Executive Summary

This report was requested by Congress out of concern that ongoing and anticipated growth in liquefied gas exports will stress the U.S. Coast Guard’s ability to efficiently and effectively verify the safety compliance of the foreign tank ships that load these exports for transport overseas. All foreign commercial vessels that call on U.S. ports are subject to periodic Port State Control (PSC) examinations conducted by Coast Guard marine inspectors. In addition to the PSC exams applicable to all foreign vessels visiting the United States, specialized vessels, such as tank ships, are required to satisfactorily undergo a Certificate of Compliance (COC) exam annually. As a general matter and from an international perspective, COC exams are a PSC function of the Coast Guard, but with an added layer of statutory requirements for tank ships. Tank ships that transport liquefied gas, including liquefied natural gas (LNG) and liquefied petroleum gas (LPG), are known as liquefied gas carriers (LGCs) and fall into this category. COC exams are unique to the United States and are conducted by Coast Guard marine inspectors with specialized qualifications for gas carriers. A vessel that passes a COC exam is granted a certificate that is valid for 2 years, but it must also undergo an intermediate exam 1 year into the 2-year term to maintain the certificate’s validity.

As liquefied gas exports from U.S. ports have grown rapidly in recent years,¹ Coast Guard marine inspectors can be pressed to conduct the exams as foreign LGCs arrive from overseas in advance of their assigned times for

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¹ As discussed in Chapter 2, exports of LNG increased from near zero in 2015 to 4,343 billion cubic feet in 2023.

cargo operations. Increased arrivals of LGCs could outpace the ability of the Coast Guard’s limited force of gas-qualified inspectors to conduct the required exams in a timely and thorough manner. In response, Congress proposed several options for consideration in this study, each intended to maintain the Coast Guard’s ability to implement the COC program efficiently without compromising its safety role as growth in gas exports and LGC traffic escalates. The expert committee charged with conducting the study was asked to provide a recommended course of action based on its assessment of these proposed options along with a review of other promising ideas.

To inform its review, the committee examined liquefied gas export trends and LGC traffic forecasts, the Coast Guard’s methods for implementing the COC program, and the reasons why an efficient implementation can be critical to the smooth functioning of gas export operations. In addition, the committee sought to understand how the COC program fits within the broader Coast Guard, international, and industry regimes for assessing and verifying the safe condition and operations of foreign cargo vessels generally and LGCs in particular.

The committee concluded that reforms to the COC program as it applies to LGCs are indeed needed, including reforms that will confer early positive effects on program efficiency given the fast pace of growth in gas exports. Escalating growth in liquefied gas exports and LGC arrivals is likely to increase the demand for gas carrier COC exams greatly over at least the next decade. The chronic shortage of Coast Guard marine inspectors, including inspectors trained for LGCs, looms large as a challenge for the Service in keeping pace with the increasing demand for these exams. The committee likewise concluded that reforms should be possible without jeopardizing the program’s effectiveness for safety assurance because a comprehensive, international, and collaborative regime for assuring LGC safety has emerged since the advent of the COC program during the 1970s.

With this mature safety assurance regime in place, the time is right for Congress to revisit the COC program’s requirements stipulating the frequency of exams and to give the Coast Guard greater authority to decide when and how to examine individual LGCs using indicators of risk. The following recommendations are intended to further these aims.

Recommendation 1: To promote the efficient implementation of the Certificate of Compliance (COC) examination program, while preserving and striving to enhance its effectiveness for safety assurance, Congress should modify the program’s statutory requirements for liquefied gas carriers (LGCs) by

• ending the requirement that all LGCs must undergo an annual exam to maintain the validity of the COC;
• authorizing the Coast Guard to use indicators of risk, including but not limited to a vessel’s enrollment in a quality assurance program, to determine the frequency and scope of Port State Control exams for each LGC as it calls on U.S. ports during the COC term; and
• extending the COC’s validity term to 5 years in alignment with the duration of major international certificates and the duration of the U.S. Certificate of Inspection that applies to domestic vessels, including domestic tank ships.

Recommendation 2: The Coast Guard, with direction and sufficient resources from Congress as needed, should work to enhance its current Port State Control (PSC) risk assessment and vetting capabilities to support determinations about the appropriate scope and frequency of exams for individual gas carriers that require Certificates of Compliance (COC). The enhancements should incorporate the databases used for PSC functions and leverage other sources of information from the Coast Guard, the International Maritime Organization, industry ship vetting programs, other flag states, and PSC regional regimes such as

• Quality Shipping for the 21st Century Initiative enrollment data;
• records of vessel compliance during Coast Guard COC and PSC exams (e.g., data from the Coast Guard’s Marine Information for Safety and Law Enforcement);
• records of vessel compliance during foreign PSC exams (e.g., from regional and global databases such as the Paris and Tokyo Memoranda of Understanding and the Electronic Quality Shipping Information System);
• reports of vessel incidents and casualties worldwide (e.g., the International Maritime Organization’s Global Integrated Shipping Information System);
• industry vessel inspection reports and vetting programs (e.g., class survey data, Ship Inspection Report program, Tanker Management and Self-Assessment program, and Condition Assessment Program);
• vessel repair and maintenance histories; and
• vessel particulars, including age, type, design, and equipage.

Recommendation 3: The Coast Guard should enlist the unique capabilities and technical expertise of the Liquefied Gas Carrier National Center of Expertise (LGC NCOE) to monitor the risk and safety

performance of the U.S.-trading LGC fleet continuously to inform modifications to the Coast Guard’s LGC risk assessment methods for vetting individual vessels and determining examination scope and frequencies. To establish and sustain an LGC risk assessment program that is supported by the LGC NCOE, the Coast Guard likely will need to augment the center’s staffing, analytic tools, competencies, and data capabilities with sufficient resourcing from Congress.

CONCLUDING COMMENTS

Greater reliance on risk indicators to guide the frequency and scope of COC exams for gas carriers could be viewed as an initial step in the Coast Guard’s leveraging of increasingly more sophisticated, state-of-practice methods for probabilistic risk assessment for its vessel safety assurance programs. In the case of LGCs, the Coast Guard has the advantage of a National Center of Expertise that is already in place to play a key supportive role. Indeed, the committee’s confidence in its recommendations is bolstered by knowing that the Coast Guard can tap the specialized expertise of the Liquefied Gas Carrier National Center of Expertise.

This study’s charge is focused on the COC exam for LGCs, even though other types of tank ships (e.g., chemical and oil tankers) are subject to the requirements of the COC program. The committee believes that any reforms to the COC program for LGCs should not be delayed while deciding on the treatment of other tank ships.

Finally, even in concluding that reforms focused on the marine inspection workforce do not have significant potential to boost the Coast Guard’s efficient implementation of the COC program in the near term (2 to 4 years) to medium term (5 to 9 years) to the degree that will be needed, the committee believes that efforts to enlarge or supplement this workforce will be necessary over the longer term (10 or more years) in part because of the sustained growth in LGC traffic. Conducting COC exams is a small part of the Coast Guard’s overall marine inspection responsibility. Offering advice on meeting this much broader workforce imperative, however, is beyond the scope of this study.