[Federal Register Volume 80, Number 37 (Wednesday, February 25, 2015)]
[Notices]
[Pages 10131-10137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-03852]


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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

[Docket No. USCG-2013-1084]


Policy Letters: Guidance for the Use of Liquefied Natural Gas as 
a Marine Fuel

AGENCY: Coast Guard, DHS.

ACTION: Notice of availability.

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SUMMARY: On February 7, 2014, the Coast Guard announced the 
availability, in the docket, of two draft policy letters for which it 
sought public comment. This notice announces the availability of the 
finalized Coast Guard policy letters, including explanations of changes 
made to the policy letters and enclosures based on the public comments 
received. The first policy letter provides voluntary guidance for 
liquefied natural gas (LNG) fuel transfer operations on vessels using 
natural gas as fuel in U.S. waters, and training of personnel on those 
vessels. It recommends transfer and personnel training measures that we 
believe will achieve a level of safety that is at least equivalent to 
that provided for traditional fueled vessels. It applies to vessels 
equipped to receive LNG for use as fuel, but not to vessels regulated 
as LNG carriers that utilize boil-off gas as fuel. The second policy 
letter discusses voluntary guidance and existing regulations applicable 
to vessels and waterfront facilities conducting LNG marine fuel 
transfer (bunkering) operations. The second policy letter provides 
voluntary guidance on safety, security, and risk assessment measures we 
believe will enhance safe LNG bunkering operations. Both policy letters 
are available on the public docket. They have been updated to reflect 
publication numbers of the current year. Accordingly, as discussed in 
this notice, Policy Letter 01-14 became Policy Letter 01-15 and Policy 
Letter 02-14 became Policy Letter 02-15.

FOR FURTHER INFORMATION CONTACT: If you have questions on this notice, 
call or email Ken Smith, Vessel and Facility Operating Standards 
Division (CG-OES-2), U.S. Coast Guard; telephone 202-372-1413, email 
[email protected]. If you have questions on viewing or submitting 
material to the docket, call Cheryl Collins, Program Manager, Docket 
Operations, telephone 202-366-9826.

SUPPLEMENTARY INFORMATION: 
    Viewing material in the docket: To view the policy letters and 
related material, go to http://www.regulations.gov, type the docket 
number (USCG-2013-1084) in the ``SEARCH'' box and click ``SEARCH.'' 
Click on ``Open Docket Folder'' on the line associated with this 
notice. If you do not have access to the Internet, you may view the 
docket online by visiting the Docket Management facility in Room W12-
140 on the ground floor of the Department of Transportation West 
Building, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 
a.m. and 5 p.m., Monday through Friday, except Federal holidays. We 
have an agreement with the Department of Transportation to use the 
Docket Management Facility.
    Privacy Act: Anyone can search the electronic form of comments 
received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review a 
Privacy Act, system of records notice regarding our public dockets in 
the January 17, 2008, issue of the Federal Register (73 FR 3316).

Background and Purpose

    The shipping industry is exploring conversion from oil-based fuel 
to cleaner burning natural gas, because the use of natural gas as fuel 
would substantially reduce carbon emissions, sulfur emissions, and 
nitrogen oxide emissions. This natural gas fuel would be stored on and 
transferred to vessels in the form of liquefied natural gas (LNG). 
Existing regulations cover design, equipment, operations, and training 
of personnel on vessels that carry LNG as cargo and at waterfront 
facilities that handle LNG in bulk. They also cover conventional oil 
fuel transfer operations, but do not address LNG transferred as 
fuel.\1\
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    \1\ 33 CFR parts 127, 155 and 156; 46 CFR parts 10-15, 30-39, 
and 154.
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    On February 7, 2014, the Coast Guard published two draft policy 
letters (CG-OES 01-14 and CG-OES 02-14), requesting comments, that 
recommended the transfer procedures and other operating guidelines for 
vessels and waterfront facilities providing LNG to vessels for use as 
fuel and for vessels operating in U.S. waters that will be fueled with 
natural gas that will be stored onboard as LNG. The Coast Guard has 
revised these policy letters based on comments received and now makes 
the final policy letters available to the public.
    The policy letters and voluntary guidance do not apply to vessels 
regulated as LNG carriers that utilize their boil-off gas as fuel. They 
also do not provide guidance on vessel design criteria for natural gas 
fuel systems or design of vessels providing LNG for use as fuel. If you 
have questions about the design of these systems, please contact the 
Coast Guard's Office of Design and Engineering Standards (CG-ENG, 
formerly CG-521). See FOR FURTHER INFORMATION CONTACT section for 
contact information.

Discussion

    The Coast Guard received 27 letters from the public containing a 
combined total of 185 individual comments which are discussed below. We 
discuss more fully the changes we made to the policy letters in 
response to comments.
    All letters received were generally supportive of the Coast Guard's 
effort to provide guidance on the use and transfer of LNG as a marine 
fuel and the Coast Guard appreciates this important feedback.
    We also received various comments recommending changes that cannot 
be made in a policy document because the Coast Guard would need to 
undergo rulemaking to make these recommended changes enforceable. For 
example, one submitter suggested that we provide specific details 
concerning the information that risk assessments should contain. 
Another submitter suggested that we provide common checklists for 
industry to follow when conducting bunkering operations. The Coast 
Guard will consider these comments and determine whether any further 
action is necessary. Additionally, the Coast Guard received comments on 
matters unrelated to the two policy letters discussed in this notice. 
Those comments have been reviewed but did not effect any changes to 
these policy letters. Examples of some of the comments we received 
pertaining to design were related to venting arrangements, LNG tank 
design, and gas detection.

[[Page 10132]]

    Vessel design issues relating to the technical aspects and problems 
inherent in vessel design are not discussed in Policy Letters 01-15 and 
02-15. We do not intend to include vessel design recommendations or 
equivalencies in either policy letter and thus comments requesting 
design related revisions cannot be incorporated. Information concerning 
design criteria for natural gas fuel systems can be found in CG-521 
Policy Letter 01-12, ``Equivalency Determination--Design Criteria For 
Natural Gas Fuel Systems,'' which can be viewed at the following 
location: http://www.uscg.mil/hq/cg5/cg521/docs/CG-521.PolicyLetter.01-12.pdf.
    The Coast Guard also identified certain non-substantive 
recommendations in comments. Many of these are useful and have been 
incorporated where appropriate.
    Six comments were submitted recommending that Compressed Natural 
Gas (CNG) and other alternative fuels be addressed in our policy 
letters. The Coast Guard believes it is better at this time to evaluate 
other alternative fuels on a case-by-case basis and will continue to 
gather information on how these alternative fuels are used to determine 
whether guidance is necessary and appropriate. One submitter suggested 
that it would be useful if we added language indicating how LNG differs 
from other ``conventional'' liquid hydrocarbon fuels. The Coast Guard 
agrees and added additional information in Policy Letter 01-15, 
Enclosure (1).
    Five comments were submitted on the topic of hot work. Based on the 
comments received, the Coast Guard revised its discussion on hot work 
in Policy Letter 01-15, Enclosure (1) to further clarify that hot work 
must be conducted in accordance with the existing regulations to which 
vessels are inspected. Where no regulations are specified, we recommend 
that the regulations in 46 CFR 91.50-1 be followed.
    Six comments were received on the Coast Guard's use of the term 
``in bulk.'' Three comments asked whether LNG packaged in ISO 
tanktainers, and loaded on a vessel, is not ``in bulk'' and therefore 
not subject to 33 CFR Part 127. The Coast Guard confirms that LNG in 
packaged form such as LNG in ISO tanktainers is not considered an ``in 
bulk'' shipment and the facility where those packages are loaded does 
not need to comply with 33 CFR Part 127. The Coast Guard further 
clarifies that LNG in ISO tanktainers is a hazardous material in 
packaged form and as such must be loaded from a facility that complies 
with 33 CFR Part 126. Three additional comments requested clarification 
on the Coast Guard's definition of the term ``bulk.'' In response to 
these requests, the Coast Guard clarifies in Policy Letter 01-15, 
Enclosure (1) that ``bulk'' has the meaning defined in the Marine 
Safety Manual as a material that is transported on board a vessel 
without mark or count and which is directly loaded into a hold or tank 
on a vessel without containers or wrappers.
    Six comments were received on LNG tank truck operations. Three 
spoke to matters involving the driving and transfer of LNG from tank 
trucks directly on a vessel, and one wanted to know why the Coast Guard 
doesn't discuss the activity. The Coast Guard does not discuss this 
type of operation because the operation is not considered as safe as 
other forms of transfer operations available. Driving LNG tank trucks 
aboard a vessel and conducting LNG transfer operations while aboard is 
considered to be a transfer involving a greater risk than other forms 
of LNG transfers because vessels and LNG tank trucks cannot remove 
themselves from the area in the event of an emergency. The Coast Guard 
does not wish to promote the operation in general, but remains open to 
evaluating requests on a case-by-case basis. One submitter requested to 
know if all of 33 CFR Part 127 would apply to LNG tank truck and rail 
car transfers. As discussed in Enclosure 1 of Policy Letter 02-15, 
existing regulatory standards may not be appropriate for small scale 
(e.g., LNG fuel transfer) operations and the Coast Guard Captain of the 
Port (COTP) may consider alternatives under 33 CFR 127.017.
    Five comments were received concerning ISO type tanks. One 
submitter noted that ISO tanks need to be properly approved and 
designed and are not as robust as type ``C'' tanks. The Coast Guard 
notes that LNG in portable tanks must meet specifications outlined by 
the Department of Transportation for transport and carriage of 
hazardous materials in accordance with the Hazardous Material 
Regulations contained in Title 49 of the U.S. Code of Federal 
Regulations. The Coast Guard Office of Design and Engineering (CG-ENG) 
and/or the Marine Safety Center will evaluate as part of their plan 
review and approval process the design and construction of tanks used 
to store LNG as fuel on board U.S. vessels.
    Four comments were received concerning guidance to the COTP for 
considering alternatives to the requirements in 33 CFR Part 127. Of 
those comments received, two comments also recommended Coast Guard 
Headquarters oversight so as to ensure greater consistency from port to 
port. The Coast Guard recognizes the need and desire for consistency 
from port to port and throughout the Coast Guard. To help COTPs 
understand alternatives which may be considered for the requirements in 
33 CFR Part 127, we have added a new enclosure. Enclosure (4) to Policy 
letter 02-15 has been added to provide COTPs with guidance as to 
alternatives which may be considered in lieu of the requirements of 33 
CFR Part 127 for LNG fuel facilities. Through publication of these 
policy letters and continued work within the Coast Guard, we hope to 
provide consistent application of regulations and policies for LNG 
operations throughout the country.
    Ten comments were received on the topic of conducting Risk 
Assessments. One of the submitters recommended we add more wording 
concerning identification of hazards (HAZID's), operational hazards 
(HAZOP's) and quantitaive risk assessments (QRA's). The Coast Guard 
agrees and added additional guidance and information concerning the 
need to conduct risk assessments. We have revised Enclosure 1 of Policy 
Letter 01-15 and Enclosures 1 and 2 of Policy Letter 02-15 to include 
more information on recommendations for risk assessments established by 
recognized industry organizations. Finally, one submitter stated that 
there is no clearly defined or broadly accepted standard for evaluating 
risk assessments and noted that NFPA standard 551 has some guidance 
which should be considered. For the purpose of harmonizing with the 
international community, we recommend and reference in the policy 
letters the publications of the classification society Det Norske 
Veritas--Germanischer Lloyd (DNV-GL) and the International Organization 
for Standardization (ISO) as guides which should be used to conduct 
risk assessments.
    The Coast Guard received twelve comments on training and drills. 
One submitter indicated that the Coast Guard should establish and 
specify definite training intervals in order to avoid differing 
interpretations. The Coast Guard agrees that guidance on appropriate 
intervals would be helpful and suggests as an example that the drills 
be conducted quarterly. One submitter indicated that they strongly 
support having defined training requirements and believe this will 
significantly contribute to a safer industry. The Coast Guard agrees. 
The amendments to this policy include recommended training provisions. 
This guidance identifies a two-tier system--basic and advanced training 
that

[[Page 10133]]

companies may use to structure their training. In addition, the company 
is also responsible for the vessel familiarization of the crew members 
which is ship and fuel specific and tailored to each mariner's onboard 
duties. The recommendations are consistent with the proposed 
International Maritime Organization (IMO) ``Interim guidance on 
training for seafarers on board ships using gases or other low-
flashpoint fuels'', STCW.7/Circ.23, the draft amendments to the STCW 
Convention, and the MERPAC recommendations on this issue. The Coast 
Guard has added a new Enclosure (3) to Policy Letter 01-15 which is 
based upon ``Interim guidance on training for seafarers on board ships 
using gases or other low-flashpoint fuels'', STCW.7/Circ.23. STCW.7/
Circ.23 is the final version of HTW 1/WP.3, Annex 5 that is referenced 
by the submitters. Another submitter also indicated they believed the 
Coast Guard should ensure the transitional provisions are followed as 
an interim measure until relevant STCW requirements come into force to 
allow for initial personnel training for the new technology. The Coast 
Guard agrees and is recommending interim steps as part of this policy 
letter to help ensure an orderly transition to future mandatory 
requirements. One submitter suggested that Enclosure (2) of Policy 
Letter 01-14 be deleted in its entirety because the guidelines 
contained in Resolution MSC.285(86) are expected to be superseded by 
new interim guidance recommended in HTW 1/WP.3, Annex 5 once the 
guidance is adopted by MSC. The Coast Guard agrees in part. Enclosure 2 
repeats Chapter 8 of IMO Resolution MSC.285(86), ``Interim guidelines 
on safety for natural gas-fuelled engine installations in ships,'' 
which contains both training and operational components. We've retained 
the operational components from Enclosure 2 and replaced the training 
components with the product from STCW.7/Circ.23, ``Interim guidance on 
training for seafarers on board ships using gases or other low-
flashpoint fuels'' as Enclosure (3). STCW.7/Circ.23 is the current IMO 
circular which is based upon the HTW 1/WP.3, Annex 5 that is being 
referenced by the submitters. One submitter recommended that the Coast 
Guard work towards approving training courses that meet the proposed 
requirements of part A (Annex 4) of HTW 1/WP.3 and look to begin 
issuing endorsements as quickly as possible. The Coast Guard agrees in 
principle but is unable to approve courses or issue endorsements until 
enabling regulations are in place. However, the Coast Guard is 
endeavoring to provide within CG-OES Policy Letter 01-15, interim 
guidance that can be used by maritime training providers, maritime 
companies and mariners to develop training courses and will review 
courses submitted on a voluntary basis that are designed to meet the 
training guidance outlined in Enclosure (3). The Coast Guard will issue 
a letter to maritime training providers attesting to the Coast Guard's 
review and conformance of these courses with the training recommended 
in this guidance. One submitter additionally noted that the various 
means of transfer would require various levels of qualification and 
training specific to transfers. The Coast Guard agrees that training 
guidelines would be helpful to companies involved in transfers. The 
Coast Guard has expanded the training guidelines in line with work 
currently ongoing at IMO and MERPAC recommendations. MERPAC provided 
recommendations on the content of the training, transitional 
provisions, and the proof of training. Their recommendations are 
included in the revised policy letter. As for mariners holding 
tankerman PIC (LG), tankerman-engineer (LG) and tankerman assistant 
(LG) endorsements, transition requirements have also been addressed.
    One submitter presumed that the Coast Guard will not require a 
special endorsement on a license or Merchant Mariner Document (MMD) for 
mariners serving aboard an LNG powered vessel other than the PIC, who 
must hold a proper endorsement in order to conduct the transfer 
operation. The submitter also stated that the policy letter was silent 
as to the level of competency that each company must provide for other 
shipboard personnel involved in LNG bunkering operations. In response, 
the Coast Guard has expanded the training section of the policy letter 
to include recommended training for members of the vessel's crew who 
have safety responsibilities in regard to the gases or low flashpoint 
fuels being used and that documentary evidence such as course 
completion certificates, company letters, etc., should be issued 
indicating that the holder has successfully completed the basic or 
advanced training, as appropriate--See Enclosure 3 of Policy Letter 01-
15. One submitter indicated that care should be taken to assure that 
training for personnel on board vessels using gas fuels are 
differentiated from a full tankerman (LG endorsement) as appropriate 
and that referencing the parts of 46 CFR that are for Tankerman should 
be eliminated. The Coast Guard agrees that vessel personnel on vessels 
using gases and low flashpoint fuels should be differentiated from full 
tankerman. As a result, recommendations specific to their training have 
been provided in Enclosure (3) accordingly.
    The Coast Guard received three comments concerning PICs. One 
submitter indicated that the Coast Guard needs to clarify the meaning 
of the word ``enough'' where it is stated that, ``. . . there must be 
enough Tankerman-PICs on duty . . .'' noting that the word ``enough'' 
is too vague. The Coast Guard notes the submitters concern, and 
understands that the term may be ambiguous. However, the term is 
carried forth from the existing regulations for cargo handling 
operations in 46 CFR 35.35-1 allowing flexibilty to owners, managing 
operators, masters, and PICs in determining the number of qualified 
personnel needed to safely transfer liquid cargo based on the details 
of a specific transfer operation. Enclosure 2 of Policy Letter 02-15, 
pertaining to tank vessels transfering LNG, remains unchanged in this 
regard and points to the regulations in 46 CFR 35.35-1 and 154.1831 
outlining the qualifications for personnel involved in liquid cargo 
transfer. However, aboard the receiving vessel that uses gases or low 
flashpoint fuels, the Coast Guard recommends in Enclosure (1) of Policy 
Letter 01-15, that the Master of a vessel using LNG as fuel should 
ensure that all personnel involved with LNG fuel use, transfer, or 
emergency response meet the standards of competence or advanced 
standards of competence outlined in Enclosure (3) of Policy Letter 01-
15 for the duties to which they are assigned. One submitter noted that 
both the receiving vessel and supplier of LNG have PICs but our policy 
letters did not discuss an overall PIC, and requested to know who the 
overall PIC is. The Coast Guard does not discuss designatation of an 
overall PIC, because the Coast Guard does not believe an overall PIC is 
necessary. Similar to conventional fuel transfer operations, no one 
individual is designated as having overall control and responsibility 
for the transfer. Each PIC is responsible for their part of the 
transfer operation (supplier and receiver) and each side of the 
transfer should have a means to stop the transfer in the event of an 
emergency (See 33 CFR 127.205 and 155.780). Both supplier and receiver 
must have a means for dedicated voice communication with each other in 
order to maintain oversight and control of LNG tanks and transfer lines 
(See 33 CFR 127.111 and 155.785). Given that personnel on either side 
of the transfer

[[Page 10134]]

may not be familiar or experienced with equipment on the other side, it 
would be improper to assign one entity as being in charge overall. For 
this reason, the transfer operation should be an event highly 
coordinated by both PICs. One submitter suggested the Coast Guard add 
three additional points covering PIC responsibilities--``Establishment 
of safety zone encompassing both supplier and receiving vessel,'' 
``Emergency response personnel defined and readiness,'' and 
``Monitoring of climatic conditions prior to and during transfer 
operations.'' The Coast Guard agrees in part and has modified the 
section in Enclosure (1) of Policy Letter 01-15 discussing PIC 
responsibilities to include checking for climatic conditions and 
setting safety and security areas around the LNG transfer area. 
Information related to emergency response is covered in item 2 of the 
same section.
    Two comments were submitted on portable gas detectors. Both 
expressed a belief that it was unnecessary for all personnel involved 
in an LNG transfer to have a portable gas detector and suggested that 
the policy letter align with existing regulations (See 33 CFR 127.203 
and 46 CFR 154.1345) which require at least 2 portable gas detectors in 
the marine transfer area. The Coast Guard agrees and has modified the 
policy letters to align with existing regulations.
    Eight comments were received concerning simultaneous operations. 
All but one supported the need to conduct simultaneous operations. The 
one comment submitted against simultaneous operations stated that 
simultaneous operations create a significant risk factor, dramatically 
increasing the likelihood of a casualty while fueling. The Coast Guard 
agrees that simultaneous operations may introduce increased risk, but 
believes that performance of a risk analysis and incorporation of risk 
mitigation measures can be useful toward decreasing the likelihood of a 
casualty occurring while fueling. One comment stated that simultaneous 
operations should not be treated any differently than current fueling 
operations. One comment indicated that simultaneous operations should 
only be allowed after a detailed risk analysis and dispersion analysis 
are completed. Two comments indicated the need to have a definitive 
statement that the Coast Guard recognizes the need to allow 
simultaneous operations. The Coast Guard agrees with the majority of 
commenters and has modified the discussion of simultaneous operations 
in Policy Letter 01-15, Enclosure (1) to include a more definitive 
statement concerning the need for considering simultaneous operations 
and identifies recommended industry standards which may be used by 
facility owners to conduct risk assessments. The Coast Guard does not 
wish to specify what operations may or may not be conducted 
simultaneously while LNG transfer operations are in progress and the 
COTP will evaluate each proposal on a case-by-case basis based on the 
specific hazards involved.
    Three comments were submitted on emergency shutdown devices (ESD). 
One submitter said all ESD components are to be tested no more than 24 
hours before commencement of the actual bunkering operation and that 
the tests should be documented in accordance with the bunkering 
procedure. The Coast Guard agrees. In accordance with 33 CFR 
127.315(i), and 156.120(r), the ESD system is currently required to be 
tested by the PIC prior to transfer which should be well within the 24 
hour period suggested. One submitter suggested that there could be an 
exemption for testing bunker tanker ESD equipment, provided evidence of 
regular testing is available or alternative requirements are deemed as 
an acceptable equivalence. The Coast Guard disagrees. As noted 
previously, testing of the ESD system must be conducted by the PIC 
prior to the transfer as required by existing regulations 33 CFR 
127.315(i), and 156.120(r). One submitter suggested that automatic 
activation of the ESD system due to a gas detection alarm should be 
reconsidered noting that gas detection systems have been prone to false 
alarms, particularly if located in humid areas, and repeated shutdowns 
due to erroneous alarms could create an unanticipated hazard. The Coast 
Guard is unaware of this being a widespread problem attributed to the 
performance of all gas detection systems available on the market. 
However, we have amended Policy Letter 01-15, Enclosure (1) such that 
gas detection is one of eight items that can be considered as a means 
to activate the ESD system.
    Two comments were received on checklists. One commenter indicated 
that compatibility between the LNG supplier and the vessel receiving 
LNG must be ensured in terms of LNG transfer system design, operational 
manuals, emergency response procedures and a common checklist for the 
LNG transfer operation. Another comment requested that we consider 
adopting a professional industry organization's bunker checklists into 
our policy letters. The Coast Guard agrees that the use of checklists 
is valuable. We have provided a hyperlink in our policy letters 
recommending that owners and operators involved in LNG transfer 
operations consider using checklists in order to help globally 
standardize LNG transfer operations.
    Five comments were submitted concerning hazard zones, safety 
distances, and transfer areas. One submitter questioned whether or not 
the transfer area is considered to be a hazardous area and asserted 
that no ignition sources should exist in the transfer area. The Coast 
Guard agrees and confirms that the transfer area is considered to be a 
hazardous area. Details concerning removal of ignition sources 
associated with LNG supply are addressed in Policy Letter 02-15 which 
focuses on vessels and facilities providing LNG as fuel. One submitter 
noted that we refer to transfer area and hazardous area, but believed 
that consideration on `Determination of safety and security zones' 
should be given. They also pointed out a key aspect with regard to the 
responsibility of the PIC is to establish the exchange of sufficient 
information to allow completion of a Declaration of Security (if 
required), agreement on how and between whom, communications regarding 
security that are to be made and actions to be taken in the event of a 
breach of security. Another submitter commented that there should be a 
discussion about hazardous areas and safety and security areas around 
the LNG transfer area. The Coast Guard agrees and has added a new 
paragraph discussing the items in Enclosure (1) of Policy Letter 01-15. 
One additional submitter stated that advice needs to be given regarding 
safety distances at different transfer rates, due to increasing 
``largest credible spills'' and that dispersion analysis needs to be 
included. The Coast Guard agrees with the need to provide additional 
information concerning safety and security areas and has added 
information in Policy Letter 01-15, Enclosure (1) indicating they 
should be established in accordance with industry standards established 
by the International Organization for Standardization (ISO) which is a 
recognized organization that has published information related to 
determining the size of safety and security areas around LNG transfer 
points. The Coast Guard doesn't agree with the need to require a 
declaration of security at this time, and notes that existing 
regulations concerning the declaration of inspection (33 CFR 127.317, 
and 33 CFR 156.150) require PICs to conduct a series of checks before

[[Page 10135]]

transfer operations, including ensuring that communications are 
operable between PICs involved in the transfer. The Coast Guard agrees 
that breaches in safety and security areas should be evaluated and has 
included a recommendation that a contingency plan be developed 
concerning how to handle and respond to them. One submitter stated that 
consideration should be given to include the scope for interaction of a 
vessel's hazardous areas, emergency response equipment (firefighting, 
mechanical ventilation, etc.) emergency response procedures and linked 
ESD systems. The Coast Guard agrees. These items should be considered 
as part of the compatability assessment we recommend to be conducted 
between suppliers and receivers of LNG. We also recommend that 
emergency response manuals be developed and provide a list of 
recommended information they should contain.
    Four comments were submitted concerning pipelines. One comment 
suggested that we delete references to bonding of pipelines in Policy 
Letter 01-14, Enclosure (1) in the section discussing detailed diagrams 
of the transfer area. The submitter indicated it was not clear how this 
would be shown on a diagram. The Coast Guard agrees and has removed the 
item as suggested. One submitter addressed the discussion on, ``Conduct 
before a LNG Fuel Transfer'' under Regulations and Recommendations for 
Vessels Bunkering LNG, of Enclosure (2) to CG-OES Policy Letter No. 02-
14. The submitter noted the policy letter states that before 
transferring LNG to a vessel for use of gas as fuel, the PIC for 
transferring LNG should inspect the accessible portions of the transfer 
piping system and equipment to be used during the transfer and ensure 
that any worn or inoperable parts are replaced and any leaks are 
identified. The Coast Guard agrees and has added an item recommending 
that the transfer piping be tested for leaks prior to the transfer of 
LNG. Finally, one comment was received concerning Policy Letter 02-14, 
Enclosure (2) section discussing, ``Conduct after a LNG Fuel 
Transfer.'' The submitter requested adding a requirement to ensure that 
transfer hoses, manifolds, and associated piping are purged so that 
natural gas levels are below the lower flammability level. The Coast 
Guard has amended the section to recommend these types of safety 
measures.
    We received one comment on loading flanges. The submitter indicated 
the existing regulations contain seemingly contradictory provisions 
which could complicate the siting, permitting and operation of such 
facilities. The submitter noted that Part 127 and Part 193 contain 
differing requirements in terms of the location of LNG loading flanges 
in relation to nearby bridges. The Coast Guard understands the 
concerns, but notes that any correction to these regulations would need 
to go through the Department of Transporation or USCG rulemaking 
process. Therefore, the noted discrepancies cannot be rectified through 
these policy letters.
    We received one comment concerning transfer hoses. The submitter 
referenced an early draft version of our policy letter suggesting that 
the transfer hose should include provisions to prevent electrical flow 
during connection or disconnection of the transfer hose string through 
the hose string or loading arm. The insertion of one short length of 
non-conducting hose without internal bonding in each hose string, or 
installation of an insulating flange, should be addressed. In addition, 
the submitter suggested that each transfer hose string should contain 
only one electrically discontinuous length of hose or insulating 
flange, to prevent electrostatic build-up in the hose string. The Coast 
Guard agrees and has amended Policy Letter 02-15, Enclosure (2) to 
include these recommendations.
    One comment was received on lighting whereby the submitter 
suggested that the intensity levels should not be specified. The Coast 
Guard disagrees as the lighting intensity levels specified in the 
policy letters simply mirror existing federal regulations already 
imposed for transfer operations. See 33 CFR 127.109 and 155.790.
    One comment was submitted concerning operations manuals whereby the 
submitter said there should be a provision to demonstrate that all 
relevant personnel are familiar with the operations manual. The Coast 
Guard agrees and has modified the opening paragraph discussing 
operation, emergency, and maintenance manuals in policy letter 01-15, 
Enclosure (1) indicating that the master of a vessel using LNG as fuel 
should ensure that all personnel involved with LNG fuel use, transfer, 
or emergency response are familiar with the contents of the LNG fuel 
transfer system operations manual.
    We received three comments concerning emergency procedures. One 
commenter stated that simultaneous operations imposes the need for more 
requirements, especially where passengers, public or non-qualified/
briefed personnel are in proximity of the bunkering operation. At a 
minimum, the submitter stated a need to consider emergency procedures 
for handling of passengers in the event of an incident during 
bunkering. The Coast Guard agrees and has modified Policy Letter 01-15, 
Enclosure (1) to include a provision in the emergency manual for 
removing or relocating passengers in the event of an LNG incident 
during bunkering. One commenter suggested that the LNG bunkering and 
emergency response procedures take into account the LNG bunkering 
system in place and that the results of the risk assessment studies are 
adequately managed. The Coast Guard agrees and has included reference 
to recognized standards for conducting risk assessments which are 
identified in Enclosure 1 of Policy Letter 01-15 and Enclosures 1 and 2 
of Policy Letter 02-15. The risk assessment we recommend should be 
based on specific details of the operation intended and identify 
associated risks and hazards and the means to mitigate those risks. The 
risk assessment is expected to be used as a guide to assist owners and 
operators in developing their bunkering and emergency response 
procedures. One commenter asked for guidance on what security 
requirements, if any, will be required for the vessel arriving at the 
facility to receive LNG for fuel. If applicable, the security 
requirements for vessels may be based on the requirements of 33 CFR 
part 104--Maritime Security: Vessels. Additionally, a safety or 
security zone may be established around a vessel by the COTP if it is 
determined necessary based on the results of a risk assessment.
    Six comments were received concerning the topic of LNG bunkering. 
One commenter suggested that LNG bunkering procedures should ensure 
that unauthorized and non-essential personnel cannot enter the 
bunkering area. The Coast Guard agrees and has amended Policy Letter 
01-15, Enclosure (1) to include a recommendation that procedures be 
established for setting, securing, and clearing safety and security 
areas around the LNG transfer point. Two commenters recommended that 
the operator define the operational envelope under which transfer can 
take place noting that this should be indicated as a ``permissible 
range of motion where transfer operations can proceed (to be defined 
for the operation as well as the transfer equipment)'', and be included 
in the Operations manual. The Coast Guard agrees and has amended Policy 
Letter 01-15, Enclosure (1) recommending that the operations manual 
define the operating envelope for which safe transfer operations can

[[Page 10136]]

and cannot occur. One submitter suggested that paragraph 5b. of Policy 
Letter No. 01-14 be modified to impose a mutual obligation on both the 
transferring vessel operator and the receiving vessel operator to 
ensure that both parties have the personnel and equipment to safely 
conduct LNG bunkering operations. The Coast Guard agrees and has added 
recommended information related to the declaration of inspection which 
must be signed and completed by both persons in charge of the transfer 
in accordance with 33 CFR 156.150 signifying a mutal obligation on the 
part of both parties. One commenter stated that it is critical to have 
a common set of regulatory procedures for all LNG bunkering operations 
in all ports in the United States (as exists today under 33 CFR part 
127 and elsewhere) which companies could incorporate into their 
operational plans and crew training. The Coast Guard agrees that 
standardized procedures help ensure safe transfer operations and 
believes the policy letters will help establish guidelines for 
standardized industry procedures.
    Eight comments were submitted concerning referenced standards. The 
Coast Guard received one comment pointing out that the reference to 
SIGTTO's LNG Ship to Ship Transfer Guidelines, 1st Edition, 2011, was 
outdated and should be replaced with SIGTTO's ``Ship to Ship Transfer 
Guide--Petroleum, Chemicals, & Liquefied Gases,'' 1st Edition, 2013, 
whenever referenced. The Coast Guard agrees and has modified the policy 
letters as suggested to reflect the updated industry standard. One 
comment requested referencing NFPA 59A, the ``Standard for the 
Production, Storage, and Handling of Liquefied Natural Gas'' and 
SIGTTO's ``Liquid Gas Fire Hazard Management'' in our discussion of 
firefighting equipment in Policy Letter 02-14, Enclosure (2). The Coast 
Guard agrees in part and has added a reference to the SIGTTO 
publication, but does not reference NFPA 59A because the standard 
refers to shore based LNG storage and production facilities and 
Enclosure (2) of Policy Letter 02-15 is focused on vessels providing 
LNG as fuel. We received a comment suggesting that we add a reference 
to SIGTTO 2009 publication, ``ESD Arrangements & Linked Ship/Shore 
Systems for Liquefied Gas Carriers'' in the discussion of emergency 
shutdown devices in Enclosure (1) of Policy Letter 01-14. The Coast 
Guard agrees and has modified the section as requested. Two comments 
suggested full incorporation of International Maritime Organization 
(IMO) standards and guidelines. Policy letter 01-15 outlines these 
operational items in great detail but we have added a recommendation to 
better align with IMO guidance noting that procedures for confined 
space entry should be included in the operations manual. One submitter 
provided a list of industry standards and guides which the Coast Guard 
should consider recognizing. The Coast Guard has provided a hyperlink 
to a free publication provided by the LNG Ship Fuel Advisory Group, 
titled, ``Standards and Guidelines for Natural Gas Fuelled Ship 
Projects'' which identifies many of these standards and recommends that 
owners and operators become familiar with its contents. This change can 
be found in Policy Letter 01-15, Enclosure (1), and Policy Letter 02-
15, Enclosures (1) and (2) under the section labeled Job Aides.
    One submitter suggested Policy Letter 01-14, Enclosure (1) not 
recommend installation of firefighting equipment on unmanned barges 
because potential operating scenarios of a barge may include operations 
away from the LNG facility and firefighting capabilities of a towing 
vessel during vessel-to-vessel operations could be difficult to ensure. 
The Coast Guard disagrees and believes operators should consider all 
firefighting equipment available in the vicinity of an LNG transfer 
operation whether the transfer is off port or at shore. When conducting 
a safety assessment for a particular operation, all available 
firefighting equipment and emergency response equipment should be 
considered.
    One comment suggested that due to the cryogenic properties of LNG, 
personal protective equipment should be listed with more specificity, 
including such items as leather working boots (no canvas sneakers 
should be worn during fueling or transfer operations), loose fitting 
fire resistant gloves, full face shields, and fit-for purpose multi-
layer clothing. The Coast Guard agrees and has modified the sections in 
Policy Letter 01-15, Enclosure (1) and Policy Letter 02-15, Enclosure 
(2) discussing recommended personal protective equipment.
    The Coast Guard received comments about how the policy letters will 
be enforced. One commenter raised concerns regarding the notice and 
comment process of the Administrative Procedure Act (APA), 5 U.S.C. 
551, et seq., with regard to the guidance document process and Due 
Process concerns of appealing a Coast Guard decision. The Coast Guard 
notes that guidance documents are by their nature non-binding as they 
are created to assist the industry in absence of other sources or in 
explaining existing regulatory requirements. These policy letters 
provide clarification to industry of existing requirements and how to 
apply them in this quickly changing environment. These policy letters 
do not impose legally binding requirements and a company can choose not 
to adopt the recommendations in the policy letter if it desires. There 
is no enforcement action associated with these recommendations and thus 
no appeal process is necessary. However, it is important to note that 
anyone affected by a direct decision of an OCMI/COTP can appeal that 
decision to the District Commander as provided for in 46 CFR 1.03-20 
and 33 CFR 127.015. Finally, the Coast Guard received one comment 
requesting clarification on the statement in Policy Letter 01-14 
indicating that it is the responsibility of the operator of the 
facility and/or the transferring vessel to ensure that the receiving 
vessel has the necessary personnel and equipment to safely and securely 
participate in the conduct of an LNG transfer operation. While the 
regulations in 33 CFR Part 127, Subpart B, indicate the primary 
responsibility for ensuring appropriate LNG transfer protocols are 
followed lies with the facility operator, the receiving vessel is 
required by 33 CFR 156.120 and 156.150 to identify a PIC of transfer 
operations on the vessel who will assist the PIC of shoreside transfer 
operations in conducting the preliminary transfer inspection required 
and completing the declaration of inspections required by 33 CFR 
127.317 and 156.150. The qualifications set forth at 33 CFR 127.301 and 
33 CFR 155.710 (Qualifications of person in charge) are good guidance 
for assigning a PIC. Addtionally, this policy sets forth recommended 
personnel training guidelines for those personnel who will participate 
in the transfer operation.
    We received one comment asking for guidance on the topic of roll 
over. As a result of this comment, the Coast Guard added roll over to 
the list of items in Policy Letter 01-15, Enclosure (1) for which 
emergency actions and response measures should be described in the 
emergency manual.
    One comment suggested that the word, ``if used'' be deleted in 
enclosure (1) to CG-OES Policy Letter No. 01-14, on page 2, under the 
heading, ``Operations, Emergency, and Maintenance Manuals,'' noting 
that inert gas must be used to prevent potentially explosive 
conditions. The Coast Guard agrees and has amended the policy letter as 
suggested.
    Finally, one comment was submitted requesting that the Coast Guard

[[Page 10137]]

elaborate what is meant by the boundary of a facility conducting 
bunkering. In response, the Coast Guard provides that the boundaries of 
an LNG facility handling LNG should be based on the requirements for 
design and spacing in NFPA 59A as outlined in 33 CFR Part 127 and any 
risk or fire safety assessments that may be prepared for the specific 
operation. The boundary of each facility conducting bunkering should be 
based on details of the specific bunkering operation.

Voluntary Policy

    The Coast Guard's intent in issuing these policy letters is to 
assist the industry, public, Coast Guard, and other Federal and State 
regulators in applying existing statutory and regulatory requirements. 
Following the policy and guidance recommended in these policy letters 
is voluntary. The policy letters are not a substitute for applicable 
legal requirements nor are they regulations themselves. The policy 
letters, however, do contain references to existing requlations which 
may require certain action where applicable. The Coast Guard notes 
those instances where it discusses requirements under existing 
regulations instead of policy or guidance. Nothing in the policy 
letters and guidance they contain are meant to override or subvert the 
discretion of the COTP when addressing the unique safety and security 
concerns of an LNG operation.
    This notice is issued under authority of 5 U.S.C. 552(a).

    Dated: February 19, 2015.
J.G. Lantz,
Director of Commercial Regulations and Standards, U.S. Coast Guard.
[FR Doc. 2015-03852 Filed 2-24-15; 8:45 am]
BILLING CODE 9110-04-P