conversion is a separate determination that can trigger a cascade of requirements leading to the vessel being re-admeasured and inspected by the USCG as if it were newly built. For any existing vessel, either of these rulings can be catastrophic. A ruling that a vessel has undergone a substantial alteration for vessels involved in international voyages could mean the applicability of Safety of Life At Sea (SOLAS) Convention where not previously required, or the use of a new date of construction by which various requirements under SOLAS are determined to apply. For more than a year, the USCG has been indicating that any change in a vessel's gross tonnage of more than one percent will constitute a substantial alteration.

The USCG has recently modified this policy, increasing it to a five percent change in the ITC gross or net tons.

The change was published as Change 2 to the USCG's Navigation and Vessel Inspection Circular (NVIC) 11-93.

It should be noted that the new five percent figure applies only to vessels constructed after July 18, 1982. Those vessels whose construction was started prior to the 1982 date will continue to have the one percent criteria applied to determine if a substantial alteration has occurred.

A vessel ruled by the USCG to have undergone a major conversion would require a new set of drawings reflecting the vessel's current as built condition and resubmitting them to the USCG for approval under the new tonnage as if it were a new vessel.

The keel laying date is used to determine the application of domestic regulations, as well as international rules. If the vessel in question is an Offshore Supply Vessel (OSV), it would mean applicability of the regulations now applicable to new OSVs, 46 CFR Subchapter L. For an older passenger vessel under 100 gross tons, it could mean being required to rebuild the vessel to today's latest regulations.

The origin of major conversion is a 1988 amendment to Title 46 of the U.S. Code. 46 USC 2101(14a) defines a major conversion as being a vessel modification that does one of the following: • Changes the dimensions or carrying capacity; •Changes the type;•Prolongs the life; or •Otherwise so changes the vessel so that it is essentially new. Rulings of substantial alteration or major conversion could cause an existing OSV to be viewed by the USCG as requiring compliance with 46 CFR Subchapter L, the new supply boat rules. These rules were once unimportant to the government and took 15 years to produce. Now it appears that they are so important they must be force fed to the offshore industry. Major conversions are a particularly big deal for liftboats, which are considered by the USCG to be OSVs.

Recently, the USCG has been indicating that modifications which have been routinely accomplished for the past five or more years would now be major conversions and require the application of Subchapter L rather than the standards under which they were originally inspected.

The USCG seems to be ignoring the precedents set since passage of the statutory amendment in 1988 until the end of 1996.

Many vessels, but particularly liftboats, were modified but not considered by the USCG to have undergone substantial alterations and/or major conversions until 1997. If they had, then current standards would have been applied in toto, and they were not. Most of these precedents were passive, i.e. the question was not formally routed through USCG Headquarters for a determination. The USCG was nonetheless deeply involved with each conversion of an inspected vessel. All conversions were done with approval of individual OCMIs and the USCG's Marine Safety Center.

Operators of other vessels should be aware that the USCG will apply these rulings to them as well. As time passes, this will become more significant. It means that with each new round of regulatory changes will come a probable round of interpretations forcing owners to modify vessels to the new standards.

Major conversions and substantial alterations are hopelessly intertwined. The former being a matter of domestic law and the latter a matter of international agreement.

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