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28–282 PDF 2006

IMPLEMENTATION OF THE OIL

POLLUTION ACT

(109–67)

HEARING

BEFORE THE

SUBCOMMITTEE ON

COAST GUARD AND MARITIME TRANSPORTATION

OF THE

COMMITTEE ON

TRANSPORTATION AND

INFRASTRUCTURE

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

APRIL 27, 2006

Printed for the use of the

Committee on Transportation and Infrastructure

(
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

DON YOUNG, Alaska, Chairman

THOMAS E. PETRI, Wisconsin, Vice-Chair

SHERWOOD L. BOEHLERT, New York

HOWARD COBLE, North Carolina

JOHN J. DUNCAN, JR., Tennessee

WAYNE T. GILCHREST, Maryland

JOHN L. MICA, Florida

PETER HOEKSTRA, Michigan

VERNON J. EHLERS, Michigan

SPENCER BACHUS, Alabama

STEVEN C. LATOURETTE, Ohio

SUE W. KELLY, New York

RICHARD H. BAKER, Louisiana

ROBERT W. NEY, Ohio

FRANK A. LOBIONDO, New Jersey

JERRY MORAN, Kansas

GARY G. MILLER, California

ROBIN HAYES, North Carolina

ROB SIMMONS, Connecticut

HENRY E. BROWN, JR., South Carolina

TIMOTHY V. JOHNSON, Illinois

TODD RUSSELL PLATTS, Pennsylvania

SAM GRAVES, Missouri

MARK R. KENNEDY, Minnesota

BILL SHUSTER, Pennsylvania

JOHN BOOZMAN, Arkansas

JIM GERLACH, Pennsylvania

MARIO DIAZ-BALART, Florida

JON C. PORTER, Nevada

TOM OSBORNE, Nebraska

KENNY MARCHANT, Texas

MICHAEL E. SODREL, Indiana

CHARLES W. DENT, Pennsylvania

TED POE, Texas

DAVID G. REICHERT, Washington

CONNIE MACK, Florida

JOHN R. ‘RANDY’ KUHL, JR., New York

LUIS G. FORTUN ̃ O, Puerto Rico

LYNN A. WESTMORELAND, Georgia

CHARLES W. BOUSTANY, JR., Louisiana

JEAN SCHMIDT, Ohio

JAMES L. OBERSTAR, Minnesota

NICK J. RAHALL, II, West Virginia

PETER A. DEFAZIO, Oregon

JERRY F. COSTELLO, Illinois

ELEANOR HOLMES NORTON, District of

Columbia

JERROLD NADLER, New York

CORRINE BROWN, Florida

BOB FILNER, California

EDDIE BERNICE JOHNSON, Texas

GENE TAYLOR, Mississippi

JUANITA MILLENDER-MCDONALD,

California

ELIJAH E. CUMMINGS, Maryland

EARL BLUMENAUER, Oregon

ELLEN O. TAUSCHER, California

BILL PASCRELL, JR., New Jersey

LEONARD L. BOSWELL, Iowa

TIM HOLDEN, Pennsylvania

BRIAN BAIRD, Washington

SHELLEY BERKLEY, Nevada

JIM MATHESON, Utah

MICHAEL M. HONDA, California

RICK LARSEN, Washington

MICHAEL E. CAPUANO, Massachusetts

ANTHONY D. WEINER, New York

JULIA CARSON, Indiana

TIMOTHY H. BISHOP, New York

MICHAEL H. MICHAUD, Maine

LINCOLN DAVIS, Tennessee

BEN CHANDLER, Kentucky

BRIAN HIGGINS, New York

RUSS CARNAHAN, Missouri

ALLYSON Y. SCHWARTZ, Pennsylvania

JOHN T. SALAZAR, Colorado

JOHN BARROW, Georgia

(II)
SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION

FRANK A. LOBIONDO, New Jersey, Chairman

HOWARD COBLE, North Carolina

WAYNE T. GILCHREST, Maryland

PETER HOEKSTRA, Michigan

ROB SIMMONS, Connecticut

MARIO DIAZ-BALART, Florida

DAVID G. REICHERT, Washington,ViceChair

CONNIE MACK, Florida

LUIS G. FORTUN ̃ O, Puerto Rico

CHARLES W. BOUSTANY, JR., Louisiana

DON YOUNG, Alaska

(Ex Officio)

BOB FILNER, California, Ranking Democrat

CORRINE BROWN, Florida

GENE TAYLOR, Mississippi

JUANITA MILLENDER-MCDONALD,

California

MICHAEL M. HONDA, California

ANTHONY D. WEINER, New York

BRIAN HIGGINS, New York

BRIAN BAIRD, Washington

JAMES L. OBERSTAR, Minnesota

(Ex Officio)

(III)

(V)

CONTENTS

TESTIMONY

Page

Gilmour, Rear Admiral Thomas, Assistant Commandant for Prevention, U.S.

Coast Guard, Department of Homeland Security .............................................. 3

Kennedy, David, Director, Office of Response and Restoration, National Oceanic and Atmospheric Administration, U.S. Department of Commerce .......... 3

Lane, Jan, Director, National Pollution Funds Center ........................................ 3

PREPARED STATEMENTS SUBMITTED BY WITNESSES

Gilmour, Rear Admiral Thomas ............................................................................. 21

Kennedy, David ........................................................................................................ 29

Lane, Jan .................................................................................................................. 21

SUBMISSION FOR THE RECORD

Lane, Jan, Director, National Pollution Funds Center, response to a question

from Rep. Coble .................................................................................................... 10

(1)

IMPLEMENTATION OF THE OIL POLLUTION

ACT

Thursday, April 27, 2006

HOUSE OF REPRESENTATIVES, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, SUBCOMMITTEE ON

COAST GUARD AND MARITIME TRANSPORTATION, WASHINGTON, D.C.

The committee met, pursuant to call, at 10:00 a.m. in room 2167,

Rayburn House Office Building, Hon. Frank A. LoBiondo [chairman

of the committee] presiding.

Mr. LOBIONDO. Good morning. The Subcommittee will come to

order.

The Coast Guard and Maritime Transportation Subcommittee is

meeting this morning to oversee oil spill prevention and response

programs implemented under the Oil Pollution Act of 1990 and to

review the level of funding in the Oil Spill Liability Trust Fund.

Over the past two years, we have been reminded time and again

the importance of the Coast Guard’s oil spill prevention and response responsibilities. As recently as two days ago, the Coast

Guard responded to a seven mile long oil slick in the Delaware

Bay, which is still under investigation. This spill, coupled with the

recent hurricanes in the Gulf Coast region, and last year’s large oil

spills in the Delaware River and off the coast of Alaska have resulted in the release of millions of gallons of crude oil into U.S. waters. I commend the Coast Guard and its many Federal, State and

local partners for the response to these incidents.

In response to these spills, Congress has taken several steps to

provide the Coast Guard with additional authorities to improve its

capabilities to prevent and response to oil spills. The House has

passed H.R. 1412, the Delaware River Protection Act, and a conference report on H.R. 889, the Coast Guard and Maritime Transportation Act of 2006, has adopted the provisions included in H.R.

1412.

The conference report includes a provision that will adjust oil

spill liability limits for vessels to reflect the changes in the inflation since the passage of the Oil Pollution Act of 1990. This provision will encourage the use of double hulled vessels by more than

doubling liability limits on single hulled vessels, making them more

expensive to operate than the safer double hulled alternative. The

provision will also restore a great share of the responsibility for

costs associated with the spills to the vessel owner and will enhance the solvency of the Oil Spill Liability Trust Fund.

I, however, am very concerned about the effect recent events may

have on the long term health of the fund. The Coast Guard’s inves-
2

tigation into the Athos I oil spill has found no evidence of violations

by the river pilot or of the vessel, nor can we identify the owners

of the object that struck the vessel’s hull. I hope the witness will

provide us with an update on the investigation into the spill and

the potential cost to the fund if no liable party is identified.

I am also concerned about the potential use of oil spill liability

trust funds to pay for damages in the Gulf region resulting from

Hurricane Katrina. We have received estimates that the cost associated with the response and restoration activities could reach up

to $800 million. I hope to learn more about whether the Administration is suggesting that some of these costs be absorbed by the

Fund and how this could affect the Fund’s balance.

I am also interested in hearing testimony regarding the Federal

Government’s research and development efforts under OPA. OPA

requires Federal agencies to conduct a wide scope of oil spill research. However, we have made very little progress towards this

goal.

I believe that it is extremely important we continue to develop

technologies and procedures to improve our prevention and response to oil spills. In the conference report on H.R. 889, we included a provision to authorize a program to investigate technologies and procedures to remove or otherwise mitigate submerged oil in U.S. waterways. I hope the enactment of this provision will spur the Administration to support further research in

these areas.

Before I introduce our witnesses, I would like to express my appreciation and that of the Committee to Admiral Gilmour for his

more than 30 years of dedicated service to our Country. Admiral,

congratulations, and we wish you a well-deserved retirement.

I look forward to your testimony this morning, and I now would

like to turn to Mr. Filner for any statement he may have.

Mr. FILNER. Thank you, Mr. Chairman, and thank you for scheduling this hearing.

We passed the landmark legislation, the Oil Pollution Act of

1990, in the wake of the Exxon Valdez disaster in Alaska. It had

languished in the House and Senate for years until Congress got

this wake-up call that it was in our national interest to make sure

that disasters like that don’t happen again. But marine casualties

do continue to occur, perhaps not spilling as much oil, but impacting our local communities nonetheless.

Mr. Chairman, I would like to focus on three issues and hope the

panel might refer to them. First, given our 16 year history since

enactment of the Oil Pollution Act, are the limits of liability of ship

owners proportional to the risk or damage that their vessels could

cause to our coastal communities? Second, as we saw with the accident of the New Carissa in Oregon several years ago, bunker fuels

can cause a lot of damage to our coastline and environment. However, the double hulled requirements of the OPA only apply to

tankers and tank vessels that transport oil as cargo. It does not require any improved safety protection for fuel tanks, even though a

large ship today can carry as much fuel as a World War II tanker.

Third, Hurricane Katrina, and you mentioned this, Mr. Chairman, has resulted in a large amount of oil being spilled along our

Gulf Coast. What is the potential liability exposure of the Oil Pollu-
3

tion Liability Trust Fund to help pay for these cleanup and remediation costs? Did vessel owners and shore based oil facility operators

take normally prudent measures when they saw the storm coming,

or did their failure, for example, to fill their storage tanks with

water contribute to the oil being spilled from these tanks?

Mr. Chairman, last year the Subcommittee took some small steps

in helping to address some of the issues raised by the large oil spill

on the Delaware Bay that affected your district. It is time for this

Subcommittee to look at the Oil Pollution Prevention program from

a national and international perspective and see what improvements need to be made to help decrease the likelihood of future oil

spills in the United States.

Thank you again, Mr. Chairman, for scheduling this hearing. I

look forward to working with you to improve oil pollution prevention and liability systems.

Mr. LOBIONDO. Thank you, Mr. Filner.

Mr. Coble, would you like to start off with anything?

Mr. COBLE. Thank you, Mr. Chairman. I will be very brief.

Admiral, I just want to reiterate what the Chairman said. We

appreciate your years of good service with America’s oldest continuous sea-going service and best wishes to you.

Mr. Chairman, I am told that Hurricane Katrina, you touched on

this, I think, peripherally, caused at least ten major oil spills in the

Gulf region, resulting in the release of approximately 8 million gallons of oil into the waterways in the region. I hope that one of the

witnesses might touch on the manner in which these hurricane-related costs are currently being funded in the Gulf region.

It is good to have you all with us, and I yield back, Mr. Chairman.

Mr. LOBIONDO. Thank you, Mr. Coble.

Mr. Taylor? OK. Mr. Taylor will pass.

We are very pleased with our panel today. We have Rear Admiral Thomas H. Gilmour, who is Assistant Commandant for Marine

Safety, Security and Environmental Protection for the United

States Coast Guard. We have Ms. Jan P. Lane, the Director of the

National Pollution Funds Center for the United States Coast

Guard. And Mr. David Kennedy, Director of the Office of Response

and Restoration, for the National Oceanic and Atmospheric Association.

We thank the panel members. Admiral Gilmour, please proceed.

TESTIMONY OF REAR ADMIRAL THOMAS GILMOUR, ASSISTANT COMMANDANT FOR PREVENTION, UNITED STATES

COAST GUARD, DEPARTMENT OF HOMELAND SECURITY;

JAN LANE, DIRECTOR, NATIONAL POLLUTION FUNDS CENTER; DAVID KENNEDY, DIRECTOR, OFFICE OF RESPONSE

AND RESTORATION, NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION, UNITED STATES DEPARTMENT

OF COMMERCE

Admiral GILMOUR. Thank you, Mr. Chairman.

Mr. Chairman, Representative Filner and distinguished members

of the Committee, good morning. I am Rear Admiral Thomas

Gilmour, Assistant Commandant for Prevention. And with me, as
4

stated, is Ms. Jan Lane, the Director of the National Pollution

Funds Center.

We are pleased to appear before you today to discuss oil pollution

prevention and the Oil Spill Liability Trust Fund. Congress enacted the Oil Pollution Act of 1990 in the wake of the Exxon Valdez

spill in Prince William Sound and a rash of other major spills.

OPA’s scope was ambitious, as it set new requirements for vessel

construction, crew licensing and manning, mandating contingency

planning, enhancing Federal response capability, broadening enforcement authorities, increased penalties and created a new research and development program and increased the liability for

those responsible vessels and facilities that spill oil.

The Oil Spill Liability Trust Fund has been referred to as the

cornerstone of the OPA 1990 regime. The Fund provides the resources for Federal incident-specific response and is available to

compensate individuals, businesses, natural resource trustees and

State and local governments for their costs and damages resulting

from a spill when responsible parties do not pay.

The Fund is also used by Congress as a source for direct appropriations to the various Federal agencies responsible for the administration and enforcement of OPA, which supports programs to prevent spills, to coordinate preparedness for spill response at the national, State and local levels. Enhanced spill research and development initiatives compensate injured parties and make polluters

pay when spills occur.

The enormous success of the OPA 1990 regime can be measured

in large part by the overall reduction in the quality of oil spilled

since 1990. The combination of OPA and the Fund has been highly

effective in achieving the success and in comprehensively addressing oil pollution risks and damages. Despite the many success stories over the 16 years since OPA was enacted, risks to the long

term viability of the Fund persists. The financial rate or tax on oil

expired in 1994, but fortunately in the summer of 2005, Congress

provided for the resumption of the financing rate. The rate is effective this month and continues in effect through the end of 2014,

with revenue to be deposited to the Fund.

While a resumption of the financing rate is an important step in

ensuring continued viability of the Fund, there are new challenges

on the horizon. One key issue is the limit on liability. OPA provides

for adjustments to vessel liability limits by regulation to reflect increases in the consumer price index, but limits have not been adjusted for the CPI since OPA was enacted. While the Coast Guard

has taken steps toward making the CPI base adjustment for vessels through regulation, we believe the magnitude of the adjustment needed is greater than what the CPI based adjustments will

provide.

A responsible party’s liability for removing costs and damages is

limited unless certain exceptions apply. The liability limit for a vessel spill is based on a formula that considers a vessel’s tonnage and

whether the vessel, ship or barge, is a tank vessel or a non-tank

vessel. Liability limits for on-shore facilities, off-shore facilities and

deepwater ports are set at designated amounts.
5

Fundamental to OPA is the polluter pays principle. Thus, the

issue is whether the current liability limits are sufficient to support

the polluter pays principle.

The catastrophic impacts of Hurricanes Katrina and Rita included substantial damage to oil production infrastructure and an

estimate discharge of more than 9 million gallons of oil. Fortunately the Stafford Disaster Relief and Emergency Act funds were

available to finance the Federal response and assistance in connection with the environmental cleanup. The Fund has not been

tapped for cleanup costs of oil spills caused by these hurricanes.

However, we are concerned about major claims exposure for natural resource damage and for oil removal costs and damages incurred by responsible parties and other third parties.

While responsible parties are generally liable under the Oil Pollution Act for costs, they too may present a claim to the Fund for

their costs and damages that exceed their applicable OPA liability

limit, or for their costs and damages if they can establish one of

the OPA complete defenses to liability.

One OPA defense that is likely to be seriously tested as a result

of these hurricanes is the act of God defense. One of the principal

reasons the Fund was created was to provide for a source of funding in response and compensation when responsible parties do not

pay. The question today is whether that risk is properly apportioned between the responsible parties and the Fund. Clearly, responsible party limits, at least for vessels, are long overdue for an

increase. That need was recognized in H.R. 1412, the Delaware

River Protection Act, which Chairman LoBiondo introduced and

which was subsequently incorporated in large part as Title VI of

H.R. 889, the Coast Guard and Marine Transportation Act of 2006.

We look forward to working closely with Congress as we report

further on the adequacy of liability as a means to ensure the polluter pays its fair share and that the OPA and the Fund regime

continues to provide effective and efficient oil spill prevention, response and compensation services to the public.

Thank you again for the opportunity to testify before you today,

and we will be happy to answer questions.

Mr. LOBIONDO. Thank you, Admiral Gilmour.

Ms. Lane, thank you for being here. Please proceed. I’m sorry,

Mr. Kennedy.

Mr. KENNEDY. Thank you for the opportunity to present NOAA’s

role in response, restoration and research under the Oil Pollution

Act. I am David Kennedy, Director of the Office of Response and

Restoration at NOAA.

OPA created a comprehensive prevention response liability and

compensation regime to respond to oil pollution incidents. Under

OPA, NOAA acts as a natural resource trustee for coastal and marine resources. NOAA’s responsibilities include working through

the national and regional response teams to ensure the most appropriate response and cleanup actions are taken to protect resources

from further injury, working with our co-trustees to assess and restore injured natural resources, and carrying out oil spill research

and development under Title VII of OPA.

Our Nation must be prepared to respond to major oil spills. The

near-simultaneous Athos I and Selandang Ayu referred to already
6

spills in late 2004 and the magnitude of oil spilled again referred

to after Hurricanes Katrina and Rita last fall serve as reminders

of that fact.

NOAA’s response to each incident is dependent on the skill’s

characteristics. Using its expertise and state of the art technology,

NOAA forecasts the movement and behavior of spilled oil, evaluates the risks to resources and recommendations protection priorities and appropriate cleanup actions. In addition, NOAA scientists

and economists work with other trustees and responsible parties to

ensure the coastal and marine resources injured by oil spills are restored.

I would like to share with you three examples of NOAA’s past

response and restoration work. On November 26th in 2004, the MT

Athos I, a 750 foot tanker, hit several submerged objects in the

Delaware River, spilling approximately 265,000 gallons of heavy

oil. In addition to surface and shoreline oiling, a portion of the oil

migrated below the water surface, complicating the response and

assessment efforts. During the event, NOAA provided oil trajectory

analysis, weather forecasts, shoreline impact assessments, and recommendations on environmentally appropriate cleanup techniques.

The NOAA navigation response team conducted emergency navigational surveys to locate the objects responsible for the incidents

and to identify potential sunken oil collection points. U.S. Coast

Guard suspended vessel traffic through the area, and the Salem

Nuclear Power Plant shut down two reactors as a precaution to

prevent oil-fouled water intakes. The detection of submerged oil

was a critical economic issue in this case, essential to the reopening

of the port and the reactivation of the power plant. NOAA led a

special task force to develop detection and mitigation methods for

the submerged oil. NOAA’s efforts aided in the rapid return of normal vessel traffic and helped the plant, a significant regional power

supplier, come back online.

NOAA also led State and Federal trustees in efforts to initiate

natural resource damage assessment. NOAA continues to work

closely with Fish and Wildlife Service in the States of New Jersey,

Delaware and Pennsylvania to restore coastal marine resources injured from the Athos spill. On December 7th and 8th of 2004, the

cargo vessel Selandang Ayu lost power and ran aground and broke

in half in the shores of Unalaska Island, Alaska, losing about

60,000 tons of soybeans along with 335,000 gallons of fuel oil.

Again, NOAA conducted shoreline and aerial surveys and prepared

a comprehensive map of shoreline contamination as well as providing on-scene weather information.

NOAA staff coordinated environmental issues for the unified

command, including technical matters related to potential dispersant use and trajectory forecasts for the residual oil on board.

NOAA also worked with the Coast Guard and State of Alaska to

monitor cleanup operations. NOAA continues to work with other

natural resource trustees and the responsible party to conduct a

damage assessment.

Public meetings have been held to solicit local input on potential

restoration alternatives. And NOAA is committed to providing the

public with up to date information and opportunities for review and
7

comment during the damage assessment restoration planning process.

As it relates to Katrina, the magnitude of environmental impacts

of the aftermath of Katrina are unprecedented. As has been mentioned, 9 million gallons roughly released, thousands of vessels

sunk and stranded. NOAA was one of the first Federal agencies to

respond after the Coast Guard, and we provided staffing to multiple command posts, provided U.S. Coast Guard, EPA and States

with critical scientific information to support cleanup and recovery.

This included the assessment, prioritization and mitigation of over

1,000 hazardous material releases.

Thank you for the opportunity to talk about NOAA’s important

work under OPA. My written statement has more in-depth description of our work and current research efforts. Of course, I would

be happy to answer any questions. Thank you.

Mr. LOBIONDO. Thank you, Mr. Kennedy.

Mr. Filner?

Mr. FILNER. Thank you for being here this morning.

As I outlined in my opening remarks, I had several areas of interest. For example, the limits of liability for cleanup and restoration, as I understand it, were established under OPA after the

Exxon Valdez. But the limits are based on gross tonnage of the vessel and are not necessarily risk-based.

So I guess the questions I have, do the limits of liability in OPA

reflect the risk with cleaning up an oil spill after a marine casualty

whether the oil was transported as fuel or as cargo? Can we get

to a risk-based kind of a coverage here?

Ms. LANE. I think the only thing that we could probably look to

is recent data that we have been able to collect over the past several years. And recent data would suggest that for certain high risk

vessels that limits may be disproportionately low and should be

raised well above CPI levels, which as you know, could only be

achieved through Congressional action.

The cost data in respect to oil spills from cargo vessels and tank

barges, or costs that exceeded limits, indicate that liability limits

for those vessel types may pose the greatest risk. And since 1999,

there have been 55 vessel incidents involving over $1 billion in incident costs that have resulted in oil removal costs and damages of

$800 million in excess of their OPA liability limits. That is, 80 percent of the cost of those 55 incidents exceeded their liability limits.

Eighty-three percent of those costs were realized in 29 incidents,

about more than half the incidents involving 2 tank ships, 13 tank

barges and 14 cargo vessels. And only one of these, the DPL 152

that recently hit a submerged platform in the Gulf after Hurricane

Katrina, had double hulls. All the others were single hulls.

Sixty-one percent of the excess liability costs that we have seen

were for tank barges and cargo vessel spills alone. In addition,

there were 26 incidents involving smaller vessels, small fishing and

other vessels, where limits were exceeded. But those incidents represented only 17 percent of the costs.

Fourteen of the larger cases have resulted in $240 million in

claims to the Fund and four additional cases are ongoing, which we

believe could result in claims of more than $160 million to the

Fund. We believe that this data shows that the OSLTF may be at
8

a disproportionate risk for removal costs and damages, particularly

with respect to tank barges and cargo vessels. Because limits on

that particular class of vessels are relatively low compared to tankers and compared to the risk of a spill. And that CPI liability increases alone may not be adequate to reflect the appropriate share

of risk between polluters and the OSLTF.

Mr. FILNER. And so what conclusions do you draw? What adjustments should we make in the limits of liability? Do you have some

specifically related to those figures that we should change?

Ms. LANE. We don’t have any specific levels that we would recommend. The Administration has not reviewed it. H.R. 889 asks us

to take a look at that. I am not sure if we will have adequate time

within the 45 day reporting requirement to provide any recommendations on specific limits. I think we would look to a dialogue with Congress and with the industry about what limits might

be appropriate, based on the data that we’ve seen.

Mr. FILNER. That is one area we ought to talk more about.

Just briefly on Hurricane Katrina, Mr. Chairman, there were

many examples, I think the sum totals were given in the testimony. There was one oil company which had a 250,000 barrel

above-ground storage tank, and it was dislodged and damaged. The

tank at the time contained, as I understand, 65,000 barrels of

crude oil and released approximately 25,000 barrels of that. And it

impacted about 1,700 homes in an adjacent neighborhood.

As I understand it, a prudent owner would have filled the tank

with water to prevent the storm surge from lifting it off its foundation. This was not done by the oil company. Should they be allowed

to limit their liability for this oil spill and have the Federal Government pay for the cost, or should we talk about again what a

prudent owner should have done?

Ms. LANE. I think that that really gets to the question of claims

and whether or not responsible parties will be able to file a claim

against the Fund successfully. In some cases, they may be claiming

a defense to their liability. One defense may be an act of God defense. And we will be looking at that very closely, as I am sure you

are aware, act of God in the statute is defined as an unanticipated

grave natural disaster, other natural phenomenon of an exceptional, inevitable and irresistible character.

Mr. FILNER. No, but that was the election in 1994. That was not

an act of God.

[Laughter.]

Mr. FILNER. Read that definition again so people can get what

I was saying.

Ms. LANE. The effects of which could not have been predicted or

avoided by the exercise of due care or foresight. And to establish

the defense, the act of God must be the sole cause of the discharge.

Each claim that we receive will be adjusted on its merits, taking

into account the specific circumstances of the discharge.

To the extent possible, we will look at industry standards as well

as facility plans for design, construction, maintenance of the facility, as well as prevention, preparedness, including shutdown procedures and response. And we will look at the extent to which the

facility owners complied with both industry standards and their
9

specific facility plans, and the extent of due care and foresight that

was taken in preparing for the storm and preventing the discharge.

It is worth noting that prior to Katrina, we had received six act

of God claims from responsible parties against the Fund. They

were all vessel spills and all were denied on the basis that they did

not meet the due care, foresight and sole cause thresholds of the

defense.

In general, I would say that it is a very difficult defense to establish. However, with Katrina, I think we will be breaking new

ground, as has been experienced in so many other areas with

Katrina, because of the magnitude and severity of the storm. We

could find that RPs are more successful in asserting this defense

than they have been in the past. But again, we will have to look

at each case on a case by case basis.

Mr. FILNER. Right. Thank you, Mr. Chairman.

Mr. LOBIONDO. Mr. Coble.

Mr. COBLE. Thank you, Mr. Chairman.

Admiral Gilmour, the Coast Guard estimated approximately

$750 million was available in the Oil Spill Liability Trust Fund at

the beginning of fiscal year 2006. Do you have an estimate as to

the balance currently held within that fund?

Admiral GILMOUR. Sir, I am going to let Ms. Lane handle that

question. She has the answer for you.

Mr. COBLE. OK, thank you.

Ms. LANE. As you probably know, we will be providing a report

to Congress which includes a nine year forecast of the Fund. It was

recently cleared by the Administration and you should be receiving

that soon. What that report will show is that the current balance

of the Fund is $662 million. And the emergency fund balance is $46

million.

I can provide you some additional details on the revenue forecast

and expense forecast and projected balances that will be reflected

in that report, if you would like, sir.

Mr. COBLE. Well, how does this current balance——

Mr. LOBIONDO. Excuse me, yes, we would like that.

Ms. LANE. OK.

[The information received follows:]
10
11

Mr. LOBIONDO. Thank you.

Ms. LANE. Again——

Mr. LOBIONDO. If we could provide that in a written response

afterwards.

Ms. LANE. Yes.

Mr. COBLE. Thank you, Mr. Chairman.

How does this available balance currently held within the Fund

carry out the spill prevention response and restoration actions?

What do you say to that?

Ms. LANE. Of the various agencies? There are several different

components to that. I think one very important component is the

agency appropriations that are received every year for the agencies

that have a key role in the implementation of OPA 1990. They receive about $90 million a year for their roles and responsibilities

in prevention, preparedness, response infrastructure, compensation, liability and R&D. It provides the ready capability for agencies for the Federal Government to be able to respond to spills

when they occur. Also there is a $50 million emergency fund appropriation that is

a portion of that balance. And it is available for all response costs

that are required for responding to the spill, for removal costs, and

those funds generally are available for the Federal responders as

well as State responders and——

Mr. COBLE. But are you comfortable with the current balance?

Ms. LANE. I would say that we are very fortunate that the tax

was reinstated last summer. That will be bringing an additional

$200 million into the Fund on average each year. And that certainly will go a long way to keeping the Fund healthy.

There are, as a result of a number of spills, larger spills that we

have seen in the past couple of years, I believe that they are going

to tax the Fund significantly over the next couple of years, particularly with respect to claims, particularly with respect to the Athos.

And we would expect to see the Fund balance over the next couple

of years probably by the end of fiscal year 2007 drop to a level of

about $500 million. And then after those Athos costs, or payments,

are made, and barring any large Katrina claims or other large

spills, we should see the balance start to gradually increase again

until the tax revenue expires.

Mr. COBLE. OK. Well, at the outset, I expressed interest in how

the hurricane-related response and restoration costs in the Gulf region are being funded. I don’t believe you all addressed that. If you

did, I missed it. How about addressing that?

Ms. LANE. Yes, sir, I would be happy to do that.

Again, we have a report to Congress, which you should get soon,

which will provide a little bit more detail. But unfortunately, that

report will not make any specific predictions about the specific impact on the Fund. At this time, the estimates are really impossible

to quantify. We just simply don’t have the data. The $800 million

that was indicated earlier was just a very rough estimate, based on

our experience, historical estimates, experience with the Exxon

Valdez, experience with the Athos and other large spills that we

have seen.

What the report will do is just try and address the potential impacts. And it will show that to date, there have been no costs
12

charged to the OSLTF for Katrina. We are all aware of the magnitude of the spills down there, some 900 million gallons spilled,

6 major, 5 medium spills, 120 wrecked or destroyed offshore platforms in the Gulf, 300 pipelines destroyed. And in addressing all this, the Coast Guard has received $178

million in Stafford Act funding for ESF–10 pollution removal activities to respond to those incidents. However, we believe that the potential for claims still exists, based on our experience with other

large spills.

Mr. COBLE. Well, this will be addressed, I presume, in more detail when your report is forthcoming.

Ms. LANE. Yes, sir, but we really are not able in the report to

specifically quantify the amount of impact on the Fund.

Mr. COBLE. OK. I think my time has expired, Mr. Chairman. I

yield back.

Mr. LOBIONDO. Thank you.

Mr. Taylor.

Mr. TAYLOR. Thank you, Mr. Chairman. I want to thank our witnesses.

What percentage of barges that operate in American waters—

just a couple quick questions—what percentage of barges as of

today are double hulled? What percentage of tankers in the Jones

Act trade are double hulled? What percentage of international commerce tankers, those coming from overseas, are double hulled?

Second question, directly to Admiral Gilmour, I never want to

miss the opportunity to brag on the great job the Coasties did in

Hurricane Katrina. A lot of guys leaned forward, made great decisions at the end of the month when I know there were a lot of aviation fuel and steaming fuel and again, if FEMA had done half as

well as you all, Michael Brown might still be on the Government

payroll.

So the question to the Coasties is, one of the outcomes of the

storm, particularly on the Mississippi Gulf Coast, is that every single waterfront fueling facility was out of business. Shrimp season

comes up, you need two things to run a shrimp boat. Well, you

need a crew. You have to have a boat, a crew, oil and ice. And since

every one of our waterfront facilities is gone, and because the business has not been good for the past few years, I am noticing a great

reluctance of people to invest in waterfront oil and facilities.

What if anything can we do with the Oil Pollution Act to try to

grant some waivers or at least work with people who are willing

to run a fuel truck to the water’s edge so we can start fueling boats

this summer and for those people who understand the business, at

least get them fuel. I am going to ask, I know that is an involved

question, but I want you all to think that through, because I know

most of those truckers probably did not have the insurance they

need to fuel boats. But I can tell you that folks who were in the

business are not jumping back into the business. And so we have

to find something to fuel those boats, and I want you to think

about that.

Lastly, to Ms. Lane, I heard with great interest that the costs of,

apparently what you are telling me is that the cost of the cleanups

are not matching the fines. As someone who was here for the passage of the Oil Pollution Act in 1990 when we were talking about
13

unlimited liability, my question to you would be, did we actually

have to reach into appropriated funds to pay for those cleanups, or

to date, has that money been coming out of the Trust Fund? And

if it has been coming out of the Trust Fund, are annual collections

meeting annual outlays, or are we dipping into previous year collections to make last year’s outlays?

And lastly, for Mr. Filner, in fairness, at least in the case of one

of those spills, the Murphy oil spill in Chalmette, Louisiana, it is

not only an act of God, but the levees that the taxpayers of the

United States built failed. And so I would hope that we would keep

that in mind. Had the levees not failed, there would not have been

a spill at the Murphy oil facility in Chalmette. Just wanted to

throw those two cents in there.

Admiral GILMOUR. Sir, on your first question, about percentages

of tankers, tank barges and then foreign tank vessels coming in, I

would like to follow up and make sure I give you the right answers.

My gut feeling is right now the majority are, but, and I have seen

the numbers but I would like to come back.

Mr. TAYLOR. The reason for that, Admiral, is not too long after

the passage of it, I attended a dinner with a lot of international

tank owners. And some of them made some remarks like, we are

just going to wait until the last minute and then we are going to

go to Congress and say, either give us a waiver or you get no oil.

So again, it might have been a guy who had one too many martinis, or it might have been a real threat. So what I am trying to

think, and it was made several years ago. So that is the reason,

are they complying or aren’t they? Are they complying on a time

line that gets us to 100 percent by the mandated days?

Admiral GILMOUR. Yes, sir, I can positively answer that we inspect every vessel with OPA 1990 in mind and review their

records. So they are meeting the time line. The results of concerns

on insurance, I think, when OPA 1990 happened, and that did not

happen at the end of the period where they were——

Mr. TAYLOR. If the Chairman will indulge me, one of the other

things that was said that night, and only you and Ms. Lane and

Mr. Kennedy would be in a position to see if this has actually happened, one of the other things that again, followed after one too

many martinis, somebody said what we will do is we will just start

a paper corporation in the Bahamas and that way if there is a massive spill, that paper corporation that has no assets gets hit with

the bill and we walk away scot-free. Have you seen any evidence

of that happening with spills that have occurred to date?

If you have a total failure to collect on spills or substantial failure to collect on spills because someone has succeeded in insulating

themselves, isolating themselves by creating a paper corporation

overseas?

Admiral GILMOUR. I would say, and Ms. Lane can talk to those

vessels that went over their liability, but certainly I can only think

of one case where the owner walked away and that was the Berman spill in Puerto Rico. That was a U.S. operated company.

But other than that, I can’t think of cases where people walked

away.

Mr. TAYLOR. How were they able to walk away?

Admiral GILMOUR. Well, in that case I think their limit was——
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Ms. LANE. It was $10 million.

Admiral GILMOUR. Yes, it was $10 million and it happened, their

limit was reached very quickly.

Ms. LANE. Their insurer paid up to their limit, and then the

Coast Guard took over.

Mr. TAYLOR. OK.

Ms. LANE. I don’t believe we have seen any cases where a responsible party has refused to respond at all, if the responsible party

is known.

Mr. TAYLOR. OK. How about the other questions? Ms. Lane?

Ms. LANE. I think the one question that you had regarding

whether the excess liability costs have been charged to the Fund

or charged to the appropriated funds, and the answer to that is,

they have been charged to the OSLTF and not appropriated funds.

Then the other question was, how do I see the revenues and expenses and whether or not we are bringing enough money into the

Fund to cover the expenses. I think my response to that would be

prior to the passage, to the reinstatement of the tax last summer,

the answer would be that revenues were not adequate to cover expenses and we saw a declining balance in the Fund. With the reinstatement of the tax and the additional $200 million coming into the Fund each year, I believe that trend is changing. But again, it is dependent upon the number of spills that you

have in any given year and the magnitude of those spills that could

change at any time.

I think historically speaking, revenues are balanced fairly well

with expenses at the current time. However, I would note that the

$2.7 billion level that was designated in the Energy Bill last year,

the new level of the Fund, we don’t ever expect to reach that level.

By 2014, the tax turns off. Our forecast will show that we expect

the balance to be at about $830 million.

Mr. TAYLOR. Mr. Chairman, one last question?

Mr. LOBIONDO. Sure, go ahead.

Mr. TAYLOR. I am going to guess that on the day we passed the

Oil Pollution Act, the value of a barrel of oil was about $18 a barrel. Today it is in the low 70’s, last time I looked. And I am asking

this in the form of a question. Has the fact that the value of oil

has shot up rather dramatically, and yet the liabilities have remained fairly constant, does that in any way create a situation

where the shipper has less of an incentive to have adequate insurance?

Ms. LANE. I believe that ship owners do have adequate insurance. In fact, most ship owners have insurance well above the limits of liability that are specified in the law. And with respect to an

incentive, I am not sure that I can comment on that. I think there

are a lot of reasons why we need to increase those, the limits of

liability, at least commensurate with the CPI adjustments that

have occurred since 1990. I believe the data shows that we should

increase them above those CPI adjustments as well.

Mr. TAYLOR. I will welcome your recommendations on the increase of those limits.

Ms. LANE. Yes, sir.

Mr. TAYLOR. Thank you.

Thank you, Mr. Chairman.
15

Mr. LOBIONDO. Just a quick follow-up on the solvency of the

Fund. I know the report is going to maybe give us a better picture.

But if you dip below zero, do you have borrowing authority? How

do you handle that?

Ms. LANE. We have borrowing authority into the emergency fund

from the principal fund. If the principal fund, if the OSLTF goes

to zero, I am not sure if that same $100 million borrowing authority would apply. But certainly we would have to come to Congress

and seek supplemental appropriations to cover those costs.

Mr. LOBIONDO. OK. On the Athos I, I believe it was stated that

the potential claims to exceed $265 million or $270 million, in addition to the $252 million that has already been paid from the Fund

for response activities. Have the owners of the Athos I presented

a third party defense for the Coast Guard’s review?

Ms. LANE. They have presented a claim to us for costs in excess

of their liability limit. They spent $124 million on a spill. Their

limit was $45.5 million. So their excess costs were $78.5 million.

They presented $124 million claim to us requesting reimbursement for the $78.5 million. We have to look at all their costs in

order to determine whether or not all the costs, all the $124 million

that was spent is compensable. And we have gotten several indications from the responsible party that they do plan to submit a third

party defense claim to us, at the point at which their entitlement

to hold their limit is granted, if that happens, if we grant that.

Mr. LOBIONDO. How does the Coast Guard review and adjudicate

claims for response action or natural resource damage?

Ms. LANE. We rely on the regs and we have put together a set

of guidance, internal guidance that is based on those, the regs that

provide the requirements and the process that has to be undertaken on the part of the trustees in order to file a claim with the

Fund. And we worked very closely with the trustees in developing

that guidance.

Mr. LOBIONDO. On Katrina, I guess the big question that you

have to deal with is whether this was an act of God or not?

Ms. LANE. Could I get back to you on that?

[Laughter.]

Mr. LOBIONDO. How is that going to start to unfold? How are you

going to start to get your arms around this one?

Ms. LANE. I guess the thing I would say on that is that we really

have not made a broad determination that an act of God defense

would apply here. We are really going to have to look at each claim

as they are presented to the Fund on a case by case basis. And

again, to the extent possible, we will look at industry standards

and the facilities response plans. And with respect to prevention,

preparedness, response, their shutdown procedures and the extent

to which they complied with industry standards and their own facility plans.

Mr. LOBIONDO. That is going to be pretty tough.

Ms. LANE. It will be.

Mr. LOBIONDO. On the phase-out of the single hulled vessels, do

you expect because of what is happening with the European Union

and the time line that has been established there that the number

of single hulled tank vessels operating in U.S. waters will—what
16

do you think the numbers are going to be? Significantly increased

when they do what they are going to do?

Ms. LANE. I am going to defer to Admiral Gilmour on that.

Admiral GILMOUR. Sir, I do not think it will have a significant

effect on those vessels that trade here. And I say that because I

think most of the vessels that do trade in the United States, foreign, certainly domestic, have been built to OPA 1990. It could

have influenced those vessels that are in worldwide trade. So it

could have a slight impact on reducing the number of single hulled

vessels that come to the United States.

Mr. LOBIONDO. I may have a couple more. Mr. Baird?

Mr. BAIRD. I thank the Chairman, I thank our witnesses.

Following up on Mr. Taylor’s questioning, it sounds like, pretty

obviously from your figures, Ms. Lane, that the cost of the accidents are basically exceeding the liability limits on a pretty reliable

basis. What, and maybe Mr. Kennedy can comment on this, what

are the factors that have made that happen? What has happened

that has made those limits no longer apparently realistic?

Ms. LANE. I believe the costs of response has increased since

1990, just obviously with the cost of inflation. But just the cost of

responding to the spill. In many areas, in many cases, you will be

in an area that has very sensitive resources. And the cost to protect

those resources probably add to the costs of this bill as well.

Mr. BAIRD. And we haven’t given, Congress hasn’t given you

folks the authority to increase that liability limit commensurate

with that cost increase?

Ms. LANE. We, the statue did provide a provision that required

adjustment for CPI every three years, yes, sir.

Mr. BAIRD. But at the cost, the point you were making earlier,

if the cost exceeds CPI, then we are going to fall back a little bit

each year?

Ms. LANE. Yes, sir.

Mr. BAIRD. And so that might be something the Committee

would—now, the consequence of that, presumably as you are pointing out I think is greater demand on the Fund than had been anticipated.

Ms. LANE. Yes, sir.

Mr. BAIRD. What would be the consequence of raising the liability limit? What impacts would that have if we did that?

Ms. LANE. It probably depends on how high you raise them.

And——

Mr. BAIRD. Let’s suppose we raised it so that the median, so that

we hit the mark half the time, so that half the time, versus it

sounded like 80 percent, the costs are 80 percent more or less of

the times exceeding the limits, let’s suppose we cut it down to 50

percent. Just hypothetically, what would be the pros and cons of

that?

Ms. LANE. I think from industry standpoint, if you raise the limits, the cost of insurance would inevitably go up. And I would expect that those costs would be passed on to the consumer in the

form of increases in goods and services.

Obviously the impact on the Fund would be positive, because we

would be paying out a lot fewer costs in those incidents where limits were exceeded.
17

Admiral GILMOUR. Sir, if I could just add on to that, at some

point I think the industry would think about trading in the U.S.

at some point.

Mr. BAIRD. Would think about what? I missed your point.

Admiral GILMOUR. At some point, if you raise the liability limits

high enough, industry could think twice about trading in the

United States. It might limit the number of vessels that would

trade. I was assuming your question was going to unlimited liability.

Mr. BAIRD. No, it really wasn’t. I think there has to be some economic calculus where you say at this point you protect the Fund,

you provide some assurance, but you still provide the sort of supercatastrophic protection.

Did we see, have we seen, in effect we are indemnifying the insurance industry a little bit. Have we seen a lowering, a commensurate lowering of rates?

Ms. LANE. I am not sure I have that data. I am not aware of any

lowering of rates.

Mr. BAIRD. Several years ago, post-September 11th, we set limits

based on terrorist attacks. I actually tried to see if we couldn’t do

something to say, well, if the public is going to indemnify insurance

industry, they ought to somehow pass the savings on to the consumers. And I don’t know that we ever mandate that, but it is common sense to me that we might want to consider it.

Just the thought I had, the discussion so far is mostly focused

on acts of God. When the legislation was written, it was obviously

10 years prior to September 11th. How does that factor in terrorist

attacks? What impacts do they have on various issues that have

come up today in terms of liability, who would bear that, how the

funds would respond to that, etc.?

Ms. LANE. I think in the case of a terrorist act, that would probably be viewed, more likely it would not be viewed as an act of war.

There are certain criteria that probably would not be met with today’s view of terrorism. So we would probably generally view the

defense in an act of terrorism as a third party defense.

And in the case of a third party defense again, you would look

at the case on a case by case basis, you would look at the facts of

the case. The third party defense requires that the incident be solely caused by a third party. It requires that no contractual relationship with a third party exists, and that they exercise due care with

respect to the oil and took precautions against foreseeable acts or

omissions of a third party.

I guess the limits of liability are also an issue that come into

view when you are talking about a terrorist act and whether or not

they may be susceptible to unlimited liability. And I think our view

on that is that simply failure to stop removal actions once limits

are reached or financial resources are unavailable would not in and

of itself be viewed as a failure to cooperate. So it is likely that their

limits would apply in a terrorism act and then we would need to

look closely at the merits of the case to determine whether or not

they could successfully claim a third party defense.

Mr. BAIRD. I appreciate that. May I ask one final question?

Overall, we talk a lot in Congress about emergency

supplementals. We try to deal with how we can anticipate various
18

emergencies. Here is a program that has set out to do that, where

we actually tried to set up a fund in anticipation rather than drawing on the Treasury yet again. Overall, do you think this program

has worked fairly well, and might it be a model for other opportunities to prepare for emergencies?

Ms. LANE. I do. I think it has worked very well. I think one key

to making it work is having a sustained revenue source. And I

think the tax provides that. And I would hope that in 2014 that

there would be consideration to continuing that sustained revenue

source. I believe that is the only way that it would work. And I

think it could serve as a model in other areas.

Admiral GILMOUR. Sir, if I could add on. The tremendous benefit

of having the Fund available, having been in this business before

and after, is in case that Chairman LoBiondo just brought up with

the spill, the last couple of days, the mystery spill in Delaware

Bay, and that we can act immediately to clean, not worrying about

the costs and then going after the responsible party, which we have

done successfully in a number of cases. But it just gives us the ability to do what needs to be done.

Mr. BAIRD. Mr. Kennedy, any comments on that?

Mr. KENNEDY. I would just echo what has already been said. As

a user of the Fund, I don’t know of anything out there like it. It

does allow us to respond immediately. It does ensure that we are

there and doing the right thing, regardless of whether other funds

are available. So as a model, I think it has been very successful.

Mr. BAIRD. I very much appreciate the expertise and the comments of the panelists. Thank you very much.

Mr. LOBIONDO. Thank you. Mr. Diaz-Balart?

Mr. DIAZ-BALART. No questions at this time, Mr. Chairman.

Mr. LOBIONDO. Back on Katrina for a minute, how long will the

Stafford funds be available?

Ms. LANE. I believe those funds will be available through the remainder of this fiscal year, the $178 million. And those are just

Coast Guard funds. There are other removal activities underway

that EPA is carrying out. And I don’t have any information on the

extent of their resources and how long they expect to continue to

rely on the Stafford Act.

Mr. LOBIONDO. Mr. Kennedy, what if any long term environmental impact from the Athos I spill is now documented or are you

concerned about?

Mr. KENNEDY. We are continuing to do the environmental assessment with the other trustees. I am not aware, and I don’t think we

have final results that will lead us to be able to say with any surety at this moment what the long term effects will be. There certainly were effects as the result of the spill. We are looking at potential ways to do restoration based on some of the impact to the

wildlife.

In particular, along the coast, some of the fishing issues and certainly of course, we had a power plant that got shut down. Those

are not long term impacts necessarily. So I think we are still working and we don’t have answers to the long term impact. But I think

as we often see, there is a significant recovery from those injuries

already occurring.
19

Mr. LOBIONDO. Originally when the Athos I spill took place, I

think if I am remembering correctly, because of the nature of the

crude, it was felt that an awful lot of it had sunk to the bottom.

Do we have a feeling for, if anything is left down there or where

we stand on that, Admiral? Or Mr. Kennedy, do you?

Mr. KENNEDY. I think I can field that, in that we were involved

in trying to track that submerged oil. And we have done a lot of

looking since, and we are not aware of any of that in any significant amount that is left. And we did monitor, we went into the

next year and did a lot of surveys after the fact, thinking possibly

it would come up in the bays. We haven’t found any evidence. We

think a majority of it is gone, yes.

Mr. LOBIONDO. Also for you, Mr. Kennedy, Title VII of the Oil

Pollution Act authorizes an extensive oil spill pollution research

program to be directed by the Interagency Coordinating Committee

on Oil Pollution Research. It seems that very little has been done.

No interest? Why have we not done more here?

Mr. KENNEDY. Title VII laid out about five major areas that we

should address, including the Interagency Committee. Developing a

plan, if you will, and then an annual report, a couple of other items

in there. There was a lot of interest initially, tremendous draw of

experts from all over the Country sat down to actually do the plan.

And I think the Coast Guard chaired that, those sections as we developed the plan.

But once the plan was more in place, and it was extremely comprehensive, there have been no funds. So although individually and

collectively, collaboratively, all of the different agencies have done

research, we have been doing research for a long time with the

Coast Guard, and sometimes with industry and others, it has been

out of our own budgets. There is no setaside funds to actually move

that ball forward, if you will.

And so it is kind of hard when you have a plan and no funds to

move it forward in any kind of comprehensive way.

Mr. LOBIONDO. I am not sure, I think, Admiral, this may be for

you. There was a recent article or news report about a violation of

the act to prevent pollution from ships. It was a ship that had apparently developed an elaborate bypass system that it was clearly

their intention to dump and I think several individuals have been

convicted of willfully and knowingly violating this ocean pollution

law.

Can you give us any comments about how we can improve our

awareness of these kinds of activities? I mean, this seemed like it

was a big company that, this wasn’t just somebody taking a bucket

of something and dumping it overboard. They had a plan to do this.

I mean, do we have any way of checking if anybody else has got

some of these type of systems that we ought to be trying to uncover?

Admiral GILMOUR. Yes, sir. We, working with the Department of

Justice over the last seven or eight years, have taken a very aggressive stance on looking for bypassing of oily water separators.

In fact, I brought along a copy of a Coast Guard Proceedings magazine that I would be glad to leave with you from last year that

talks about some of the cases we have done. And the most recent

one from here is about two years old.
20

But I think the best thing that can happen is that these cases

go forward and these people are held to justice and fines are levied.

So I think we have been very successful at that in a number of

cases, and the Department of Justice, with the Coast Guard, have

an aggressive program to find when that happens in the United

States. In fact, many folks, including the European Union, are

looking at our program or a similar program for the European

Union.

Mr. LOBIONDO. Are the recent convictions the result of improved

intelligence gathering, or did we just get lucky?

Admiral GILMOUR. It is a combination of our inspections, our surveillance. Many of the cases were found from overflights. And the

third area that we get is a lot of crew complaints. We will get a

crewman that will come to us and say, this is happening. So it is

a combination.

Mr. LOBIONDO. Is there like a hot line or how do they know to

come to you?

Admiral GILMOUR. Many different ways. They can either call the

local captain of the port or certainly we have a 1–800 number for

pollution response. The majority of the time, though, is when our

inspectors go on and they confide in us, crew members confide in

us.

But in many cases we find evidence of the problem.

Mr. LOBIONDO. OK. I want to thank the panel very much. We

look forward to the reports that are coming out. Good luck on the

challenges that you have in the future. And I am sure we are going

to be in touch.

The Committee stands adjourned.

[Whereupon, at 11:11 a.m., the subcommittee was adjourned.]
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