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Suggested Citation:"Executive Summary." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"Executive Summary." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"Executive Summary." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"Executive Summary." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"Executive Summary." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"Executive Summary." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"Executive Summary." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"Executive Summary." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"Executive Summary." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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Suggested Citation:"Executive Summary." National Academies of Sciences, Engineering, and Medicine. 2021. Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program. Washington, DC: The National Academies Press. doi: 10.17226/26450.
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1 Executive Summary On October 1, 2015, the U.S. flag cargo ship El Faro sank during a hur- ricane en route to Puerto Rico from Florida, leading to the death of all 33 crew members. Following investigations, the National Transportation Safety Board and the U.S. Coast Guard’s (Coast Guard’s) Marine Investiga- tion Board identified a number of safety issues contributing to the tragedy, most significantly the unsafe actions and decisions made by the ship’s master and owner before and during the voyage. The investigations also revealed that in the months prior to the El Faro’s sinking, verification of the vessel’s compliance with applicable safety regulations was lacking, in part, due to vague or misunderstood policies and procedures by the Coast Guard and American Bureau of Shipping (ABS). ABS was the classification society authorized to verify the El Faro’s compliance with safety regulations on behalf of the Coast Guard. One of ABS’s responsibilities was to certify that the El Faro’s owner had an effective safety management system (SMS), but post-accident audits of the company’s SMS revealed deficiencies sufficient to warrant the certificate’s suspension. Investigators also found evidence of substandard conditions among other vessels similar to El Faro that had been inspected by ABS on behalf of the Coast Guard. Classification societies are nongovernmental organizations that estab- lish and apply technical standards for ships. Certification by a classification society is usually required for a ship owner to obtain marine insurance. The certification confirms that the ship’s design and construction meet the society’s standards and that the ship remains in compliance with the stan- dards as verified by surveys conducted by the society. In addition, classifica- tion societies are often authorized by maritime administrations to perform

2 STRENGTHENING U.S. COAST GUARD OVERSIGHT AND SUPPORT OF ROs surveys of ships and audits of the management systems of ship owners to verify compliance with the safety requirements and other demands of international conventions. If the classification society is one of seven rec- ognized organizations (ROs) currently authorized by the Coast Guard, its verifications and certificates of compliance with international requirements, including those pertaining to SMS, can be accepted by the Coast Guard as evidence of compliance with safety, security, and environmental standards. The Coast Guard uses this information to evaluate whether or not the ship merits a Certificate of Inspection (COI) and it is fit for its intended route and service. As an RO, ABS was authorized to conduct the El Faro’s SMS review and certification on behalf of the Coast Guard. Moreover, because the El Faro was enrolled in the Coast Guard’s Alternate Compliance Program (ACP), ABS was also authorized to act on the Coast Guard’s behalf in verify ing its compliance with many other applicable requirements. ABS along with three other classification societies are authorized ROs to partici- pate in this program. When conducting inspections of ACP-enrolled vessels, the ROs consult a “U.S. Supplement” to verify that the vessel complies with all applicable U.S. requirements that are not otherwise satisfied by interna- tional or classification society rules. The El Faro’s compliance shortcomings prompted investigators to take a closer look at the Coast Guard’s oversight of the delegations to ROs, and particularly those in the ACP. Subsequent findings of substandard vessels in the ACP fleet caused investigators to question the vigilance of RO sur- veyors in conducting inspections and the effectiveness of RO auditors in verifying SMS compliance. They also pointed to the need for more vigilant Coast Guard monitoring and oversight of ROs, including more thorough and better targeted vessel examinations, routine tracking of vessel compli- ance and safety levels, and more defined procedures for addressing poor performance. Inconsistent communication and coordination among ROs surveyors and Coast Guard inspectors were identified as possible factors contributing to these issues and exacerbated by incomplete and difficult- to-access records of vessel condition and compliance histories in the Coast Guard’s Marine Information for Safety and Law Enforcement (MISLE) data system. In finding that RO performance was not being monitored and lapses not being investigated and resolved, investigators pointed to the Coast Guard’s failure to establish an organizational unit with direct responsibility for oversight of ROs and the ACP. In response to these findings, the Coast Guard has acted promptly and deliberately to create a new framework for RO oversight. Its foundation is a new organizational unit within Coast Guard headquarters’ Office of Commercial Vessel Compliance, the Flag State Control Division (CVC-4), dedicated to overseeing ROs and other third-party organizations having

EXECUTIVE SUMMARY 3 functions delegated by the Coast Guard. CVC-4 has issued new poli- cies, procedures, and guidance for marine inspectors in conducting vessel oversight examinations and making observations relevant to assessing the quality of RO surveys and audits. With this organizational and procedural framework in place, the Coast Guard has taken additional steps to support the compliance verification work of marine inspectors and RO surveyors and auditors. These steps—the effectiveness of which can be difficult judge at this early juncture—include the development and introduction of some additional training courses for inspectors, the creation of a single and more simplified U.S. Supplement, and the addition of documentation in MISLE of safety and quality management audits of vessel owners, their vessels, and their ROs. Significantly, the Coast Guard is hiring and training a new workforce of third-party organization coordinators whose responsibilities will include maintaining liaison with ROs and investigating and seeking to resolve any shortcomings in RO performance. In October 2018, Congress passed the Hamm Alert Maritime Safety Act (as part of the Save Our Seas Act), formally mandating that the Coast Guard carry out many of these oversight reforms that it was planning and starting to implement. The act also called for an independent assessment of their effectiveness and impact, which led the Coast Guard to commission this study by an expert committee. Having reviewed the Coast Guard’s re- sponse, the committee’s overarching conclusion is that the Coast Guard has put in place and proceeded to implement a well-conceived organizational and procedural framework for supporting and overseeing ROs and the ACP. While it is too early to assess fully the effectiveness of this new frame- work, important supportive elements that remain missing or incomplete suggest a potential impact that remains unfulfilled. In particular, to ensure an effective, longer-term implementation of this framework, the commit- tee believes that the Coast Guard will need to make more pronounced and sustained progress in improving vessel records and data systems to support inspections and other compliance verification activity and to enable the development of more relevant metrics and risk-based methods for moni- toring and assessing compliance and RO performance. It will also need to strengthen the relevant skills and competencies of its field inspectors and other marine safety personnel who support and oversee them, while also improving their ability to coordinate and communicate with ROs. The committee’s recommendations are summarized next. Underlying the committee’s advice is the notion that the Coast Guard and ROs are in a safety partnership, the effective performance of which requires positive support in addition to vigilant monitoring and oversight. Qualities key to that support are embedded in the recommendations, including an emphasis on cooperation, communication, transparency, and continuous learning.

4 STRENGTHENING U.S. COAST GUARD OVERSIGHT AND SUPPORT OF ROs CONCLUSIONS AND RECOMMENDATIONS Building a Database for Vessel Compliance Verification and Recognized Organization Oversight The Coast Guard’s progress in instituting a more data-driven and risk-based approach to overseeing ROs has not kept pace with the strides it has made in establishing an organizational and procedural oversight framework. The MISLE data system is poorly suited to supporting vessel compliance veri- fications by marine inspectors and RO surveyors as well as by the Coast Guard for monitoring and assessing the performance of ROs. The data system’s intended uses are too varied, its design and structure are too out- moded, its records are too incomplete and unreliable, and its access is too restricted. Plans to upgrade or replace the data system are in their infancy and cannot be relied on as either near- or medium-term solutions to these problems. Even if a replacement system is created, it is uncertain whether it will permit the needed integration of RO data or provide external access due to data protection and security requirements. In the near term, the Coast Guard has little choice but to use the informa tion in MISLE along with any other relevant data it can obtain from ROs and other sources (such as foreign port-state control inspection data and quality management information from vessel owners) for the purposes of regulatory compliance verification and RO oversight. However, looking a little further out—over a period of about 5 years—there is greater oppor- tunity for the Coast Guard to collaborate with ROs to create a database external to MISLE that is focused on the modest-size fleet of vessels that use ROs, including the fewer than 500 ships in the ACP fleet and the fewer than 50 ships in the Maritime Security Program Select fleet. Although a more comprehensive and modern data system to fully replace MISLE may not emerge for many years, its eventual introduction holds the greatest promise to support the Coast Guard’s interest in more data-driven and risk-based approaches for vessel compliance verification and RO oversight. Although characterized as key indicators of RO performance (or KPIs), the statistics and metrics that are now publicly reported by the Coast Guard have limited relevance to RO performance or regulatory compliance by the ACP fleet. More relevant and focused KPIs are required and may need to be developed with the assistance of, and information from, ROs and vessel owners. In considering the Coast Guard’s use of risk-based approaches for monitoring and assessing RO performance, the Coast Guard stratifies vessels in the ACP fleet on the basis of risk factors to inform the frequency and scope of oversight examinations; however, the need for manual data gathering and input has hindered the timely development and regular use of more sophisticated, risk-based models.

EXECUTIVE SUMMARY 5 Absent better data systems and tools for data extraction and analysis, the Coast Guard’s intentions to be more risk based and data driven are not likely to be fulfilled. The following four recommendations pertaining to data, metrics, and risk-based tools are offered with the needs, constraints, and time dimen- sions identified above: Recommendation 1: In the near term, the Coast Guard should collaborate with ROs and vessel owners to develop and execute a plan to share and validate information for the purpose of ensuring that records derived from MISLE of vessels and vessel owners who use RO services are complete, accurate, and current with respect to compliance history. The augmented records should be scrubbed of sensitive information and extracted from MISLE so they can be made available to RO surveyors and auditors in addi tion to marine inspectors. The data set should also be structured to meet CVC-4’s need for calculat- ing specified KPIs, performing risk-based profiling of vessels and ROs, and enabling other data analyses for oversight purposes. Additional data set filtering could enable access and use by vessel owners and the public. Recommendation 2: While collaborating with ROs and vessel owners on means of supplementing, validating, and enabling greater access to relevant MISLE records, the Coast Guard and ROs should work together on the development of KPIs that are most relevant to monitoring and overseeing the performance of ROs. Although persistent shortcomings in MISLE-derived data will undoubtedly limit the quality of the indicators that can be developed, such collabora- tion will offer insight into the kinds of data and data system capabilities that will be needed for the design and functioning of a new stand-alone oversight database. Recommendation 3: Congress should resource the development and imple- mentation of a stand-alone data system, fully external to MISLE, that is exclusive to the purpose of supporting compliance verification and RO performance and oversight. ROs should be engaged during the database’s planning—such as through a Coast Guard and RO database/information technology working group—to ensure that the database’s design, elements, and functional capabilities align with the needs of Coast Guard inspectors, other marine safety personnel, and RO surveyors and auditors. To the extent feasible, the data system should have access features that en- able the Coast Guard, ROs, and vessel companies to push or pull data to or from their respective data systems. Because the data set recommended above—consisting of mostly MISLE augmentations—is a short-term fix, it

6 STRENGTHENING U.S. COAST GUARD OVERSIGHT AND SUPPORT OF ROs will be important for efforts to get under way to introduce this more func- tional, stand-alone data system as soon as possible. Recommendation 4: Although it may take many years to bring about, the replacement of MISLE with a new, modernized data system should be a high priority for the Coast Guard to more fully support the work of marine inspectors and ROs and to monitor and oversee their performance. Whether the new system replaces, incorporates, or feeds into and from the external data system recommended above, it will be important that the compliance verification, performance monitoring, and analytic needs of marine inspectors, ROs, TPO coordinators, and CVC-4 are met. Public access, with appropriate protections and filters, should be another specified feature to enable external analysis and ensure more transparency about vessel compliance and RO performance levels. Strengthening and Supporting the Work of Marine Inspectors The El Faro investigations—and subsequent inspections of similar ships after the casualty—raised concerns about the guidance and resources avail- able to Coast Guard inspectors to conduct high-quality inspections and examinations of vessels in the ACP that use ROs, about shortcomings in inspector competencies and experience levels for this purpose, and about the lack of marine safety personnel charged with, and capable of, oversee- ing ACP compliance and RO performance generally. The Coast Guard has taken important steps to address these concerns, including the introduction of new work instructions and tools (e.g., a mobile app for inspectors), the planning and introduction of some additional training courses with rel- evance to ACP vessels and third-party oversight, and the creation of CVC-4 and third-party organization coordinators. Nevertheless, needs and oppor- tunities remain for the Coast Guard to further strengthen the performance and capabilities of its marine safety workforce by: • Actively monitoring the competencies that marine safety personnel have and require to conduct vessel inspections and oversight exami- nations in order to make determinations about where improvements are needed; • Verifying that Coast Guard guidance on the career progression paths for Operations Ashore Prevention Officers can be pursued without undue impediment, is indeed being pursued by sufficient numbers of junior officers, and aligns with the goal of ensuring that mastery of marine inspection specialties provides sufficient profile and oppor- tunities for assignments that can lead to command and leadership positions such as Officer in Charge, Marine Inspections (OCMI); and

EXECUTIVE SUMMARY 7 • Ensuring that all marine inspectors, and particularly senior inspec- tors, have sufficient knowledge of SMS principles and purposes to make observations about whether vessel and company SMS plans are being followed. SMS training for senior inspectors, including training on the process and principles of SMS audits, would cre- ate a valuable skill set that could make this career path even more desirable. Based on these findings, the committee recommends the following: Recommendation 5: The Coast Guard should consider establishing a stan- dardization team, modeled after similar teams in other Coast Guard do- mains, that visits marine inspection field units on a regular basis to assess inspector competencies, the consistency in following work instructions and protocols, and the quality of inspections. The team, whose role should also be to provide real-time, constructive feed- back to inspectors and to inform Coast Guard inspector training programs, could be created through augmentation of the Coast Guard’s traveling staff of senior marine inspectors. Recommendation 6: The Coast Guard should review its current career path progression guidance for Operations Ashore Prevention Officers, which was introduced before the El Faro investigations, with an eye to whether the guidance is being followed by sufficient numbers of junior officers, provides opportunities to master the marine inspection specialties, and ensures that mastery of those specialties provides ample career advancement opportunities in the prevention field, including relevant leadership positions such as OCMI. While the Coast Guard has acknowledged the importance of ensuring that OCMIs have marine inspection expertise, it is an imperative for assign- ments in the country’s largest commercial and feeder ports. To meet this imperative, the Coast Guard must make sure that marine inspection career pathways exist, are attractive, and are being pursued by officers qualified for these assignments. Recommendation 7: The Coast Guard should ensure that all marine in- spectors have sufficient understanding of the purpose and components of an SMS and how adherence to it should be evident during an inspec- tion. Senior inspectors should have a strong understanding of how an RO conducts an SMS compliance audit to allow them to know when deficien- cies and nonconformities observed during vessel inspections and oversight exami nations may be indicative of substandard RO performance and war- rant referral to the Flag State Control Division (CVC-4) and third-party organization coordinators.

8 STRENGTHENING U.S. COAST GUARD OVERSIGHT AND SUPPORT OF ROs Because the SMS audit function is a critically important role of the RO, the Coast Guard’s oversight of it must be robust and comprehensive, starting with ensuring that field inspectors have sufficient awareness and under- standing to observe compliance firsthand. Cooperation, Communications, Transparency, and Continuous Learning When the ACP was created more than 20 years ago, among its key selling points was that it would relieve the Coast Guard of redundant inspection responsibilities and leverage a well-trained and experienced RO work- force to bring about even higher levels of vessel compliance and safety performance. In turn, the Coast Guard could concentrate its inspection resources in other higher-risk areas to provide additional safety dividends. The strengthening of that partnership notion, in the committee’s view, should be the foremost aim of the oversight program and inculcate all efforts to support and improve it. The El Faro investigations revealed how the Coast Guard had failed to maintain its end of a partnership arrangement with ROs. The Coast Guard has taken many steps since these revelations to strengthen its support for ROs along with its monitoring and oversight. The single U.S. Supplement, reestablishment of liaison arrangements with ROs, and CVC-4’s conven- ing of annual conferences with ROs are notable examples of these steps. At the same time, the committee could find only some evidence of Coast Guard progress in ensuring that marine inspectors and RO surveyors can, and do, readily communicate and share data on their own inspections and on the compliance histories of the vessels. The mostly one-way access to complete vessel records, whereby RO surveyors cannot access all relevant Coast Guard data, is a longstanding problem that has not been rectified. The Coast Guard’s efforts to develop and make use of key indicators of RO performance have been hampered by data inadequacies stemming in part from a lack of sharing and accessibility of certain sensitive infor- mation and made worse by data systems that do not integrate. Where it has sought to develop vessel compliance and RO performance metrics, the Coast Guard has chosen to report only some of them publicly for reasons that are not clear. Efforts to develop risk-informed methods for designing and focusing compliance verification and RO oversight activities have proven to be so labor intensive and lacking in implementation fidelity that their utility has been limited. Until the improvements to data systems are made, through the kinds of actions recommended in this report, these problems are likely to persist. Yet, when they are resolved, it will be im- portant for the Coast Guard to make its KPIs and risk-informed methods public. Transparency is vital to harnessing the capacity of all parties, including external parties, to drive continual improvements in the metrics

EXECUTIVE SUMMARY 9 and tools needed to ensure that resources are devoted to mitigating the highest consequence risks. Having several years of experience with the implementation of its new organizational and procedural framework for RO oversight, the Coast Guard can now take stock in whether its elements are designed and being implemented in a manner that reinforces a safety partnership. For instance, it can reflect on whether its reviews of RO survey and audit performance, including its own audits of ROs, are shedding light on the effectiveness of its own efforts to support high-quality RO performance, thereby reinforc- ing a culture of learning and continual improvement by not only the ROs and vessel operators, but also the Coast Guard itself. Indeed, all monitoring and oversight activities will present opportunities for the Coast Guard to be more introspective and comprehensive in thinking about where improve- ments are needed and how they can be made. With this interest in mind, the committee recommends the following: Recommendation 8: With the intent of fostering continuous improvement and greater transparency, the Coast Guard should build on its current practice of conferring with ROs, shipping companies, and other flag-state regimes. Regular, periodic meetings with these groups should be arranged to communicate ideas and concerns and, where practical, share approaches to KPI assessment, flag-state inspections, and RO oversight. Ultimate responsibility for safety rests with the vessel owner and cannot be delegated. However, high-quality inspections and audits are critical to achieve desired safety outcomes. The committee’s overall impression is that the Coast Guard’s commitment to meeting these needs has been commend- able, producing a well-planned and promptly executed response. For this commitment to be sustained and the response made more comprehensive and complete, the Coast Guard will need to leverage other parts of its en- terprise, from human resources to IT. It will also need to partner and col- laborate in the many and varied ways recommended above. Doing so will undoubtedly require a devotion of resources that the study committee is not in a position to estimate, but that Coast Guard leadership and Congress will need to take into account.

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Partly in response to a 2015 cargo ship sinking, the U.S. Coast Guard has put in place and proceeded to implement a well-conceived organizational and procedural framework for supporting and overseeing “recognized organizations,” particularly those in the Coast Guard’s Alternative Compliance Program.

TRB Special Report 343: Strengthening U.S. Coast Guard Oversight and Support of Recognized Organizations: The Case of the Alternative Compliance Program recommends a series of steps the Coast Guard should take to strengthen its support for and monitoring of third-party organizations that conduct vessel inspections on its behalf. The study committee concluded that Coast Guard has made significant strides in introducing a comprehensive oversight framework, but that its long-term effectiveness will depend on more pronounced and sustained progress in improving data systems and communications and coordination among Coast Guard and third-party inspection personnel.

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