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S. HRG. 108–842

PHASE–OUT OF SINGLE–HULL TANK VESSELS

HEARING

BEFORE THE

COMMITTEE ON COMMERCE, 

SCIENCE, AND TRANSPORTATION 

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

JANUARY 9, 2003

Printed for the use of the Committee on Commerce, Science, and Transportation

(

(II)

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

JOHN MCCAIN, Arizona, Chairman 

TED STEVENS, Alaska 

CONRAD BURNS, Montana 

TRENT LOTT, Mississippi 

KAY BAILEY HUTCHISON, Texas 

OLYMPIA J. SNOWE, Maine 

SAM BROWNBACK, Kansas 

GORDON SMITH, Oregon 

PETER G. FITZGERALD, Illinois 

JOHN ENSIGN, Nevada 

GEORGE ALLEN, Virginia 

JOHN E. SUNUNU, New Hampshire 

ERNEST F. HOLLINGS, South Carolina 

DANIEL K. INOUYE, Hawaii 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

JOHN B. BREAUX, Louisiana 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

BARBARA BOXER, California 

BILL NELSON, Florida 

MARIA CANTWELL, Washington 

FRANK LAUTENBERG, New Jersey 

JEANNE BUMPUS, Republican Staff Director and General Counsel 

ROBERT W. CHAMBERLIN, Republican Chief Counsel 

KEVIN D. KAYES, Democratic Staff Director and Chief Counsel 

GREGG ELIAS, Democratic General Counsel 

(III)

C O N T E N T S 

Page 

Hearing held on January 9, 2003 ........................................................................... 1

Prepared statement of Senator Hollings ................................................................ 4

Statement of Senator Inouye .................................................................................. 2

Statement of Senator McCain ................................................................................. 1

Statement of Senator Nelson .................................................................................. 23

Statement of Senator Stevens ................................................................................ 2

Statement of Senator Sununu ................................................................................ 2

Statement of Senator Wyden .................................................................................. 78

WITNESSES

Allegretti, Thomas A., President and CEO, the American Waterways Operators ........................................................................................................................ 24

Prepared statement .......................................................................................... 26

Cowen, Robert N., Senior Vice President and Chief Operating Officer, Overseas Shipholding Group, Inc. .............................................................................. 65

Prepared statement .......................................................................................... 67

Article dated January 8, 2003 from Lloyd’s List, entitled Spanish ban 

sends single-hull Elcano ship to U.S., by Brian Reyes .............................. 69

Letter dated January 31, 2003 to Hon. John McCain ................................... 75

Cox, Joseph J. President and CEO, Chamber of Shipping of America ............... 29

Prepared statement .......................................................................................... 32

Davies, Elaine F., Deputy Director, Office of Emergency and Remedial Response, Environmental Protection Agency ......................................................... 14

Prepared statement .......................................................................................... 15

Frick, G. William, Vice President for Industry Operations and General Counsel, American Petroleum Institute ...................................................................... 59

Prepared statement .......................................................................................... 61

Godfrey, Tom, President, Colonna’s Shipyard, Inc.; Chairman, Shipbuilders 

Council of America ............................................................................................... 35

Prepared statement .......................................................................................... 38

Keeney, Timothy R. E., Deputy Assistant Secretary of Commerce for Oceans 

and Atmosphere, Department of Commerce ...................................................... 8

Prepared statement .......................................................................................... 10

Pluta, Rear Admiral Paul J., Assistant Commandant for Marine Safety, Security and Environmental Protection, United States Coast Guard ..................... 4

Prepared statement .......................................................................................... 7

Rauta, Dragos, Technical Director, International Association of Independent 

Tanker Owners (INTERTANKO) ........................................................................ 46

Prepared statement .......................................................................................... 48

Sandalow, David, Executive Vice President, World Wildlife Fund ..................... 42

Prepared statement .......................................................................................... 44

APPENDIX

Response to written questions submitted by Hon. John McCain to: 

Thomas A. Allegretti ........................................................................................ 85

Robert N. Cowen ............................................................................................... 98

Tom Godfrey ...................................................................................................... 86

Dragos Rauta .................................................................................................... 90

(1)

PHASE–OUT OF SINGLE–HULL TANK VESSELS 

THURSDAY, JANUARY 9, 2003

U.S. SENATE, COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, Washington, DC. 

The Committee met, pursuant to notice, at 2:30 p.m. in room 

SR–253, Russell Senate Office Building, Hon. John McCain,

Chairman of the Committee, presiding. 

OPENING STATEMENT OF HON. JOHN MCCAIN,

U.S. SENATOR FROM ARIZONA 

The CHAIRMAN. Good afternoon. The Committee meets today to 

consider issues relating to the required phase-out of single-hull 

tanker vessels that carry oil in bulk, including calls by some in the 

international community to accelerate the deadlines for transition 

to double-hull tankers. 

Since the break-up and sinking of the PRESTIGE on November 

19, 2002, Spain and France have taken unilateral action against 

single-hull tankers and the European Commission has adopted a 

new phase-out schedule for such tankers. As a result of those actions, concerns have been raised about how those actions could, if 

adopted by the European Union and the International Maritime 

Organization, impact the international and domestic transportation 

of oil. 

The phase-out of single-hull tankers is not the sole solution to oil 

spills. Based on experiences here in the U.S., we know that oil spill 

prevention, response, and damage mitigation efforts necessitate a 

combination of things, including the phase-out of single-hull tankers, liability and insurance requirements, response preparation and 

coordination, and improved response technology. This combination 

is clearly represented in the Oil Pollution Act of 1990, commonly 

referred to as ‘‘OPA–90.’’

Since OPA–90 was enacted, there has been a significant decline 

in cargo oil spills. In 1990, 152,000 barrels of oil, the equivalent of 

6.4 million gallons, were spilled in U.S. waters. By 2000, the volume of oil spilled had fallen to 24,600 barrels. 

About 60 percent of all oil worldwide moves by oil tanker. The 

U.S. is currently responsible for one-quarter of total oil consumption, and in 2001 we imported 55 percent of our oil supply. Because 

so much oil and oil products move in and out of the United States 

and we know from experience that bad things can happen even to 

sound ships and barges, we must remain vigilant. 

It has been over 12 years since the enactment of OPA–90 and I 

hope that today’s hearing will be helpful in shedding light on what 

2

has been accomplished and whether there is a need for any further 

action on our part to help prevent oil spills or to change our existing policies along the lines of the European Community. 

Senator Inouye. 

STATEMENT OF HON. DANIEL K. INOUYE,

U.S. SENATOR FROM HAWAII 

Senator INOUYE. Thank you very much, Mr. Chairman, and I 

wish to commend you for holding this hearing on this very important matter. Obviously, I am looking forward to assuming my position as Ranking Member on the Merchant Marine Subcommittee, 

at which time this issue and many others will be considered in the 

coming years. 

Thank you very much, sir. 

The CHAIRMAN. Thank you, Senator Inouye. 

Senator Stevens. 

Senator STEVENS. He was the first one. 

The CHAIRMAN. Senator Sununu. 

STATEMENT OF HON. JOHN E. SUNUNU,

U.S. SENATOR FROM NEW HAMPSHIRE 

Senator SUNUNU. Something is truly wrong with the decorum in 

the Senate when I am asked to give a statement ahead of Senator 

Stevens. 

[Laughter.] 

Senator SUNUNU. I am looking forward to the testimony and 

learning a little bit more about this issue, and I have no further 

statement, Mr. Chairman. Thank you. 

The CHAIRMAN. Senator Stevens. 

STATEMENT OF HON. TED STEVENS,

U.S. SENATOR FROM ALASKA 

Senator STEVENS. Thank you very much. 

Mr. Chairman, I join Senator Inouye in congratulating you for 

moving forward on this hearing as quickly as possible. It is almost 

13 years ago that Senator Breaux and I managed a bill on the floor 

that would become the most significant policy change, I think, in 

maritime transportation of oil. That was the Oil Pollution Act of 

1990 that you mentioned. It was in response to the largest oil spill 

in U.S. history. Eleven million gallons of crude oil poured out of the 

EXXON VALDEZ, polluting one of the Nation’s most sensitive ecosystems and spreading over 350 miles of shoreline in the Prince 

William Sound on the coast of Alaska. 

I went up and flew over that. It was the most awesome sight I 

think I have ever seen. Alaskans will never forget the devastating 

effect of that spill and its effect on our wildlife, fisheries, and our 

overall economy. 

Without really being too specific, I think I was the one that negotiated the specifics of the Oil Pollution Act to phase-out single-hull 

tankers. The proposal was criticized at the time by the international community as being too stringent and aggressive. Nonetheless, we proceeded. I remember at one time Senator Magnusen 

sent me over to a meeting of that international committee in London to talk about single-hull tankers long before the EXXON 

3

VALDEZ disaster, and I wish they had listened to us then. But we 

passed a law that provides for safe maritime transportation of oil 

and the structure necessary for preparedness and response in case 

of a spill in the United States. 

During the height of Alaskan oil production in 1988 to 1999, 

there were 70 tankers moving oil from Valdez to West Coast ports. 

During this period the throughput of the Trans-Alaska Pipeline 

was 2.1 million barrels a day, near full capacity. Today the pipeline 

carries only 1 million barrels of oil a day, which means the pipeline 

is only half full. Because of this decline in production, there are 

now only 25 tankers presently transporting oil from Alaska. 

The American Petroleum Institute, the American maritime industry and trade unions reported last year that we would need to 

construct 18 new double-hulled vessels to transport oil if Congress 

opened the coastal plain of Alaska to oil production. Maritime 

unions also tell us that each ship would create 3,000 direct employment jobs during the period of construction. Those are high-paying 

jobs, high-skilled and labor-intensive jobs that we do need in the 

United States. 

Last month, the State of Alaska extended the right of way for the 

pipeline across our state lands. Just this week the Secretary of the 

Interior signed a 30-year renewal for the federal right of way for 

the Alaska oil pipeline. The Federal Government believes this pipeline needs to be on line for at least another 30 years, but that 

means opening up enough lands of Alaska for oil production, and 

ANWR is still the best prospect. 

I know I have come to be a little provincial here today, Mr. 

Chairman, but I want to announce that this is my No. 1 goal for 

this Congress, to try to find a way to start to find out if we do have 

additional prospects in the northern part of Alaska. 

The requirement for Oil Pollution Act compliance, that is the 

1980 Act, for single-hull tankers will be phased out by 2015, and 

this would be—starting new production of tankers for Alaskan oil 

would be a great opportunity for our shipyards, but only if there 

is a demand for increased domestic production. 

I want to work with you and to try to extend the concept of single-hull tankers for all the tankers that serve our waters, and I 

think it would be in the best interest of the whole world if we 

would find some way to not only utilize such tankers, but find ways 

to limit the transportation of oil by ship wherever it is possible. 

Thank you very much. 

The CHAIRMAN. Well, thank you, Senator Stevens. Again, thank 

you for the job that you and Senator Breaux did on OPA–90. It certainly has stood the test of time and, as I mentioned in my opening 

statement, the dramatic reduction in oil spill over the years has 

been a direct result of that effort. I think we will all learn a lot. 

Perhaps, since it has been 12 years, over 12 years, since that law 

was passed, maybe we will be updated today and our witnesses will 

be able to give us a snapshot as to how things are today and how 

they will look in the future. 

[The prepared statement of Senator Hollings follows:]

4

PREPARED STATEMENT OF HON. ERNEST F. HOLLINGS,

U.S. SENATOR FROM SOUTH CAROLINA

Mr. Chairman, we are here today to consider the implementation of the Oil Pollution Act of 1990 (OPA–90), and the international agreements that require the retirement and cessation of the use of tankers that have single hulls. Fortunately, since 

the passage of OPA–90, we have seen a real improvement in the safe marine transport of oil. I would commend the Coast Guard on a fantastic job, who along with 

agencies like NOAA, have set up a first rate system of prevention and response. 

However, the fact is, our marine ecosystem is too fragile too sustain the type of 

long term damage that can be caused as a result of an oil spill, and all possible 

care must be taken to ensure that we have a system that protects our marine environment to the maximum extent. I am convinced that we must take all steps necessary to force unsafe tanker tonnage out of the marketplace, and I concur that the 

double hull design is probably the best technology out there. However, we cannot 

just sit back and rely on ship design to protect against oil spills. Other steps should 

be taken to prevent against oil spills. The Coast Guard has a lot of jurisdiction to 

combat unsafe shipping practices, but the fact is, that we have been forced to rely 

on a lot of inspectors, and qualifications and such, from foreign nations, and in some 

cases, I would say that we have to deal with foreign nations that do not police safety 

and marine operations the way we do here in the United States. We need to level 

the playing field, and we need to ensure that they are doing as adequate a job of 

policing as we are. 

I would also like to note that I am concerned that many oil companies have gotten 

out of the business of doing marine transportation, and now they are sitting back 

and relying on the charter market, and trying to absolve themselves of liability 

when they hire a cut-rate operator who spills their oil because of shoddy practices. 

This is just what happened off the coast of France, when the ERIKA sank. Apparently, the French oil company that chartered that vessel was passing out bonuses 

based on how cheap they could get transportation. Well they got the cheapest transportation, and the nation of France had to pay the costs. This oil company was every 

bit as responsible for that oil spill as the tanker company, and I can guarantee that 

if they were liable for their action of chartering unsafe tonnage, they would have 

spent a lot more time looking for the safest tanker as opposed to the cheapest tanker. Maybe we should look at policies that favor double-hull users, for instance tax 

credits, or reestablishing the assessments that go into the Oil Spill Liability Trust 

Fund on the movement of oil in single-hull tankers. 

I am also very concerned that, while the deadlines for the phase out of singlehull tankers is not very far in the future, most oil companies are not being active 

enough in building or using double-hull ships, with the exception of some companies 

in the Alaska trade. The companies need to know that we are not going to relax 

OPA–90, and we are not going to relax the Jones Act. If they want to continue carrying oil in coast-wise trade, they’d best get cracking at building double-hull vessels. 

Of course, double-hull tankers by themselves aren’t the only solution. As the double-hull fleet begins to age, we will face some of the same risks of a catastrophic 

oil spill that we are facing with some of these old single-hull tankers. We also need 

to look at whether more should be done with respect to other types of sources of 

oil pollution, such as requiring response plans by non-tanker vessels that carry large 

amounts of fuel oil. 

While we have done much better in this area, the stakes are simply to high not 

to continue to do even better. I look forward to this afternoon’s testimony.

The CHAIRMAN. So we welcome our witnesses. Thank you for 

being here. We will start with you, Admiral Pluta, and then we will 

go to Mr. Keeney and then Ms. Davies. Admiral. 

STATEMENT OF REAR ADMIRAL PAUL J. PLUTA, ASSISTANT 

COMMANDANT FOR MARINE SAFETY, SECURITY AND

ENVIRONMENTAL PROTECTION, UNITED STATES COAST 

GUARD 

Admiral PLUTA. Thank you, Mr. Chairman. Good afternoon, and 

good afternoon to the distinguished Members of the Committee. 

I am Rear Admiral Paul J. Pluta, Assistant Commandant for Marine Safety, Security, and Environmental Protection, and it is a 

5

pleasure to appear before you today with my shipmates from EPA 

and NOAA to discuss the Oil Pollution Act of——

The CHAIRMAN. Could you move the microphone over? 

Admiral PLUTA. Yes, sir. 

It is a pleasure to appear before you today with my shipmates 

from EPA and NOAA to discuss the Oil Pollution Act of 1990 and 

the phase-out of single-hull tankers. 

Thirteen years ago, we faced what seemed an insurmountable 

task, responding to a spill of 258,000 barrels or 11 million gallons 

of crude oil into the pristine environment of Prince William Sound, 

Alaska. Coincident with the massive clean-up effort, the Congress, 

state legislatures, many countries, and the international organizations began an intensive investigation and exploration of the root 

causes of the accident and deliberated on appropriate prevention 

and response measures to reduce the likelihood of similar oil pollution incidents. 

Here in the United States, the 101st Congress unanimously 

passed the Oil Pollution Act of 1990, or OPA–90, as Senator Stevens rightly pointed out, and the President signed it into law on 

August 18, 1990. Since the passage of OPA–90, there has been a 

dramatic reduction in the volume of oil spilled into U.S. waters per 

million gallons shipped, declining from 9.7 gallons spilled per million gallons shipped in 1990 to 2.7 gallons spilled per million gallons shipped in 1999, a decrease of over 70 percent. 

In broad terms, the public policy objectives of OPA–90 are the 

prevention of oil spills, the provision of a comprehensive response 

regime when spills occur, and the assessment of appropriate penalties and liabilities to ensure that polluters pay for damages. As 

part of the prevention objective, the Oil Pollution Act of 1990 established double-hull requirements for newly constructed tank ships 

and tank barges that operate in U.S. waters, and established a 

phase-out schedule for existing tank vessels. 

The OPA–90 phase-out schedule requires that existing singlehull tank vessels be retrofitted with a double bottom, or be phased 

out of operation by 2010 unless they are equipped with a double 

bottom or double sides, in which case, some may continue to trade 

in the United States through 2015 depending on their age. The 

phase-out schedule is specified in section 4115 of OPA–90, and all 

tank vessels operating in U.S. waters must have double hulls by 

January 1, 2015. 

It is important to note that certain exemptions in OPA–90 allow 

single-hull tank vessels to continue to operate in the U.S. through 

2015. Any single-hull tank vessel unloading oil in bulk at a deep 

water port licensed under the Deep Water Port Act of 1974 as 

amended, or offloading oil in bulk within a lightering zone more 

than 60 miles offshore may still operate until 2015. Currently, the 

Louisiana Offshore Oil Port is the only deep water port operating 

in the United States, and three designated lightering zones are 

available in the Gulf of Mexico. In addition, the double-hull requirements do not apply to foreign vessels while engaged in innocent passage through U.S. waters. 

To provide clarification in applying the provisions of OPA–90, the 

Coast Guard produced a circular which provides guidance for deterVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00009 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
6

mining phase-out dates for single-hull tank vessels operating in 

waters subject to the jurisdiction of the United States. 

In 1991 the U.S. took the OPA–90 single-hull phase-out proposal 

to the Maritime Environment Protection Committee, or MEPC, of 

the International Maritime Organization. This resulted in the 

adoption of amendments to the International Convention for the 

Prevention of Pollution from Ships, or MARPOL, in 1992. Regulations 13.F and 13.G of that convention establish a 25- to 30-year 

life for single-hull tank vessels and require double hulls or tank 

vessels with designs equal to or exceeding the double hull’s ability 

to reduce or stop oil outflow due to a collision or grounding. While 

this represented a significant step forward in the elimination of 

single-hull tank vessels, these international amendments fell short 

of the phase-out scheme established by OPA–90. 

In December 1999, the tank ship ERIKA, containing 30,000 tons 

of heavy oil, broke-up off the French coast. The European Commission initiated a study which resulted in numerous recommendations and proposals to prevent another such occurrence. One of 

these proposals was an acceleration of the MARPOL Regulation 

13.G phase-out schedule for single-hull tankers. 

In June 2000 France, along with Belgium and Germany, submitted a comprehensive paper to the 45th session of the MEPC, 

proposing an amendment to Regulation 13.G of MARPOL that accelerated the phase-out schedule for single-hull tankers. The U.S. 

assisted France to ensure that the proposed dates were aligned as 

closely as possible with the phase-out dates in OPA–90. 

At its 46th session, MEPC adopted the modified version of that 

regulation. However, these dates were not consistent with those in 

OPA–90, and the U.S. was unable to become a party to these 

amendments. 

In November of 2002, the tank ship PRESTIGE, carrying approximately 20 million gallons of fuel oil, broke—began leaking 

after its hull split in a storm. The vessel eventually sank 150 nautical miles off the northwest coast of Spain, and the Coast Guard, 

along with the National Oceanic and Atmospheric Administration, 

sent a delegation to assist Spain with the massive clean-up effort. 

Under OPA–90, the tank vessel PRESTIGE had reached its phaseout date on January 1, 2000, and could no longer operate carrying 

oil in a U.S. port. In response to the sinking, the European Commission is looking at accelerating the phase-out time line for singlehull vessels to those originally proposed after the sinking of the 

tank vessel ERIKA. 

In conclusion, the success of OPA–90 can be measured by the absence of significant oil spills from tankers in U.S. waters since its 

passage. It establishes the cornerstones of prevention, preparedness, and response that serve as a useful model for the international maritime community. Nevertheless, we will continue to 

work with the international maritime community to ensure that 

shipping remains a safe, economical, and environmentally friendly 

transport option. 

Thank you for the opportunity to testify before you today. I will 

be happy to answer any questions that you have, Mr. Chairman. 

Thank you, sir. 

[The prepared statement of Admiral Pluta follows:]

7

PREPARED STATEMENT OF REAR ADMIRAL PAUL J. PLUTA, ASSISTANT COMMANDANT

FOR MARINE SAFETY, SECURITY AND ENVIRONMENTAL PROTECTION, UNITED STATES

COAST GUARD

Good afternoon Mr. Chairman and distinguished Members of the Committee. I am 

RADM Paul J. Pluta, Assistant Commandant for Marine Safety, Security and Environmental Protection. It is a pleasure to appear before you today to discuss the Oil 

Pollution Act of 1990 and the phase-out of single-hull tankers. 

Thirteen years ago, we faced what seemed an insurmountable task: responding to 

a spill of 258,000 barrels (11 million gallons) of crude oil into the pristine environment of Prince William Sound, Alaska. Coincident with the massive cleanup effort, 

the Congress, state legislatures, many countries, and international organizations 

began an intensive investigation and exploration of the root causes of the accident 

and deliberated on appropriate prevention and response measures to reduce the 

likelihood of similar oil pollution accidents. Here in the United States, the 101st 

Congress unanimously passed the Oil Pollution Act of 1990 (OPA–90), and the 

President signed it into law on August 18, 1990. Since the passage of OPA–90, there 

has been a dramatic reduction in the volume of oil spilled into U.S. waters from 

tankers per million gallons shipped—declining from 9.7 gallons spilled per million 

gallons shipped in 1990 to 2.7 gallons spilled per million gallons shipped in 1999, 

a decrease of over 70 percent. 

In broad terms, the public policy objectives of OPA–90 are: the prevention of oil 

spills, the provision of a comprehensive response regime when spills occur, and the 

assessment of appropriate penalties and liabilities to ensure that polluters pay for 

damages. 

As part of the prevention objective, the Oil Pollution Act of 1990 established double hull requirements for newly constructed tank ships and tank barges that operate 

in U.S. waters and established a phase-out schedule for existing tank vessels. The 

OPA–90 phase-out schedule requires that existing single-hull tank vessels be retrofitted with a double hull or be phased-out of operation by 2010, unless they are 

equipped with a double bottom or double sides, in which case some may continue 

to trade in the United States through 2015 (depending on their age). The phaseout schedule is specified in section 4115 of OPA–90 and all tank vessels operating 

in U.S. waters must have double hulls by January 1, 2015. 

It is important to note that certain exemptions in OPA–90 allow single-hull tank 

vessels to continue to operate in the U.S. through 2015. Any single-hull tank vessel 

unloading oil in bulk at a deepwater port licensed under the Deepwater Port Act 

of 1974, as amended, or offloading oil in bulk within a lightering zone more than 

60 miles may still operate until 2015. Currently, the Louisiana Offshore Oil Port 

is the only deepwater port operating in the United States and three designated 

lightering zones are available in the Gulf of Mexico. In addition, the double hull requirements do not apply to foreign vessels while engaged in innocent passage 

through U.S. waters. 

To provide clarification in applying the provisions of OPA–90, the Coast Guard 

produced Navigation and Vessel Inspection Circular number 10–94, ‘‘Guidance For 

Determination and Documentation of the Oil Pollution Act of 1990 (OPA–90) PhaseOut Schedule For Existing Single Hull Vessels Carrying Oil in Bulk.’’ This circular 

provides guidance for determining phase-out dates for single-hull tank vessels operating on waters subject to the jurisdiction of the United States. 

In 1991, the U.S. took the OPA–90 single hull phase-out proposal to the Maritime 

Environment Protection Committee (MEPC) of the International Maritime Organization (IMO). This resulted in the adoption of amendments to the International Convention for the Prevention of Pollution from Ships (MARPOL) in 1992. Regulations 

13F and 13G establish a 25–30 year life for single-hull tank vessels and require double hulls or tank vessels with designs equal to or exceeding the double hulls’ ability 

to reduce or stop oil outflow due to a collision or grounding. While this represented 

a significant step forward in the elimination of single-hull tank vessels, these 

amendments fell short of the phase-out scheme established by OPA–90. 

In December 1999, the tank ship ERIKA carrying 30,000 tons of heavy oil broke 

up off the French coast. The European Commission (EC) initiated a study, which 

resulted in numerous recommendations and proposals to prevent another such occurrence. One of these proposals was an acceleration of the MARPOL regulation 

13G phase-out schedule for single-hull tankers. In June 2000, France (along with 

Belgium and Germany) submitted a comprehensive paper to the 45th session of the 

MEPC proposing an amendment to regulation 13G of MARPOL that accelerated the 

phase-out schedule for single-hull tankers. The U.S. assisted France to ensure that 

the proposed dates were aligned as close as possible with the phase-out dates in 

OPA–90. At its 46th session, MEPC adopted the modified version of 13G that reVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00011 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
8

quires the phase-out of all single-hull tankers by 2015. However, since the dates 

were not consistent with those in OPA–90, the U.S. was unable to become a party 

to these amendments. 

In November 2002, the tank ship PRESTIGE, carrying approximately 20 million 

gallons of fuel oil, began leaking after its hull split in a storm. The vessel eventually 

sank 150 miles off the northwest coast of Spain and the Coast Guard, along with 

National Oceanic and Atmospheric Administration (NOAA), sent a delegation to assist Spain with the massive clean up effort. Under OPA–90, the tank vessel PRESTIGE had reached its phase-out on January 1, 2000 and could no longer operate 

carrying oil in a U.S. port. 

ln response to the sinking, the European Commission is looking at accelerating 

the phase-out timeline for single-hull vessels to those originally proposed after the 

sinking of the tank vessel ERIKA and more in line with the United States’ OPA–

90. This might also include an immediate prohibition on the carriage of heavy or 

persistent oils in single-hulled tank vessels. The Coast Guard currently has a delegation meeting with the European Commission to discuss their proposals. The economic impact of the EC initiative is unclear at this point. The April 2000 Government Accounting Office (GAO) report to Congress recommended that MARAD regularly assess the progress being made to replace phased-out single-hull vessels to determine whether sufficient shipping capacity exists to meet domestic oil needs. 

MARAD indicates that it intends to continue such assessments with the Coast 

Guard’s assistance and routinely report its finding to the Congress until the phaseout for single-hull tank ships is complete on January 1, 2015. 

In conclusion, the success of OPA–90 can be measured by the absence of significant oil spills from tankers in U.S. waters since its passage. It establishes the cornerstones of prevention, preparedness and response that serve as a useful model for 

the international maritime community. Nevertheless, we will continue to work with 

the international maritime community to ensure that shipping remains a safe, economical, and environmentally friendly transport option. 

Thank you for the opportunity to testify before you today. I will be happy to answer any questions you may have.

The CHAIRMAN. Thank you, Admiral. 

Mr. Keeney, welcome. 

STATEMENT OF TIMOTHY R. E. KEENEY, DEPUTY ASSISTANT 

SECRETARY OF COMMERCE FOR OCEANS AND

ATMOSPHERE, DEPARTMENT OF COMMERCE 

Mr. KEENEY. Good afternoon, Mr. Chairman and distinguished 

Members of the Committee. I am Timothy Keeney, Deputy Assistant Secretary of Commerce for Oceans and Atmosphere. On behalf 

of NOAA Administrator Vice Admiral Conrad Lautenbacher, thank 

you for inviting NOAA to testify today. 

Under several laws, NOAA has been distinguished as a steward 

of the Nation’s ocean and coastal—excuse me—as a steward of the 

Nation’s oceans and coasts and as a trustee of marine resources. 

As such, NOAA has a strong interest in how tanker accidents impact the ocean and coastal environment, including habitat and living marine resources. 

Two recent oil spill events off the coast of Europe demonstrate 

the difficult issues presented by tanker spills. Both tankers were 

old and broke apart during fierce storms. The PRESTIGE tanker 

which sunk off the coast of Spain in November of last year, was 

26 years old; and the ERIKA tanker which ruptured off the coast 

of France in 1999 was about 24 years old. Second, both vessels 

were single-hull tankers. 

Both of these events have focused renewed attention on phasing 

out single-hull tankers in favor of double-hull tankers. NOAA supports the Coast Guard’s efforts to implement the Oil Pollution Act 

requirements for double-hull tankers. Shifting to double-hull tankVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00012 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
9

ers, however, is not the silver bullet solution to our problems. 

Other significant oil pollution threats can or do result from aging 

infrastructure, including pipelines, shoreside facilities, and nontank vessels, maritime acts of terror, and polluted runoff. In addition, we must also plan for the day when new double-hull tankers 

become older and decayed. 

Mr. Chairman, my testimony will focus on NOAA’s roles of prevention, preparedness, and response, restoration, and will conclude 

with four recommendations. 

Under prevention, prevention of marine disasters is hard to 

measure, but it must remain a priority. Prevention is simply the 

best way to protect people, the economy, and the marine environment. In addition to regulation, the Federal Government assists 

prevention by providing information that facilitates safe marine 

transportation. Today, NOAA is the major provider of geographic, 

oceanographic, and meteorological information in the form of nautical charts, hydrographic and related surveys, tide and current 

predictions, and weather forecasts. 

New technologies are providing advanced services to meet the 

needs of modern navigation, including electronic navigational 

charts and the Physical Oceanographic Real-Time System, or the 

acronym ‘‘PORTS’’. PORTS measures water levels, currents, and 

other oceanographic and meteorological conditions that directly 

support safe and efficient marine trade. 

A report by the Woods Hole Oceanographic Institute concluded 

that the electronic navigational charts and other new technologies 

could yield a higher cost-benefit ratio than double-hull tankers, especially in high traffic areas. Accidents such as the EXXON 

VALDEZ, for example, could be avoided using modern navigational 

systems. 

Under preparedness, despite prevention efforts, we know that 

spills can and will occur. Without adequate preparation, such as 

the periodic training and drilling exercises the Coast Guard conducts with NOAA and others, a response will not be effective. 

NOAA supports preparedness with several products, including the 

environmental sensitivity indexes, which are maps depicting the location of vital and sensitive natural resources; the trajectory analysis planner, a computer program that helps to predict spill movements so spill response action can be planned even prior to a spill 

actually occurring; and through regional representatives NOAA 

helps states, communities, and industry develop contingency plans 

that are location-specific. 

Following the EXXON VALDEZ, many industry cooperatives and 

companies specializing in spill preparedness and clean-up were 

formed. Over time, many of these companies have gone out of business or merged, reducing the national investment in research and 

development. 

Under response, NOAA serves as the primary scientific support 

to the Coast Guard during oil spills. NOAA’s scientific expertise includes oceanographers, meteorologists, chemists, biologists, and 

others. When an incident does occur, NOAA first assesses the 

spill’s behavior, focusing on immediate health and safety issues. 

NOAA then provides forecasts, predictions, models, and analysis of 

10

the spill. Experts from NOAA try to determine the threat the spill 

poses to living marine resources. 

In late November, Spain accepted American assistance following 

the PRESTIGE tanker disaster. Both NOAA and the Coast Guard 

sent staff to Spain to assist. NOAA has provided experts on beach 

clean-up techniques, methods to prioritize sites, marine biology, 

seafood safety, and forecasting oil spill movements. Currently, 

three NOAA staff are working in different areas of Spain on PRESTIGE-related issues. 

Finally under restoration, under the Oil Pollution Act of 1990 

NOAA is responsible for assessing and restoring coastal and marine resources injured by oil spills. When oil threatens and injures 

coastal marine resources, NOAA provides multidisciplinary teams 

of scientists, economists, and attorneys that work collaboratively 

with other natural resource trustees to determine the injury to 

coastal resources and the restoration required to address those injuries. 

In order to build upon improvements in prevention and preparedness, response and restoration, NOAA offers the following four recommendations: One, implement advanced charting technologies 

and navigation information systems; 

Two, institutionalize and improve coordination of oil spill research and development between government, academia, and industry; 

Three, ensure adequate levels of funding for the oil spill liability 

trust fund; 

And four, finally, continue efforts to review potential impacts 

from tankers and other vessels on the marine environment. Such 

efforts should include working through the International Maritime 

Organization. 

Thank you, Senator. I look forward to your questions. 

[The prepared statement of Mr. Keeney follows:]

PREPARED STATEMENT OF TIMOTHY R. E. KEENEY, DEPUTY ASSISTANT SECRETARY OF

COMMERCE FOR OCEANS AND ATMOSPHERE, DEPARTMENT OF COMMERCE

Introduction 

Mr. Chairman, and distinguished Members of the Committee, I am Timothy 

Keeney, Deputy Assistant Secretary of Commerce for Oceans and Atmosphere. On 

behalf of NOAA Administrator Vice Admiral Conrad C. Lautenbacher, Jr., USN 

(ret), thank you for this opportunity for NOAA to testify on recent oil spills, the 

phase-out of single-hull tankers, and related issues. The United States Coast Guard 

(USCG) and Environmental Protection Agency (EPA) are charged with executing 

many vessel-related laws and regulations, so I will respectfully defer to Assistant 

Commandant of the Coast Guard, Rear Admiral Pluta, and Deputy Director of EPA, 

Elaine Davies, on some of these issues. After some introductory remarks, I will discuss NOAA’s efforts following the recent PRESTIGE tanker disaster off the coast 

of Spain, and NOAA’s role in marine oil spill prevention, preparedness, response 

and restoration. 

Approximately 70 percent of imported oil used by the United States is shipped 

by tanker. At any given time, oil, petroleum products, and other hazardous materials account for about half of all cargo in transit upon U.S. waters, most of it in 

tankers or tank barges. NOAA’s principal concern regarding tankers is the impact 

of spills on the ocean and coastal environment, including habitat and living marine 

resources. NOAA is a steward and trustee of many of the Nation’s coastal and marine resources pursuant to the Oil Pollution Act, the Magnuson-Stevens Fishery 

Conservation and Management Act, the Marine Mammal Protection Act, the National Marine Sanctuaries Act, and other laws. NOAA has a strong interest in vessel 

activities because of its marine stewardship responsibilities and has some capability 

11

1See http://www.isl.org/english/public/shortcommentno3-e.htm 2 Id. 

to regulate vessels under these authorities, depending on actual or potential impacts 

on NOAA’s trust resources. Having such broad stewardship responsibilities also creates an incentive for NOAA to work closely with sister agencies that have more direct regulatory responsibilities over maritime activities. Two agencies that we coordinate with are the Coast Guard and EPA. 

Two recent events that resulted in major oil spills off the coast of Europe demonstrate the difficult issues presented by major oil spills from oil tankers. First, both 

tankers were old. The tanker, PRESTIGE, which recently broke apart off the coast 

of Spain, was 26 years old. The ERIKA was about 24 years old when it broke apart 

off the coast of France in 1999. The average age of a tanker in the global tanker 

fleet at the beginning of 2002 was 18.2 years. 1 Second, both vessels were singlehull tankers, as are the majority of the estimated 9,716 tankers of 300 gross tons 

and over operating globally. 2 Third, both PRESTIGE and ERIKA broke apart during fierce storms. Fourth, international shipping typically involves a host of actors, 

which can make it difficult to determine the responsible party in the event of an 

oil spill. For example, the PRESTIGE was a Japanese-built ship, owned by a company registered in Liberia, managed by a Greek firm, registered in the Bahamas, 

certified by an American organization, and chartered by a Swiss-based Russian 

trading company. Finally, PRESTIGE was traveling neither to nor from a European 

Union port. Port State control offers an important mechanism for a country to impose regulations on ships; however, it is extremely difficult (if not impossible) to do 

so for ships merely in transit past a Nation’s coast. 

The global nature of the maritime transport industry presents a strong argument 

for a uniform set of environmental and safety rules. A diverse array of unilateral 

regulatory approaches could contribute to increased costs for the tanker industry 

and ultimately for national economies and consumers. Uniform rules allow for the 

efficient, economic conduct of business and creates a level playing field among the 

participants. However, agreeing to and approving uniform rules through the International Maritime Organization (IMO) can take considerable time to accomplish, 

and since IMO works primarily by consensus, a country may not achieve its desired 

outcome through the IMO process. The bottom line is that nations (and their political subdivisions) directly impacted by major spills inevitably face heavy pressure 

to take rapid and decisive action. A nation may decide that domestic legislation is 

the best way to protect its interests. 

Double hulls can provide an added measure of safety, but shifting to double-hull 

tankers is not a panacea. Even as we phase out single-hull tankers, we must remain 

vigilant in providing state-of-the-art navigation data and other preventive and preparedness services. We also must recognize other significant oil pollution threats to 

public health, commerce, and the marine environment from other aging infrastructure, including pipelines, shore-side facilities, and non-tank vessels. We should also 

recognize and prepare for the future when double-hull tankers become older and 

consequently, are at an increased risks for spills. 

A particular concern today is maritime acts of terror. Events like the October 

2002 explosion that rocked the Yemen-bound French tanker, LIMBURG, breached 

both hulls of a new, double-hulled ship, penetrating about 24 feet into the cargo 

hold. I commend Congress, and particularly Members of this Committee, for recognizing the vulnerability of our ports and coastal communities by passing the Maritime Transportation Security Act of 2002, which President Bush signed the same 

day that he signed into law the Homeland Security legislation. 

I would be remiss if I did not mention that spills are not the only threat to marine 

resources from petroleum products. The amount of oil deposited in the coastal waters of the United States from urban runoff, highways and related sources greatly 

exceeds deposits from the transportation of oil. While the impacts of a major spill 

can be dramatic, these deposits also present a serious and complex challenge and 

will continue regardless of ongoing efforts to curb marine disasters from tankers. 

In addition, natural seepage of crude oil is another significant source of oil in the 

marine environment, although this natural seepage tends to occur sporadically and 

at low rates. Devoting attention to distinguishing the effects of petroleum released 

by natural processes versus anthropogenic activities would greatly aid in understanding crude oil behavior in the marine environment, and how marine life responds to the introduction of petroleum. 

The remainder of my testimony will summarize the support NOAA has provided 

in response to the PRESTIGE catastrophe and then I will update the Committee 

on NOAA programs and responsibilities in the areas of spill Prevention, Preparedness, Response, and Restoration. 

12

3 Hauke L. Kite-Powell, Di Jin, and Scott Farrow, Expected Safety Benefits of Electronic 

Charts and Integrated Navigation Systems, May 1997. 

NOAA and the PRESTIGE Spill 

NOAA offered expert (knowledge only, not products) assistance to Spain after the 

PRESTIGE sank. Spain accepted and NOAA sent four people to Spain a few days 

later: two experts in cleanup measures and general organization of information during a spill, a fisheries expert and a damage assessment economist. The U.S. Coast 

Guard also sent one person with this team from their Gulf Strike Team. The first 

team was in Spain for two weeks, providing clean-up guidance, helping to prioritize 

cleanup areas, visiting beaches, and writing reports. When they rotated out, two 

more NOAA employees, a marine biologist and a cleanup expert, took their place. 

Three weeks after accepting our original offer of assistance Spain requested a trajectory expert to help them set-up their own capabilities to determine the fate and 

transport of the oil still coming up from the PRESTIGE. NOAA agreed to help and 

sent a trajectory expert after Christmas to work with Spain’s team. The cleanup expert on the second team was also invited to Madrid to speak to the new Spanish 

Scientific Commission, which he did. NOAA is currently evaluating the level of our 

continued support to Spain. On December 18, NOAA Administrator, Vice Admiral 

Lautenbacher, along with the Commandant of the Coast Guard, met with the Prime 

Minister of Spain, to discuss our efforts in Spain and to receive his thanks for our 

continued presence. Vice Admiral Lautenbacher offered further technical assistance 

to Spain, and the Prime Minister accepted. 

Prevention 

Prevention of maritime disasters is hard to measure. It is difficult to attribute 

credit for accidents that do not occur. However, prevention must remain a priority. 

It is simply the best way to protect people, the economy, and the marine environment. 

One way for government to aid in prevention is through regulation. This can include regulating the structural integrity, design, and manning requirements of vessels, such as phasing in a requirement for double-hull tankers. Governments can 

also regulate vessel traffic, including creating vessel traffic lanes or designating certain sensitive areas off limits. Another regulatory option is to create financial disincentives to pollute, such as OPA, which requires responsible parties to pay the 

costs of the response and restoration, as well as penalties in certain circumstances. 

The Federal Government also facilitates safe marine transportation by providing 

mariners with vital oceanographic and meteorological information. The life-saving 

and economic value of this non-regulatory approach was recognized early in our history when President Thomas Jefferson authorized the Survey of the Coast in 1807. 

Today, NOAA is the major provider of geographic, oceanographic, and meteorological 

information about our coastal waters. NOAA’s services include nautical charts, hydrographic and related surveys, tide and current predictions, and weather forecasts. 

Although, ultimately mariners are responsible for prudent navigation, NOAA takes 

seriously its responsibility to provide them with accurate, up-to-date information so 

that their decisions are well informed. 

New technologies are aiding in providing advanced services that meet the needs 

of modern navigation, including Electronic Navigational Charts (ENCs) and the 

Physical Oceanographic Real Time System (PORTS). PORTS supports safe and costefficient navigation by providing ship masters and pilots with accurate real-time information necessary to avoid groundings and collisions. PORTS includes centralized 

data acquisition and dissemination systems that provide real-time water levels, currents, and other oceanographic and meteorological data from bays and harbors to 

the maritime user community. NOAA ENCs support real time navigation, as well 

as collision and grounding avoidance needs of the mariner, and accommodate a realtime tide and current display capability that is essential for large vessel navigation. 

NOAA ENCs also provide fully integrated vector base maps for use in geographic 

information systems (GIS) that are used for coastal management or other purposes. 

A report by the Woods Hole Oceanographic Institution’s Marine Policy Center concluded that ENCs and other new technologies could yield a higher cost-benefit ratio 

than double-hull tankers. 3

Data from NOAA weather buoys and water level stations also support a backbone 

of observations in support of an Integrated and Sustained Ocean and Coastal Observing System. PORTS represents a practical application of such a system in support of safe and efficient maritime commerce. Of course, every accident avoided also 

supports NOAA’s responsibilities as a trustee, steward and manager of marine resources by preventing harm to ocean and coastal waters and living marine resources. In addition to enhancing safety and stewardship, this data also promotes 

13

more efficient movement of goods. This can provide significant national economic 

benefits, including supporting the competitiveness of U.S. exports in an increasingly 

global marketplace. 

I would like to add at this point that an interagency task group at the National 

Science and Technology Council is planning an international Earth Observation 

Summit for this coming summer, and has asked NOAA, along with NASA, to coordinate the interagency planning effort. This event will highlight the need for a comprehensive data collection system, which will complement the existing ocean, coastal 

and terrestrial observation systems. 

Preparedness 

Even as we seek to prevent maritime accidents, we must be mindful that they 

can and will occur. How prepared we are to respond in such instances can prevent 

loss of life and mitigate the degree of environmental and economic harm. The bottom line is that without adequate preparation, a response cannot be effective. The 

Coast Guard’s Incident Command System provides a framework to organize decision-making, understand response strategies, and establish mechanisms for evaluating tradeoffs among response approaches. 

In preparation for and in actual response to marine emergencies, NOAA brings 

valuable expertise, which is readily available to respond to accidental spills as well 

as deliberate acts of sabotage and threats to homeland security. This expertise includes oceanographers, meteorologists, chemists, biologists, and others who have focused on better understanding the behavior of marine oil and chemical releases and 

reducing the risks to resources. Examples of services NOAA provides include:

1. The Environmental Sensitivity Indexes, which are maps depicting the location of vital natural resources. This information improves the ability to make 

strategic response decisions.

2. The Trajectory Analysis Planner helps predict spill movements, which supports strategic placement of response resources.

3. The NOAA Guide to Seafood Safety supports decision making on fisheries 

that may be impacted by an event.

4. NOAA also provides training and participates in joint drills and related activities to enhance our capabilities for responding to spills and conducting natural resource damage assessments.

Improving the ability to respond to a spill was a major focus following the EXXON 

VALDEZ catastrophe. This included the formation of industry cooperatives and companies specializing in spill preparedness and clean up. Unfortunately, over time 

many of these companies have gone out of business or merged, reducing the national 

investment in research and development. 

Response 

When an incident does occur, NOAA’s primary role in a response is to mitigate 

damage to public health, property and the marine environment and resources by 

providing scientific support to response agencies. A successful response is dependent 

on an agency’s response capability; and NOAA has made a conscious effort to implement a disciplined, agency-wide capability. Since 1994, NOAA has responded to 896 

spill incidents. 

NOAA’s first efforts involve assessments of a spill’s behavior, focusing on immediate health and safety issues for on-scene responders and the public. NOAA offices 

begin providing regular weather forecasts, tide and current predictions, oceanographic modeling, and analysis of how these may impact the trajectory and related 

aspects of the event. Experts from NOAA undertake efforts to understand the 

threats to living marine resources. The need to deploy vessels, aircraft, and instruments, such as tide gauges, is assessed. 

Restoration 

Under the Oil Pollution Act of 1990 (OPA), NOAA is responsible for assessing and 

restoring coastal and marine resources injured by oil spills. NOAA is also responsible for developing and maintaining regulations under OPA that guide federal, 

state and tribal natural resource trustees in their efforts to conduct natural resource 

damage assessments. When oil threatens and injures coastal and marine resources, 

NOAA arrives on-scene to take samples of oiled natural resources and collect other 

information about injuries to natural resources and the services they provide. This 

information is used in the damage assessment and for restoration planning. NOAA 

provides multi-disciplinary teams of scientists, economists, and attorneys that work 

collaboratively with other natural resource trustees to determine the injury to coastal resources and the restoration required to address those injuries. 

14

NOAA also places a high priority on working cooperatively with the parties responsible for the released oil—government and industry working cooperatively can 

reduce transaction costs and expedite restoration of the injured resources. NOAA 

has conducted natural resource damage assessments and restoration projects for oil 

spills across the country, including Alaska, California, Florida, Hawaii, Louisiana, 

Maine, Maryland, New Jersey, Oregon, Rhode Island, Texas, and Washington. 

Through these authorities and cooperative efforts, NOAA successfully restores natural resources across the nation and ensures the long-term health of coastal and 

marine resources. 

Conclusions and Recommendations 

In order to build upon improvements in prevention, preparedness, response and 

restoration, NOAA offers the following recommendations:

1. Implement advanced charting technologies and navigation information systems. Support for safe and efficient marine transportation should be a priority 

of a coastal observing system.

2. Institutionalize and improve coordination of research and development between government and industry.

3. Continue efforts to review potential impacts from tankers and other vessels 

on the ocean environment. Such efforts should include working through the 

International Maritime Organization.

4. Maintaining a regular schedule of periodic training and drills for oil spill response is absolutely essential.

5. Senate assent and U.S. ratification of the Law of the Sea Treaty would 

strengthen the position of the United States in addressing global ocean issues.

Thank you and I look forward to answering any questions.

The CHAIRMAN. Thank you, sir. 

Ms. Davies, welcome. 

STATEMENT OF ELAINE F. DAVIES, DEPUTY DIRECTOR,

OFFICE OF EMERGENCY AND REMEDIAL RESPONSE,

ENVIRONMENTAL PROTECTION AGENCY 

Ms. DAVIES. Thank you. Thank you, Mr. Chairman. Good afternoon. Thank you, Members of the Committee. 

I am Elaine Davies, the Deputy Director of the Office of Emergency and Remedial Response. I am pleased to be here today to discuss EPA’s efforts to prevent, prepare for, and respond to oil spills 

in our Nation’s waters. 

EPA’s Office of Emergency and Remedial Response manages the 

agency’s oil program activities. We regulate preparedness and prevention at such facilities as oil production and bulk storage facilities and refineries. We share responsibility for responding to oil 

spills with the U.S. Coast Guard. We respond in the inland waters 

and Coast Guard responds along the coast. We have a very good 

working relationship with the Coast Guard as well as with NOAA 

and we are indeed, as Admiral Pluta says, shipmates. In practice, 

EPA and Coast Guard often provide each other technical assistance 

and support regardless of where the spill occurs. 

The Coast Guard, however, is principally responsible for most 

marine transportation-related oil spill prevention activities, including the subject of today’s hearing, the phase-out of single-hull tankers. 

EPA strongly supports the Coast Guard’s effort to implement the 

Oil Pollution Act requirements for double-hull tankers. We feel that 

the phase-out of single-hull tankers is an important component of 

Federal efforts to protect our Nation’s environmental and natural 

resources from potentially catastrophic oil spills. 

15

Every year EPA evaluates approximately 13,000 reports of oil 

spills to determine whether there is a need for the agency to respond, and we do respond at approximately 300 of those, where we 

manage the event or we provide oversight. The vast majority of responses are done by the parties who cause the spills. In conducting 

the response, we use the national contingency plan, which provides 

the blueprint for all Federal oil and chemical spill response. 

We also chair the National Response Team, and Coast Guard is 

our Vice Chair. This is a group composed of 16 Federal agencies 

who meet regularly to deal with preparedness, prevention, and response, planning and policy issues, and then can provide valuable 

response and assistance during a spill. In responding to a major 

spill, we would make use of incident command, which is an excellent organizational tool for such an event. 

Since the EXXON VALDEZ spill, there has been significant effort 

to improve readiness in the Nation. One element is area contingency planning, which has gone on for the last 12 years since the 

passage of OPA. The plans are created and updated by those who 

would actually respond, the federal, the state, the local, and industry, and they have made tremendous progress. 

In conclusion, I want to say preparedness and prevention are the 

surest way to protect human health and the environment from the 

harmful effects of an oil or chemical spill. 

Mr. Chairman, I ask that my entire written statement be submitted for the hearing record. I will be pleased to answer any questions you may have. 

The CHAIRMAN. Without objection. Thank you, and thank all the 

witnesses for coming today. 

[The prepared statement of Ms. Davies follows:]

PREPARED STATEMENT OF ELAINE F. DAVIES, DEPUTY DIRECTOR, OFFICE OF

EMERGENCY AND REMEDIAL RESPONSE, ENVIRONMENTAL PROTECTION AGENCY

Good Afternoon Mr. Chairman and Members of the Committee. I am Elaine Davies, Deputy Director of EPA’s Office of Emergency and Remedial Response. I am 

pleased to appear today to discuss EPA’s responsibilities in the event of a major oil 

spill in our Nation’s waters. 

EPA’s Oil Spill Response Program is an integrated program that works to prevent, prepare for and respond to spills at a wide variety of facilities that handle, 

store, or use oil across the country. EPA regulates approximately 400,000 facilities, 

including oil production, bulk oil storage, and oil refinery facilities that store or use 

oil in above-ground and certain below-ground storage tanks. Additionally, EPA is 

the principal federal response agency for spills in inland waters, including oil pipeline ruptures and tank spills. 

EPA shares the responsibility of responding to oil spills with the U.S. Coast 

Guard (USCG). Further, we share the responsibility for prevention and preparedness with USCG and several other federal agencies. The USCG responds to spills 

that occur along the coast of the United States, or the coastal zone, and EPA responds to spills that occur in the internal United States, or the inland zones. The 

exact lines between the inland and coastal zones are determined locally and established by Memoranda of Agreement (MOAs) between regional EPA and Coast Guard 

offices. While oil spills that occur off the coast of the United States and certain 

transportation related oil spill prevention activities, such as the phase-out of singlehull tanker vessels, are the principal responsibility of the Coast Guard, EPA often 

provides assistance and works closely with the USCG at all times. 

EPA strongly supports the USCG’s efforts to implement Oil Pollution Act requirements for double-hull tankers. The phase-out of single-hull tankers is an important 

component of federal efforts to protect our Nation’s environmental and natural resources from potentially catastrophic spills. 

16

EPA’s Oil Response Program 

Each year, millions of gallons of petroleum and other oils are transported and 

stored throughout the country, creating a significant potential for oil spills and serious threats to human health and the environment. Approximately 20,000 oil spills 

are reported to the Federal Government each year, and of those, EPA evaluates as 

many as 13,000 to determine if its assistance is required. On average, EPA either 

manages the oil spill response or oversees the response efforts of private parties at 

approximately 300 sites per year. 

The type and extent of EPA’s participation in an oil spill response varies depending on who is actually leading the oil spill cleanup and where the spill is located. 

If the party responsible for the spill is unknown, unwilling, or unable to clean up 

the spill, EPA may be the lead responder, and the response decisions and activities 

are made by EPA and paid for by the Federal Oil Spill Liability Trust Fund. This 

is, however, a rare occurrence, and the majority of oil spills are cleaned up and paid 

for by the parties responsible for the spill, with EPA’s advice or under EPA’s direction, or in some instances by a state agency. 

The type of technical assistance EPA provides after an oil spill includes air and 

water monitoring support and access to the Federal Environmental Response Team, 

a group of highly skilled environmental experts available to employ the most upto-date and innovative technological practices to each and every response situation. 

EPA is also responsible for maintaining the National Contingency Plan’s (NCP) 

Product Schedule. The NCP Product Schedule lists chemical and biological products 

available to a federal On-Scene Coordinator (CSC) that may help clean up an oil 

spill. Due to the unique nature of each oil spill, and the potential impact on natural 

resources, OSCs help determine which products, if any, may be used on a particular 

spill. To make the best use of this resource, an OSC, in consultation with the Regional Response Team (RRT), is the final decision maker in determining which technology and particular product would most successfully assist in the spill cleanup. 

EPA’s Oil Spill Coordination With the USCG 

EPA and the USCG closely coordinate our activities to ensure an effective national oil spill response program. One major coordination tool is the National Contingency Plan (NCP). The NCP is the Federal Government’s blueprint for responding to both oil spills and hazardous substance releases among federal, state, and 

local authorities. Additionally, it provides the government with a framework for notification, communication, and responsibility for response to an oil spill. 

Under the NCP, another major coordination tool is the National Response Team 

(NRT). Composed of up to 16 federal agencies, with EPA serving as chair and the 

Coast Guard serving as vice-chair, the NRT assists responders by providing information, technical advice, and access to resources and equipment during an incident. 

In the event that response is needed by more than one federal region, the NRT 

helps coordinate the overall response efforts. 

In addition to the NRT, there are 13 Regional Response Teams (RRTs), one for 

each of EPA’s ten regional offices and one each for Alaska, the Caribbean, and the 

Pacific Basin. RRTs are co-chaired by each EPA Region and its Coast Guard counterpart. The RRTs work with the federal OSC in making certain response decisions, 

and identifying and accumulating specialized resources. 

For example, through the RRT, the OSC can request and receive assistance on 

natural resource issues from the Department of the Interior, or borrow specialized 

equipment from the Department of Defense. Involvement of the RRT in these response decisions and activities helps ensure efficient agency coordination while providing the OSC with the assistance necessary for successful response. 

In addition, during major oil spills, EPA joins with other responders in implementing an Incident Command System (ICS). This system provides the OSC with 

an organizational structure to facilitate and effectively use the resources from all 

appropriate federal, state, local and private organizations. 

EPA’s Oil Spill Preparedness and Prevention Program 

While EPA’s Oil Response Program is ready to respond whenever necessary, it is 

always better to prevent spills before they happen. This is the goal of EPA’s Oil 

Spill Preparedness and Prevention Program. 

A principal preparedness tool, Area Contingency Plans (ACPs), are a critical element of the national oil spill preparedness, prevention, and response infrastructure. 

The plans are created and updated by a committee composed of federal, state, and 

local agency representatives who will work together during an actual emergency response. Chaired by an EPA OSC in the inland zone and the USCG in the coastal 

zone, the committees work with industry and responders to identify potential discharge scenarios, potentially affected resources (including environmentally sensitive 

17

areas), and possible response resources such as equipment and trained personnel. 

This up-front planning work allows the various agencies, including EPA and the 

USCG, to become familiar with each other and understand their expected roles and 

responsibilities during a response. It also ensures that high risk scenarios are considered and practiced before actual spills occur, thereby testing the response mechanism in a given area of the country. 

EPA also requires owners and operators at certain high-risk, non-transportation 

related, oil storage facilities to prepare and submit to EPA a Facility Response Plan 

(FRP) that outlines exactly how a facility will respond to a worst-case oil spill at 

the facility. We also manage the Spill Prevention, Control and Countermeasures 

(SPCC) program, which requires owners or operators of all regulated oil facilities 

to prepare and implement facility plans to prevent an oil spill. 

By working to prevent and prepare for oil spills across the country, the EPA Oil 

Program actively protects human health and the environment and greatly reduces 

the harmful effects of an oil spill. 

Conclusion 

EPA works diligently to maintain an effective Oil Spill Program. The lessons 

learned from preventing, preparing for, and responding to oil spills over the past 

30 years have enabled EPA to build an overall emergency response program that 

effectively responds to and mitigates the human health and environmental effects 

of both natural and man-made events. EPA looks forward to working with Congress 

as we strive to meet our common goal of protecting human health and our Nation’s 

environmental and natural resources through prevention, preparedness, and response to oil spills.

The CHAIRMAN. I guess that this issue has clearly been made significantly more important because of the threat of acts of terror. 

Would you agree, Admiral Pluta? 

Admiral PLUTA. Yes, sir. 

The CHAIRMAN. Including the October 2002 explosion on board 

the French liner LIMBERG, which was a new double-hulled ship, 

which is of some interest, I think, in our discussion here. 

But what I found interesting in Mr. Keeney’s—believe it or not, 

we do read your statements from time to time. 

[Laughter.] 

The CHAIRMAN. Mr. Keeney, you mentioned in your statement 

that the PRESTIGE was a Japanese-built ship, owned by a company registered in Liberia, managed by a Greek firm, registered in 

the Bahamas, certified by an American organization, and chartered 

by a Swiss-based Russian trading company. 

Finally and very importantly here, PRESTIGE was traveling neither to nor from a European Union port. In other words, a huge 

amount of damage was done to a European country that this tanker was never even intended to come very close to. I note in OPA–

90 that the double-hull requirements do not apply, the phase-in of 

double-hulled requirements do not apply to foreign vessels while 

engaged in innocent passage through U.S. waters. Is that an issue, 

Admiral and Mr. Keeney and Ms. Davies? 

Admiral PLUTA. Mr. Chairman, yes, it is an issue. But my response to you would be that double-hull is merely one intervention 

in the package that OPA–90 presents to us, Mr. Chairman. There 

are many other facets of OPA–90 that have caused changes in the 

way that oil is shipped to and from the United States, and since 

OPA–90, we have had other interventions, both domestically and 

internationally, that permit us to take even more action, port state 

control action. There is a safety management system in place on 

these ships now. We have upgraded the standards for training and 

certification of all the people on watch. 

18

The CHAIRMAN. That does not address my question, Mr. Pluta. 

If a ship is sailing through, is cruising through United States waters, through our waters—and I do not know exactly which—to 

show you the level of my ignorance, I am not sure which boundary 

we use in that connection. 

Admiral PLUTA. The 12-mile limit, Mr. Chairman. 

The CHAIRMAN. The 12-mile limit. Some countries use as much 

as a 200-mile limit, right? 

Admiral PLUTA. Yes, sir. 

The CHAIRMAN. But if that ship is passing within 12 miles of the 

United States, but it is not going into port in the United States, 

it can be forever a single-hulled ship; is that correct? 

Admiral PLUTA. Mr. Chairman, under the limits, if it is not a 

U.S. flag vessel it would have to comply with the limits at IMO, 

and they would eventually be phased out anyway. But you are 

quite right that these ships can be passing close to the United 

States. There are Law of the Sea issues in what is happening off 

of some countries in Europe that need to be addressed at the U.N. 

as well, Mr. Chairman. But you are right on target. 

The CHAIRMAN. Mr. Keeney? 

Mr. KEENEY. I defer to the Coast Guard on this. This is really 

not an area that NOAA has direct knowledge, with regards to foreign vessels and the rules that apply to them in U.S. waters. 

The CHAIRMAN. Does it concern you if indeed a ship can come 

within 12 miles of the United States, single-hull like the PRESTIGE, and not be required to have a double hull at any time, 2015, 

2030, whatever it is? 

Mr. KEENEY. Certainly. Any kind of increased risk concerns us 

at NOAA to potential damage to marine resources. 

The CHAIRMAN. Ms. Davies? 

Ms. DAVIES. We certainly are concerned about any oil spill and 

we definitely would defer to the Coast Guard on any of the guidelines of the work that they are doing on double-hull, and we would 

support them in any way we could. 

The CHAIRMAN. Admiral, do you believe the PRESTIGE would 

have broken apart and sunk if it had had a double hull, given your 

knowledge of the experience that that ship went through? 

Admiral PLUTA. Mr. Chairman, it is hard to say until the accident investigation is complete, but my experts tell me that just by 

virtue of the fact that you have a double hull does not prevent that 

a vessel is not going to unzip and break apart at sea in heavy 

weather like the motor vessel PRESTIGE experienced. 

The CHAIRMAN. And age is always a factor in the ability of any 

ship to resist those kinds of things? 

Admiral PLUTA. Yes, Mr. Chairman, as well as many other factors. 

The CHAIRMAN. This ship was 26 years old, the PRESTIGE? 

Admiral PLUTA. Yes, sir. Age as well as how well the vessel is 

being maintained and monitored in service. 

The CHAIRMAN. And some of them are not, especially if they may 

be a Japanese-built, owned, registered in Liberia, managed by a 

Greek firm, registered—the maintenance may not be the best on 

that kind of ship? 

Admiral PLUTA. That is always a possibility, Mr. Chairman. 

19

The CHAIRMAN. It has been your experience of your many years 

of observing these ships in the United States Coast Guard? 

Admiral PLUTA. Yes, sir, that is a distinct possibility. 

[Laughter.] 

Admiral PLUTA. You never can tell. There are some countries and 

some companies take their responsibilities very seriously, and I 

think the majority of them do, Mr. Chairman. But there certainly 

are those that do not and those are the ones that cause the problems. 

The CHAIRMAN. Mr. Keeney, I believe it was in your statement 

you recommend ratification of the Law of the Sea Treaty; is that 

correct? 

Mr. KEENEY. That is correct. 

The CHAIRMAN. Is that the Administration’s position? 

Mr. KEENEY. I have not checked. My testimony, I believe, did get 

cleared. 

[Laughter.] 

Mr. KEENEY. But I did not make any specific calls on that one. 

We just at NOAA believe that it puts us, the United States, in a 

stronger position in dealing with other countries in relation to the 

taking advantage of the provisions of the Law of the Sea Treaty. 

The CHAIRMAN. Well, I may have additional questions, but what 

I think we owe the American people—and from your testimony and 

everything I know, our agencies of government are doing a fine job, 

and OPA–90 was not only an excellent piece of legislation, it was 

eventually copied by other nations. I think that the leadership of 

our Nation in that is laudable. 

I just think, given post-9/11, given the PRESTIGE devastation to 

the Spanish coastline, that it is appropriate for us to review what 

we are doing, how we are doing it, and whether there needs to be 

changes in existing law, or regulations or government policy. That 

is what I really would like to have from all three witnesses. 

Senator Inouye. 

Senator INOUYE. Thank you very much, Mr. Chairman. 

Admiral Pluta, it is correct that the United States has jurisdiction over foreign vessels entering U.S. waters to do business in the 

United States? 

Admiral PLUTA. Yes, sir. 

Senator INOUYE. All safety practices? 

Admiral PLUTA. Yes, sir. We have port state control provisions 

that permit us to enforce the international standards. 

Senator INOUYE. However, I have been advised that, because of 

the volume of foreign vessels entering American ports, that you oftentimes have to limit your inspection to just inspecting paperwork. 

Is that correct? 

Admiral PLUTA. Not exactly, Mr. Senator. But let me explain it 

this way. There are too many volumes of vessels coming toward the 

United States for us to board and inspect every single one. But 

what we use is in our port state control program is a targeting matrix, where we look at the flag state, the owner, the classification 

society, and we are looking at the charterers now as well. We rate 

even the performance of the vessel as it has performed, as it has 

visited the United States before. 

20

We will go through this targeting matrix to see whether that vessel poses a high risk or a low risk to safety or environmental protection in the United States, and that is how we make our decisions on what to board. But when we board, we always look at 

more than paper. We will look at the general condition of the vessel 

and go through all the important parts to see where—and we have 

enough experience to know where to look and what to look for. If 

we see anything that does not look right, well, we will continue to 

go further. But if everything looks in order, well, then we will move 

on. 

Senator INOUYE. That is provided you are in that matrix group? 

Admiral PLUTA. Yes, sir. 

Senator INOUYE. Just as an aside, would Senator McCain’s 

PRESTIGE come within that matrix group? 

Admiral PLUTA. It would have been phased out January 1, 2000, 

I think, Mr. Inouye. 

Senator INOUYE. I gather that the Coast Guard would like to 

have a much more thorough inspection process. If that is the case, 

how much more would you need? 

Admiral PLUTA. Senator, you have been very generous to the 

Coast Guard, and I cannot answer your question specifically, but 

I can tell you that we feel confident that, given the laws that you 

have given us to enforce, we are using our resources to the best. 

We are—over a multi-year budget strategy with maritime homeland security overlaid on top of our safety and environmental protection responsibilities, with your good graces, we ought to be able 

to catch up. 

Senator INOUYE. I thank you very much. 

Secretary Keeney, you cited a study in your full statement in 

which you concluded that if you implemented the Advanced Charting and Navigation Information System, that could be just as effective as double hulls, especially in busy ports. What is the current 

navigation information available for U.S. ports? Do we have data 

that is useful? 

Mr. KEENEY. Senator Inouye, we have a system which we refer 

to as the PORTS system, which NOAA has tried to put in place in 

some of—many of the major ports in the United States where there 

is heavy traffic. This is a system that is a shared cost system. It 

is referred to as—it stands for, again, ‘‘Physical Oceanographic 

Real-Time System,’’ which supports safe and cost-effective navigation, providing ship masters and pilots with accurate real-time information required to avoid groundings and collisions. 

The system includes centralized data acquisition and dissemination systems that provide real-time water levels, currents, and 

other oceanographic and meteorological data from bays and harbors 

to the maritime user community. 

We believe that this system along with the electronic chart information are two excellent tools for reducing the risk of collision or 

grounding. 

Senator INOUYE. Have you implemented this program? 

Mr. KEENEY. We have. We have implemented—I can give—for 

the record, I can produce the record of which ports have active programs. This has been a successful program and in every port we 

have had it, I think we have had great response and cooperation. 

21

In fact, the ports where it is operating right now include Narragansett Bay, the New York–New Jersey Harbor, the Delaware River, 

Chesapeake Bay, Tampa Bay, Galveston, Houston ports, San Francisco Bay, and the Port of Anchorage, which we just opened at the 

end of last year. 

Senator INOUYE. But this will not be an adequate substitute for 

double hulls? You would like to have both, would you not? 

Mr. KEENEY. No, I do not think we refer to it as a substitute. 

We are basically saying that it is actually even more cost-effective 

than investing in double hulls. The implication was that we go both 

routes. I can also provide a copy for the record of the study that 

was done at Woods Hole that verifies my statement. 

Senator INOUYE. I thank you very much, Mr. Secretary. 

Mr. KEENEY. Thank you. 

Senator INOUYE. Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Sununu. 

Senator SUNUNU. Thank you, Mr. Chairman. 

The modern charting and navigation system, Mr. Keeney, that 

you are speaking of, you referred to as a shared cost. Shared by 

whom? 

Mr. KEENEY. It is shared by the local port facilities, so that the 

local governments, I believe, contribute toward the expense of installation and operation of the system. That is an important part 

of, I think, trying to implement the system, that it is accepted. 

Senator SUNUNU. I consider that, generally speaking, one entity, 

the local port authority. 

Mr. KEENEY. That is correct. 

Senator SUNUNU. So, are they paying for it, or are they sharing 

the cost with someone else? 

Mr. KEENEY. Just let me check on that for a minute. 

[Pause.] 

They are sharing the cost with many of the operators of the port. 

Senator SUNUNU. With the operators. 

Mr. KEENEY. Right. 

Senator SUNUNU. But NOAA is not putting out any money for 

this, or actually undertaking the implementation itself? 

Mr. KEENEY. I think NOAA does put out money for the initial 

implementation of the program. 

Senator SUNUNU. Can you give me an estimate of how much 

money is put out? 

Mr. KEENEY. We will provide that for the record, Senator 

Sununu. 

Senator SUNUNU. Just to try to gauge a sense of how cost-effective it is, at least relative to the burden that is shared by I guess 

the taxpayers or by NOAA. 

Mr. KEENEY. We will provide that. 

Senator SUNUNU. What locations—that was a pretty extensive 

list. I did not see Long Beach on there, knowing Long Beach is a 

pretty significant port. Are there many ports that have not been 

touched by the upgrades to navigation and charts that you would 

like to see take on the new technology? 

Mr. KEENEY. We do. We have probably as many as an additional 

20 ports that are interested in this program. 

Senator SUNUNU. How long has it been available? 

22

Mr. KEENEY. 3 years. I think only in the case of—I think San 

Francisco is the one area where I think they are having difficulty 

meeting the requirements of maintaining the system because of 

some of the financial constraints that they have locally. 

Senator SUNUNU. One of the most striking charts in the package 

that I saw leading up to the hearing today showed the amount of 

oil spilled per volume that is shipped in U.S. waters. There really 

has been a dramatic fall-off in spillage since 1990, obviously due 

in part to the success of the OPA legislation. To what specific 

changes in the legislation or required by the legislation do you attribute that to? This is really one, I think, more for the Admiral. 

Admiral PLUTA. Thank you, Senator Sununu. 

Senator SUNUNU. In fact, I should point out it is a Coast Guard 

graph. 

Admiral PLUTA. I will be happy to respond, sir. Obviously, the 

single-hull phase-out has had a major impact by having vessels not 

be permitted to come back to the United States to trade. Also there 

are operational measures that we have imposed. We have gotten 

access to the National Drivers Register and other criminal background kind of checks that we can now make on mariners. We have 

more stringent civil and criminal penalty procedures that we can 

go through. We have response plans that are required. That is a 

very critical issue because——

Senator SUNUNU. Those sound like excellent provisions. But the 

nature of the drop-off is so sharp, I was just curious whether there 

was any one provision that was found to be the most effective. I 

mean, the threat of criminal provisions; I do not imagine there was 

a huge majority of vessels that suddenly were being used that were 

double-hulled in just a 1- or a 2-year period, although that may 

well be. There may have been a huge influx as soon as the legislation was passed, knowing that a phase-in was coming. 

Admiral PLUTA. Senator Sununu, the best answer I could give 

you is that in our opinion, it is the comprehensive approach taken 

by OPA–90 which no one else has done. It is the most comprehensive oil prevention package in existence today, and it has been extremely effective because of all the pieces working together. And we 

have even refined the process further with other international provisions that we have implemented since then. 

So, I do not think it is any one thing. I think it is the whole 

package together. 

Senator SUNUNU. Are there any oceanographic conditions, weather conditions, shoreline features, navigational challenges, where 

the potential damage sustained and spillage sustained by a doublehulled tanker is greater than that of a single-hulled tanker, all 

other things such as age or maintenance being equal? 

Admiral PLUTA. I do not think so, sir. I think I look at it as an 

equal opportunity environment. You know, you are managing your 

risk by having—you know, we know through either calculations or 

by the school of hard knocks when vessels run aground how deep 

do they get penetrated and we make ships designed, make the people design the ships to avoid those sorts of limits. Of course, there 

are no guarantees. 

But in response to your issue of geography, we have done a study 

of all of the major ports of the United States, and for those where 

23

congestion is an issue or maybe tight entry, some sort of thing like 

that is an issue, we have vessel traffic systems and traffic separation schemes to try to prevent bad things from happening as well. 

Senator SUNUNU. You may have answered my question, but I 

was not talking so much about traffic. You said, well, when vessels 

run aground. A vessel can run aground on rocks, on sand. A vessel 

can break up because of the stresses involved in waves during very 

heavy seas. A vessel can be struck by another vessel. All of those 

accidents involve different sets of strains and scenarios and damage to the vessel. 

I guess my question was, is a double-hulled vessel less prone to 

catastrophic damage in all cases? You believe so? 

Admiral PLUTA. My answer, to the best of my knowledge, is yes, 

sir. 

Senator SUNUNU. Thank you very much. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Nelson. 

STATEMENT OF HON. BILL NELSON,

U.S. SENATOR FROM FLORIDA 

Senator NELSON. Thank you, Mr. Chairman. This of course is an 

exceptionally important subject to my state, which has 14 deep 

water ports, and such an enormous amount of coastline. 

Admiral should we consider not accepting the safety certifications of certain classification societies who we determine not to 

have the adequate and sufficient safety programs? 

Admiral PLUTA. In essence, Senator Nelson, we take—we do 

grade and score classification societies, and for those vessels that—

it is a part of our grading factor that we use in our targeting matrix to decide whether to board a vessel. So, if we have a class society that is suspect, it is probably going to wind up being boarded, 

and we are probably going to look closer, yes, sir. 

But as far as not accepting their work, we take the approach of 

overchecking their work. 

Senator NELSON. What types of drills do we test to use in order 

to test the readiness of private companies that are involved in oil 

spill clean-up? 

Admiral PLUTA. Senator Nelson, we have—and EPA might even 

chime in on this one as well, Senator Nelson. But we together work 

with the states and work with the stakeholders and port committees to have drills on a very predictable, routine basis. Plus we 

have the Spills of National Significance, and it involves not only tabletop exercises, where we get people together and go through scenarios, but then, there is also large-scale exercises where we actually will break out equipment and make sure that everything 

works. So, the people are trained, the procedures are checked and 

revised, and the equipment is run to make sure that it is functional. 

Senator NELSON. Does the producing of this report by the GAO, 

which says as U.S. single-hull old vessels are eliminated, few double-hull vessels may replace them, does that, in essence, say that 

we are not moving to the double-hull vessels and this is, in essence, 

an impediment to us getting the double hulls? 

24

Admiral PLUTA. Senator Nelson, the maritime—I cannot speak 

specifically for the Maritime Administration, but we have been 

through this exercise to see, are we going to run into a carriage requirement based on our best predictions, and I think what that report says is with the current bookings for construction, that there 

may be a shortfall of double-hull vessels to carry what we think our 

need is going to be. 

Senator NELSON. Even with this most recent action of the European Union wanting to speed up the double hulls as a result of this 

tanker being sunk off of Spain? 

Admiral PLUTA. Senator, certainly if they change their standards 

for Europe, it will have an effect on the carriage capacity worldwide. But we do not know exactly what they are going to do. One 

of our Coast Guard people who goes to MEPC is in Brussels right 

now meeting with the European Commission to find out exactly 

what they have in mind, and what their timeframe is, so that we 

can predict for you what potential action the U.S. may consider as 

a result. 

But we do not know, sir. But whatever they decide—if they are 

going to accelerate their phase-out schedule, it clearly will have an 

impact, yes, sir. 

Senator NELSON. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Nelson. 

I want to thank you for coming today, and I appreciate the information you have provided for the Committee. Thank you very 

much. 

Admiral PLUTA. Thank you, Mr. Chairman. 

The CHAIRMAN. Our next panel will be: Mr. Thomas Allegretti, 

President of the American Waterways Operators; Mr. Joe Cox, 

President of the American Chamber of Shipping; Mr. Tom Godfrey, 

the President of Colonna’s Shipyard and Chairman of the Shipbuilders Council of America; Mr. David Sandalow, who is Executive 

Vice President of the World Wildlife Fund; Mr. Dragos Rauta, the 

Technical Director of the International Association of Independent 

Tanker Owners; and Mr. G. William Frick, Vice President and 

General Counsel, American Petroleum Institute; Mr. Robert 

Cowen, Senior Vice President and Chief Operating Officer of the 

Overseas Shipbuilding Group. 

I am sorry, I apologize for it being a little crowded at the witness 

table. We will begin with Mr. Allegretti, who is the President of the 

American Waterways Operators. Welcome, Mr. Allegretti. Thank 

you for coming to the Committee today. 

STATEMENT OF THOMAS A. ALLEGRETTI, PRESIDENT AND 

CEO, THE AMERICAN WATERWAYS OPERATORS 

Mr. ALLEGRETTI. Good afternoon, Mr. Chairman and Members of 

the Committee. On behalf of the 375——

The CHAIRMAN. Could you pull it a little closer there so I can 

hear you. Thank you. 

Mr. ALLEGRETTI. On behalf of the 375 member companies in the 

American Waterways Operators, thank you for holding this important hearing today. 

Tank barges account for more of the domestic transportation of 

petroleum in our country than any mode except pipelines. In fact, 

25

more than 20 percent of the oil that fuels our economy, keeps our 

cars running, keeps our homes comfortable, is moved each year by 

barge. 

The recent tanker spill off the coast of Spain is a sobering reminder of the inherent risks of oil transportation and the need for 

constant vigilance in minimizing those risks. We are very fortunate 

in the United States that the marine transportation of oil is governed by the Oil Pollution Act of 1990, a law that is working well. 

While I cannot tell you the OPA–90 has eliminated all of the risks 

of oil transportation, I can say that the passage of that law 

launched a process that has worked to reduce spills and to reduce 

the risk of spills significantly. 

Today, the U.S. maritime industry is moving oil more safely than 

ever before. Today, more than two-thirds of the U.S. tank barge 

fleet is double-hulled, years in advance of the OPA–90-mandated 

phase-out dates. The record over the last decade is an encouraging 

one. Oil spills in the United States are today at a historic low, and 

the trend line is pointing in the right direction. Tank barge operators spilled 87 percent less oil in 2000 than they did in 1990. 

Today, for every one million gallons of oil moved by barge in the 

U.S. less than two gallons are spilled. 

Just as encouraging as those statistics is the story that is behind 

the numbers. Tank barge companies have put in place a comprehensive array of safety improvements and spill prevention 

measures that have not only produced a safer oil transportation 

system, but one that offers the promise of continued progress in the 

years ahead, with the ultimate goal of zero spills. 

This array of safety improvements and spill prevention measures 

is very broad. It begins with better-trained crews. It also includes 

the establishment of comprehensive safety management systems, 

like AWO’s Responsible Carrier Program. And all of this reflects a 

sea change in the way companies operate their fleets and within 

AWO, it is now a condition of membership within our association. 

Adoption of these safety management systems reflects our industry’s understanding that oil spills are simply not acceptable. They 

are not acceptable to Congress, they are not acceptable to the 

American people, and they are not acceptable to us. 

The risk of oil transportation in the United States is further reduced by the OPA-mandated retirement of single-hull vessels. 

America’s tank barge operators are leading the transition to an alldouble-hull fleet and have invested more than a billion dollars in 

new vessels to serve the U.S. energy transportation market. Indeed, single-hull retirements are proceeding at a faster pace than 

OPA–90 requires, and that represents an enormous commitment by 

tank barge companies in the business of transporting petroleum by 

water. My written testimony highlights several examples of these 

significant company commitments. 

Mr. Chairman, as a result of all of this the domestic tank barge 

industry today is not only maintained and operated more safely 

than ever before, but is rapidly transitioning to the double-hull design that OPA–90 requires. 

We know that globally and domestically, there is still too much 

oil spilled into the world’s oceans and rivers. In the United States, 

our industry firmly believes that safety management and spill preVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00029 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
26

vention are never-ending imperatives. The actions Congress took in 

1990 are working just as you designed, and as a result the risk of 

oil spills in the United States today is dramatically lower. 

However, our job is not done. Our goal and your expectation is 

zero spills and a 100 percent double-hulled fleet, and our industry 

is fully committed to achieving those goals. 

Thank you for the opportunity to testify today. I will be happy 

to take any questions that you may have. 

[The prepared statement of Mr. Allegretti follows:]

PREPARED STATEMENT OF THOMAS A. ALLEGRETTI, PRESIDENT AND CEO, THE

AMERICAN WATERWAYS OPERATORS

Good afternoon, Chairman McCain, Senator Hollings, and Members of the Committee. I am Tom Allegretti, President and CEO of The American Waterways Operators (AWO), the national trade association for the American tugboat, towboat, and 

barge industry. AWO’s 375 member companies include the owners and operators of 

tugboats, towboats, and barges that move more than 800 million tons of America’s 

cargo every year, including dry, liquid, containerized and specialty cargoes on the 

inland river system, the Atlantic, Pacific, and Gulf coasts, and the Great Lakes. We 

carry over 60 percent of U.S. grain exports, providing American farmers a safe, economical and environmentally-friendly way to stay competitive with foreign producers. We also move enough of the nation’s coal to produce 10 percent of all U.S. 

electricity annually. AWO’s members also operate the tugboats that provide 

shipdocking services in our nation’s ports and harbors. The transportation of petroleum and petroleum products is a key segment of our industry’s business: tank 

barges move 20 percent of the oil that fuels our economy and keeps our cars running 

and our homes warm. Powerful, state-of-the-art tugboats also provide tanker escort 

services to facilitate the safe movement of petroleum cargoes in busy ports and harbor approaches. 

On behalf of AWO’s diverse membership, thank you for the opportunity to testify 

at this hearing on the phase-out of single-hull tank vessels that carry oil in bulk 

as mandated by the Oil Pollution Act of 1990 (OPA–90). The overriding message I 

want to leave you with today is this: the law you passed 12 years ago is working. Oil spills from U.S. tank vessels have declined to historic lows. American companies have invested more than a billion dollars in new double-hulled vessels to 

serve the U.S. energy transportation market. While the recent tanker spill in Europe reminds us all of the inherent risks of oil transportation and the need for constant vigilance, you can be proud of the transformation you helped to bring about 

in the U.S. tank vessel industry. Today, less than one ten-thousandth of one percent 

of the oil moved by tank barge in this country is spilled. Today, more than twothirds of the U.S. tank barge fleet is double-hulled, years in advance of the OPAmandated phase-out schedule. Our job is not over: our goal, and your expectation, 

is zero spills and a one-hundred-percent double-hulled fleet. We come before you 

today firmly committed to achieving those goals. 

Mr. Chairman, I can tell you that the U.S. tank barge industry is working hard 

to meet the demand of Congress, our customers, and the American public to move 

oil safely and securely, with not one drop entering our precious marine environment. 

In 1990, according to Coast Guard and Army Corps of Engineers’ data, the U.S. 

tank barge industry moved 1.7 billion barrels of oil in U.S. waters. Of that total, 

23,600 barrels were spilled. While this means that 99.99998 percent of the oil moved 

by barges in this country was delivered safely, no one would argue that the 23,600 

barrels of oil that did enter the marine environment was acceptable. However, the 

record since 1990 tells an encouraging story: oil spills in the United States are today 

at a historic low. In 2000, the last year for which complete statistics are available, 

barges spilled 87 percent less oil than in 1990, with 3,180 barrels entering the 

water. That’s not perfect, to be sure, but an 87 percent improvement is indisputably 

a trend line pointing in the right direction. 

Oil Spill Reductions Result from a Full Array of Improvements 

What is perhaps more encouraging is the story behind the numbers. Spills are a 

lagging indicator of oil transportation safety; they help us to evaluate the efficacy 

of the prevention measures we have implemented in the past. Given that we have 

ten years of post-OPA–90 statistics to look back on, that’s an appropriate report 

card to consider. But, if we look behind the statistics at the state of the oil transportation industry today, we see what might be considered some leading indicators, 

27

some harbingers of future improvements. The fact is that companies in the oil transportation business today have and are continuing to put into place a more comprehensive array of safety improvement and spill prevention measures than any 

time in the history of oil transportation by water. Taken together, these measures 

have produced a safer oil transportation system that offers the promise of continuing progress toward our ultimate goal of zero spills. 

Perhaps the most significant change in the oil transportation industry today is the 

degree to which companies have embraced safety management systems that aim to 

reduce operational risks throughout their operations. The tugboat, towboat and 

barge industry has been a leader in this transformation. In December 1994, AWO’s 

Board of Directors established the AWO Responsible Carrier Program, a code of 

practice for member companies. The Responsible Carrier Program establishes safe 

operating standards—standards that exceed governmental requirements—in the 

areas of management and administrative practices, vessel equipment and inspection, and human factors, such as training and watchstanding practices. In April 

1998, in a tangible demonstration of the industry’s commitment to leadership in marine safety and environmental protection, AWO’s membership voted to make compliance with the Responsible Carrier Program a condition of membership in the association. Today, all members of AWO, and any company that seeks to become a member, must commit to complying with the Responsible Carrier Program and undergoing an independent, third-party audit within two years of joining the association. 

This represents nothing less than a sea change in the character of our industry and 

its trade association. 

Complementing the transformation of the oil transportation industry itself is a 

changed relationship between industry and government. Over the past twelve years, 

both industry and the Coast Guard have come to appreciate that we are bound together by the common, critically important goal of improved marine safety and environmental protection. Starting from the premise that we share common objectives, 

we have developed a reservoir of mutual trust and forged a constructive working 

relationship. We have also discovered a broader array of tools available to us to 

achieve our common goals. Today, both the industry and the Coast Guard recognize 

that regulations are just one of the tools that can be used to implement safety improvements. Clearly, regulations have their place, and where they do, we’ve learned 

that the regulatory development process can be approached cooperatively. More significantly, we have recognized that there are many opportunities to bring about 

safety improvements outside the regulatory process. The first-of-its-kind Coast 

Guard-AWO Safety Partnership was inaugurated in November 1995 for just that 

purpose—not to replace the regulatory process, but to augment it and encourage 

companies to go beyond regulatory compliance. 

Vessels are safer, as a matter of design, maintenance, and operation. Innovative 

new technologies are being phased into the fleet. ‘‘Z-drive’’ or ‘‘tractor’’ tugs capable 

of exerting propulsive power in all directions—the maritime equivalent of the helicopter—are transforming the fleet of shipdocking and escort tugs. In the coastal environment, articulated tug-barge units, or ATBs, are gaining recognition for their 

safety, fuel efficiency, and all-weather capability. Developments in navigation and 

communication technology, including Automatic Identification System (AIS) technology, offer enhanced collision avoidance capability. Companies have implemented 

more rigorous maintenance programs to ensure that vessels and equipment remain 

as safe and functional on the water as they were designed to be in the shipyard. 

The Coast Guard has estimated that 80 percent of accidents are the result of the 

human factor. Therefore, state of the art vessels and better practices are by themselves not enough. Industry safety would not be possible without qualified, experienced, well-trained vessel crews. That is why there is a commitment to see that vessel crews today are better trained and better prepared to do their jobs safely. Both 

the Coast Guard and the industry recognize that operational competence means 

more than the ability to pass a license exam. The Coast Guard has issued regulations establishing new licensing requirements for towing vessel operators that require a practical demonstration of operational skill as a prerequisite to obtain a 

Coast Guard license. The industry has also invested heavily in training to ensure 

that qualified crewmembers continue to hone and improve their skills throughout 

their careers. State-of-the-art training facilities and company training centers established by some of the nation’s leading tank barge operators, demonstrate the industry’s increasing recognition that training and professional development are good investments and an essential part of doing business safely. 

All of these efforts—many of them expensive and all of them requiring the highest 

level of commitment of both the public and private sector—are working together to 

produce the significant decrease in oil spills that we have seen over the last decade. 

28

Double Hull Fleet Modernization is Proceeding on Schedule 

Even as government and industry sources agree that there is a surplus of tonnage 

on the market today—more vessels than are needed to meet U.S. demand for oil 

transportation—America’s tank barge operators are leading the transition to an alldouble-hull fleet. According to U.S. Coast Guard data, U.S. tank barge operators 

have built 607 new double-hulled petroleum barges for inland and coastal service 

since the Oil Pollution Act was passed in 1990. The pace of new construction has 

accelerated in recent years, with more than a quarter of this total—174 

doublehulled barges—built between 1999 and 2002. When looking at vessels of more 

than 5,000 gross tons, an OPA–90 threshold, the picture is just as bright. Government and industry sources indicate that approximately 50 of these larger vessels 

have been built since OPA–90 was enacted. In the last three years alone, 32 doublehull vessels greater than 5,000 tons have been built or contracted for. Many companies hold options for construction of additional vessels, while some companies have 

plans for conversion of existing single-hull vessels to a double-hull configuration. 

The capital investment required to overhaul the U.S. tank barge fleet is signifi- cant: a 30,000 barrel inland tank barge costs some $1.45 million to build, while a 

120,000–140,000 barrel coastal tank barge carries a price tag of $15–17 million. Because a double-hull barge is much larger than a single hull with the same carrying 

capacity, vessel owners must often invest an additional $9–10 million for a more 

powerful tugboat to move the larger barge. Retrofitting (adding a double-hull to an 

existing single-hull barge) can shorten delivery time by several months, but the cost 

remains high: some $12–13 million for a 120,000–140,000 barrel barge. The cost of 

a state-of-the-art articulated tug-barge unit, or ATB, runs $26–27 million. 

Given the size of the capital outlay required, companies must weigh many factors 

in deciding when to build a new double-hulled vessel. Paramount is demand for oil 

transportation—the strength of shipper demand, and the likelihood that freight 

rates will be sufficient to offset the cost of such a major investment. If demand is 

there, building will follow. Building vessels of any kind in the absence of demand 

hurts the industry, artificially depressing freight rates and undermining the industry’s ability to shoulder the investment in modern, environmentally friendly vessels 

to meet future needs. 

Government sources agree that U.S. tank vessel capacity exceeds demand for domestic oil transportation, and will continue to do so until at least 2004. The Government Accounting Office in 2000 found that ‘‘industry currently has more vessels 

than needed to meet the current shipping demand,’’ and concluded that decisions 

on new double hull construction would likely await reduction of this overcapacity. 

The U.S. Coast Guard, after consulting with the Maritime Administration, reached 

a similar conclusion in its September 2001 Report to Congress on the Progress to Replace Single Hull Tank Vessels with Double Hull Tank Vessels, and noted that a 

number of U.S. flag tank vessels were then working in foreign trades because of 

overcapacity in the U.S. domestic market. 

As American companies strongly committed to the U.S. market, the members of 

the American Waterways Operators have already made substantial investments in 

new double-hulled vessels, and stand ready to make additional investments to meet 

the nation’s energy transportation needs, and to continue providing safe, environmentally friendly, and economically efficient service to U.S. shippers and consumers. 

I’d like to share just a few examples of AWO companies who have, and will continue 

to, respond to the demands of the market and meet the requirements of OPA–90 

in order to ensure the continued availability of domestic carrying capacity for petroleum products. These examples are representative of the commitment shared 

throughout our industry, and taken together, they help to paint the picture of an 

industry that is collectively expending more than a billion dollars in this effort. 

In New England, which is heavily dependent on barge transportation of petroleum 

products, family owned companies like Bouchard Transportation Company of New 

York and Reinauer Transportation Company of New York and Massachusetts have 

invested hundreds of millions of dollars to ensure that their companies can continue 

to meet the needs of U.S. shippers and consumers in future generations. Bouchard, 

founded in 1918, has built seven new double-hulled barges, retrofitted three single 

hulls, and will take delivery of two new double hulls this year. The Bouchard family 

has invested some $200 million so far, and will spend another $70–80 million by 

the time its fleet replacement program is complete. Reinauer Transportation, founded in 1923, has spent $200 million on its own fleet modernization program, which 

includes two new state-of-the-art ATBs and a third barge scheduled for delivery this 

year. Reinauer will have to spend tens of millions more to complete the replacement 

or retrofit of the company’s remaining single-hull barges. 

Similar investments are taking place throughout the tank barge industry, by companies that are making a tangible commitment to serve the U.S. domestic market 

29

for the future. On the West Coast, Crowley Marine Services, a family company in 

business for more than a century, has spent $130 million to date on a fleet replacement program that includes four new double-hulled ATBs. Canal Barge Company 

of Louisiana, which will celebrate its 70th anniversary in December of this year, has 

built 69 double-hulled inland tank barges since the passage of OPA–90, at a cost 

of more than $70 million. The company will retire its only remaining non-doublehulled barge—a double-sided, single-bottom barge in limited service—in the near future. 

This is real money, being spent by real people to comply with OPA–90 and serve 

the energy needs of the American economy in a safe and environmentally responsible way. The stories of these companies, and those of the dozens of other American 

tank barge operators, large and small, that are making similar investments are 

sometimes overlooked in dry macroeconomic analyses and bar graphs showing petroleum movements and fleet tonnage. 

As Congress considers the state of OPA–90 implementation today, and the 

progress of the transition to a double-hulled fleet, it is worth reflecting on these stories and the commitment to the U.S. market they demonstrate. It is also worth noting that, as a practical matter, the marketplace is accelerating the single-hull retirement schedule to a degree few of us envisioned in 1990. This has happened because 

shippers are demanding that their cargoes be moved in double-hulled vessels, and 

vessel owners who see themselves as long-term players in the U.S. market are 

building double-hull vessels to satisfy the demands of their customers, both now and 

for the future. Congress helped bring this success story about by providing, in OPA–

90, for an orderly phase-out schedule that allowed market forces to work—and work 

they have. Going forward, Congress can best support U.S. vessel owners in meeting 

their obligations under OPA–90 by exercising its oversight role and making clear 

its continuing commitment to transitioning to an all-double-hull fleet as provided for 

in OPA–90. 

Conclusion 

In summary, Mr. Chairman, the single hull phase-out schedule contained in OPA–

90 has provided stability and certainty to the process of transitioning our petroleum 

carrying capacity from a single-hull fleet to one that is entirely double hulled. For 

over a dozen years it has been, and it continues to be, the expectation that the existing schedule will remain in effect. Against that backdrop, and with a substantial 

commitment of resources, American vessel owners are making decisions to invest in 

new double hull capacity based on a variety of economic factors. The pace of that 

construction has increased in recent years. The evidence shows that capacity will 

rise to meet demand, but also that new vessels will not be constructed or contracted 

for until there is an economic basis for their construction. Subject to these economic 

considerations, the domestic tank barge industry is transforming its vessels into a 

fully double-hulled fleet. 

Perhaps the best news is that oil spills in U.S. waters have declined dramatically 

and OPA–90 is working to promote safer transportation of petroleum products and 

better protection of our marine environment. This is being accomplished through 

compliance with new regulatory requirements as well as a strong industry commitment to new technologies, safer vessels, constructive partnership with government, 

comprehensive safety management systems, and improved training for vessel crews. 

The breadth of the transformation of the U.S. tank barge industry—a transformation that goes beyond the statutory requirements of OPA–90—demonstrates 

our commitment to the shared goal of protecting our environment while meeting 

Americans’ need for the safe transportation of petroleum products. 

Mr. Chairman, thank you for the opportunity to appear before the Committee 

today. I would be pleased to respond to any questions the Committee may have.

The CHAIRMAN. Thank you very much. 

Mr. Cox. 

STATEMENT OF JOSEPH J. COX, PRESIDENT AND CEO, 

CHAMBER OF SHIPPING OF AMERICA 

Mr. COX. Thank you, Mr. Chairman. I will submit my statement 

for the record if I can and I will summarize here. 

The CHAIRMAN. Without objection. 

Mr. COX. Thank you, sir. 

30

On behalf of the members of the Chamber of Shipping of America, which are owners, operators, and charterers of vessels—and I 

point out, Mr. Chairman, they do operate both foreign-flag and 

U.S.-flag vessels, we are pleased to testify. You have heard some 

of the issues being discussed in the government panel. In my testimony, I go through a history of phase-out. The phase-out concept 

does go back to 1978, and the original changes to MARPOL that 

required tankers to outfit segregated ballast tanks or dedicated 

clean ballast, then OPA, then two changes in MARPOL. Then I 

ended that history with the PRESTIGE incident and the proposed 

EU actions. 

Mr. Chairman, I am a little bit questioning about the EU activities. I certainly look at their press releases, I talk to my colleagues 

in Europe, and I am not at all convinced that we are getting 

straight answers from each particular European participant. I 

think we have yet to see what the final outcome of their deliberations is going to be. 

However, after the PRESTIGE, Mr. Chairman, my testimony describes what we feel are unacceptable actions taken by individual 

countries, or by the European Union itself. This includes the arrest 

of the master of the PRESTIGE after he had come ashore from 

going through a quite harrowing experience where he lost his vessel and, thankfully, did not lose any of his crew. 

Then, two nations, France and Spain, began escorting tankers 

outside of their 200-mile limit, which we feel is in violation of the 

Law of the Sea Treaty and also international traditional law of the 

sea. There is a definite effect on IMO. Mr. Chairman, it was kind 

of interesting to be at the IMO, where they were talking to us 

about restrictions with regard to U.S. actions relative to security 

measures and to what extent we could go out into international waters to inspect vessels for security measures, and at the same time 

be escorting tankers outside of their waters for environmental purposes. 

There will be an effect on IMO, the very same organization that 

was taking the U.S. to task in 1990 for OPA–90. Some of the same 

nations that were criticizing the United States then are now proposing actions themselves along the same lines of unilateralism. 

Finally, Mr. Chairman, there is a ports of refuge issue that I 

think is a very important and one for the world to start talking 

about. That is, when a vessel is in distress, what do we do with 

that vessel? Do we tell it to go out into some other waters and handle it as best they can or do we have some type of a safe haven 

available for those ships so that they can come in and possibly, 

maybe take care of their problem? 

Mr. Chairman, we looked at the effect of the 23-year issue, and 

this is where a little bit of the confusion about the definitiveness 

of the EU actions comes into play. We looked at vessels over 23 

years old in our data base. There are some 1630 tankers in the 

world’s fleet that are over 50,000 deadweight tons, therefore could 

trade in the international market. Eight hundred thirty-four of 

those are currently double-hull, and some 168 are over 23 years 

old, so those vessels cannot come into our ports, although they can 

trade into LOOP and in offshore lightering. 

31

Now, how many will is a question for the marketplace to determine, because certainly, if Europe puts a ship out of Europe that 

is 23 years old, it could come into the U.S. It could also trade to 

the Far East, it could also trade to the Indian subcontinent, and 

it could also trade into South America. Those determinations would 

be made by the marketplace. 

Mr. Chairman, I was talking to somebody in the audience today 

who is a smart guy, and he reminded me about the 15-year-old 

issue in crude oil tankers and how the Europeans may be discussing not allowing crude oil carried on single-hull tankers over 

15 years old. That is a little bit of an interesting issue because I 

discussed with some friends in Europe yesterday and that would 

put out of business all their North Sea shuttle tankers except for 

four of them. So I am not quite sure that they would take that 

step, but if they do, we would add to that 168 approximately 300 

more vessels that would be capable then of trading in other parts 

of the world than Europe. 

Mr. Chairman, the commercial marketplace, at the end of the 

day, is going to determine where those vessels go. 

You have heard comments about OPA–90. We agree with all 

those before us. It is a well-thought-out piece of legislation. It is 

all-encompassing. We will have to review the final EU action to see 

what vessels would be involved. We certainly—if the Congress feels 

necessary, if the Senate feels it necessary, to begin a deliberation 

about those vessels, it is certainly something we are willing to discuss. But we have to address the ships that are affected therein, 

and not the wholesale review of OPA–90. 

You have heard a little bit of reaction from Senator—‘‘Senator 

Pluta’’ might be a little bit premature, to call him that, Senator—

but Admiral Pluta has talked about maintenance. I want to say 

that, in respect to double-hull, certainly maintenance is as important as any other parameter, including age, and we should put on 

the record that double-hull is not a panacea. It does provide a great 

amount of protection in low-energy collisions and groundings. However, in catastrophic situations, it will not be the answer. We have 

not seen catastrophic situations because mainly, quite seriously or 

quite frankly, those vessels are relatively new ships with all the 

newest——

The CHAIRMAN. Did you not see one with the French tanker? 

Mr. COX. Well, the French tanker, sir, was——

The CHAIRMAN. You saw a catastrophic——

Mr. COX. Well, that was a terrorist incident. 

The CHAIRMAN. Is that not a catastrophic event? 

Mr. COX. I am sorry, I would determine catastrophic event in the 

sense of a grounding, or a collision or some internal problem with 

the vessel. I think a terrorist incident I would not characterize as 

catastrophic. However, the effect would be the same. 

The CHAIRMAN. I think most——

Mr. COX. The effect would be the same. 

The CHAIRMAN. I do not want to quibble over words with you, but 

I think it is a catastrophe, Mr. Cox. Go ahead. 

Mr. COX. On that issue, Senator, it does, the double hull does 

provide a protection. You do have that extensive void area between 

the outer hull and the inner hull that any type of an action against 

32

the outer hull is going to have somewhat of a protective measure 

against the inner hull being breached. 

We did include, Senator, two other issues which we took the opportunity of responding in terms of your request for comments. One 

was on terrorism insurance for vessels. It is a very serious problem, 

particularly applicable to the American operator and owner because his assets are all here in the United States, and he cannot 

hide behind the registration of a vessel in another locale. 

We also discussed the confidentiality of our information in the 

ship safety security plans. 

Thank you very much, Senator. I will certainly be available for 

questions. 

[The prepared statement of Mr. Cox follows:]

PREPARED STATEMENT OF JOSEPH J. COX, PRESIDENT AND CEO, CHAMBER OF

SHIPPING OF AMERICA

Mr. Chairman, we appreciate the opportunity to testify before you today on the 

subject of double hull phase-out dates and the potential effect of recent decisions by 

the European Union. The Chamber of Shipping of America (CSA) is an organization 

that represents companies that own, operate or charter commercial vessels. We were 

founded over eighty years ago and are involved in domestic and international issue 

affecting our members. 

Early in December, we attended the Maritime Security Conference at the International Maritime Organization (IMO) that deliberated on and adopted amendments 

to the Safety of Life at Sea Convention. Those amendments dealt with the vital 

issue of security in the maritime industry. The resulting requirements that must be 

met by the ship owning community are comprehensive and the cost will be totally 

borne by the ship owner. During the year it took to develop those requirements, 

CSA participated in numerous domestic deliberations with the Coast Guard and 

were members of the U.S. delegation to the three preparatory meetings held in London. We mention the conference because the main topic of discussion for many other 

nations’ representatives at the conference was the intended actions of the European 

community in response to the PRESTIGE incident. The PRESTIGE is a single-hull 

tanker that broke in two off the coast of Spain in November and caused a major 

spill. The U.S. delegation was focused on the security deliberations and they did a 

good job of achieving all U.S. objectives. One major point very actively debated on 

security was the rights of sovereign nations to control vessels entering their waters. 

During the conference, a working group was sent out a number of times to draft 

language allowing nations to take certain steps for security. The working group was 

very careful to allow security controls yet not violate traditional law of the sea. 

From the U.S. bench, we saw an incongruous situation where some of the nations 

at IMO were taking definitive positions on rights of ships regarding security while 

these same nations were taking actions against ships based on environmental concerns that went beyond what were considered prudent for security. These actions 

affected single-hull tankers. In explanation of the incongruity of the circumstance, 

we should discuss briefly the background of vessel control and why double hulls and 

the phase-out of single hulls is with us today. 

Background 

Under well-established international maritime law, it is recognized that any sovereign nation has the right to control vessels entering its maritime jurisdiction. A 

nation may require an entering vessel to meet any requirements it determines prudent. The corresponding right of the vessel is to not enter the waters of a nation 

that has requirements it does not agree with or is unable to meet. The role of international treaties is to provide a set of universal requirements that nations can 

agree. Once agreed, a nation enforces those international requirements on vessels 

entering its waters although it retains the right as a sovereign nation to require 

additional measures if it sees fit to do so. This is not an optimum situation for ship 

owners and we usually object to a nation seeking additional requirements unilaterally. We strongly urge all nations to seek additional requirements in the international fora such as the IMO. 

When the ‘‘EXXON VALDEZ’’ ran aground in 1989, she was one of the newest 

U.S.-flag ships and was built to meet the international requirements for tankers at 

the time which included segregated ballast (SBT). SBT was placed into the MariVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00036 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
33

time Pollution Prevention Convention (MARPOL) in 1978 and required a certain 

percentage of the tanks to be for the carriage of ballast only. These non-cargo carrying tanks were also to be in locations along the hull that provided a degree of 

protection against collision. The requirements addressed the operational discharge 

of ballast water that contained oil residue and, to a degree, the threat of collision 

damage to a cargo tank. Existing tankers were given a short period of time to comply with requirements for dedicated clean ballast tanks or crude oil washing systems. We did not use the term ‘‘phase-out’’ at the time but the effect of the coverage 

of existing tankers in this manner was to phase-out the existing tanker and replace 

it with a more environmentally protective tanker albeit one with the same external 

hull. 

After substantial debate on the spill and the causes, Congress wrote OPA–90. 

Among other requirements, it included one that all tankers calling into U.S. maritime jurisdiction must be double hulled. Included in that debate was much discussion about alternatives to double hulls. While the door was left open for research, 

OPA–90 did not recognize any alternatives. Once again after much debate, the Congress agreed that the changeover to double-hull tankers was to be accelerated by 

legislatively phasing out older, single-hull tankers. A very deliberate approach was 

crafted based on age and size. The U.S. took these actions as a sovereign nation 

and there is no contention that the U.S. acted outside traditional maritime law, 

however, because the U.S. is such a large market for tankers, no international 

owner would consider building a tanker that did not meet the new U.S. requirement. The Coast Guard soon took the issue to the IMO and asked them to place 

a double hull requirement into MARPOL. 

After a relatively short period of review, the IMO amended MARPOL to require 

double hulls on tankers. A measure was also adopted that would limit the age of 

existing tankers although the age at which they would be phased out was conservative relative to OPA, i.e. the dates of phase-out were longer than the dates contained in OPA–90. This situation, where some tankers could trade to the U.S. and, 

when phased out of our trade, could remain in the rest of the world’s markets, was 

static until the late 1990’s. On December 12, 1999 a vessel called the ‘‘ERIKA’’ sank 

and caused a very damaging spill on the coast of France. It was noted in the European press that the ‘‘ERIKA’’ could not trade into the U.S. due to OPA–90 phaseout dates. The subsequent move by the European community was to ask the IMO 

to revise MARPOL and accelerate the phase-out date of existing single-hull tankers. 

Once again, the IMO started a discussion on amending MARPOL. The result is a 

new schedule that is a sliding scale much like OPA–90 although the new schedule 

still allows tankers to have older phase-out dates than those contained in OPA–90. 

In the later years of effectiveness for the new MARPOL changes, a tanker is allowed 

to trade up to 26 years of age. These changes to MARPOL came into force on September 1, 2002 or just four months ago. Regrettably, another incident in European 

waters occurred this past November and was the subject of the discussion at the 

conference we refer to above. 

The PRESTIGE sank after breaking in two off the coast of Spain. Once again, 

there was a call for action both in the European press and among representatives 

of the European Union. This incident, however, highlights a number if issues. While 

we are not privy to technical details and believe the cause or causes are still under 

review, we can comment on several steps taken by authorities that we believe are 

unacceptable. 

The master of the PRESTIGE knew he had a problem and requested permission 

to come into sheltered waters. That permission was denied and the ship was then 

at the mercy of her own devices in a heavy weather situation. When the ship subsequently sank, with no loss of life, the master was then taken into custody and 

placed in prison. Two nations, France and Spain then took steps to prevent singlehull tankers not only from entering their waters but also from being within 200 

miles of their coasts. We saw press coverage in December of tankers being escorted 

by naval vessels out of the 200 mile zone. Mr. Chairman, it was a singularly interesting moment to be at IMO debating the rights of sovereign nations to take steps 

regarding security and have actions being taken for environmental reasons that 

were in excess of those being debated for security measures. The PRESTIGE was 

not destined for a Spanish port; she was in innocent passage, so we believe the action taken violates international law. 

The topic of discussion among many at the IMO meeting involved phase-out dates 

and the fact that the PRESTIGE, like the ‘‘ERIKA’’ before her, could not enter U.S. 

waters. Several persons in authority positions in the European community were 

calling for a phase-out of tankers as a European Union action. 

34

European phase-out Decision 

On December 20, the European Commission announced new measures to ‘‘protect 

our coasts’’. The steps announced, which have to be adopted by the European Union 

Council and Parliament, include not allowing single-hull tankers to carry heavy fuel 

oil in European waters, phasing out single-hull tankers to an accelerated schedule 

from the MARPOL schedule, and a special inspection program for those single-hull 

tankers not yet affected by the phase-out. There are several points about this action:

• There is no logical connection between the structural failure of the PRESTIGE 

(or the ‘‘ERIKA’’) and the debate about single/double hulls, nor any suggestion 

that a double hull would have made any difference,

• The EU program to accelerate the phase-out dates does not include an analysis 

of the practicability in terms of shipbuilding and ship recycling capacity,

• The EU is damaging the role and objectives of the IMO, the same organization 

that wrote the new phase-out schedule just come into force at the request of 

the EU,

• The first step taken by authorities after the incident was to criminalize the incident,

• The denial of a refuge for the tanker when she was in trouble is not mentioned 

nor is a review of the policy mentioned.

Effect on Tankers Calling at U.S. Ports 

The EU proposal sets a 23-year age date for phase-out. That is the same as OPA. 

The EU proposal does not allow any additional time for lightering or calls at offshore terminals; OPA–90 does. OPA–90 allows single-hull tankers older than 23 

years to offload at a deepwater port or to lighter in designated lightering zones more 

than sixty miles offshore. The controlling phase-out dates for these tankers are the 

new dates contained in MARPOL that came into effect in September. The maximum 

age in MARPOL is 26 years although the phase-out allows some older tonnage to 

continue following a sliding scale. We considered all tankers older than 23 years. 

We are indebted to Poten and Partners, a firm that provides analysis and data to 

the industry, for the basic data on numbers of tankers, sizes and date of build. 

There are 1637 tankers over 50K dwt that serve world trade. Of those, 168 are 

over 23 years old. That is the potential number that would be permitted to call at 

our offshore terminal or be involved in lightering, however we really cannot predict 

what can happen in the market place and using the total number of 168 would be 

highly misleading. Many of the tankers are not of a size appropriate to use in the 

Gulf of Mexico. If they are currently in the European market, they would go elsewhere than the U.S. We can assume that not all these tankers are calling at European ports or what portion of their voyages over a time period have them calling 

into Europe. A number are involved in trades now that are totally outside Europe 

and the U.S. While we cannot give a firm number of tankers displaced into which 

markets, we can predict with a degree of certainty that the EU proposal will tighten 

up the market for double-hull tankers and there will probably be a rise in rates 

across the board. 

At this point, we should mention that 834 of the tankers are double hull and another 161 are double bottom or double side tankers. Single-hull tankers make up 

less than forty percent of the tanker fleet today and the number continues to shrink. 

OPA–90

OPA–90 was a well thought out piece of legislation that balanced risk management and commercial impacts. Industry has planned capitol investment to comply 

with the OPA–90 phase-out regime. While the actions of the EU affecting these few 

tankers may deserve review, we do not believe that a wholesale look at OPA–90 is 

warranted. If the few tankers described above are a concern, they can be dealt with 

as a separate legislative issue from the phase-out that is taking place predictably 

and as planned. 

Maintenance 

A discussion of phase-out based on age does not include the most important issue 

of any ship, i.e. maintenance. Age is a factor although a greater one is the maintenance of the ship. For many years, the Coast Guard has recognized the need for 

port state control inspections to ensure that ships calling into the U.S. meet the requirements of the safety and environmental protection treaties. These inspections 

are more critical than a one-dimensional look at a paradigm such as age. A concern 

recently voiced among the CSA membership is the continuance of the level of inspections by the Coast Guard. We recognize the Coast Guard is moving to a new department with security as a focus. We do not want to experience a lessening of the deVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00038 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
35

gree of oversight of the industry when the move takes place. The continuance of the 

high quality inspections should continue to serve us well and we support continuing 

the Coast Guard’s budget for safety/environmental compliance inspections. 

Other Issues 

The invitation to testify asked us to cover other issues. We have two: terrorism 

insurance and security/safety documents. 

Insurance is a major concern. Currently, our protection and indemnity insurance 

does not cover acts of terrorism. This was a theoretical concern until the ‘‘LIMBURG’’ was attacked. We have worked on this issue for a time now and our concerns have not lessened. The main point is one of pollution. Whether double hull 

or not, a vessel is strictly liable for an oil spill. If a spill is caused by a terrorist 

incident, the vessel is strictly liable and insurance is not available. Arguably, the 

pollution fund could be available although the determination is made after the fact 

and we believe that the decision about liability should not wait for oil on the water. 

We are working closely with the Coast Guard and others on this issue and would 

like to brief your staff on the issue. Any assistance your Committee could provide 

is deeply appreciated. 

The issue of our documentation on security/safety is one of confidentiality. Many 

of the CSA members will dovetail their vessel plans for security with the existing 

safety management plans. The safety plan was used as a paradigm for the security 

plan and each contains self-audits and management follow up. Our intention is to 

have these plans and documents as one the company can share with the Coast 

Guard and other government agencies with a reason to review them and limit the 

availability to others. At the conference, we were asked to meet with other nations’ 

representatives to ensure the international language permitted the confluence of the 

two plans. We were successful and note the Coast Guard has recognized this in the 

Notice of Meetings they published on December 31, 2002. 

Mr. Chairman, we appreciate the opportunity to testify before your Committee 

today and would be pleased to answer any questions.

The CHAIRMAN. Thank you, Mr. Cox. 

Mr. Godfrey. 

STATEMENT OF TOM GODFREY, PRESIDENT, COLONNA’S

SHIPYARD, INC.; CHAIRMAN, SHIPBUILDERS COUNCIL OF 

AMERICA 

Mr. GODFREY. Mr. Chairman, thank you. 

My name is Tom Godfrey. I am President——

The CHAIRMAN. Would you move the microphone closer. Thank 

you, Mr. Godfrey. 

Mr. GODFREY. Thank you. 

My name is Tom Godfrey. I am President of Colonna’s Shipyard 

in Norfolk, Virginia. I am also Chairman of the Shipbuilders Council of America. The council is the oldest and most broad-based trade 

association representing all sectors of the commercial shipyard industry. Founded in 1920, SCA represents 71 shipyards—71 companies that own and operate 150 shipyards over 24 states, including 

about 35,000 employees. Our member companies are involved in 

building and repairing America’s commercial fleet, as well as the 

vessels involved in the U.S. military, the U.S. Coast Guard, and 

other mid-sized vessels included in the government operations. We 

maintain these vessels, we repair these vessels, and we also are active in maintaining vessels for the National Defense Reserve Fleet. 

Relative to OPA–90, the phase-out of single-hull tankers, clearly, 

these catastrophic spills in Europe have raised new issues. We are 

watching the EU very carefully right now, and it appears that new 

regulations are coming up, and it is quite possible that they are 

going to promulgate regulations that, frankly, validate the leaderVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00039 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
36

ship of the United States in the action taken by this Congress 12 

years ago in designing and implementing OPA–90. 

The EU proposal considers eliminating all single-hull vessels in 

a certain trade immediately. It would ban all single-hulls by 2010, 

and would impose very strict inspection schemes on vessels older 

than 15 years old. In some regards, the EU regulations that are 

under discussion may be more aggressive than OPA–90. 

This initiative by the EU, I think, raises several questions for 

Congress and for industry to examine at this point. We would ask, 

will the accelerated EU single-hull retirement schedule create a 

shipping problem, a shortage of hulls to supply the crude oil that 

we need to support our needs here domestically? 

The second question may be, what is the status of the domestic 

energy transportation needs as OPA–90 deadlines approach us? 

And should—the third question being, should OPA–90 be modified 

or adjusted relative to the action taken by the EU? 

This is our comment relative to those questions. As we see it, in 

the global marketplace, there is sufficient ship construction capacity to meet the deadlines that are under discussion in the EU. The 

entire global fleet, about 1600 tankers, could be replaced in a timeframe of only 7 years. About half of that fleet is already in the double-hull configuration. 

So, while we see the market being impacted, and perhaps the 

cost of transportation being impacted, we believe that the ship industry, the ship construction capacity, is out there to construct and 

deliver these new vessels. 

Relative to the second question, in the domestic petroleum markets, we see a mix of circumstances and we want to point out a few 

of those to you. There has been a very significant launching of new 

vessels in the market of tank barges. Based on our statistics, we 

believe about 60–65 percent of the large coastwise tank barge fleet 

is OPA-compliant today. We believe, based on construction to date, 

the progression of new double-hull tank barges going into service 

is going to readily meet the OPA deadlines, and we feel very confident that that aspect of the industry will be ready. 

In the ship community, there are more questions about the availability of new double-hull vessels being available to meet the OPA–

90 deadlines. Very few new vessels have been built. At this date, 

approximately 40 percent or so of the active tonnage is doublehulled, and there are very few or no contracts pending for new vessels at this time. I want specifically to say that, with respect to 

new product tankers, there have been no contracts signed since the 

mid-1990’s. 

There are factors that come to bear relative to these circumstances. The oil majors are not offering long-term charter and 

transportation agreements to the owner-operators of ships. Economic profits are obviously very substantial for those that choose 

to continue to use these single-hull vessels until the bitter end. 

The liability for environmental damage is focused on the vessel 

owner and operator. Charterers, oil companies, producers, brokers, 

other people involved in the distribution of petroleum products, can 

limit their liabilities, and perhaps the analogy of the Japanesebuilt ship that is now registered in one country and managed by 

a company in another country is a good analogy. 

37

Charterers in most cases, being in business to make a profit, will 

utilize the lowest-cost transportation and I think the economic 

forces there are obvious. 

It is also a fact that markets are changing. The patterns of oil 

distribution are shifting. Supply and demand is moving. Clearly, 

some of the markets that were traditionally served by self-propelled tankers may be better-served more economically with today’s 

newest tank barge and they are doing a marvelous job in many 

markets. 

The question concludes with, can the U.S. shipbuilding industry 

meet the need to build the projected tankers? Yes, we believe absolutely that is possible. Assuming conservatively that perhaps 15 

tankers could be ordered, the industry could easily supply those 

over the next 5 years or so. The fact that the barge operators have 

ordered and received 32 large barge units in the last 3 years is evidence and affirmation of what our capabilities are. The same thing 

can be done with the ships. 

We believe that Congress must send a clear message to everyone 

concerned that U.S.-built ships, U.S.-owned and U.S.-crewed double-hull vessels will be used to move our oil and our oil products 

along our coastlines and our river systems, and that there will not 

be the possibility of extension, or waiver, or modification of the 

OPA–90 deadlines. I know there has been a lot of discussion in industry, maybe not recently, but over the years since OPA was implemented, is there any possibility that those dates might be 

stretched? 

Congress may want to consider some additional measures to ensure that vessel safety and compliance is encouraged to be prompt 

and timely. For instance, we specifically would suggest that Congress consider implementing more stringent inspection requirements for vessels of a certain age, perhaps 15 years and older. That 

seems to be in step with what the EU is considering. 

We would also consider—would offer that Congress may need to 

revisit the structure of liability law to consider how we can clarify 

where the liability runs if a vessel does encounter a problem and 

spill oil. Charterers and other types of entities that are involved in 

this process should all equally share in whatever risk and liabilities there may exist. 

Further, we would maybe make a suggestion that Congress go 

back and look at reenacting some assessments on cargo moved in 

single-hull tonnage, and deposit those collections in the oil spill liability trust fund. This would create a clear economic incentive for 

owners to go ahead and make the transition to double hulls as soon 

as possible. 

Last, I would make one further comment, and that is with respect to the fact that we are concerned that the U.S. flag tanker 

fleet is not well-prepared to serve this country’s military needs that 

are upcoming. There are studies on the record from the Military 

Sealift Command of the Navy and the United States Maritime Administration that project a significant shortage of double-hull tanker capacity in as early as 2005. Our military sealift requirements 

are critical, and failure to address those needs could have dire implications for our security here at home. 

38

In closing, the Shipbuilders Council appreciates the opportunity 

to testify, Mr. Chairman, and I would be very happy to answer any 

questions you may have. 

[The prepared statement of Mr. Godfrey follows:]

PREPARED STATEMENT OF TOM GODFREY, PRESIDENT, COLONNA’S SHIPYARD, INC.; 

CHAIRMAN, SHIPBUILDERS COUNCIL OF AMERICA

Good Afternoon Mr. Chairman and Members of the Committee. My name is Tom 

Godfrey and I am President of Colonna’s Shipyard in Norfolk, Virginia. Colonna’s 

Shipyard is a 128-year-old family owned business currently engaged in commercial 

and Navy ship repair and new barge construction activities. 

I am also the Chairman of the Shipbuilders Council of America. SCA is the oldest 

and most broad based trade association representing all sectors of the commercial 

shipyard industry. Founded in 1920, SCA today represents 71 shipyard companies 

that own and operate over 150 shipyards in 24 states and employ approximately 

35,000 workers. Our member companies build and repair America’s commercial vessel fleet as well as support vessels for the U.S. military, U.S. Coast Guard vessels 

and other small and mid-sized government craft. We also repair and maintain Navy 

combatant ships, vessels in the National Defense Ready Reserve Fleet and other 

vessels needed to maintain our military readiness. 

Mr. Chairman, the spate of recent oil spills around the world and the reaction 

to those spills in the European Union and elsewhere is proof that Congress took the 

right course when it enacted the Oil Pollution Act of 1990 (‘‘OPA–90’’) in response 

to the EXXON VALDEZ disaster. In its simplest terms, that law mandates that all 

vessels calling at U.S. ports be double-hull by 2015. The environmental benefit of 

moving petroleum product in double-hull vessels far outweighs the negligible cost 

to the consumer that the double-hull requirement imposes. It is estimated that the 

total transportation cost of refined petroleum product moving from the Gulf of Mexico to New England is less than $.07 per gallon, a small price to pay to protect our 

coastlines from potentially devastating oil spills. 

It has taken the EU two major spills and several minor ones over the last few 

years to make the difficult economic and political decisions you made in 1990. Recent spills off the coasts of France and Spain could have been prevented, or at least 

minimized with more modern, double-hull ships. The most recent accident which occurred in the English Channel last week was minimized to some extent because the 

vessel in question was double-bottomed. Some have suggested that the spill could 

have been minimized even more with a vessel that was entirely double-hulled. No 

vessel, or any form of transportation for that matter, can protect 100 percent 

against potential spills, but double-hulls are safer under most circumstances. 

Now the Europeans in reaction to these spills are likely to take action, which will 

almost assuredly create more comprehensive protections against spills in EU waters 

than enacted in the OPA–90 law. Specifically, the EU proposals would prohibit carriage of heavy fuel oil in single-hull vessels immediately; ban single-hull vessels 

more than 23 years old immediately; phase-out all single-hull tonnage by 2010; and, 

require vessels 15 years old to comply with more frequent and stringent inspection 

requirements. Individual European countries are considering even tougher actions 

such as banning all single-hull vessels from their ports immediately. 

This new EU action raises several questions:

• Will accelerated EU phase-outs create a tonnage shortage in the international 

market, which could constrain the ability of the U.S. to import crude and/or petroleum products?

• What are our domestic energy transportation needs and are we doing what is 

necessary to ensure that adequate environmentally safe petroleum product 

transportation will be available under the OPA–90 requirements?

• Should the OPA–90 retirement schedule be accelerated to meet or exceed EU 

plans and what would the impact of an accelerated phase-out schedule be?

Accelerated retirement schedules being considered by the EU will not create a petroleum transportation crisis worldwide. There is sufficient capacity to build tankers 

worldwide. Analysis performed by Poten & Partners, a well-known energy and 

transportation brokerage and consulting firm, estimates that the entire world tanker fleet of 1654 vessels can be replaced every 6.6 years given current shipbuilding 

capacity worldwide. In fact, Poten & Partners reports that 107 tankers have been 

delivered in the last four years and that 70 large tankers are on order, and this 

before the EU enacted an accelerated phase-out requirement. International-flag opVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00042 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
39

1Statistics in this testimony do not include vessels that service the Alaska crude oil market. 

Vessels constructed for the Alaskan trade are significantly larger than those needed for domestic 

coastwise petroleum product transportation and are prevented by the economics of operating 

larger vessels from being interchangeable with vessels utilized in the coastwise trades.

erators have for some time been taking advantage of subsidized construction prices, 

mostly in Asian shipyards, to add to their tanker fleets well in advance of international regulations requiring them to do so. 

The result of this added tonnage is overcapacity in the oil transportation sector 

and depressed shipping rates as more double-hull tonnage is added to the international marketplace, while international owners try desperately to keep single-hull 

vessels operating for as long as possible. Until now, there simply has not been a 

clear and unequivocal signal to the world that old tonnage must be retired. As long 

as domestic and international charterers are unwilling to pay a premium for transportation in modern, double-hull vessels, operators will continue to utilize all singlehull tonnage available, much of which is registered in ‘‘flags of convenience’’ states 

that pose significant security risks when they call on U.S. ports and around the 

world. 

While an accelerated phase-out of single-hull tank vessels servicing European 

markets should not create an insurmountable shortage of vessels available elsewhere, additional vessel retirements especially of older, cheaper tonnage is expected 

to put upward pressure on international shipping rates potentially affecting decisions on whether to import or produce petroleum product at home through efforts 

such as the opening of ANWR. Higher international shipping costs could lead to 

more domestic production and increased domestic shipping demands. 

The larger question in my opinion, Mr. Chairman, is whether there will be sufficient U.S.-flag, double-hull capacity to meet domestic petroleum product transportation requirements. It has been a dozen years since OPA–90 was enacted and much 

remains to be done with the first major phase-out date for large, ocean-going tank 

vessels less than two years away. 

Demand for coastwise petroleum product movement is difficult to project with certainty. Weather, economic activity, the cost of petroleum overseas, and other transportation options all impact demand for coastwise transportation; however, a private 

study cited by the National Research Council in 1998 estimates that approximately 

4.150 million deadweight ton (dwt) or roughly 29 million barrels of capacity (tanker 

and tank barge) will be needed to meet domestic coastwise petroleum transportation 

requirements in 2005. These projections do not include transportation of crude oil 

from Alaska, nor do they take into account military requirements. 1

40

2Sources: U.S. Maritime Administration, 2001; Clarkson’s Tanker Registry, 

January 1, 2000. 

3Sources: U.S. Corp of Engineers, Master File, 2001; coltoncompany.com, U.S. 

Maritime Administration, 2001. 

4Demand: Wilson, Gillette & Co. (as cited in Double-Hulled Tanker Legislation: 

An Assessment of the Oil Pollution Act of 1990, National Research Council, 

1998.


109g1.eps
41

5This includes six 46,000 dwt integrated tug/barges classified as tankers by the Coast Guard 

and the Corp of Engineers. These vessels phase-out under OPA–90 in 2012, 2013, and 2014. 6 AT/B systems allow the tug to connect into a notch built into the barge with a fixed connection that enables the tub and barge to move independently of each other. Integrated tug/barge 

systems look similar but have a rigid connection which does not enable independent movement 

of the tug and barge. 

Today, there is approximately 815,000 dwt (21 tankers) (roughly 5,705,000 barrels) of double-hull capacity in the domestic coastwise self-propelled tanker fleet. Of 

this available tonnage, only 456,000 dwt (11 tankers) was built or rebuilt after 

OPA–90 was enacted and 359,000 dwt (10 tankers) of this capacity will be 20 years 

old or older in 2005. In addition to the double-hull self-propelled tonnage available, 

an additional 1,297,000 dwt (29 product tankers) of single-hull or double-bottom capacity will be available in 2005. 5 Total coastwise tanker capacity in 2005 will be 

2,112,000 dwt under the current retirement schedule. 

If the U.S. were to enact policies similar to the EU proposal and ban non doublehull tankers more than 23 years old from U.S. coastwise trade, all but one of the 

non double-hull U.S. flag tanker fleet would be forced into retirement by 2007. 

OPA–90 currently does not prohibit trade by double-hull vessels regardless of their 

age. The lack of double-hull tanker replacement construction and the age of the fleet 

that can remain in service under OPA–90 clearly illustrates that we are fast approaching a crisis point, and as the experience in Europe has shown there is clearly 

a greater risk of disaster with older single-hull vessels. 

The one bright spot in this picture has been U.S.-flag tank barge operators who 

have been much more responsive to OPA–90 retirement schedules and requirements 

than those operating self-propelled vessels. U.S. shipyards and tank barge operators 

have worked together to develop new technologies such as articulated tug/barges 

(AT/Bs) to meet coastwise petroleum transportation requirements. AT/Bs are less 

expensive to build and operate than self-propelled tankers. They are safer and faster 

than traditional tug/barges or even integrated tug/barges. 6 Almost every large tank 

barge constructed in the last five years has been built in the AT/B design. Today, 

operators are considering even larger AT/Bs, equivalent in size to a handy-size product tanker, to replace portions of the self-propelled tanker fleet. 

Since OPA–90 was enacted, U.S.-flag tank barge operators have built or contracted for 48 large coastwise tank barges equaling roughly 800,000 dwt (5,665,000 

barrels) of capacity. In the last three years alone, U.S.-flag coastwise tank barge operators have ordered 32 large ocean-going barges with a capacity of 530,000 dwt 

from U.S. shipyards. There is 543,000 dwt of double-hull tank barge capacity built 

prior to 1990 in the marketplace. In addition to double-hull tonnage, an additional 

1,012,000 dwt (40 barges) of large ocean-going tank barge capacity will remain 

available for coastwise movements in 2005, bringing total U.S.-flag tank barge capacity in 2005 to approximately 1,940,000 dwt (13,580,000 barrels). 

Total coastwise tank vessel—tankers and barges—capacity in 2005 assuming all 

vessels currently under contract are delivered will be approximately 4,052,000 dwt, 

approximately 100,000 dwt below projected demand. The shortfall grows to 756,000 

dwt by 2008 assuming no growth in transportation demand and the OPA–90 retirement schedule remains unchanged. The shortfall will grow to 953,000 dwt assuming 

the modest growth in coastwise petroleum transportation demand projected in the 

National Research Council analysis. To put these numbers into perspective, 953,000 

dwt equates to approximately (10) 40,000 dwt self-propelled product tankers, (6) 

280,000 barrel AT/Bs, (6) 150,000 barrel barges, (10) 100,000 barges, and (10) 

80,000 barrel barges. 

Can U.S. shipyards build the tonnage needed to meet demand by 2008? The answer is yes as long as vessel operators place orders in a timely and orderly manner. 

Indeed, if they would approach it in this way, significant cost reductions could be 

obtained through series construction efficiencies. Seven shipyard companies are 

building/converting or have recently delivered large ocean-going tank barges. There 

are several additional shipyards with the capabilities and infrastructure needed to 

build tank barges in the range of 150,000 barrels or below if the demand requires 

it. There are at least six shipyards today that have the capability to build larger—

280,000 barrel range—AT/Bs. Construction of these larger ‘‘handy-size tanker equivalent’’ AT/Bs is expected to take 12 to 14 months with follow-on vessels every four 

to six months. 

The number of shipyards with the capacity today to build self-propelled tankers 

is smaller. There are currently three commercially-oriented shipyards capable of beginning construction of self-propelled tankers immediately and several others have 

expressed interest in this market, but they are either engaged in ship construction 

of another type or would require facility modifications. Construction of the first of 

42

7 EUSC fleet is made up of vessels owned by U.S. citizens but operated under the flags of the 

Marshall Islands, Honduras, Liberia, Panama and the Bahamas. 

a series of 40,000 dwt product tankers will take 20 to 24 months to complete depending on engineering and design requirements. Follow-on vessels can be delivered 

every four to six months thereafter. The first ships can be delivered in 2005 assuming contracts materialize very soon. U.S. shipyards can deliver at least a dozen 

product tankers by 2007; however, this simply cannot be achieved if U.S. owners 

persist in delaying investments in new tonnage. In our view, failure to sign construction contracts within the next 12 months will make it virtually impossible for 

new tonnage to be delivered in advance of the current OPA retirement schedule. 

Mr. Chairman, there has been some discussion over whether the U.S. should accelerate vessel phase-outs under OPA–90 in reaction to likely actions by the EU. 

This is a decision that ultimately lies with Congress, but I would ask you to consider that a large number of tankers and large tank barges must be built over the 

next several years to meet the current OPA–90 retirement schedule and to consult 

with the vessel operator and shipbuilding industries before taking any such action. 

Because the commercial marketplace does not differentiate in rates between new 

vessels and older, fully depreciated assets, commercial operators are in effect encouraged to keep old tonnage operating for 25 years and beyond. We ask you today 

to send a clear message to the marketplace that Congress and the American people 

will not tolerate any delay in complying with the OPA–90 dictate that petroleum 

product must be moved in modern, double-hull, U.S.-flag tonnage. In fact we would 

ask you to consider options to encourage voluntary compliance more quickly than 

the current law requires, such as extending the liability, to a greater extent, for future damages to the oil producers, refiners and distributors. You might also consider 

reinstituting the assessment on petroleum product moved in single-hull vessels with 

the assessment to be deposited into the Oil Spill Liability Trust Fund. This would 

bring the transportation cost for product moved in newer, more expensive doublehull vessels into parity with the cost of using older, fully depreciated, vessels. We 

would also ask you to consider requiring a more comprehensive and frequent inspection regime, similar the EU proposal, for U.S.-flag vessels to ensure that all vessels 

used to move heavily pollutant cargoes are in sound condition. 

Mr. Chairman, my testimony focuses primarily on the OPA–90 law as it relates 

to supply and demand of the domestic coastwise petroleum transportation market 

from the shipbuilders perspective. I would; however, be remiss if I did not at least 

mention the importance to our military readiness of an adequate U.S.-flag tanker 

fleet. Our armed forces depend on a mix of vessels in the Military Sealift Command 

(MSC), the National Defense Ready Reserve Fleet, U.S. flag commercial fleet and 

‘‘Effective U.S. Control’’ 7 fleet to meet sealift readiness requirements. Recent studies 

by MSC and the U.S. Maritime Administration project significant tanker capacity 

shortages as early as 2005 for this critical sealift need based on single-hull retirements in all of these fleets. We must find a way (other than through reflagging of 

foreign built vessels) to ensure adequate U.S.-flag tank vessel tonnage to meet our 

commercial and military needs. 

Mr. Chairman, I want to thank you for holding this hearing today. America’s commercial shipyards stand ready to construct vessels necessary to meet our domestic 

petroleum transportation requirements in an efficient manner. Very few issues are 

as important to our economic and national security as our access to oil and petroleum products and our ability to transport these products on U.S.-built, U.S.-owned 

and U.S.-crewed vessels. 

In closing, Mr. Chairman, I urge the Committee to send a clear message to the 

marketplace that Congress will not under any circumstance consider any delay in 

the double-hull requirement in the OPA–90 law. 

Thank you and I will be happy to answer any questions.

The CHAIRMAN. Thank you, sir. 

Mr. Sandalow, welcome. 

STATEMENT OF DAVID SANDALOW, EXECUTIVE VICE 

PRESIDENT, WORLD WILDLIFE FUND 

Mr. SANDALOW. Thank you, Senator. With your permission, I will 

submit my written statement for the record. 

The CHAIRMAN. Without objection. 

43

Mr. SANDALOW. I am pleased to be here today to testify on behalf 

of the World Wildlife Fund, one of the largest nature conservation 

organizations in the world. WWF currently works in more than 80 

countries, thanks to the support of 1.2 million members in the 

United States, and more than 5 million members worldwide. 

Mr. Chairman, I come here today with a simple message: There 

are reasonable and prudent steps that we should take to protect 

our oceans from major oil spills. In this oral statement, I will recommend two such steps: first, accelerating the phase-out of singlehull tankers; and second, of critical importance, building a network 

of ‘‘no go’’ zones in our oceans that are off limits to tanker traffic. 

Mr. Chairman, the sinking of the tanker PRESTIGE off Spain in 

November grabbed the attention of millions around the world. But 

what is most striking about this accident is its familiarity. Since 

the EXXON VALDEZ ran aground roughly 13 years ago, large 

spills have continued to take their toll on coastal communities and 

fisheries around the world. 

In 2001, for example, the Ecuadoran ship, JESSICA, spilled diesel and bunker fuel into the sea off the Galapagos Islands, imperiling one of the world’s great ecological treasures. In November 

2000, a single-hull tanker dumped 550,000 gallons of Nigerian 

crude oil near Port Sulphur in the Gulf of Mexico. In the past decade, eight tankers have accidentally spilled at least 1 million gallons of oil into the world’s oceans. 

The costs of these spills are enormous. Consider: 550 miles of 

coastline, the entire Atlantic coast of the Spanish province of Galicia, have been closed to fishing and shellfish-gathering since the 

PRESTIGE spill, affecting 90,000 people whose livelihoods depend 

directly on these activities. The damages associated with the 

EXXON VALDEZ spill have been estimated to exceed $2 billion. 

And although the United States has taken important steps in the 

past to prevent similar disasters, most notably by passing OPA, we 

must do more. 

I will speak very briefly today to two steps that we can take. 

First, we must eliminate the riskiest vessels. Present U.S. and 

international law calls for the phase-out of single-hulled tank vessels by 2015. Yet incidents like the PRESTIGE remind us that we 

are still at risk, and that 2015 remains a long ways off. Today the 

majority of tankers carrying oil out of VALDEZ are still not doublehulled. As late as this summer, the average age of tankers in the 

Trans-Alaska Pipeline trade between VALDEZ and the U.S. West 

Coast was 20.5 years. 

Accelerating the elimination of single-hulled vessels is a good 

idea whose time has come. Knowledgeable observers note that a 

quicker timetable is realistic. An OECD report suggested a phaseout in the next 7 to 9 years may be possible. The United States 

should carefully consider such advice and support the quickest possible removal of single-hull tankers both in our home waters and 

abroad. 

Second, Mr. Chairman, and very critically, we should build a 

global network of ‘‘no go’’ zones in our world’s oceans. Even under 

an accelerated phase-out timetable and other measures that have 

been discussed today in this hearing, single-hulled and unsafe vesVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00047 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
44

sels will continue to pose a threat to marine biodiversity and coastal commerce for years to come. 

Moreover, double-hulled tankers, although they do better than 

single-hulls in preventing pollution, are by no means a panacea, as 

Mr. Cox has said before me on this panel. Accordingly, we urge the 

United States to play a leadership role in establishing a global network of ‘‘no go’’ zones where tanker traffic would be prohibited. 

IMO rules provide an important mechanism for the designation 

of such zones, known as Particularly Sensitive Sea Areas, PSSA’s. 

Our Nation should be active in promoting the use of this important 

tool by the IMO. In our own waters, we should seek ‘‘no go’’ zone 

status for areas that are critical to the ocean web of life, or of special importance to commercial and recreational fishermen and others who rely on the sea. 

As a starting point, the United States should strongly consider 

petitioning the IMO for special protection of: first, areas of special 

importance to the economy of coastal communities, including places 

designated as essential fish habitat under the Magnuson-Stevens 

Fishery Conservation and Management Act; and second, areas of 

special biological importance, such as our national marine sanctuaries. These ‘‘no go’’ zones can make a huge difference in protecting the world’s oceans. 

Mr. Chairman, WWF thanks you and the Members of the Committee for the opportunity to testify today. We stand ready to assist 

the Committee in shaping constructive solutions to the serious continuing problem of major oil spills in the world’s oceans. 

Thank you. 

[The prepared statement of Mr. Sandalow follows:]

PREPARED STATEMENT OF DAVID SANDALOW, EXECUTIVE VICE PRESIDENT, WORLD

WILDLIFE FUND

Introduction 

Mr. Chairman and Members of the Committee, thank you for the opportunity to 

testify today. I am David Sandalow, Executive Vice President of the World Wildlife 

Fund. WWF is the largest private conservation organization working internationally 

to protect wildlife and wildlife habitats. We currently sponsor conservation programs in more than 100 countries, thanks to the support of 1.2 million members 

in the United States and more than 5 million members worldwide. 

WWF has a keen interest in the issue before this Committee. With offices and 

programs around the world, we have too often witnessed first hand the devastating 

effects of tanker spills on marine wildlife. WWF has a major presence in Spain, and 

is playing a significant role in the wake of the PRESTIGE spill. WWF experts are 

helping train volunteers to clean oil-covered birds, advising authorities on wildlife 

rescue and treatment and coordinating volunteers cleaning beaches and rescuing 

animals. 

The Cost of Inaction: Long Time No Sea 

The sinking of the tanker PRESTIGE less than two months ago reminded us once 

again of the grave risk posed by irresponsible shipping to the marine environment 

and coastal communities. As the tragedy in Galicia unfolded, Americans recalled the 

disastrous grounding of the EXXON VALDEZ thirteen years ago and the ecological 

nightmare that was its aftermath. These incidents are but two examples in a long 

line of accidents involving oil tankers. Their effect on the web of life in our oceans—

and on the millions of people who derive their livelihoods from it—has been both 

incredibly destructive and long-lived. Remarkably, we seem to forget these biological 

and human impacts soon after each incident disappears from the front page. And 

their costs to nature and coastal economies are discounted each time we formulate 

policies to prevent future spills. 

It is time for a more honest reckoning of the cumulative price we have paid for 

ignoring the problem of sub-standard shipping. As we weigh the need for new poliVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00048 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
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cies to prevent spills in the wake of the PRESTIGE disaster, we must base our decisions on a full accounting of these costs. Too often the price tag of more effective 

regulation has been amplified while the biological effects of inaction, not to mention 

the hard economic costs of oil spills, have been given short shrift. Clearly there are 

real costs associated with more rigorous tanker inspection requirements and better 

vessel design standards; but they are more than outweighed by the price we have 

paid for adhering to the status quo. Some cases in point include:

• 550 miles of coastline (the entire Atlantic coast of Galicia) have been closed to 

fishing and shellfish gathering since the PRESTIGE spill, affecting 90,000 people whose livelihood depends directly on these activities. Galicia accounts for 40 

percent of the total Spanish fish catch (it is the foremost fishing region in all 

of Europe). Experts estimate economic and environmental recovery in the region 

will take at least a decade.

• Damages associated with the EXXON VALDEZ spill exceeded $2 billion. The 

spill’s environmental toll is still being felt today. Of the 28 species and resources studied since the spill, recovery objectives have only been met for seven.

Although the United States has taken important steps in the past to prevent similar disasters—most notably by passing the Oil Pollution Act of 1990—we must do 

more. Single-hulled tankers still pose a direct threat to America’s marine environment. Our most valuable ocean areas remain unprotected. In addition, we must recognize that America has a direct stake in the health of the global oceans. Our interests at home are affected in many ways by activities that take place far from our 

shores. Much of the fish that we consume in the United States is produced elsewhere. Many of the jobs in our seafood sector depend on the productivity of fisheries 

located on the opposite side of the globe. The prevention of oil spills in foreign waters is in keeping with our own national interests. 

WWF supports a three-part prescription for preventing future disasters like the 

PRESTIGE incident, and minimizing the impact of accidents that do occur. We must 

accelerate the removal of substandard tankers from ocean commerce, speeding up 

the timetable for phasing out single-hulled vessels to the extent practicable. We 

must insist on a system of real accountability for oil transport at sea, focussing on 

a more effective regime for tanker inspection and new mechanisms that ensure real 

flag state responsibility. Finally, we must take steps to protect our most valuable 

ocean areas by making them ‘‘off limits’’ to tanker traffic. 

Eliminating the riskiest vessels 

Present U.S. and international law calls for the phase-out of single-hulled tank 

vessels by 2015. This requirement is the centerpiece of the Oil Pollution Act of 1990, 

and the most significant shift in policy associated with the EXXON VALDEZ spill. 

Yet incidents like the PRESTIGE sinking remind us that we are still at risk and 

that 2015 is a long way off. 

Today, the majority of tankers carrying oil out of Valdez are still not doublehulled. As late as this summer, the average age of tankers in the Trans-Alaska pipeline trade between Valdez and the U.S. West Coast was 20.5 years. And outside of 

the United States, ‘‘garbage ships’’ like the PRESTIGE transport oil through sensitive ocean areas every day. 

Given the biological, economic and human costs of disasters like the PRESTIGE 

spill, accelerating the elimination of single-hulled vessels is a good idea. Knowledgeable observers note that a quicker timetable is not unrealistic: an OECD report suggests that a phase-out in the next seven to nine years may be possible. The United 

States should carefully consider such advice and support the quickest possible removal of single-hulled tankers, both in our home waters and abroad. 

Ensuring International Accountability 

The current approach to setting international standards for shipping has tended 

to be reactive, ponderous and based on industry-driven compromises. Even where 

rules have been agreed on internationally, ensuring compliance has been a major 

problem. Enforcement of shipping regulations relies largely on the actions of flag 

states. Many flag states take these responsibilities seriously but some—often referred to as flags of convenience (FOC)—profit from allowing foreign ship operators 

to register vessels in their nation’s name but fail to effectively oversee the ships that 

fly their flag. The FOC system turns ship registration into a business and creates 

a competitive advantage for states that allow sub-standard shipping practices. The 

PRESTIGE spill was in large measure a product of this system. 

Ultimately, the major weaknesses that exist in current accountability mechanisms 

can only be addressed through the fundamental reform of international law. In the 

best of worlds, this would involve revisiting the relevant provisions of the United 

46

Nations Convention on the Law of the Sea (UNCLOS) and the United Nations Convention on the Conditions for Registration of Ships. In the shorter term, expedited 

consideration of the proposals that have emerged since the PRESTIGE incident for 

beefing up vessel inspections should be a priority—as should new measures to require that the details of ownership and management of ships be fully transparent. 

The PRESTIGE story demonstrates that current arrangements make it very difficult to identify the real owners of vessels and hold them accountable. 

Protecting Sensitive Ocean Areas from Future Spills 

Even under an accelerated phase-out timetable, single-hulled vessels will continue 

to pose a threat to marine biodiversity and coastal commerce for a decade. Moreover, although casualty data demonstrates the positive impact of double-hulled 

tankers in preventing pollution, they are not a complete panacea. So while WWF 

strongly supports a stepped-up effort to eliminate substandard vessels and strengthen inspection protocols and design standards, we also recognize that these initiatives can not prevent oil spills altogether—and may do little to eliminate spills in 

the short-term. 

Accordingly, we urge the United States to play a leadership role in establishing 

a global network of ‘‘no go’’ zones where tanker traffic is prohibited. International 

Maritime Organization rules provide an important multilateral mechanism for the 

designation of such zones, known as Particularly Sensitive Sea Areas (PSSAs). 

PSSAs are areas of the ocean that need special protection because of their ecological 

or economic significance and their vulnerability to the harmful impacts of shipping 

activities. Within these areas shipping traffic can be more carefully regulated, or 

prohibited altogether. Coastal nations may petition the IMO to have important sea 

areas recognized as PSSAs—a process that assures designations will reflect national 

priorities as well as international interests in maritime commerce. Our nation 

should be more actively promoting the use of this important conservation tool by 

the IMO. 

In our own waters, we should seek PSSA status for areas that are critical to the 

ocean web of life, or of special importance to commercial or recreational fishermen 

and others who rely on the sea. As a starting point, the United States should 

strongly consider petitioning the IMO for special protection of:

• Areas of recognized biological importance, such as our national marine sanctuaries, and

• Areas of special importance to the economy of coastal communities, including 

places designated as essential fish habitat under the Magnuson-Stevens Fishery 

Conservation and Management Act

Conclusion 

In closing, Mr. Chairman and Members of the Committee, WWF wishes to express 

our gratitude for your active interest on oil spills and protecting the marine environment from their impacts. We stand ready to assist the Committee in providing constructive solutions to this serious problem. I am happy to answer any questions you 

may have.

The CHAIRMAN. Thank you very much. 

Mr. Rauta, please help me with the pronunciation. 

STATEMENT OF DRAGOS RAUTA, TECHNICAL DIRECTOR, 

INTERNATIONAL ASSOCIATION OF INDEPENDENT TANKER 

OWNERS (INTERTANKO) 

Mr. RAUTA. Thank you very much, Mr. Chairman. Good afternoon, Mr. Chairman. My name is Dragos Rauta. 

The CHAIRMAN. ‘‘ROU-tah,’’ thank you. 

Mr. RAUTA. Yes. I am the Technical Director of INTERTANKO 

and U.S. representative of INTERTANKO. INTERTANKO is a 

trade association representing a majority of the world tanker owners and operators. Our members operate more than 2,000 tankers. 

This is more than 70 percent of the world’s independent fleet. 

INTERTANKO ships fly the flags of more than 40 countries, including the United States, and transport more than 60 percent of 

47

all the oil and petroleum products imported into the United States 

each year. 

INTERTANKO appreciates that this Committee has taken an interest in international maritime safety issues so early in this Congress. We are pleased to be able to appear here this afternoon. I 

have submitted for the record a more complete statement. In this 

short oral presentation, I would only highlight a few points, particularly in light of recent European actions that follow the loss of 

vessel PRESTIGE. 

First, the international nature of the marine transportation system means that effective marine safety measures must be developed and accepted globally. No one nation or region can unilaterally decree new safety or prevention measures without having impacts, many of them potentially negative, in other nations or regions. 

Second, while there is an understandable political impulse to 

react immediately to issues raised by marine or aviation casualties, 

this impulse must give way to the need for accurate information 

about the cause of a casualty and to efforts to gain international 

consensus on remedial measures. 

Third, unilateral European bans on the carriage of particular 

types of petroleum and proposals for accelerating double-hull requirements undermine existing international safety mechanisms 

and, more immediately, threaten to fragment artificially the international oil transport markets. If there are remedial measures that 

are clearly suggested by the causes of the PRESTIGE spill, they 

should be placed before the International Maritime Organization 

and applied globally. Arbitrary restrictions on cargoes, vessels’ 

ages, and vessel designs, for example, double hulls versus single 

hulls, bear little connection to what is currently known about the 

cause of this incident. 

Fourth, although we all understand the desire of the governments of coastal nations affected by the PRESTIGE disaster to appear decisive, there is no justification for interference by those nations with the right of freedom of passage through their exclusive 

economic zones, a right enshrined in the United Nations Convention of the Law of Sea and established by international public law. 

The maritime nations of the world, particularly the United States, 

must speak forcefully against French and Spanish interference 

with the lawful activities of vessels that conform to all internationally accepted safety standards. Well-established principles of freedom of passage must be defended for the benefit of all nations, including the United States. 

Fifth, maritime nations must give urgent attention to the designation of ports of refuge. Never should a ship in distress like the 

PRESTIGE be forced out to sea to break up when there exists a 

chance of moving into sheltered areas where damage can be contained. With regard to the PRESTIGE, it should be noted that its 

cargo tanks were substantially intact at the time the ship was 

warded out to sea. Had it not been forced out by Spanish authorities, the resulting pollution and areas impacted very likely would 

have been a small fraction of what we experienced. 

Sixth, before new measures are created we must inquire whether 

existing flag and port state obligations are being properly impleVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00051 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
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mented. INTERTANKO has worked in partnership with the United 

States Coast Guard to promote effective port state control in the 

United States. We hope that this success can be repeated in other 

nations’ ports. 

Finally, the inclination in the United States and abroad to treat 

marine casualties as criminal matters is bad policy and harmful to 

efforts to protect ships, crews, and the marine environment. Absent 

gross negligence or willful misconduct, no officer or crew member 

should be incarcerated because a ship has been lost or damaged at 

sea. No response to a casualty should be compromised by fear of 

fines or imprisonment. No investigation should be complicated by 

concerns that honest answers will land people who have done no 

intentional harm in jail. 

Shipowners in the United States and other nations have incurred 

enormous expenses in modernizing their fleets and in ensuring the 

safe operation of their vessels. The pace of double-hull conversions 

worldwide is testimony to the immense capital commitments that 

shipowners have borne to meet current legal requirements, and to 

improve the quality of their fleets. Safety has advanced considerably over the past 20 years. Continued progress depends on the 

diligent daily efforts of shipowners and crews. National and regional governments must act responsibly to protect the benefits of 

these efforts. 

Thank you for your interest in these important issues. I will answer any questions you may have to the best of my ability. I assure 

you that INTERTANKO will continue—as it has for many years—

to make its expertise available to the Congress and the administration. We have made substantial progress and look forward to continuing improvements in the efficient maritime transportation of 

the commerce of the United States. 

The CHAIRMAN. Thank you, Mr. Rauta, and your complete statement will be made a part of the record. 

[The prepared statement of Mr. Rauta follows:]

PREPARED STATEMENT OF DRAGOS RAUTA, TECHNICAL DIRECTOR, INTERNATIONAL

ASSOCIATION OF INDEPENDENT TANKER OWNERS (INTERTANKO) 

Good afternoon. I am Dragos Rauta from the International Association of Independent Tanker Owners (INTERTANKO). INTERTANKO is an international trade 

association representing the majority of the world’s tanker owner and operators. 

INTERTANKO has 239 members controlling some 2,050 tankers with a total of 

157.7 million tons deadweight (dwt) capacity. INTERTANKO members represent approximately 70 percent of the world’s independently owned tanker fleet above 

10,000 dwt. Tankers operated by INTERTANKO’s members transport more than 60 

percent of the oil and petroleum products imported into the United States. In addition to its full members, INTERTANKO also has 287 companies which are associate 

members. INTERTANKO has offices in Oslo, London, Singapore and Washington, 

DC. 

INTERTANKO appreciates the opportunity to be here today to discuss the implications of the recent marine casualty involving the tanker PRESTIGE off the coast 

of Spain. INTERTANKO is recognized as a leading advocate of tanker safety by national and international public and private organizations around the world. Our program emphasis has been on finding meaningful safety measures based on sound 

technology and procedures that can be applied globally to protect our crews, our 

ships and the global marine environment. 

I. PRESTIGE Accident 

INTERTANKO is grateful that the crew of the PRESTIGE is safe, due primarily 

to prompt and successful rescue operations conducted by Spanish maritime authorities. We also note the bravery of the Master and his two senior colleagues who reVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00052 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
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mained on board in efforts to save their ship. INTERTANKO also commends the oil 

spill response efforts being undertaken by national and private entities to prevent 

and minimize environmental damages from this accident. 

The PRESTIGE accident has caused major economic impacts to persons who earn 

their living from the sea. While prevention must always be the first goal of government and industry, INTERTANKO is keenly ware of the human and environmental 

costs of marine oil spills. INTERTANKO champions continual review of the resources and technologies available for response and for support of those whose work 

and property are affected by these casualties. 

As in the case of any marine casualty, a complete and thorough inquiry into the 

causes of the accident must be pursued. Currently, none of us, and indeed no one 

in Europe, knows with precision what caused the loss of the PRESTIGE. Until we 

know the cause of the initial structural damage, we cannot intelligently determine 

whether specific remedial measures are necessary. Structural failure of some sort 

appears to have been an important contributor to this incident, but we do not know 

whether the age of the vessel was a factor or whether a double-hull vessel would 

have fared any better in the heavy November seas that doomed the PRESTIGE.

We believe it is essential that every effort be made to investigate and fully understand the circumstances of this accident. This includes a complete assessment of the 

historical record of the ship, its tragic last voyage and all the events surrounding 

the accident. We are therefore gratified to see that initial reports concerning the investigation underway have been, and hopefully will remain, open and impartial. We 

are however very concerned that vessel’s Master is still being detained, being unable 

to meet an extremely unreasonable level of bail and that his circumstances are 

prejudicing the conduct of post-incident investigations. When a vessel is lost or is 

fighting for its life, imminent incarceration should be the last thing a master should 

have to worry about. 

II. European Reaction 

European organizations and governments have reacted swiftly, but without adequate information, to the PRESTIGE accident. Many of these reactions and subsequent initiatives generally lack supporting analysis, violate obligations under international conventions, and have the potential to create unnecessary economic hardships for many within Europe. More to the point of these hearings, many of the 

measures being considered in Europe have the potential of imposing adverse economic and safety impacts on other parts of the globe, including the United States. 

These impacts are not intentional, but rather reflect the reality of international 

transport of oil. When one nation or region arrogates to itself the right to impose 

standards that apply only in that region, other nations will be affected, often adversely. For this reason, it is essential that all significant marine safety measures 

be the product of international consensus. To gain that consensus, measures that 

address vessel design and operations must address documented issues and must be 

reasonable responses to those issues. 

The European Commission issued proposed rules on December 20, 2002 in the 

form of a ‘‘Proposal for a Regulation of the European Parliament and of the Council 

amending Regulation (EC no 417/2002) on the accelerated phasing in of double hull 

or equivalent design requirements for single hull oil tankers and repealing Council 

Regulation (EC) No 2978/94’’. 

This proposal includes basically three amendments to existing regulations:

1. Mandating that heavy grades of oil can only be carried by double-hulled tankers;

2. Shortening the phasing out schedule of single-hulled tankers; and

3. Broadening application of the special inspection regime for tankers, the socalled Condition Assessment Scheme, which is designed to assess the structural 

soundness of single-hulled tankers over the age of 15 years.

The Commission urged the European Parliament and the Council to adopt these 

measures as soon as possible so that they may enter into force by March 2003. The 

Commission also called upon European Union (EU) member States to ensure that 

similar measures are adopted by the International Maritime Organization (IMO). 

Additionally, certain EU member states have taken unilateral measures in the 

aftermath of the PRESTIGE accident. For example, on December 13, 2002, a Royal 

Decree-law was published by the Spanish Government banning all single-hull tankers (regardless of registry) carrying heavy fuel oil, tar, asphaltic bitumen and heavy 

crude, from entering Spanish ports, terminals or anchorages. This decree entered 

into force on January 1, 2003. Spain and France also unilaterally prohibited all single-hull tankers carrying heavy fuel oils and heavy crude oil from transiting through 

their 200 nautical mile Exclusive Economic Zone (EEZ). Portugal has supported this 

50

position. This order was implemented almost immediately, resulting in Spanish and 

French warships intercepting tankers in their EEZ and preventing them from 

transiting and utilizing internationally recognized innocent passage and rights of 

freedom of navigation. 

III. Concerns with Europe’s Response 

INTERTANKO is obviously very concerned with these initiatives and has undertaken to work with the EU, its member states and other organizations to develop 

appropriate responses to the PRESTIGE accident, particularly once all the parties 

have obtained adequate information about the cause of the casualty. However, several of the proposed measures potentially fly in the face of well-established international law and procedures. INTERTANKO must point out certain infirmities with 

the general thrust of the reactions of Spain, France, Portugal and the EU. 

Single-hull tankers: There is at present no evidence that the loss of the PRESTIGE was caused by its single hull construction or that a double-hulled tanker of 

similar dimensions would have survived where a single-hull tanker failed. It is misguided public policy to regard double hull construction as a panacea to all tanker 

casualties. Double hulls have been introduced to provide additional protection in 

low-energy groundings and collisions, neither of which were factors in the PRESTIGE. Accelerated phase-out schedules for single-hull tankers operating in Europe 

totally ignore the less than two year old work that developed a timetable for phasing out single-hulled tankers and that took into account demand for oil, the capacity 

of shipyards and ship recycling yards, and the need to avoid a tanker tonnage shortage. 

Serious tanker owners with long-term commitments will find themselves in a 

most difficult situation if, for existing tonnage, new regulations make it impossible 

for them to fulfil their charter commitments. Some of these owners are of the quality that European authorities would have liked to serve the European trades on a 

regular basis. Sudden and ill-conceived changes can have dramatic market and safety implications. 

Vessel Age: The focus on age limitations for ships, regardless of whether they are 

equipped with a single or double hull, also causes particular concern. A well built 

and maintained vessel can last a considerable period of time, with some tankers in 

the United States fleet lasting almost 50 years. There is a flawed logic in limiting 

the age of any ship because it discourages the initial investment in durable and robust ships and dissuades expensive maintenance of the asset in later life. A robust 

and sophisticated new built tanker would require at least 25 years of trade to justify 

the initial investment. A related concern is the prospect that an internationally 

agreed-upon program or vessel service life and maintenance may be arbitrarily 

abandoned. This program mandates increasing maintenance and inspection requirements for vessels based on age and service. By proposing elimination of vessels 

based on arbitrary age limits, regardless of maintained condition, potentially undermine maritime safety. 

Economic Impacts: It is less than two years since a newly constructed timetable 

for phasing out single-hull tankers was introduced and agreed to at the EU and the 

IMO. This timetable took into account the demand for oil, the capacity of the shipyards and ship recycling yards, and the need to avoid a tonnage supply crisis. This 

may all be thrown out without proper consideration for tanker supply/demand situation. Attached (Appendix 1) is a graphical comparison of single-hull tanker tonnage 

to be phased-out under the current EU/IMO phase-out for single-hull tankers regulation, the EU new proposal and the OPA phase-out schedule. 

Heavy Oil: Another problem is the confusion and potential chaos resulting from 

European proposals to restrict the carriage of ‘‘heavy oil’’ to or from European ports, 

offshore terminals or anchorage areas, to double-hull oil tankers. While the EU defines ‘‘heavy grades of oil’’ as heavy fuel oil, heavy crude oil, waste oils, bitumen 

and tar, application of this definition to real cargoes have widely different results. 

Attached (Appendix 2) is an analysis conducted by INTERTANKO on the EU-proposed definition for ‘‘heavy crude oil’’ and a list of crude oils (Appendix 3) which 

could be banned from transportation by single-hull tankers. This proposal is being 

made without a clear understanding of its impact, the actual characteristics of the 

cargo and how the cargo reacts if released in the environment. There is also no analysis regarding the likely impact on the availability of appropriate tanker tonnage 

and probable supply implications. 

Unilateral Action: INTERTANKO is opposed in principle to unilateral and regional legislation for international shipping. The free passage of vessels on the high 

seas of the world is fundamental principle of international law. It is in everyone’s 

best interest to conduct discussions and impose regulations in the internationally 

51

recognized forum for marine matters, namely the International Maritime Organization (IMO). 

IV. Control and limitation of ships in Europe’s EEZ: Innocent Passage 

The EU has proposed to infringe on the long-held international principle of ships’ 

innocent passage. This is a principle that the United States has fought to preserve 

and which the United States Navy continues to protect through ‘‘freedom of navigation’’ operations. 

Following the loss of the PRESTIGE, it is understandable that EU member states 

wish to ‘‘analyze and address various ways to take measures to protect their coastal 

waters, including the territorial sea and exclusive economic zone’’... where there 

is a threat... ‘‘to the marine environment’’. EC Communication to the Parliament 

and Council of 6 December 2002. The actions of member states Spain and France 

however, it indicates that this review is meant to provide the basis for denying ships 

freedom of passage in European EEZ waters. 

The United Nations Convention on Law of the Seas (UNCLOS) Article 56 grants 

Coastal States jurisdiction in the EEZ ‘‘as provided for in the relevant provisions 

of this Convention with regard to, inter alia, the protection and preservation of the 

marine environment’’ (Articles 211 (5) and (6) and 220). Basically, 211(1) provides 

that States acting through the IMO shall establish international rules to prevent, 

reduce and control pollution... and promote the adoption of routing systems designed to minimize the threat of accidents which might cause pollution. 211(5) and 

(6) allow Coastal States to adopt laws in respect of their EEZs ‘‘where the international rules and standards are inadequate to meet special circumstances and 

Coastal States have reasons for believing that a particular clearly defined area of 

their EEZ is an area where the adoption of special mandatory measures for the prevention of pollution from vessels is required... ’’. Such laws may not impose design, construction, manning or equipment standards on foreign vessels other than 

generally accepted international rules and standards. Consultation with and approval by IMO is required, and at least 15 months notice of entry into force. 

Section 220(5) and (6) provide that where there is clear evidence that a vessel 

navigating in the EEZ or territorial sea has committed a violation of applicable 

international standards for the prevention of pollution resulting in a discharge causing or threatening significant pollution, the State can inspect or detain the vessel. 

Where there are clear grounds for believing a vessel has committed such a violation 

in the EEZ, the Coastal State can require information from the vessel to establish 

whether it has in fact occurred (220(3)). 

INTERTANKO recognizes the concerns of coastal nations over marine safety and 

environmental protection. These concerns must be addressed within the context of 

international law. In a joint press statement on December 12, 2002, the Round 

Table of international shipping organizations (INTERTANKO, the International 

Chamber or Shipping, the Baltic and International Maritime Council and 

INTERCARGO) condemned the continuing contravention of the Law of the Sea Convention by coastal states in the wake of the PRESTIGE incident. There is no justification for the illegal action taken by the Governments of Spain and France in 

ordering a number of foreign ships out of their 200 mile EEZ. 

Merchant ships are entitled to freedom of navigation through the EEZ. The flouting of international obligations by two important maritime nations sets an inexcusable and damaging precedent which should be strongly opposed by other nations 

worldwide. Unilateral action by one or more Coastal States, or the entire EU, cannot be condoned, when clearly there are adequate provisions within international 

law to address these concerns. The United States Government should voice its position on this very important international law issue.

V. Positive Indications 

While we have focused upon the negative aspects of the European reactions to the 

PRESTIGE, there are nevertheless some aspects that we believe are positive:

• Long overdue attention that is now being given to Places of Refuge and the 

need for appropriate pre-planning of response arrangements. Acceleration of the 

designation of places of refuge is an essential activity not only in Europe but 

also around the world. Some independent commentators have suggested that 

much of the resulting oil pollution the PRESTIGE would have been avoided if 

the Spanish authorities had offered the vessel sheltered waters and assistance 

in cargo transfer in the early hours of the vessel’s struggle with the sea;

• There is recognition that several European states have failed to live up to their 

obligations on Port State inspections, and the hope that, in addition to enforcement of those commitments, an enhanced inspection system will include better 

targeting rather than adherence to simple numerical targets;

52

• There must be renewed focus on compensation schemes, including a call for 

States to ratify both the Carriage of Hazardous and Noxious Substances and 

the Bunker Oil Pollution Damage Conventions, as well as support the introduction of the Supplementary Fund for Oil Pollution Compensation. The United 

States should give consideration to joining international conventions governing 

compensation for pollution;

• There has been confirmation that the ERIKA 1 package will be implemented 

promptly;

• The case for establishment of a European Maritime Safety Agency (EMSA). 

Such an agency could contribute to ensuring that EU states uniformly implement and enforce internationally agreed legislation and provide the European 

Commission with much-needed maritime competence, including a thorough 

analysis of post-accident inquiries, review of vessel maintenance and construction standards, training of inspectors, and designation of places of refuge; and

• Support for the development of a Flag State code of practice and the model 

audit scheme (the PRESTIGE was registered in the Bahamas, a flag with better 

safety record than many of the European flags), as well as procedures for the 

authorization and control of Classification Societies.

All of these developments are positive. INTERTANKO is totally committed to 

working with all responsible parties to ensure the safe transport of oil and to protect 

the marine environment. The Association therefore will remain strongly engaged in 

assisting the international maritime community, European officials and the European Maritime Safety Agency to achieve these goals. 

VI. Conclusion 

Marine casualties are traumatic events because of the human, environmental, and 

economic losses they often cause. This shock often leads to an impulse to respond 

politically before all relevant information is available. In terms of environmental 

protection, it is important to identify and understand problems before we try to 

solve them. It is obvious that some in the EU are determined to take unilateral action, in clear contradiction of previous statements in support of multinational international regulation of shipping. By contrast, some EU Member States do not agree 

with this approach and are advocating a more conscientious approach that does not 

risk diluting overall marine safety and environmental protection. 

The effect of hasty European proposals can have impacts both in the EU as well 

as other countries, including the United States. 

According to EIA (U.S. Energy Information Administration), the 2001 total costs 

of U.S. oil imports were $102,747,000,000. Out of this, only $5,000,000,000 (or 5 percent) was the cost of transportation. A market with regional regulations means a 

less flexible and a tighter market. Such a situation will cause problems for oil companies and traders who wish to fix ships for optional discharge areas. Although, at 

this point in time, INTERTANKO cannot anticipate the level or significance of a 

possible increase of the transportation costs, one cannot exclude that the transportation costs to the U.S. could increase to $2.5 per barrel instead of the approximate 

costs of $1.5 per barrel for long haul crude been the average over the last years. 

INTERTANKO is not implying that the EU rules will induce immediate shortages 

of tonnage. It is, however, of interest to note that U.S. imports a large amount of 

crude oils which, under the proposed EU definition, might be considered ‘‘heavy 

crude oils’’. These are all Venezuelan crudes, some from West Africa and some from 

the Arabian Golf. If the EU goes ahead with current proposals, all these oils would 

need to be transported in and out of the EU by double-hull tankers only. This could 

result in shortage of adequate tonnage supply either in U.S. or Europe or other 

parts of the world. 

We are prepared to work with the United States Government to ensure its concerns are addressed both internationally and domestically. INTERTANKO believes 

very strongly that only through all parties working together can we truly achieve 

higher levels of marine safety and environmental protection. 

Thank you again for the invitation to be here today and I would be happy to answer any questions you may have.

53


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54

APPENDIX 2

AN INTERPRETATION OF THE MEANING BEHIND ‘‘HEAVY OIL’’, T.J. GUNNER—

DECEMBER 2002

Introduction 

Currently various proposals are circulating within the EU to ‘‘ban the transport 

to or from ports of Member States of heavy grades of oil in single-hull oil tankers’’. 

The term ‘‘heavy grades of oil’’ is further defined within the proposal to mean and 

include ‘‘heavy fuel oil, heavy crude oil, waste oils, bitumen and tar’’. In real terms 

and for the layman this would mean all oils that are ‘‘dark and sticky’’ and impact 


raut2.eps
55

1The IOPC Fund definition of a non persistent oil is ‘‘An oil is considered non persistent if 

at the time of shipment at least 50 percent of the hydrocarbon fractions, by volume, distil at 

a temperature of 340 °C (645 °F), and at least 95 percent of the hydrocarbon fractions, by volume, distil at a temperature of 370 °C (700 °F), when tested in accordance with the ISO 

3405:2000 test method or any subsequent revision thereof.’’

the environment. How can the terms ‘‘Dark and Sticky’’ be associated with a defined 

grouping of all the infinite number of differing oils that are carried by tankers 

today. 

Given the association of the phrases with heavy fuel, tar, and bitumen and the 

use of the term ‘‘heavy’’ this would imply the use of the physical parameter of density as the guideline parameter. The parameter of ‘‘Density’’ reflects the ‘‘heaviness’’ 

of all substances where for example the density of lead is higher or heavier than 

that of water—in other words it sinks in water. However, is it the intention of the 

EU Commission, by use of this terminology, to identify those oils that create the 

greatest environmental impact and pollution threat? If this is so, then it is believed 

the greatest concern is the ‘‘persistence’’ of the oil as to its ability to break up and 

reduce its environmental impact from a pollution perspective. If this is so, then perhaps the parameter of Kinematic Viscosity at a defined temperature would be a potential guideline for the definition of the group of oils that need restriction to double-hulled tankers. 

Alternatively, there is already an alternative definition, supplied by the International Oil Pollution Compensation Fund (IOPC), which allows the identification 

of those oils that are non-persistent. This definition uses the parameter of the percentage of the substance that can distil at certain defined temperatures. 1 The problem is that the distillation data for each type or individual cargo is never available 

and therefore no valued judgement can be made regarding the shipment criterion 

for that specific cargo for the type of vessel to be used for its transportation. 

What is needed is a clear outline for the cargo type using a regularly available 

physical parameter so that a clear evaluation can be undertaken regarding a cargo’s 

shipment. Such parameters would be either Density and/or Kinematic Viscosity.

Density 

Given the foregoing discussion and the association with the terms ‘‘heavy’’ and 

‘‘fuel oil’’, the standard max density of heavy fuel oil is 991 kg/m3 at 15 °C (ISO 

8217) but is more usually about 985–989 kg/m3 at 15 °C. Using this criteria then 

there are very few crude oils that are regularly traded by sea in large volumes that 

have equivalent densities to that of a residual fuel oil given that fuel oils are derived as a heavy residue from the crude oil refining process. However, by lowering 

the density figure and using an arbitrary density figure of say 900 kg/m3, as a definition for ‘‘heavy crude oil’’, then this same density would capture all persistent fuel 

oils, tars and bitumens carried by tankers today. The density criteria would also include such crude oils as examples:

Alba (North Sea), Bachaquero (all grades), Champion, Gryphon, Balder, Laguna, Leona, Duri, Bonny Med., Lokele, Maya, Merey, Captain (North Sea).

The foregoing list is but an example of crudes carried by sea in any volume. 

Viscosity 

Turning to the viscosity criteria then it will be recalled that crude oils fall into 

three defined but broad categories; namely Paraffinic, Intermediate and Aromatic 

types. Paraffinic and Intermediate crude oils have a Kinematic Viscosity similar to 

that of water at 50 °Centigrade. Therefore, it will be the Aromatic type crude oils 

that would be primarily considered for impact of this parameter. Using the same 

principles as above by comparing viscosities with those of fuel oils then with a heavier fuel oil viscosity being 380 centistokes at 50 °C (ISO 8217) the majority of these 

type of crude oils would come from Venezuela and the northern areas of South 

America e.g. Boscan, Tia Juana Pesado etc. 

Proposed Definition 

Given the foregoing discussion, the following possible definition may be a balanced 

and suitable definition to meet the objectives of the proposals for a ‘‘Heavy Crude 

Oil’’:

56

2This viscosity criterion has its basis within the associated guidelines to the International 

MARPOL Regulations for pumpability of cargoes—i.e. those cargoes whose viscosity is so high 

that they require heating for transportation. 3 N.B. proposals for alternative definitions include the parameter of API Gravity at 60 °F. This 

is an alternative oil industry parameter for the SI parameter of Density (normally recorded at 

15 °C). Proposals for either API Gravity 20 or 30 have been voiced but the foregoing definition 

weighs the total impact of these values. The proposed density of 900 kg/m3 is equivalent to an 

API Gravity of approximately 25.6. For reference purposes the following web site can provide 

an indicative API Gravity for a diverse selection of crude oils:

http://www.oil-transport.info/Crude Oil Data/crude oil data.html

A Heavy Crude Oil is a crude oil, as defined by Regulation 1.28 of MARPOL 

73/78, but having a Density greater than 900 kg/m3 AND a Kinematic Viscosity 

greater than 250 cst 2 at 30 °Centigrade. 3

Heavy Fuel Oil 

Turning now to the question concerning ‘‘Heavy Fuel Oil’’—reference to this type 

of material for ships may be found in the ISO 8217 specification and table 2 thereof. 

However, this definition as quoted above will also cover all the intended types of 

fuels and substances as defined within the original scope of oils—i.e. ‘‘Heavy Grades 

of Oils’’ to be banned from carriage on single-hulled tankers.

57

APPENDIX 3

Crude Oils with an API less than 30

(suggested as ‘‘heavy fuel oils’’ by the EU Commission proposed definition and which could be banned from transportation on single-hull 

tankers) 

Name of Crude API Gravity at 60 °F Indicative 2001 Shipped

Vol [Bbls}* 

Abu Safah 28.90 15,047,441

Alaskan North Slope 27.20 138,960,523

Alba (North Sea) 19.00 23,536,950

Al Rayyan 24.50

Al Shaheen 29.00

Arabian Heavy 27.80 91,160,684

Arabian Medium 29.50 112,857,221

Ardeshir 26.20

Ashtart 29.00

Bachaquero BCF13 13.00

BCF 17 17.00

BCF 22 22.00

BCF 24 24.00

Bachaquero Dos 13.80

Nowruz 26.80

Balder (N.Sea) 23.40

Basrah Heavy 23.70

Basrah Medium 29.60

Belayim Blend 27.30 13,402,771

Belayim Land 22.30

Belayim Marine 29.50

Bima 20.50

Bintulu 29.40

Bolivar Coast 24 24.00

Bonny Medium 26.60

Bouri 26.00 21,444,608

Bow River 24.90

Buzachinakaya 25.00

Caldarosa 29.20

Canadon Seco 26.60

Cano Limon 29.00

Captain (N.Sea) 19.30

Carassai Gasolina 26.30

Caripito 21.60

Carmopolis 25.10

Cavone 24.10

Ceuta 29.70

Champion 23.40

Chinaja 29.20

Cinta 28.00

Clair 1 28.00

Coban 25.80 6,463,302

Cold Lake Vancouver 23.00

Dai Hung 29.10

Dirillo 15.40

Djeno 28.00

Duri 21.80 11,437,739

Dutch Offshore 29.50

E4 19.80

Emerald 23.10

Emeraude 23.00

Emilio 5 9.30

Emilio 7 8.60

Escalante 23.50

Fao Blend 29.70

Foinhaven 25.00

Forcados Blend 28.40 77,526,071

Forth Central 19.00

Fosterton 23.80

58

Crude Oils with an API less than 30—Continued

(suggested as ‘‘heavy fuel oils’’ by the EU Commission proposed definition and which could be banned from transportation on single-hull 

tankers) 

Name of Crude API Gravity at 60 °F Indicative 2001 Shipped

Vol [Bbls}* 

Furial 29.00

Geisum 18.50

Gela 14.60

Gianna 2 7.10

Giaurone 12.90

Gombe Marine 23.00

Gyrphon 21.30

Gulf of Suez 29.90

Gullfaks 28.60 106,047,000

Harding Blend 20.60

Heidrun 28.60 21,496,332

Helm Blend 27.30

Iranian Heavy 29.70 96,648,389

Isla 11.30

Khafji 27.90

Kiame 29.30

La Rosa Medium 24.50

Lagotreco Mediano 24.50

Laguna 11.20

Leona 22.70

Libyan B1NC41 28.10

Liu Hua 22.80

Lloydminster 22.50

Loango 26.10

Lokele 20.00

Mandji 28.50

Maralago 20.90

Mars 28.40

Maya 21.90 272,329,420

Menemota 18.90 11,780,256

Merey 16.60 20,179,943

Mesa 28 27.30

Mesa 30 29.50 33,108,164

Miri Light 29.00

Mokoko Abana 19.20

Morichal 12.00

Narciso 21.00

Odudu 27.00

Ombrina 21.50

Oriente 28.10 17,138,675

Payamino 25.50

Perla 14.10

Pilon 13.80

Pisticci 9.40

Prezioso 19.00

Prinos Blend 27.90

Prinos North 18.70

Ragusano 19.56

Ras Budran 24.70

Ras Gharib 25.40

Ratawi 24.30

Reb 28 28.10

Rospo Mare 11.88

San Joaquin Valley 15.10

Santa Maria 17.40

Sarago 11.40

Sarago 1 8.10

Schiehallion (N. Sea) 25.40

Sedgewick 21.40

Seme 22.70

Sendji 26.00

59

Crude Oils with an API less than 30—Continued

(suggested as ‘‘heavy fuel oils’’ by the EU Commission proposed definition and which could be banned from transportation on single-hull 

tankers) 

Name of Crude API Gravity at 60 °F Indicative 2001 Shipped

Vol [Bbls}* 

Shengli 24.50

Souedie 24.00 29,659,237

Stag 18.50

Sumatran Heavy 21.70

Tarakan 26.30

Tempa Rossa 2 18.70

Tia Juana 102 25.80

Tia Juana 24 24.00

Tia Juana Light 29.40

Tia Juana Pesado 11.00

Tona 29.40

Trintopec 26.90

Troll (N. Sea) 28.70 36,740,966

Turkish Indigenous 25.80

Urals Heavy 28.00

VS 28 28.00

Vega 18.30

Vic Bihl 21.10

Wafra Burgan 23.10

Wafra Ratawi 24.80

Wandoo 19.40

Yanga 29.20

Yizheng 28.50

Yombo 17.50

Zaafarana 23.10

Zafiro 29.60

Zatchi 23.70

* This is only an indication of the extent of carriage of the individual crude oil by 

sea where data is available. These figures should not be taken as absolute but seen in 

relationship to one another. 

The CHAIRMAN. Mr. Godfrey, can you move over just a little bit. 

I want to apologize to the witnesses that there is not sufficient 

room at the table, and I apologize for that again. 

Mr. Frick, welcome. 

STATEMENT OF G. WILLIAM FRICK, VICE PRESIDENT FOR

INDUSTRY OPERATIONS AND GENERAL COUNSEL,

AMERICAN PETROLEUM INSTITUTE 

Mr. FRICK. Thank you, Mr. Chairman, Members of the Committee. I am Bill Frick, Vice President for Industry Operations and 

General Counsel of the American Petroleum Institute, a trade association representing over 400 companies involved in all aspects of 

the petroleum industry. I am pleased to be here today on behalf of 

the API members, member companies who own, operate, and charter tanker fleets for the transportation of crude oil and petroleum 

products. 

With the chair’s permission, I will proceed with a brief oral statement, and submit a more detailed version for the record. 

The CHAIRMAN. Your complete statement will be made part of 

the record, Mr. Frick. Thank you. 

Mr. FRICK. The Committee is to be commended for calling this 

hearing to consider issues arising from the breakup of the MV 

PRESTIGE and the subsequent damage caused the coastlines of 

60

France and Spain. It is distressing to all of us to see the impacts 

this incident has caused and continues to cause to such a beautiful 

and bountiful area of our world. 

As Members of this Committee know, concern over the effects of 

major tanker accidents was the impetus for enactment of OPA–90. 

This act deserves a large measure of credit for the dramatic improvement in spill prevention over the last decade. In the average 

year from 1981 to 1990, according to U.S. Coast Guard records, a 

total of 70,000 barrels of oil were released by tankers in U.S. waters. But the rate dropped to just 4,000 barrels per year in the 10 

years following enactment of OPA–90, a decrease of 95 percent. A 

chart of this dramatic improvement is attached to our written testimony. 

Given that over 25 billion barrels were imported over this period, 

it is an extraordinary success story. Nevertheless, even with great 

progress, the industry continuously seeks to improve its records, 

guided by the OPA–90 framework. 

OPA–90 is an important bulwark against a catastrophe such as 

the one caused by the PRESTIGE. It has many beneficial features, 

from establishing financial accountability and liability to limiting 

the hours a seaman can work. The most discussed feature of the 

act, however, is the directive for an orderly phase-out of single-hull 

tank vessels in favor of double-hull or hull-within-a-hull designs. 

Some have questioned whether the American tanker industry 

still favors the conversion that will make single-hull tankers a 

thing of the past in U.S. waters by the year 2015. To be very clear, 

API and its member companies support the double-hull conversion 

schedule in OPA–90. API members who own ships are investing 

large sums in new double-hull tankers and are on schedule to meet 

OPA’s phase-out. 

We do not, however, want the expected benefits of double hulls 

to diminish the importance of other components in our having safe 

marine transportation of oil. Effective prevention relies on a system 

of measures that goes beyond hull configuration, including regulatory and industry oversight, a vessel’s maintenance as well as the 

competency of its crew, and port infrastructure. Each of these plays 

a vital role in the system’s success. Double hulls provide protection 

from low-energy collision and grounding. They are not a substitute 

for proper standards of management, operation, maintenance, and 

corrosion control. 

In the wake of the PRESTIGE incident, European governments 

have under consideration unilateral acceleration of the single-hull 

phase-out schedule along with certain other restrictions on tankers 

that may enter EU ports. This has raised issues of whether the EU 

requirements could affect shipments to the United States. Certainly, to the extent that phase-out schedules differ from one part 

of the world to another and companies must redeploy tankers, the 

world shipping system will not run as smoothly and efficiently as 

it can. 

It appears, however, that there is sufficient capacity and flexibility in the worldwide shipping industry to adjust, if the EU does 

adopt these new requirements, without significant disruption to 

U.S. commerce. Were such measures to spread to other regions, 

however, the situation could change. Because shipping is a global 

61

1 International Association of Independent Tanker Owners. 

activity, API believes that the development of programs and standards relative to these issues should generally be directed toward 

the entire world fleet, via an international body such as the International Marine Organization, IMO. They should not be implemented just on a unilateral port-state-by-port-state basis, which is 

why the United States pursued worldwide phase-out of single hulls 

through IMO after passage of OPA–90. 

As an industry, we are very pleased with the strong record of improvement in preventing tanker spills. We remain committed to 

full implementation of OPA–90 and believe that it has all parties 

on the right track. More stringent measures such as the EU is considering are not in our view warranted, given the progress made 

here pursuant to OPA–90. 

We look forward to continuing our work with the Coast Guard, 

the other agencies, and the Congress to realize the statute’s goals. 

Mr. Chairman, I will be happy to respond to questions. 

[The prepared statement of Mr. Frick follows:]

PREPARED STATEMENT OF G. WILLIAM FRICK, VICE PRESIDENT FOR INDUSTRY

OPERATIONS AND GENERAL COUNSEL, AMERICAN PETROLEUM INSTITUTE

The American Petroleum Institute (API) is a national trade association representing over 400 companies involved in all aspects of the petroleum industry. A 

significant number of API member companies own, operate, and charter substantial 

tanker fleets. On their behalf, API would like to take this opportunity to respond 

to your questions and concerns regarding the recent MV PRESTIGE oil spill incident off the coast of Spain. We would like to address the protections offered to this 

country by the passage of the Oil Pollution Act of 1990 (OPA) and to emphasize additional measures that API and its member companies have taken to improve the 

integrity and safety of the marine transportation system in the United States. 

API has testified before Congress on a number of issues relating to OPA. We specifically addressed the topic of OPA’s double-hull requirements for tank vessels, during a hearing of the U.S. House or Representatives’ Committee on Transportation 

and Infrastructure Subcommittee on Coast Guard and Marine Transportation on 

June 29, 1999. API has aggressively supported the highest technical and safety 

standards for tank vessels and, on behalf of its Marine Transportation Segment 

members, have taken very seriously our role in safely and efficiently transporting 

the oil needed to meet America’s energy needs. We remain committed to the tanker 

requirements of OPA, which mandate when a vessel must either be retrofitted with 

a double-hull or retired from U.S. service. 

As a direct result of the MV PRESTIGE incident, the European Commission proposes an immediate prohibition of single-hull vessels of 600 tons deadweight and 

above from the transportation of heavy fuel oil, heavy crude oil, waste oils, bitumen 

and tar into the ports of the 15 European Union (EU) member States and also proposes an accelerated phase-out of all single-hull vessels for the transport of all types 

of oil. Since December 12, 2002, the Spanish and French governments have taken 

a further step in banning singlehull tankers, built more than 15 years ago, from 

sailing within 200 miles of their coastlines unless such vessels submit to extensive 

inspections by the port states. 

The double-hull provisions of OPA have significantly changed the oil transportation industry, both domestically and abroad. The international community followed the U.S. lead by adopting similar requirements through amendments to the 

International Convention for the Prevention of Pollution from Ships (MARPOL). 

Since 1993, international law has required that all large, newly constructed tankers 

be built with double-hulls. According to INTERTANKO 1, well over 50 percent of the 

world’s fleet carries double-hulls as we enter 2003. 

Vessels that are directly owned or chartered by the major oil companies or their 

affiliate organizations transport a significant volume of crude oil and petroleum 

products to the U.S. As part of their respective safety management system, organizations employ or subscribe to a vessel screening and inspection process (vetting) 

when selecting third party vessels to transport cargo. Typically, the vetting and 

62

2Polar Tankers is owned by ConocoPhillips. 

3 Alaska Tanker Company is a newly formed ‘‘pool’’ operator formed between BP, Keystone 

Shipping, and OSG. 4SeaRiver Maritime, Inc. is a wholly owned affiliate of Exxon Mobil Corporation. 

5The cost of a foreign built product tanker is approximately $30 million and a U.S. built is approximately $90 million. 

screening process includes a review of a third party’s management system and compares the nominated vessel to marine safety criteria which is based on recognized 

safety standards established by regulatory authorities and reputable maritime organizations. Oil company tanker fleets must meet the same high standards as these 

chartered vessels. 

Members of the U.S. maritime industry have and will continue to take delivery 

of new Jones Act double-hull tankers (U.S. owned, built, flagged, and crewed with 

U.S. documented seafarers) to maintain compliance with the provisions of OPA and 

to keep pace with tonnage requirements. However, the number of Jones Act tankers 

will remain a relatively small portion of the total tanker fleet that delivers crude 

oil and petroleum products to the U.S. Today, the U.S. consumes almost 20 million 

barrels of oil daily. We import 55 percent of the crude oil and petroleum products 

we consume. Of this total, 10 million barrels per day are transported to the U.S. 

by non U.S.-flag tankers. 

In early November 2002 API responded to a letter of inquiry from six U.S. Senators, relating to the 25-year phase-out schedule of OPA and concerns over the number of shipbuilding orders to serve coastwise or Jones Act oil transportation trade 

in the near future. As much of the discussion on the petroleum industry’s conversion 

to double-hulls has focused on the U.S. tanker fleet, we offer the following observations about the two primary and distinctly different trades that affect U.S. flag tonnage—Alaska North Slope (ANS) crude and the U.S. coastwise petroleum product 

market. 

Alaska North Slope Crude Trade 

The number of tankers needed to transport Alaskan North Slope (ANS) crude to 

West Coast refineries is declining. Still, several double-hull tankers have been introduced to this trade and several others are being built in accordance with OPA’s 

phase-out schedule. More specifically, a fleet of 25 Jones Act tankers is currently 

engaged in the transport of ANS crude oil. Nine of these tankers have double-hulls. 

Seven (or 11 if all options to build are exercised) additional double-hull tankers will 

be added to the fleet when the new Polar Tankers 2 and Alaska Tanker Company 3

crude tankers ordered and under construction are delivered by 2008. In addition, 

SeaRiver Maritime, Inc. 4 is currently evaluating its needs. 

As you know, production of ANS crude oil has declined from 1.8 million barrels 

per day in 1990 to 1.0 million barrels per day in 2002. The Alaska Department of 

Natural Resources forecasts that ANS production will steadily decline to about 

577,000 barrels per day by 2016, resulting in a corresponding reduction in needed 

tanker capacity. Based on the production from existing fields, average utilization of 

tankers and recent shipping patterns, API’s analysis found that the capacity of the 

existing and planned fleet should be sufficient to meet the projected ANS production 

(see Figure 1) as single-hull vessels are phased out under the mandated OPA timetable. 

U.S. Coastwise Petroleum Product Trade 

Again, while faced with decreasing demand for petroleum product tankers, industry has invested significant resources to construct new double-hull product tankers. 

According to the U.S. Maritime Administration’s (MARAD’s) most recent statistics, 

there are currently 64 available tankers to operate and move products along the 

U.S. coast. Twenty-two are double-hulled. However, U.S.-flag tankers continue to 

move a diminishing amount of product, particularly between the Gulf Coast and 

East Coast. Since the 1980s, there has been an ever-increasing use of domestic pipelines, movement of product imports on foreign flag tank vessels, and an increased 

deployment of double-hull coastal tank barges. (Coastal tank barges have become 

more attractive as the cost for new product tanker construction continues to escalate.) These trends are expected to continue, primarily because of the disparate cost 

of new U.S. product tanker construction (approximately triple the cost of a similar 

foreign built vessel). 5

Currently there is excess capacity in the U.S.-flag product tanker market. In 2000 

(the latest data available from MARAD), of the 64 U.S.-flag product tankers, only 

53 were engaged in domestic operations. Ten could not find cargo to haul in the domestic market and were deployed by their owners to the international market 

(where they were at a distinct competitive disadvantage); another was idle. MoreVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00066 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
63

6The Oil Companies International Marine Forum’s (OCIMF’s) SIRE system and Equasis—the 

European Commission’s/French Maritime Administration’s cooperative information system, 

which collates existing safety-related information on ships from both public and private sources 

and makes it available on the Internet—are examples of such databases. 

over, the U.S. coastal tank barge fleet, which continues to become a competitive alternative to product tankers, is also under-utilized. 

Congress, when it enacted OPA, recognized that the transition from a single-hull 

to a double-hull fleet needed to occur in an orderly fashion and without a condemnation of the substantial investment already made in the existing tanker fleet. Congress provided a 25-year period to retire single-hull vessels. Thanks to the foresight 

of the drafters of OPA, the energy supply chain has not been disrupted as a result 

of this legislation. This was a risk-based decision that balanced economic and supply 

chain considerations with the oil spill risk reduction potential of double-hulls. It is 

worth noting the wisdom of this decision. The transition has been and we expect 

it to continue to be orderly. 

The value of double-hull tanker designs has been evaluated and supported by the 

National Research Council (NRC). Their 1991 report, Tanker Spills—Prevention by 

Design, concluded that the double-hull design is among the best values on the basis 

of cost-effectiveness. The findings of this report are consistent with the operational 

experiences of double-hull tankers and the overall improved environmental performance record of the tank vessel industry. 

However, we believe that safe marine transportation, as a system, goes beyond 

hull configuration and that each component of this system (including regulatory 

oversight, the vessel’s maintenance as well as the competency of its crew, and port 

infrastructure) plays a vital role in the system’s success. Double-hulls provide protection from low energy collision and grounding. They are not a substitute for proper 

standards of management, operation, maintenance, and corrosion control. 

The question of whether the MV PRESTIGE incident could have been prevented 

by a double-hull requirement presupposes we know why the PRESTIGE incident occurred. That question has not yet been fully answered. Although several possibilities 

are under investigation, none lead to the conclusion that a double-hull design would 

have prevented the incident. The PRESTIGE was in trouble days before her catastrophic failure and had requested help and refuge from Spanish authorities. It was 

declined entry to a port of refuge and sent back out to sea in deteriorating weather. 

It is important to keep in mind that while the double-hull design is good, hull design alone will not prevent all oil spills. More important than hull design are good 

management, proper maintenance, and correct navigational decisions. Detailed attention, by Classification Societies to vessel structure and then to Special Survey 

repairs, together with comprehensive Port State Control inspections and the use of 

industry and other databases (such as the OCIMF SIRE system and Equasis), will 

greatly reduce the risk of such environmental incidents. 6

Beyond OPA—An Improved Industry Record 

To date, 75 percent of the world tanker fleet is independently owned. To ensure 

that vessels and their crews are of the highest quality, tankers are subjected to a 

series of rigorous inspections by government, vessel classification societies, and the 

industry. For example, all tankers operating in the U.S. are evaluated for inspection 

by the U.S. Coast Guard. Since July 1998, vessels are required to have a certified 

International Safety Management (ISM) system in place. Our companies conduct 

pre-hiring inspections of independent tankers using trained inspectors located 

throughout the world. These inspections go beyond governmental requirements and 

often extend to the tanker’s management structure. 

As a result of numerous international and U.S. requirements and industry practices, the tankers calling on U.S. ports, both domestic and foreign-flagged, are the 

best-maintained commercial ships in the world. For example, less than 1 percent of 

tankers inspected by the Coast Guard are detained, which is the lowest percentage 

of any vessel type. Furthermore, Coast Guard data shows the dramatic reduction 

in oil spills from tankers since the enactment of OPA. For the period 1981 to 1990, 

tankers released an average of 70 thousand barrels per year. However, for the period 1991–2000, releases from oil tankers averaged 4 thousand barrels per year—

a decrease of 95 percent! 

Tankers deliver the oil and petroleum products we depend on, and the nation depends on tanker operators to do their job safely. It is a responsibility that each of 

our members considers paramount to their success (see Figure 2). Our members will 

continue to ensure they secure adequate capacity to meet their own transportation 

requirements and the energy needs of this country. 

64

Actions of the European Union (EU) and Impacts on U.S. Trade 

It is difficult to determine at this time the exact economic impacts that the EU 

actions (banning heavy oil shipments in single-hull tankers and accelerating the 

phase-out of single-hull tankers) might have on U.S. trade. Demand for new, wellmaintained, double-hulled tankers to haul heavy oil will likely increase, placing upward pressure on chartering rates for these vessels. Finally, the impact of the more 

general accelerated phase-out schedule is difficult to assess. However, to the extent 

that phase-out schedules differ from one part of the world to another, the tanker 

market may become segmented and operate less efficiently. 

In the long-term however, we have concerns over the port of refuge issue emanating from the MV PRESTIGE incident. This important topic has the potential to 

impact trading decisions by U.S. companies. API strongly believes that the development of programs and standards relative to this issue should be directed toward the 

entire world fleet, via an international body such as the International Maritime Organization (IMO), and not attempted on a unilateral port state by port state basis. 

Conclusion 

Over the past 12 years, the oil and tanker industries have demonstrated that they 

can safely supply America with petroleum under the provisions of OPA. This oil 

fuels our transportation systems, heats our homes, powers our industry, and contributes substantially to America’s high standard of living. The industry is converting its tanker fleet to double-hulls in compliance with OPA and MARPOL. By 

2015 the tanker fleet that calls on U.S. ports will be double-hulled. API supports 

the double-hull conversion schedule in OPA, and no additional action by Congress 

is necessary to ensure that this conversion will take place. 

API and its members are dedicated to ensuring that the oil we all use to go about 

our daily lives is delivered safely. Since 1990, there have been no major environmental incidents involving tankers in U.S. coastal waters and a substantial reduction in smaller incidents has also occurred. This can be credited to improved industry operations, technological advancements, enhanced risk management tools, international enforcement of tanker regulations (for foreign tankers calling on U.S. 

ports), and modernization of the tanker fleet, including the double-hull requirements. 

We continue to support the excellent environmental and safety improvements 

made to date through OPA and industry initiatives. We continue to strive for 100 

percent safe delivery of petroleum and petroleum products. 

Thank you for the opportunity to share these important views with the Members 

of the Senate Commerce, Science, and Transportation Committee.

65

The CHAIRMAN. Thank you, Mr. Frick. 

Mr. Cowen, welcome. 

STATEMENT OF ROBERT N. COWEN, SENIOR VICE PRESIDENT 

AND CHIEF OPERATING OFFICER, OVERSEAS SHIPHOLDING 

GROUP, INC. 

Mr. COWEN. Thank you, Mr. Chairman. My name is Robert N. 

Cowen. I am Senior Vice President and Chief Operating Officer of 

Overseas Shipholding Group. OSG, based in New York and listed 

on the New York Stock Exchange, is the largest U.S. independent 

owner and operator of oil tankers. Over the past 3 years, OSG has 


frik1.eps
66

invested over $800 million in the renewal of our fleet with modern 

double-hull vessels. 

With your permission, Mr. Chairman, I would like to submit my 

full remarks. 

The CHAIRMAN. Without objection. 

Mr. COWEN. Thank you. 

When Congress enacted the Oil Pollution Act of 1990, the U.S. 

took a bold leap forward, leading the world in requiring double 

hulls and imposing new safety requirements for tankers moving oil 

to our shores. The International Maritime Organization followed 

our lead to require double hulls. But recent spills involving older 

single-hull vessels off the coast of Europe highlight the continuing 

dangers associated with older single-hull vessels and create a very 

real risk that new stricter practices and rules imposed in other 

parts of the world will force such vessels to trade to the U.S. 

The point I want to stress to the Committee today, Mr. Chairman, is that in the highly competitive world of international shipping, restrictions that bar older tonnage from particular trades will 

necessarily drive substandard tonnage to trades where regulations 

and practices are more lax and permissive. The U.S. cannot allow 

our waters to become a haven for older single-hull vessels that are 

no longer permitted to trade to the EU, or to other major trading 

nations like Japan and Korea. We must act to restrict these vessels 

from trading to the U.S. or face an unacceptable risk of our own 

PRESTIGE or ERIKA. 

I would like to share with this Committee some very disturbing 

statistics. Shockingly, a disproportionately large number of the 

world’s remaining 25-year-old single-hull VLCCs are trading to the 

U.S. Gulf every day. While the world fleet continues to add modern 

double-hull vessels, the remaining older vessels are still coming to 

the U.S. in large numbers. In 2002, 56 single-hull VLCCs of 25 

years of age or older were fixed on voyages to the U.S. Gulf Coast. 

This represents over 40 percent of all spot liftings worldwide on 

vessels of this vintage. Only one vessel of over 25 years of age was 

fixed to the EU in all of 2002. Not a single vessel of this vintage 

discharged in Japan or in Korea. 

Similarly, 50 percent of all spot liftings on VLCCs, very large 

crude carriers, of between 21 and 25 years of age, some 171 

liftings, discharged in the U.S. Gulf. Not a single vessel of this age 

vintage discharged in the EU or in Japan or in Korea throughout 

2002. Just looking at the first week of this year alone, all seven 

spot fixtures of VLCCs in excess of 20 years of age were reported 

moving oil from the Middle East to the U.S. Gulf. 

For many years, it has been known in the tanker business that 

older single-hull vessels are not welcome in Japan or Korea. Since 

the ERIKA incident in 1999, it is also the fact that such vessels 

are effectively discouraged from calling to the EU as well. With the 

recent oil pollution disaster involving the 26-year-old single-hull 

tanker PRESTIGE off the coast of Spain, the EU and in particular, 

Spain, France, and Portugal have moved rapidly and forcefully to 

tighten the restrictions on old single-hull tonnage trading to their 

ports and moving along their coastlines. 

The European Commission has recently adopted an outright ban 

on any single-hull vessel carrying fuel oil or heavy crude from enVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00070 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
67

tering EU ports. France, Spain and Portugal have already acted to 

exclude single-hull vessels carrying fuel oil and heavy crude from 

passing within their 200-mile economic exclusion zones. 

Once the current EU proposals to ban single-hull vessels from 

their ports and coastal waters are put into effect, these vessels will 

be forced to seek employment in trades that still accept them. 

When single-hull vessels are banned from trading to the EU, where 

will these vessels trade? We cannot allow our rules here to be more 

permissive, or these vessels will surely trade here. 

This is most eloquently illustrated by an article that appeared in 

Lloyd’s List, which is the shipping newspaper, on January 8, 2003, 

a copy of which is appended to my testimony. As stated in that article, a single-hull tanker carrying crude oil, which had been scheduled to discharge in Spain, was diverted to the U.S. because of the 

present sensitivity in Spain to calls by single-hull tankers. 

As an aside, I would like to point out to the Committee that if 

increasing numbers of older single-hull vessels call at U.S. ports, 

we believe the Coast Guard will be faced with an enormous additional burden to inspect all these vessels. In this case, consideration would have to be given, we would suggest respectfully, to providing the Coast Guard with the necessary additional resources to 

carry out such a task. 

We submit that it is wholly unacceptable to allow the U.S. to become the world’s port of last resort. As a matter of law and public 

policy, the Congress declared in 1990 that the U.S. would ban older 

substandard tonnage from its shores. Congress concluded that 

these vessels represent an unacceptable risk to our environment. 

Unfortunately, recent incidents in Europe confirm that such vessels 

continue to trade, and do in fact pose a grave risk to our oceans 

and coastlines. The U.S. cannot stand by and permit others to 

adopt trading rules which are more stringent than ours and that 

drive such vessels to our shores. We must maintain our vigilance, 

and ensure that our rules restrict such vessels from trading to the 

U.S. 

Thank you, Mr. Chairman. I will be pleased to answer any questions. 

[The prepared statement of Mr. Cowen follows:]

PREPARED STATEMENT OF ROBERT N. COWEN, SENIOR VICE PRESIDENT AND CHIEF

OPERATING OFFICER, OVERSEAS SHIPHOLDING GROUP, INC. 

My name is Robert N. Cowen. I am Senior Vice President and Chief Operating 

Officer of Overseas Shipholding Group, Inc. OSG, based in New York and listed on 

the New York Stock Exchange, is the largest U.S. independent owner and operator 

of oil tankers. OSG’s modern fleet of 50 vessels includes 15 double-hull Very Large 

Crude Carriers or VLCCs which typically carry 2 million barrel loads from the Middle East and West Africa and 13 double-hull Aframax tankers that typically carry 

crude oil loads of 700,000 barrels in the Atlantic Basin. Over the past three years, 

OSG has invested over $800 Million in the renewal of our fleet with modern doublehull vessels. 

OSG commends the Committee for holding these hearings to highlight the critical 

issue of protecting our marine environment, coastlines and commerce from the dangers posed by older, substandard tanker tonnage. 

When Congress enacted the Oil Pollution Act of 1990 (‘‘OPA–90’’), the U.S. took 

a bold leap forward, leading the world in requiring double hulls and imposing other 

new safety requirements for tankers moving oil to our shores. The International 

Maritime Organization (‘‘IMO’’) followed our lead to require double hulls on all new 

vessels for the rest of the world. But recent spills involving older, single-hull vessels 

68

off the coast of Europe highlight the continuing dangers associated with older single-hull vessels and the very real risk that stricter rules in other parts of the world 

will force such vessels to trade to the U.S. 

On November 19, 2002, the PRESTIGE, a 26-year-old single-hull tanker carrying 

77,000 tons of heavy fuel oil split apart and sank some 130 miles off the coast of 

Spain. Cargo from the PRESTIGE has continued to wash up onto the coastline of 

Galicia and to pollute sensitive fishing grounds. It is now also washing ashore in 

the picturesque Landes region near Bordeaux. The clean-up costs in Spain alone 

have exceeded $200 million and the vessel is still leaking oil. The PRESTIGE sinking was strikingly similar to the pollution incident involving the 1975 built product 

carrier ERIKA. The ERIKA split in two and sank off the coast of Brittany, France 

in December 1999, polluting the tourist beaches in the Bay of Biscay. Both of these 

pollution disasters involved older, single-hull vessels nearing the end of their permissible trading lives under existing IMO regulations. 

With the sinking of the PRESTIGE, the EU, and in particular Spain, France and 

Portugal have moved rapidly and forcefully to ban substandard tonnage from EU 

waters. The European Commission has recently adopted an outright ban on any single-hull vessel carrying heavy fuel oil or heavy crude from entering EU ports. This 

ban will be submitted to the EU Council and Parliament and is expected to become 

effective by March of this year. The EU is also proposing to significantly accelerate 

the phase-out of all single-hull tankers, with the most vulnerable pre 1982 built single-hull tankers to be phased out at 23 years of age. At the same time the EU has 

proposed that all single-hull tankers reaching age 15 will have to comply with strict 

inspections under a Condition Assessment Scheme. 

France, Spain and Portugal have already acted to exclude single-hull vessels carrying fuel oil and heavy crude from passing within their 200 mile Economic Exclusion Zones. These nations have also significantly stepped up their inspections of 

older tankers. The EU is also seeking to establish a code of conduct with the oil 

industry that will preclude the chartering of any single-hull vessel over 23 years of 

age. 

In the highly competitive world of international shipping, restrictions that bar 

older tonnage from particular trades necessarily drive substandard tonnage to 

trades where regulations and practices are more lax and permissive. The U.S. cannot allow our waters to become a haven for older single-hull vessels that are no 

longer permitted to trade to the EU or to other major trading nations like Japan 

and Korea. We must act to restrict these vessels from trading to the U.S. or face 

an unacceptable risk of our own PRESTIGE or ERIKA oil spill. 

This is most eloquently illustrated by an article that appeared in Lloyd’s List on January 8, 2003, a copy of which is appended to my testimony. As stated in the article, a single-hull tanker carrying crude oil which had been scheduled to discharge 

in Spain was diverted to the U.S. because of the present sensitivity of Spain to calls 

by single-hull tankers. As indicated in the article, this is just the tip of the iceberg. 

Proof that current U.S. rules encourage substandard tonnage to enter the U.S. is 

all too evident today in the VLCC trade. Shockingly, a disproportionately large number of the world’s remaining 25 year old single hull VLCCs are trading to the U.S. 

Gulf each day. Under an exception to the phase-out rules of OPA–90, such vessels 

are permitted to offload 18 miles off the coast of Louisiana at LOOP or to lighter 

in designated areas of the U.S. Gulf as close as 60 miles from shore. For a number 

of years, it has been well known in the tanker business that such vessels are not 

welcome in Japan or Korea. Since the ERIKA incident in 1999, it is also the fact 

that such vessels are discouraged from calling to the EU. 

Fifty-six single hull VLCCs of 25 years of age or older had been fixed on voyages 

to the U.S. Gulf Coast in 2002. This represents over 40 percent of all spot liftings 

worldwide on vessels of this vintage. Only one vessel over 25 years of age was fixed 

to the EU in all of 2002. Not a single vessel of this vintage discharged in Japan 

or in Korea. Similarly, 50 percent of all spot liftings on VLCCs of between 21 and 

25 years of age—some 171 liftings—discharged in the U.S. Gulf. Not a single vessel 

of this vintage discharged in the EU or in Japan or Korea in 2002. 

The trend of over-age VLCCs trading in disproportionately high numbers to the 

U.S. has unfortunately continued into 2003. For the first week of this year, on a 

world-wide basis, a total of six spot fixtures were reported of VLCCs in excess of 

20 years of age. Every one of these fixtures of old, single hull VLCCs involved the 

movement of crude oil from the Middle East to the U.S. Gulf. 

Once the current EU proposals to ban single-hull vessels from their ports and 

coastal waters are put into effect, these vessels will be forced to seek employment 

in trades that still accept them. Under existing U.S. law, a single hull VLCC, 

Aframax or Panamax (carrying approximately 400,000 barrels) vessel can enter a 

U.S. port until age 23. If the vessel has either a double bottom or double sides, it 

69

can trade to the U.S. until age 28. When single-hull vessels are banned entirely 

from trading in fuel oil or heavy crudes to the EU, where will these vessels trade? 

As older single hull VLCCs are discouraged from trading to the EU, Japan and 

Korea, where will these vessels trade? We cannot allow our rules to be more permissive, or these vessels will surely trade here. 

The issue is not one of law enforcement. The Coast Guard has done an admirable 

job of enforcing OPA–90 requirements. But the world is changing. Our laws need 

to keep up with those changes. As an aside, I would just point out that if the Coast 

Guard is faced with a need to inspect an increasingly large number of older singlehull vessels, consideration should be given to providing the Coast Guard additional 

resources to meet this challenge. 

We submit it is wholly unacceptable to let the U.S. become the port of last resort. 

As a matter of law and public policy, the Congress declared in 1990 that the U.S. 

would ban older, substandard tonnage from its shores. Congress concluded that 

these vessels represent an unacceptable risk to our environment. Unfortunately, recent incidents in Europe confirm that such vessels continue to trade and do in fact 

pose a grave risk to our oceans and our coastlines. The U.S. cannot stand by and 

permit others to adopt more stringent trading rules that drive such vessels to our 

shores. We must maintain our vigilance and ensure that our rules restrict such vessels from trading to the U.S. 

Lloyd’s List, January 8, 2003

SPANISH BAN SENDS SINGLE-HULL ELCANO SHIP TO U.S. 

VOYAGE SHOWS INCONSISTENCIES SHIPOWNERS FACE IN THE REGULATORY SHAKE-UP

FOLLOWING THE PRESTIGE LOSS

By Brian Reyes 

A SPANISH-operated suezmax tanker fixed last month for a trip to Spain but 

subsequently banned under Madrid’s new rules for single-hull ships, has been rerouted on a charter to the U.S., once regarded as the nation with the toughest rules 

for such vessels. 

Industry observers said the voyage illustrates the sort of inconsistencies that shipowners now face due to the regulatory shake-up following the loss of the PRESTIGE. 

A ban on single-hull tankers carrying heavy grades of oil, agreed at a European 

Union transport council last month, has created a situation where vessels allowed 

into strictly-controlled U.S. waters could now be barred from Europe. 

‘‘A single-hull ship is not inherently a bad ship,’’ said one industry official, adding 

that the focus for policy makers should be on issues such as ports of refuge. The 

important factor is that the U.S. accepts this ship but not the EU. 

‘‘This was probably not the desired effect (of the EU proposal),’’ he added. 

The 131,391 dwt Almudaina, built in Spain in 1993 and operated by former stateowned company Elcano, was due to call at the Spanish ports of Cartagena and La 

Corun ̃ a last Sunday and tomorrow, carrying crude from Cayo Arcas Terminal in 

Mexico. But the single-hull ship, which is equipped with segregated ballast tanks 

and has a spotless inspection record, was re-routed and is now fixed for a journey 

from Port Gentil, in Gabon, where it is due on January 15, to Philadelphia, where 

it is expected on February 5. 

Officially, Elcano said that the Spanish ban, announced shortly after the transport council and approved in a Royal Decree law last month, had not affected any 

of its ships. 

But well-placed sources confirmed that the Almudaina’s charter to Spain had been 

dropped and changed to the U.S. voyage, adding that the decision was taken because of the present political climate in Spain. 

The voyage is indicative of a broader trend that is becoming evident as charterers 

avoid single-hull tankers for trips to Spain. ‘‘There have been virtually no singlehull tankers chartered to Spain since the Royal Decree came into force,’’ said one 

official. 

With other European countries expected to follow Spain’s lead and implement the 

ban in national legislation, brokers are already warning of tonnage shortages to Europe. 

One of the main initial concerns with the Spanish ban was the lack of fine detail 

in the Royal Decree law, particularly the definitions of the crude cargoes that would 

be affected. 

70

Spanish shipowner association Anave has had verbal confirmation from the government that the ban will affect vessels carrying crude oils with an API grade below 

30, which is in line with the EU agreement. 

The Royal Decree law applies to all single-hull vessels of more than 5,000 dwt, 

which means that bunker barges and small tankers operating in Spanish ports are 

largely exempt. 

But there is concern in the shipowning community that Brussels wants to set that 

tonnage threshold as low as 600 dwt, which could impact on other types of vessel 

that carry thousands of tonnes of bunker fuel in single-hull fuel tanks. 

Shipowners cannot challenge the law except on constitutional grounds, which is 

seen by experts as a legal non-starter. 

It is possible, however, to challenge the way the law is being applied on a caseby-case basis. 

One Spanish shipowner that carries fuel between the country’s island territories 

has apparently managed to get around the ban by agreeing to keep its side cargo 

tanks empty, effectively giving its vessel a second skin.

The CHAIRMAN. Well, thank you, Mr. Cowen. In other words, you 

believe that we should enact the same rules that are now pending 

before the EU? 

Mr. COWEN. Mr. Chairman, I believe that we have to be very 

vigilant to make certain that if they do adopt those rules that the 

vessels do not trade here in disproportionate numbers. 

The CHAIRMAN. But you do not go so far as—I do not know how 

you would do that except by adopting those same rules. Do you? 

Mr. COWEN. No, I think you are right, Mr. Chairman. 

The CHAIRMAN. Well, let me start out here with something that 

I think disturbs a lot of Americans and puzzles me, and I do not 

know if there is anything to be done about it, but I think it affects 

the confidence of Americans about the security of their environment. I take it that PRESTIGE was not an unusual ship in this 

respect: Japanese-built, owned by a company registered in Liberia, 

managed by a Greek firm, registered in the Bahamas, certified by 

an American organization, chartered by a Swiss-based Russian 

trading company. 

Why do we have—why can we not have a ship that is built in 

a country and perhaps operated in another country? I know one of 

the answers is labor, wages, standards, et cetera. But does this 

build confidence in the American people, to know that ships like 

that, in those conditions—I mean, who would we hold responsible 

if something like happened with the PRESTIGE off of Spain happened in the United States of America? The Bahamas? The Liberians? Greeks? Russians? 

We will begin with you, Mr. Cox. You are an expert. 

Mr. COX. Thank you, Senator. I was hoping you would go alphabetically by association. 

[Laughter.] 

Mr. COX. I think your description of the circumstance around the 

ownership and operation and crewing and that of that vessel is certainly not strange in the maritime industry. The IMO did look at 

an issue which we put on the table when we began the security debate last year in February, and that was beneficial ownership. The 

idea was that the beneficial owner—and there is no description of 

that term, Senator, but at the same time, I would call beneficial 

owner that person who ultimately receives the final profits from 

that vessel’s operation. 

71

The IMO looked into that and, after much debate at the Maritime Safety Committee, they kicked it over, not 

uncharacteristically, but they kicked it over to the legal committee, 

to say you take a look at it. What they came in with was that the 

key aspect of a vessel is that person who has control over the operations of that vessel. 

The CHAIRMAN. OK, but let me interrupt. Let me have a dialogue 

with you. But if it is registered in one country, the purpose of the 

registry is that that country would make sure that any ship registered under its flag would meet certain standards and criteria, 

right? 

Mr. COX. Correct, sir. 

The CHAIRMAN. Then would not that country be responsible? 

Would not Liberia or the Bahamas be responsible, not the person 

or entity that is making the money, or both? 

Mr. COX. Yes, sir, in respect to your example, the Liberians are 

the ones who would have their flag on that ship. That would be the 

country we would look to as being responsible for the conditions of 

the vessel in terms of it meeting standards. 

The CHAIRMAN. And as you know, Liberia would say: Fine, we 

are responsible; so? 

Mr. COX. Well, we can get into a description of the flags, of what 

are called the flags of convenience, and how good or not good they 

are. But carrying on from that issue, Liberia as the flag and in the 

state does not control the movements of the vessel. Someone controls the movements of that vessel. 

The CHAIRMAN. But the fact that it is registered in that country 

gives that country the responsibility for it. Otherwise they should 

not register it under that flag. That is why its country’s flag is flying on the stern of the ship. 

Mr. COX. I am not disagreeing on that, Senator. I think that you 

are getting to a very critical and pertinent piece of information 

within the maritime community, and that is who can we finger and 

hold responsible for the operation of the vessel, and that person 

also has the responsibility for the condition of the vessel also. It is 

not just where it is going, but what condition is that ship. That is 

the person we are trying to get to. 

The CHAIRMAN. Maybe that is why, maybe that is why, Mr. 

Rauta, they throw the captain in jail, because they sure know that 

they are not going to get any Liberians. Go ahead. 

Mr. RAUTA. Thank you, Mr. Chairman. If I may come back to 

your first question regarding who is responsible for the operation 

of the ship, the answer is the operator or the owner. It depends on 

the structure. It is no doubt about this. In this case the operator 

is known, the owner is known. All factors such as the class society 

who has classified the ship, are known. 

The CHAIRMAN. The country under which that ship is flying the 

flag bears responsibility. 

Mr. RAUTA. Bears, shares——

The CHAIRMAN. Any interpretation of international law will tell 

you that. Otherwise, it does not have the right to fly its flag. 

Mr. RAUTA. I do not disagree. It shares the responsibility and, 

therefore, the Bahamas flag, which by the way has one of the best 

72

records, probably better than many EU flags or Administrations, 

will be the one conducting the accident investigation. 

The CHAIRMAN. Well, I believe in dialog here, Mr. Rauta. You are 

telling me that the Liberians can carry out the kind of inspections 

and enforce the kind of standards on a ship and its construction 

and its operation that the French can? 

Mr. RAUTA. Mr. Chairman, with due respect, it is Bahamas, and 

by the records of port state control in this country, in Paris MOU 

agreements and in Far East Port State Control agreements Bahamas has—or ships registered with Bahamas, have very good 

records. In the Paris MOU system in Europe, they belong to a 

short list of white-listed flags, so their records are good, generally 

speaking. About this case, we need to find out the causes and listen 

to the investigation report. 

On the business type of——

The CHAIRMAN. Mr. Sandalow, this kind of lash-up is not the exception, it is the rule; is that right? 

Mr. SANDALOW. That is absolutely correct, Mr. Chairman. 

The CHAIRMAN. I am not interrupting. I am going to get back to 

you, Mr. Rauta. 

Go ahead. 

Mr. SANDALOW. Let me just say, this Bahama-Liberian-GreekJapanese web of control here is a huge concern, and it is one reason that we need to take long-term steps under the Convention on 

the Law of the Sea to have additional obligations on flag states. 

They need to actually have duties and responsibilities, as well as 

the capability to carry out the responsibilities that they are undertaking. 

The CHAIRMAN. Continue, Mr. Rauta—go ahead. 

Mr. SANDALOW. One additional point, Mr. Chairman. It is going 

to take a while to get there. In the interim, we need these ‘‘no go’’ 

zones I talked about in order to protect the most sensitive areas of 

the ocean. 

The CHAIRMAN. Complete your comment, Mr. Rauta. 

Mr. RAUTA. Mr. Chairman, on the business relationship that you 

describe, maybe not though with so many different countries of residence, but there are many other businesses which are likewise administrated and organized. It is not only shipping. So, it is not particularly only for maritime business which has such an organizational structure. 

The CHAIRMAN. But those other businesses do not carry crude oil 

around the world and bring and cause a risk to lives and environment. 

Mr. RAUTA. This is correct, sir. This is correct. 

Now, in our comments, what we have said is actually not in contradiction to anybody else. The only plea we make is, No. 1, that 

if there are going to be corrective actions, those should be based on 

factual—fact-finding accident investigation and, No. 2 that those 

corrective actions are discussed, applied and adopted at an international level. 

Now, the master of the ship is the key witness on this investigation. That man has battled in impossible weather for 24 hours to 

hook the vessel to the tug boat. After that he is put in jail and sits 

there for the last 2 months. That man probably would not be the 

73

excellent witness an investigator would need to have in order to 

clarify the real cause of the accident. That was the background of 

my statement. 

The CHAIRMAN. I would be glad if there is any of the other witnesses that have a comment on this particular issue, because it has 

all got to do with confidence. I do not think that Americans, who 

I am worried about, but I am worried about all citizens of the 

world, have any confidence in the safety, the maintenance, all of 

the aspects that have the do with prevention of these kinds of 

things, when they are an alphabet soup. 

Go ahead, Mr. Allegretti. 

Mr. ALLEGRETTI. At the risk of appearing to be a shameless opportunist, Mr. Chairman, and I go here with some trepidation because I know you are a skeptic, the kinds of concerns that you raise 

about international shipping do not exist in the domestic fleet because of the Jones Act, and because all of the vessels that trade 

domestically in the United States are owned by American citizens, 

operated by American crews, and built in U.S. shipyards, and are 

subject to the——

The CHAIRMAN. I appreciate that commercial, but these ships 

come into U.S. ports and operate in U.S. waters. That was the 

issue, after the commercial is over for the Jones Act, which has 

raised costs dramatically to all American citizens who consume 

products that are carried in this exclusionary fashion. That is my 

commercial. 

Go ahead. 

Mr. ALLEGRETTI. I said I was going there with trepidation. I 

think I have made the point. 

[Laughter.] 

The CHAIRMAN. No, but please go ahead if you had a comment 

on this other situation. 

Mr. ALLEGRETTI. I would simply say that the question of confidence is one that should not exist with respect to domestic trade 

because we are subject to the full extent of U.S. law within American jurisprudence, and to all the liabilities that accrue under 

OPA–90. End of commercial. 

The CHAIRMAN. I thank you, Mr. Allegretti. I think you do make 

a very legitimate point because we do have confidence in ships that 

are carrying an American flag. I would like to have that same confidence in every ship that carries any flag of any nation in the 

world, and that is not the case today. 

Go ahead, Mr. Cox, if you want to. We will go down, if you have 

any additional comments, or just pass. 

Mr. COX. Just quickly, Senator, that the international maritime 

community is engaged in a debate as we sit here on transparency. 

That is, are we too secretive in regards to holding close to the chest 

cards that do not have to be held close to the chest and should be 

opened up for review. I think the investigation into the PRESTIGE, 

the class society and the governments involved have been extremely open, much more open than any previous incident. So, this 

is an extremely good time for you to be expressing an interest in 

this aspect of the industry. 

The CHAIRMAN. Mr. Godfrey. 

74

Mr. GODFREY. Mr. Chairman, yes. I believe OPA–90 is good evidence that when you can clearly define who is responsible you get 

good results. I think in the international realm of shipping, it is a 

mess out there, and I think again one of our points was we believe 

that liability and responsibility needs to be clarified. 

The CHAIRMAN. Mr. Sandalow, anything in addition? 

Mr. SANDALOW. A quick additional point. This is an area where 

I think we can work very productively with the European Union in 

light of what has happened over the past couple of months, and 

particularly putting short-term diplomatic pressure on the worst 

violators of flags of convenience-type rules. 

The CHAIRMAN. Mr. Frick, I know you do not have a direct interest, but it is your product that is carried. Do you have any additional? And I, again, apologize for the inconvenience. 

Mr. FRICK. It is like a bad cocktail party. 

[Laughter.] 

Mr. FRICK. What I would like to add to this is that—and I am 

not touching the whole issue of flags of convenience, both from a 

knowledge standpoint, and I know it is a very complicated issue. 

But what I think we can look at to your question of confidence is 

that OPA did more than just deal with single hulls. It has a system, the Coast Guard has a system, our members have systems, in 

which they look at these tankers that are coming in. 

So we screen these facilities. It is not just that they say, well, 

it is coming from Liberia, they flagged it, it is OK. There is a lot 

of other review that takes place as a part of our own companies’ 

practices, but also because of some of the initiatives that have been 

brought in by OPA. So that I think what we are missing here is 

that there are a lot of other aspects of it, all of which lead us to 

the results, which I tried to emphasize, we are not having these 

dangerous ships come in. We have a way of ensuring that the ones 

coming in are meeting higher standards, and that is why in the 

last year that they have records 200 gallons were spilled when 

3.2—barrels, excuse me—while 3.2 billion barrels were imported. 

So, I think the record shows we are doing better and part of it 

is because of these other elements, such as certificates of financial 

responsibility and other elements of OPA. 

The CHAIRMAN. Thank you. 

Mr. Frick—I mean Mr. Cowen. I am sorry. 

Mr. COWEN. Thank you, Mr. Chairman. Mr. Chairman, I agree 

wholeheartedly that Americans should have confidence in all the 

oil that is coming into our country. We are importing 10 million 

barrels a day by sea. 

The CHAIRMAN. Not just oil. 

Mr. COWEN. Yes, absolutely, Mr. Chairman. The point that I 

wish to make is OSG is a U.S.-based tanker company. We are a 

rarity today in the industry. For reasons having to do with the tax 

law, U.S. owners of these vessels that move the oil are at a competitive disadvantage. With your permission, Mr. Chairman, I 

would be pleased to submit for the record a brief statement that 

would explain some of the tax problems we have, and why we are 

not on a level playing field with our foreign competitors. 

75

1Price Waterhouse, ‘‘Decline in the U.S.-Controlled Share of the Open-Registry Merchant 

Shipping Fleet Since 1975,’’ June 6, 1997. 2 ‘‘Corporate Inversion Transactions: Tax Policy Implications,’’ Office of Tax Policy, Department of the Treasury, May 2002. 3 HR. 3312, 107th Cong. 

But we do very much believe that there should be a greater U.S. 

ownership involvement in the vessels that move oil on the high 

seas and come into our ports. 

The CHAIRMAN. Thank you, and we will include that statement 

in the record. 

[The information referred to follows:]

OVERSEAS SHIPHOLDING GROUP INC. 

New York, January 31, 2003

Hon. JOHN MCCAIN, Chairman, 

Commerce, Science, and Transportation Committee, 

Washington, DC.

Dear Mr. Chairman:

I am writing to follow up on a point that you raised with me at the January 9, 

2003, Commerce, Science, and Transportation Committee hearing on the phase-out 

of single-hull tanker vessels. I appreciate your allowing me to provide material for 

the record to supplement my response, and I am submitting this letter for inclusion 

in the hearing record. 

At the hearing, you expressed your concern about the general lack of transparency 

relating to foreign-owned ships entering U.S. waters. In order to achieve greater 

transparency, we should be encouraging greater U.S. ownership of vessels in our 

foreign trade. U.S. owners are well known to Coast Guard and other federal agencies. If the U.S. tax law were modified to remove a significant obstacle that impedes 

U.S. ownership of international shipping, there would be a far greater number of 

U.S. companies engaged in this business. 

As a result of tax-law changes enacted in 1975 and 1986, U.S. shipping companies 

must pay tax on income earned by subsidiaries overseas immediately rather than 

when such income is later brought back to the United States. This treatment represents a sharp departure from the generally applicable income tax principle of ‘‘deferral’’ and places U.S.-based owners of international fleets at a distinct tax disadvantage compared to their foreign-based competitors. Most foreign-based carriers 

pay no home-country taxes on income they earn abroad from international shipping. 

As a result of this competitive imbalance, U.S. companies now hold precious little 

share of the world shipping marketplace. Indeed, U.S. ownership of vessels engaged 

in international shipping dropped precipitously in the aftermath of the 1975 and 

1986 tax-law changes. Before 1975, the U.S.-owned share of the world’s open-registry shipping fleet stood at 26 percent. By 1986, the U.S. share had dropped to 14 

percent. By 1996, the U.S. share had dropped to 5 percent. 1

The Treasury Department, in a recent study, clearly articulated the problem created by present law for U.S.-owned shipping:

. . . the U.S. tax system imposes current tax on the income earned by a 

U.S.-owned foreign subsidiary from its shipping operations, while that company’s foreign-owned competitors are not subject to tax on their shipping income. Consequently, the U.S.-based company’s margin on such operations is reduced by the amount of the tax, putting it at a disadvantage relative to the foreign competitor that does not bear such a tax. The U.S.-based company has less 

income to reinvest in its business, which can mean less growth and reduced future opportunities for that company. 2

Bipartisan legislation that would seek to address the problems described by 

Treasury was introduced in the 107th Congress by Rep. Jerry Weller (R–IL). 3 Similar legislation is being reintroduced this Congress, and we would greatly appreciate 

your support. Enactment of this legislation would encourage greater U.S. ownership 

of international shipping, and therefore greater transparency with respect to ships 

entering U.S. coastal waters. 

Other security concerns also are raised by the decline in U.S. ownership in the 

international shipping trade. The U.S. military, in times of emergency, relies on the 

ability to requisition U.S.-owned foreign-flagged tankers, bulk carriers, and other 

vessels to carry oil, gasoline, and other materials in defense of U.S. interests overVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00079 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
76

4 ‘‘Increasing the Size of the Effective United States Control Fleet’’ Massachusetts Institute 

of Technology, August 2002. 

seas. These vessels comprise the Effective United States Control (‘‘EUSC’’) fleet. The 

sharp decline in the EUSC fleet since the 1975 and 1986 tax-law changes, and the 

resulting adverse strategic consequences, have been confirmed in a recent MIT 

study. 4

U.S. security depends in no small part on our ability to maintain adequate domestic oil supplies in times of emergency. The United States consumes approximately 

19.6 million barrels of oil per day, of which roughly 55 percent, mostly crude, is imported into the United States. It is estimated that 95 percent of all oil imported into 

the United States by sea is now imported on foreign-owned tankers. This means 

that one half of every gallon of oil consumed in the United States is carried on foreign-owned vessels. This growing dependence on foreign parties—who may not be 

sympathetic to U.S. interests—to deliver our oil in times of global crisis is cause for 

potential alarm. 

Enactment of the tax legislation discussed above would mitigate these concerns. 

I would be happy to provide you with any additional information on these or other 

issues if you wish. 

Sincerely, 

ROBERT N. COWEN, 

Senior Vice President and Chief Operating Officer.

The CHAIRMAN. With the indulgence of my colleague from Oregon, I ask one more question for the panel. Should the U.S. consider adopting the European Commission proposal, particularly if 

it is adopted by the IMO, and what impacts would the EU proposal 

have on the U.S. flag fleet? Mr. Rauta, beginning with you, sir. 

Mr. RAUTA. Thank you very much, sir. Well, difficult to give you 

a straight answer because the EU proposes two new regulations. 

The first is an accelerated phase-out, which it might be more clear 

and probably easier to look into the statistics and make a judgement. 

The second proposed regulation is to restrict certain types of 

cargo of being transported in single-hull tankers. These cargoes are 

heavy fuel oils, which are well-defined, and heavy crude oils. This 

is—there is no definition at the moment for heavy crude oils. There 

are two or three alternative definitions. In our written submissions, 

and according to the proposed rule by the European Commission at 

the moment, we listed to our best ability those crudes that might 

fall into the heavy crude oil category that in Europe should be 

brought in, or trade out by double hulls only. 

Now, with that degree of uncertainty it would be very difficult 

to make an assessment globally. In the United States, probably in 

the long-term, I personally would not believe there will be too 

much of an impact. In the short term, it depends very much on the 

definition of what is a heavy crude oil. Most of the Venezuelan 

crude, some of the crude from West Africa, and a couple of crudes 

coming from the Arabian Gulf will fall in this category, should the 

EU still retain the definition that they are proposing now. 

We basically have alternative definitions given there. So, we will 

have to wait and see what is the final outcome. 

The CHAIRMAN. Thank you. 

Mr. Allegretti. 

Mr. ALLEGRETTI. I am not an expert on the EU proposal, but my 

understanding of it is that it has many, many similarities with 

OPA–90, and indeed is moving the European regulatory system 

closer to what we already have here. I hesitate to say that there 

77

would be no impact on U.S. flag vessels because I think that in 

order to figure out what the impact is of that movement, you have 

to actually look at the vessel, at its size, at its age, and make a 

comparison. 

But I believe that it is correct that, generally speaking, the EU 

proposals are largely in accordance with what we already live 

under here in the U.S. under OPA–90. 

The CHAIRMAN. I think they accelerate what we are doing here. 

Mr. Cox. 

Mr. COX. Thank you, Senator. I agree, I think they accelerate in 

terms of the single hulls calling into LOOP and into the lightering 

zones. My testimony was, yes, there could be a market shift of 

some ships to our market, and we do have to take a look at that. 

We also suggest that we do not open up all of OPA–90 and redo 

everything that is working satisfactorily now. But we certainly do 

have to pay strict attention to something that is occurring in another major market that could have an impact on us. 

I think one of the factors that could ameliorate our concern is the 

port state control that we exercise. I think I can say with some confidence that our inspection circumstances here in the U.S. are 

much stronger than even in the EU, and therefore, we are protected even today by a more stringent and diverse type of an inspection regime. So, that would have to be factored into our determination. 

Thank you. 

The CHAIRMAN. Thank you. 

Mr. Godfrey. 

Mr. GODFREY. Mr. Chairman, in general the Shipbuilders Council believes that Congress should confirm OPA–90 without any significant change. However, and to qualify that, we think there are 

going to be a few good ideas in the new EU regulations, for instance stricter inspection, more frequent inspection of older vessels. 

We think Congress should consider adopting some of those enhancements. 

Last, I would say that we need to be very careful to watch what 

the final form of these regulations might be, because if they turn 

out to be tremendously different than OPA–90 and there became 

quite a difference in terms of timing and the conditions under 

which vessels would be put out of service, anything that would increase traffic of aged vessels toward U.S. shores needs to be guarded against. 

I think we are going to have to watch and anticipate the direct 

and the indirect effects of those new regulations in Europe. And I 

do not know what they will be, but we need to watch it very closely. 

The CHAIRMAN. Mr. Sandalow. 

Thank you, Mr. Godfrey. 

Mr. SANDALOW. Yes. 

The CHAIRMAN. Thank you. 

Mr. SANDALOW. Delighted to elaborate. This will help us protect 

our oceans. I am encouraged by what I hear to be some of the openness from my colleagues on the panel here to the suggestion that 

you raise. 

The CHAIRMAN. Thank you. 

78

Mr. Frick, I think you can take a pass if you want to on this. 

Mr. Cowen. 

Mr. COWEN. I think certainly, in terms of the possibility that 

tighter EU rules would apply and drive the vessels they do not 

want to our shores, we certainly have to act. So far as the Jones 

Act trade goes, I would say that that is not directly impacted by 

rules that have the effect of driving other international flag vessels 

here. The Jones Act trade, of course, is a trade unto itself. But in 

that trade, I think we have to continue to remain vigilant. We 

maintain the Jones Act vessels to a high standard. These vessels 

are in our ports every day. These vessels are subject to Coast 

Guard regulation every day. And I note that the Alaskan fleet is 

currently being replaced with double hulls that are on order right 

now. So I think that modernization of the Jones Act fleet is happening. 

The CHAIRMAN. Thank you. I want to thank the entire panel for 

a very interesting and informative discussion. 

Senator Wyden. 

STATEMENT OF HON. RON WYDEN,

U.S. SENATOR FROM OREGON 

Senator WYDEN. [presiding] Thank you, Mr. Chairman. I want to 

join you, Mr. Chairman, in this effort to close the loopholes on the 

foreign-flag vessels. I think, frankly, you have been pretty diplomatic in terms of how you have handled it. To me, what is going 

on is real simple. You have got these foreign-flag vessels playing 

a corporate shell game. They are playing a shell game that is designed to try to avoid accountability, to hide the ownership interests along the lines that the chairman is talking about. 

I want you to know, Mr. Chairman, I am going to support you 

fully in the effort to close the loopholes in this statute. That is priority business. 

Frankly, I would like to see us go significantly further. I think 

there is much to do in this area. The system certainly incentivizes 

using older, less seaworthy vessels rather than modern doublehulled vessels. Again and again, as you look at this area, it seems 

to me that profits are constantly trumping safety, to the detriment 

of communities across the country. 

We have had a special problem in my home State. The NEW 

CARISSA ran aground on Oregon’s shores in February 1999. We 

saw firsthand environmental devastation on our special coastline, 

and we have been playing catch-up ball to repair the damage done 

to the State’s shoreline and coastal resources ever since. That was 

a spill involving a ship carrying 400,000 gallons of oil, and supertankers like the EXXON VALDEZ that split in two and sank off 

Spain carry millions of gallons of oil and that is why it is important 

that we go at this in a comprehensive way. 

So, I wanted to start with a question for Mr. Frick if I might. 

It has been reported, Mr. Frick, that the tanker ERIKA that broke 

in half and sank off the coast of France was chartered by the oil 

company TotalFina Elf at half the going market rate and that the 

oil company officials involved in chartering the tanker were rewarded for keeping down the charter cost. 

79

My question to you is, how do you justify a system that creates 

these perverse incentives to charter less seaworthy vessels that put 

at risk coastlines and livelihoods of coastal communities rather 

than the charters that seem to me to be in the public interest, and 

those are the modern, state-of-the-art charter vessels? 

Mr. FRICK. Obviously, I have no immediate knowledge of the details of the charter there. All I would say is that for the traffic into 

the United States, due to OPA, due to the policies of our members 

and the Coast Guard’s activities, I would submit that that is not 

the lowest—we are not looking for the lowest price. We have many 

criteria we use. We have high limits of liability that we have to 

deal with. We have our own standards that we apply. 

So, I think it would be wrong to say that cost is the only factor 

in making those determinations. I think OPA, company policies, 

Coast Guard policies are working to get the better ships into the 

United States. 

Senator WYDEN. Well, let us examine that. It is my understanding that the difference in chartering single-hull versus double-hull vessels in the domestic trades for charters of approximately 6 months to 2 years is approximately $4,000 to $5,000 a 

day. Now, over the course of the year, that difference is as much 

as $1.5 million, certainly what looks to me to be a substantial financial incentive not to charter the double-hull tankers. 

Do you not think—and again, I am not going to ask you about 

a specific case. But is not, from the standpoint of the system, is 

that not a substantial financial incentive that exists today for chartering the older, less seaworthy vessels? Because I do not want us 

to say that government policy should be to just sit around and hope 

that you do not have a disaster. I want government policy to try 

to create the appropriate incentives to limit the prospect for tragedies. 

Mr. FRICK. I think we will find that the statistics are showing 

that the number of shipments coming in by double hulls is growing 

significantly. I think it is about 50–50 now. So I think there are 

a lot of reasons. 

Just because—and second is, just because you have an older single-hull ship does not mean that it is not seaworthy. If you have 

the right inspections, if you have the right criteria that you are applying, you can ensure that they are of high quality performance 

coming in. So, I think just because we have those, we have age and 

single hull, does not mean those are not seaworthy ships. 

Senator WYDEN. I think that is just one of the sort of structural 

problems I see with respect to the industry today. I look at the fact 

that ships containing as much diesel oil as a small tanker are not 

regulated as you would have a double-hull vessel. That was part 

of the problem in Oregon. I think what I would like to do is take 

the panel through the Oregon situation. 

In Oregon, you have a vessel, the NEW CARISSA, that ran 

aground. It was not a tanker, it was a cargo ship. But at the time 

it ran aground, it was carrying 400,000 gallons of fuel oil. Now, 

this caused enormous devastation to our coastline and severe economic hardship to the coastal communities. 

What ought to be done in the view of this panel to reduce the 

risk of oil spills from these ships? This seems to me to be another 

80

shortcoming in the statutes as they exist on the books. I would like 

to hear what this panel thinks, because you have got a situation 

where my State has been hammered as a result of a tragedy involving a ship containing as much diesel oil as a small tanker, and 

the fact of the matter is it is not regulated with the kind of safety 

provisions that you would have with the double-hull requirements. 

Let us take this panel, and we can just begin at the end of the 

table. 

Mr. COWEN. Thank you, Senator. Your point is, of course, well 

taken. It is a fact, what happened. OSG, I might say, has recently 

modified the designs on the latest double-hulled tankers it is building to actually extend the double hull to cover the bunker area. 

This is, in fact, an area of additional vulnerability and I think the 

point is well-taken. Of course, accidents can happen regardless of 

what you do, but I think that is an additional element of safety 

that can be introduced into tanker design, or any ship design. 

Senator WYDEN. Would others on the panel like to respond? 

Mr. COX. Thank you, Senator. Yes, we were certainly aware of 

the NEW CARISSA and the outcome there, and there were some 

operational issues that have to be looked at. But at the same time, 

I wrote down here ‘‘protective fuel tank location.’’ I think that is 

something that has to be looked at for all types of ships. 

I believe that the NEW CARISSA was a bulk carrier and she 

went aground and the fuel spilled. I do not know the technical details. 

Senator WYDEN. How would you see strengthening the fuel tank 

protections that you have touched on? 

Mr. COX. Well, you would want to locate the fuel tanks in a protected location, maybe aft in vertical-type tanks. 

Senator WYDEN. So, you would require that of new vessel construction? 

Mr. COX. That is what I think we are looking at at the IMO, fuel 

tank location. 

Senator you brought up an interesting point, which is that certainly OPA–90 covers oil spills from all types of ships. So if a ship 

like the NEW CARISSA happens it is certainly an OPA incident 

in terms of spilling that oil, even though it was not cargo, it was 

oil in the water. 

Senator WYDEN. Other suggestions from panel members? Yes? 

Mr. RAUTA. Senator, thank you very much. Actually, the NEW 

CARISSA accident really did bring the issue that you raised here 

to IMO. The issue is on the IMO agenda. However, the ERIKA accident and all this revision of phasing out of single-hull tankers 

kind of delayed those developments in IMO related to protection of 

bunker tanks. 

Now, the good news is that the IMO is taking up again the issue 

and actually INTERTANKO, together with the U.S.-based Society 

of Naval Architects and Marine Engineers, have already submitted 

a paper for an IMO meeting in March with suggestions of a methodology on how to address this issue for all ship types. 

Senator WYDEN. How soon could that be implemented? Again, 

what my constituents are very frustrated about is that we have 

spent years now wrangling with the owners of this company, and 

we still have this vessel out there, and there is enormous frustraVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00084 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
81

tion. It seems that there is one meeting or one workshop after another and very little done to actually get in place the changes. 

Mr. RAUTA. Senator, we here, we are NGO’s, we are industry 

representatives. In IMO, it is very much up to the governments to 

speed up the rulemaking development. The last couple of years 

IMO have shown very much strength in speeding up legislation. So, 

I would say that immediately when IMO shapes up proposed regulations, and when the industry has the confidence that those proposals will not be changed throughout the approval procedure, all 

the new ships will be built up to those standards, even before the 

rules come into force. 

Senator WYDEN. Others? Yes? 

Mr. SANDALOW. Senator, another question is whether the NEW 

CARISSA should have been at that location at all. If it was an area 

of special importance to coastal communities, or an area of special 

biological importance, the answer is no, it should not have been. 

One of the proposals that could make a difference in this type of 

incident is to have ‘‘no go’’ zones adopted by the IMO to make sure 

that vessels are not traversing over areas where accidents would 

cause a special damage to communities and to fisheries. 

Senator WYDEN. Other suggestions? 

Mr. GODFREY. Senator, if I might make a few comments. Any 

new requirements that would require greater hull protection for 

fuel tanks would have very far-reaching implications for all vessels, 

including many vessels that are not necessarily concerned with 

OPA–90. Many vessels in the domestic trade are carrying fuel in 

single-skin tanks. This would, of course, also include military vessels and vessels owned by the U.S. Government. Many of those vessels are fueled with tanks that are adjacent to the exterior shell 

of the vessel. 

You would have to reconfigure the fleet of the entire world to 

deal with that regulation, and I do not know how that could be 

dealt with in any period of time reasonably. So, that is a big issue, 

and I just caution that it has massive implications for all vessels 

and I do not know how you deal with it, frankly. 

Senator WYDEN. So, you do not do anything? 

Mr. GODFREY. No, sir, I am not saying that. 

Senator WYDEN. Well, tell me what you do. You have told me 

what you are against. I would like to know——

Mr. GODFREY. No, I am not against. 

Senator WYDEN. I would like to know what you are for, because 

the fact of the matter is 3 years after this tragedy in Oregon involving a ship containing as much diesel oil as a small tanker, 

which was not subject to the tougher rules, we still do not have a 

remedy for the people in Oregon who are hurting as a result of this 

tragedy. 

I want to be sensitive to the questions of cost, and making sure 

that you phase in any new requirements and all of the technical 

questions that are relevant to putting in place these new requirements. But I think what has been important about this hearing is 

it has exposed some very significant loopholes in the system. 

Tell me what you are for? 

Mr. GODFREY. Well, first of all, I am all for making these vessels 

safer. I am concerned that that type of requirement would take far 

82

longer than OPA–90 to put into place. There are many vessels by 

nature of their design, and by nature of their naval architecture 

that would become unstable and unseaworthy if the fuels were removed from those tanks, or relocated elsewhere in the vessel. It 

would require a complete redesign of the world’s fleet. 

What I would suggest, first of all, shipyards would be delighted 

to be involved. And I assume, since the chairman is no longer here, 

I can set forth an advertisement. We would love to take that problem on and fix it. 

Senator WYDEN. I have absolutely nothing against the idea of 

putting people to work in the Portland shipyard. 

[Laughter.] 

Mr. GODFREY. Very good, Senator. 

Senator WYDEN. If that is part of the remedy, folks, that we can 

come up with something that beefs up safety and creates some 

family wage jobs in shipyards, I think you will have a lot of Senators flock to that proposition. 

Mr. GODFREY. Well, to encourage you, Senator, I am sure there 

are good engineering solutions and we look forward to helping you 

with them. 

Senator WYDEN. Let us hold the record open for your suggestions 

on this point, because I will tell you I just had a town hall meeting 

in Coos Bay, Oregon, in fact just this past weekend, where there 

is substantial frustration as a result of the years worth of wrangling with the company and the inability to secure the compensation that is appropriate. People want answers. I will hold the 

record open. I think the points you are making with respect to how 

you do it and ensuring that it is cost-effective and which vessels 

and under what circumstances are very fair questions. But we have 

got to find answers to this. 

Mr. Cox, did you want to get into this? 

Mr. COX. Yes, Senator, I would like to add onto the concerns of 

the shipyards, and that is, we have begun to engage this protective 

fuel tank location issue. It will affect all vessels in the world’s fleet. 

I think you can confidently go back and tell the people of Oregon 

that the initiatives that the U.S. took to the IMO are going to have 

a major impact on the way ships are designed throughout the 

world. 

Certainly, it is going to take a lot of time in eventually coming 

to fruition on changing all these vessels. But at the same time, 

Senator, if we do not start we will not get to the point where we 

want to be, either, and we are at that starting point. 

Senator WYDEN. Gentlemen, anything you want to add further? 

[No response.] 

Senator WYDEN. I think your last point, Mr. Cox, is again a fair 

one, and I would only say in rejoinder what my constituents want 

to know as a result of what happened in Oregon, as a result of 

news reports that they have seen around the country, is they are 

asking: How many gallons of oil need to be spilled, and how many 

miles of coastline need to be destroyed before our country gets serious about this issue, and gets serious about dealing with vessels 

that are unseaworthy, and are transporting oil in our coastal waters? 

83

The problems are particularly egregious with respect to these foreign vessels that the chairman has been talking about. But suffice 

it to say that it is relevant in a number of other areas. So there 

is much to do on this. 

Do any of you gentlemen have anything further that you would 

like to add this afternoon? 

[No response.] 

If not, the hearing is adjourned. 

[Whereupon, at 4:43 p.m., the Committee was adjourned.] 

(85)

APPENDIX

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. JOHN MCCAIN TO

THOMAS A. ALLEGRETTI

Question 1. Mr. Allegretti, you indicated in your statement that ‘‘there is a surplus of tonnage on the market today—more vessels than are needed to meet U.S. 

demand for oil transportation.’’ Yet Mr. Godfrey, from the Shipbuilders Council has 

stated that there is a growing shortfall in capacity. How do you explain this difference of opinion? 

Answer. With all due respect to our colleagues from the shipyard industry, we do 

not foresee a growing capacity shortfall as they suggest. In fact, we have a fundamentally different view of the very premise of their concerns that suggests future 

transport capacity constraints. AWO does not believe the Committee should have 

any concerns about the long-term ability of America’s tank vessel industry to move 

the nation’s energy cargoes. We reach this conclusion for several reasons. 

First, we question both the supply and demand projections used by the shipyards. 

Arguably, projecting demand is an imprecise art that involves several factors that 

are themselves hard to predict. But, every projection of the demand for domestic 

ocean transportation of energy cargoes that AWO has seen is relatively flat. As our 

testimony pointed out, the amount of oil moved by tank barges in 2000 was the 

same as that moved in 1990. If history is any guide, we do not anticipate any skyrocketing demand for oil transportation in the near future. 

On the supply side, an analysis prepared by the shipbuilders about 16 months ago 

was projecting a shortage of more than half a million deadweight tons in the domestic tank vessel fleet by 2005. Yet, their January 9 hearing testimony shows that projected shortage to now be only 98,000 deadweight tons. The disparity of those two 

projections in such a short timeframe would suggest that they are not an accurate 

basis for concluding that the nation faces a crisis. 

The most precise information available, which gives us confidence that no capacity 

crisis is on the horizon, is the track record of our industry to be there to provide 

transportation whenever shippers have a need for transportation. That historically 

and routinely takes place as a function of the market, and as a result of the fact 

that we enjoy in this country families and companies who have a long-term commitment to this business. Our testimony highlights nearly a half-dozen prominent examples of that—companies that have been in the oil transportation business for generations and that have invested hundreds of millions of dollars in the recapitalization and modernization of their fleets. Their track record is clear that they are committed to meet the needs of their customers. If the shortage projected by the shipbuilders is indeed accurate, that is a business opportunity that these companies will 

be pleased to seize. 

Finally, the Committee should have an appreciation for the fact that the 2005 

shortage projected by the shipbuilders is not terribly surprising. The vessel of choice 

for ocean transportation is the ATB, which the yards say takes less than 18 months 

to build. It is unlikely that an examination of vessel capacity available in 2005 

would reflect today an order already placed for such a vessel.

Question 2. If a capacity problem were to develop in a market, how long would 

it take for your members to establish additional capacity in that market?

Question 2a. Am I correct that if a crisis were to develop, your members would 

very likely see it coming and act in advance to build additional capacity? 

Answer. As I outlined in my testimony, the OPA–90 phase-out schedule is only 

one of the factors that determines when new double-hull vessels will be built. To 

be sure, it is a ‘‘bottom line’’ for the elimination from service of single-hull vessels. 

However, the decision to construct new double hull capacity is basically an economic 

one, made as a result of a variety of economic and market factors. 

Each AWO member is of necessity an expert in the particular markets in which 

they operate. They watch their markets closely to remain competitive and to anticipate business opportunities. They are constantly evaluating rates and demand, both 

86

current and projected, and factoring in their current and projected fixed and variable costs, to decide the best course of action for their business. If they were to see 

a capacity shortfall on the horizon, and I am confident that they would, they would 

not regard it as a crisis but as a business opportunity—and they would be prepared 

to take advantage of that opportunity by ordering additional vessels at an appropriate point. 

So I believe that AWO members would act well in advance of any capacity shortfall to meet the needs of the market. The lead-time required for ordering vessels 

to meet anticipated demands is relatively short. As I testified, the construction time 

for a new ATB of the type used on coastal routes is less than 18 months. For inland 

tank barges and smaller coastal vessels, the construction time would be shorter.

Question 3. Can you tell us how the federal agencies involved in enforcement of 

OPA–90 monitor your industry? What types of inspection of tank barges are conducted by federal agencies? How often is the integrity of a barge inspected and by 

whom? 

Answer. Tank barges carrying oil, petroleum products and hazardous substances 

must meet comprehensive Coast Guard standards for design, construction, equipment and all elements of their operation. These vessels are inspected by the Coast 

Guard annually to ensure compliance. 

The specific requirements for inspection of tank vessels, including tank barges, 

are contained in 46 CFR Part 31. Tank vessels are required to be fully examined 

for the issuance of a Certificate of Inspection (COI) every 5 years. In addition, another full inspection is required at the midpoint of the 5-year COI inspection cycle. 

Finally, as stated above, an annual inspection is required to determine any deficiencies or major changes in the vessel. The initial inspection for issuance of the 

COI and subsequent 5-year renewal inspections may be conducted by approved classification societies under the Coast Guard’s Alternative Compliance Program. All 

other inspections are conducted by Coast Guard marine inspectors. 

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. JOHN MCCAIN TO

TOM GODFREY

Question 1. It is clear from your written statement that you are in favor of phasing out all single-hull tankers no later than what is mandated under OPA–90. That 

is understandable on your part given that the phase-out means more business for 

U.S. shipyards. However, your analysis of domestic capacity, demand, and availability, seems to ignore the decline in demand for domestic movements of crude and 

oil products. Do you disagree that demand for oil movements is declining? 

Answer. We agree that demand for crude oil movement from Alaska has declined 

dramatically in recent years; however, we disagree with the assumption that demand for domestic product movements is declining and will continue to do so. Over 

the long term oil consumption will grow and demand for transportation of that oil 

product will grow as well. 

My written testimony focused exclusively on coastwise product movement. Carriage of crude oil from Alaska is a unique market that must be considered separately from the coastwise petroleum transportation market. Vessels built to carry 

crude from Alaska are not transferable to the domestic coastwise product trades, because of their larger size and cost of operation. The Alaska North Slope trade is 

really a function of the refining process—market rules do not apply, because there 

is no alternative mode of transportation available. 

Product movement is impacted by varied circumstances at various times. For example, today much of the demand for New England heating oil is being met with 

product imports from Europe because product refined in the Gulf of Mexico is being 

diverted to the Caribbean to replace production interruption in Venezuela. Product 

imports from Europe are temporarily available at discounted prices because European demand for product has decreased due to slow economic growth in most EU 

countries and the move from gasoline to diesel fuel as Europe’s primary source of 

energy. European refineries are retooling their output to increase diesel production 

and reduce gasoline production, which will soon end the overcapacity situation in 

Europe and lead to more expensive product exports and a greater demand for domestic product movement. Similarly, the political uncertainty in Venezuela will ultimately be resolved and the product currently being diverted to the Caribbean will 

again be available for the New England marketplace increasing demand for coastwise product movement. 

The biggest determinant in the demand for product movement; however, is the 

economy. Economic growth is inevitable and that growth will require more fuel. Increased consumption will increase demand for product movement. This cannot be acVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00090 Fmt 6601 Sfmt 6621 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
87

complished solely in pipelines—waterborne product movement has to increase as 

well. Pipelines can only increase capacity by 10 percent and pipelines are not practical for all types of product movement. Increasing pipeline capacity beyond the 10 

percent, which is possible with the current infrastructure, will be cost prohibitive 

and environmentally risky. Growth for demand of coastwise product movement is 

inevitable.

Question 2. What is the average cost to build a handysize product tanker in a U.S. 

shipyard? What would that same vessel cost if built in a foreign shipyard? How do 

you explain the difference? 

Answer. The cost to build a handysize product tanker in a commercially oriented 

shipyard in the U.S. today is approximately $90 million. Several U.S. yards are currently working with foreign yards to take advantage of their buying power and proven designs to reduce that price. A similarly sized vessel can be purchased from 

Asian shipyards for approximately $30 million. 

No one single reason explains the difference between U.S. and Asian tanker construction pricing. There are a number of factors not the least of which is the fact 

that America has not built many large commercial ships in more than two decades 

and our nation has not benefited from the experience and efficiencies that series 

construction provides. Because Americans haven’t had the same opportunities to 

learn from experience, U.S. productivity lags behind Asian shipyards. This situation 

will not be reversed until American yards see the same type of series construction 

projects that have proved so beneficial to Asian shipbuilders. 

Another factor is that, for the most part, U.S.-flag operators want ships designed 

to their individual company’s specifications and usually include duplicative systems 

and more robust steel requirements than foreign designs require. Most Asian yards 

develop a ship design and primarily offer only that design. Foreign operators buy 

the stock design. Asian ship owners are much like an American consumer walking 

into a car showroom and choosing the model you want. Obviously, the cost would 

be much greater if you ask the factory to build you a car three feet longer, six inches 

wider and with other specialty features not offered on the basic design. 

Complying with U.S. labor, safety and environmental regulations are more rigorous and expensive than in foreign countries and add to the price differential. In 

the U.S., we understand that it is counterproductive to pollute the environment 

building ships designed to protect the environment. One concrete example of a regulatory compliance cost in the U.S. is that shipbuilders are required by Congress to 

participate in the workers compensation scheme provided for in the Longshoreman 

Act—complying with this requirement costs an estimated 12 cents of every payroll 

dollar. 

Moreover, the cost of materials is also more expensive for U.S. yards. Our material costs alone are greater than the delivered price of product tankers in most 

Asian yards. For example, the materials package for a handysize product tanker 

constructed in the U.S. is estimated at roughly $40 million, while Korean yards can 

buy the materials for the same vessel for roughly half that amount. Commercial 

shipyards in the U.S. are not subsidized and haven’t been for several decades. Foreign governments have enacted policies that promote domestic shipbuilding because 

they understand that shipbuilding is a labor intensive business that supports large 

numbers of industrial jobs.

Question 3. In your written testimony, you mention that international operators 

have for some time been taking advantage of subsidized construction prices. I understand that vessel pricing in Asian shipyards has been the subject of some debate 

for the last several years. Can you tell us how vessel construction is being subsidized in these shipyards? 

Answer. Subsidization of foreign shipyards is a complex issue. Subsidization over 

an extended period of time creates huge market distortions, because it allows subsidized shipyards to maintain artificial order books and use the work generated 

through those order books to learn and implement production efficiencies that unsubsidized shipyards cannot achieve. Once that production advantage has been 

achieved, it becomes extremely difficult for shipyards that have not benefited from 

extended subsidization to reach market parity. When a shipyard or a shipbuilding 

country has established itself as a market leader, the market advantages multiply. 

A perfect example of this fact is the way Korean shipyards have used volume buying power to reduce material costs. As I mentioned earlier, Korean shipyards because they buy in huge volumes and have created the world’s most extensive shipbuilding infrastructure, they can purchase materials and equipment needed to build 

ships for half what the same equipment would cost a U.S. yard. 

Korea is the ‘‘poster child’’ for shipbuilding subsidies. The EU has a case pending 

in the WTO alleging that the Korean government:

88

1. provides repayment guarantees for vessels built for export if the contracts are 

not fulfilled;

2. provides through KEXIM, the state-owned Export-Import Bank of Korea export subsidies in the form of excessively low interest loans;

3. engineered massive debt forgiveness, preferential debt-for-equity conversions, 

debt and interest relief, and tax concessions for Korean shipbuilding companies; and,

4. provides direct subsidies to upstream suppliers of key shipbuilding components and materials, thereby indirectly subsidizing shipbuilding costs.

Korean shipbuilding companies have used this array of subsidies and preferential 

government policies to build one of the world’s most efficient shipbuilding industries. Tragically, U.S. taxpayer financed loans from the International Monetary 

Fund has likely subsidized these activities. 

EU shipyards, despite complaints over Asian subsidization, also benefit from direct and indirect subsidies. Official EU policy today allows a subsidy payment of 15 

percent of the cost of containerships built in EU countries. EU shipyards also benefit from indirect subsidies for worker training, etc. because the EU understands the 

necessity of maintaining strategic heavy industries as a way to keep workers employed.

Question 3a. Does the U.S. have trade agreements regarding shipbuilding with 

the nations involved? 

Answer. To my knowledge the U.S. does not have shipbuilding trade agreements 

with major shipbuilding nations.

Question 3b. Would you object if the Administration included shipbuilding in its 

next round of trade negotiations with these countries? 

Answer. The Shipbuilders Council of America strongly supported the OECD Shipbuilding Agreement negotiated during the first Bush and Clinton administrations. 

Unfortunately, that agreement was never ratified by Congress and served only to 

divide the industry and divert our attention away from a focus on modernization 

and productivity improvements. I do not believe that at the current time it would 

be in the best interest of U.S. shipyards to include shipbuilding in the next round 

of trade negotiations. The U.S. government, American workers and the shipyard industry would be better served focusing on ways to improve our operations to build 

for the domestic market before we attempt again to level the playing field on the 

world market, which has benefited from massive government funded improvements 

not available in the U.S.

Question 4. How much of an impact has OPA–90 had in forcing ships to be replaced before the end of their useful lives? 

Answer. The impact of OPA–90 in forcing ship retirements sooner than the end 

of their useful lives has been minimal. The OPA–90 retirement schedule was negotiated with broad maritime industry participation, which resulted in a reasonable 

and practical retirement schedule that allowed vessels to stay in service until their 

estimated useful lives had expired. Unfortunately, even the largest charterers have 

been unwilling to pay a premium to ship on double-hull tonnage except in rate circumstances. As a result, vessel owners understandably have an incentive to operate 

single-hulls as long as possible.

Question 5. How much does a double hull add to the cost of a new tanker or 

barge? 

Answer. No single-hull tank vessels have been built in the U.S. since OPA–90 was 

enacted so an exact cost differential is difficult to provide; however, the industry estimates that the cost differential between single-hull and double-hull construction 

for similar vessel types is a modest 5 to 10 percent of the delivered price, primarily 

accounted for with additional steel and labor costs, although a double-hull vessel 

may require a slightly more extensive piping system. The added steel requirement 

is less than one would expect because adding the double-hull removes much of the 

internal framing required for single-hull construction.

Question 6. In your written statement you state that by 2008, the shortfall in 

product tanker and barge capacity will grow to 756,000 dwt assuming no growth in 

transportation demand and the current OPA–90 retirement schedule. To what do 

you contribute this shortfall? 

Answer. The shortfall is the result of tonnage retired under OPA–90 that to date 

has not been replaced.

Question 6a. If the issue is that revenues from oil tanker transportation are not 

sufficient to justify investment in new capacity, what has been the driving force behind the construction of the new articulated tug/barges, or AT/Bs? 

89

1Wilson, Gillette & Co. (as cited in Double-Hulled Tanker Legislation: An Assessment of the 

Oil Pollution Act of 1990, National Research Council, 1998.

Answer. AT/B revenue does allow for new construction today. AT/Bs are less expensive to build and operate and their improved operating efficiencies make them 

more competitive than previous designs.

Question 6b. Do you expect that most of the shortfall in capacity will ultimately 

be made up by AT/Bs rather than self-propelled product tankers? 

Answer. Some capacity has already moved from tanker to barges and more may 

well follow; however, self-propelled tankers are economically more desirable for 

some trades, primarily those with greater sea leg voyage length.

Question 7. The written statement of the American Waterways Operators (AWO) 

states that ‘‘... government and industry sources agree that there is a surplus 

of tonnage on the market today—more vessels than are needed to meet demand for 

oil transportation . . . ’’ The written statement of API states that demand in the 

movement of both Alaska Crude Oil and oil products is declining. Figures from the 

U.S. Maritime Administration from 2000 also show demand is dropping as well. Can 

you explain why AWO’s and API’s conclusions are so different from your organizations? 

Answer. The AWO statement referred to government studies that considered supply/demand through 2004 and not beyond (prior to a major OPA–90 retirement 

date—2005). I don’t disagree with that statement; however, as the statistics in my 

testimony indicate, a vessel shortfall will occur beginning in 2005 unless new vessels are built to replace tonnage forced into retirement by OPA–90. I believe it vital 

that the Congress consider the impact of vessel retirements in 2005 and beyond. 

Product tankers contracted for today cannot be delivered for operation until 2005. 

Failure to sign construction contracts this year will make vessel delivery in time to 

meet the projected 2005 vessel capacity shortfall virtually impossible. 

The testimony provided by the American Petroleum Institute correctly segregated 

the Alaska North Slope crude trade from the coastwise petroleum product trade, but 

the testimony relied on market demand and vessel capacity in 2000. Similar to the 

testimony of AWO, the testimony did not consider OPA–90 retirements in post 2000 

years, which are significant. The U.S.-flag fleet of 64 product tankers referred to in 

the API testimony will be reduced to a maximum of 50 ships by 2005 and will be 

further reduced to a maximum of 42 ships in 2008—and only 21 of these ships are 

double-hulled. 

Estimating the demand for coastwise product movement is difficult to project because so many factors impact demand; however, there are some basic assumptions 

that can be relied upon. The overall economy will grow over time and with that 

growth will come increased demand for product movement, pipelines are not practical for every type of product movement, pipelines are already operating at virtually full capacity, and pipeline operators have announced no plans to expand capacity. Common sense dictates that demand for coastwise product movement will increase. The statistics in my testimony assume a very modest growth rate projected 

in the only public study on coastwise product movement demand of which I am 

aware. 1 It will always be possible to look at specific time periods where demand for 

product movement is low—warm winters, economic downturns, post September 11 

travel decline, etc.; however, over any extended period of time, demand for product 

movement will increase. Furthermore, none of the testimony, including mine, considered the impact of Administration policy to promote ways for the U.S. to become 

more reliant on domestic sources of energy. 

Question 8. How much does the age and condition of a vessel have to do with the 

risk that the hull, single or double, may be breached? The action of the European 

Commission suggests that it believes that single-hull vessels more than 23 years old 

are simply too dangerous to be operated. 

Answer. Obviously age of the hull is one of the determining factors in whether 

a vessel is safe to operate, but more important than age is whether a vessel has 

been properly maintained, repaired and operated over the vessels life span. Properly 

maintained and operated ships can remain in service 25 years and beyond. With a 

rigorous inspection regime on the part of the classification society, there is no reason to require vessels to retire at an arbitrary age. However, common sense tells 

us that older vessels will be at greater risk and the EU proposal to require vessels 

older than 15 years to submit to an annual inspection makes good sense. We would 

suggest that the Committee consider requiring all vessels trading in the U.S. to be 

subject to more rigorous and frequent inspection programs. 

90

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. JOHN MCCAIN TO

DRAGOS RAUTA

Question 1. Was the PRESTIGE an INTERTANKO vessel? 

Answer. The manager of the vessel, Universe Maritime Ltd., of Greece, has been 

an INTERTANKO member in good standing since 1989. 

Appendix 1 gives a general information sheet on PRESTIGE produced by 

INTERTANKO after the tanker sunk.

Question 2. Does membership in INTERTANKO carry with it responsibilities as 

to the maintenance and inspection of vessels? 

Answer. To become a member of INTERTANKO, all applications are reviewed by 

the applicable INTERTANKO Regional Membership Panel in which the application 

is submitted then approved by a vote of the Association’s Executive Committee and 

Council. In order to become a member, all applicants must:

• Have experience in operating tankers;

• Demonstrate compliance with domestic and international requirements through 

Port State Control inspections;

• Have a certified International Safety Management (ISM) Code system:

• Classify their tankers with a Classification Society approved by the International Association of Classification Societies (IACS);

• Enter their tankers with a Protection and Indemnity Club; and

• Maintain oil pollution response plans and insurance cover.

INTERTANKO monitors its members’ compliance with these criteria. We also pay 

close attention to members’ Port State Control detention records. Lack of compliance 

with the above criteria or a negative record of detentions may result in a membership in the Association being suspended or terminated. Appendix 2 gives more details on INTERTANKO membership Criteria.

Question 3. Are there international regulations governing the maintenance of 

tanker vessels? 

Answer. There are numerous international, national and private requirements 

and arrangements regulating the operations and maintenance of tankers. This is 

the most heavily regulated segment of the maritime industry. The most important 

convention regulating and preventing marine pollution by ships is the IMO International Convention for the Prevention of Pollution from Ships, 1973, as modified 

by the Protocol of 1978 relating thereto (MARPOL 73/78). It covers accidental and 

operational oil pollution as well as pollution by chemicals, goods in packaged form, 

sewage, garbage and air pollution. Vessel construction standards are also covered. 

In addition, the International Convention for the Safety of Life at Sea, 1974 

(SOLAS), specifies minimum standards for the construction, equipment and operation of ships, compatible with their safety. Flag States are responsible for ensuring 

that ships under their flag comply with its requirements, and a number of certificates are prescribed in the Convention to provide evidence of compliance. Port State 

Control provisions also allow governments and their agents to inspect ships of other 

nations if there are clear grounds for believing that the ship and its equipment do 

not substantially comply with the requirements of the Convention. Thus, the ship 

is subject to scrutiny both by the nation whose flag it carries and, as a check on 

that process, separate inspection and review by Port States. 

Many flag and port states have unique domestic requirements pertaining to maintenance which are applied to vessels. These requirements are supplemented further 

by insurance and charterer standards and inspections. 

In conclusion, tank vessels are subject to the strictest regime of inspections in the 

maritime industry.

Question 4. What actions have INTERTANKO members taken since the PRESTIGE accident to prevent another spill? 

Answer. As indicated in our testimony before the Committee, the accident investigation regarding the PRESTIGE is ongoing. Consequently, the ‘‘lessons learned’’ 

element of future measures must await an understanding of the causes of the casualty. 

However, INTERTANKO has taken the following actions:

• we have offered data and statistical analysis to the European Commission;

• we have participated as an Observer to the IACS’ Audit on the classification 

society which inspected the PRESTIGE, the American Bureau of Shipping 

(ABS). The Audit is part of the IACS Procedures to check whether the surveys, 

91

repairs and controls performed by the Class Society was in conformity with all 

applicable rules and procedures;

• we have submitted a joint information paper to the International Maritime Organization (IMO), together with the U.S.-based Society of Naval Architects and 

Marine Engineers (SNAME), regarding assessment of risks associated with 

large fuel tanks; and

• we set up a ‘‘ship repair’’ assessment group with other industry partners. 

INERTANKO has established with industry partners representing classification 

societies, oil company’ and other independent interests a ‘‘Ships in Service’’ 

work group. The purpose of this group is to review repair and maintenance procedures, class requirements, and a general assessment of safety margins in 

tanker structures, particularly in the latter stages of their working lives. This 

therefore complements work INTERTANKO has initiated with other shipowner 

groups in joining with classification societies and shipbuilding representatives 

to review design margins for new ships in order to ensure more robust and fitfor-purpose ships at delivery from the shipyards. This however has no direct 

bearing with the PRESTIGE accident. We are waiting for an official accident 

investigation result when, as appropriate, the industry will consider what, if 

any, further corrective measures may be required.

Question 5. The volume of oil spilled in U.S. waters and internationally has declined significantly over the past thirty years, while the amount of oil shipped has 

continued to increase. To what do you attribute the decline in international spills? 

Answer. There are several contributing causes. First, the IMO has become an inc 

reasingly important catalyst for greater international cooperation and regulation of 

marine safety and environmental protection. Since 1970, the shipping industry has 

seen the creation and expansion of MARPOL 73/78, the promulgation of numerous 

new requirements under SOLAS, the ratification of the International Convention on 

Standards for the Training, Certification and of Watch-keeping (STCW), the increased use of radar and adherence to the International Convention on the Prevention of Collisions at Sea (COLREGS), and acceptance of numerous other conventions, regulations, and resolutions concerning marine safety and environmental protection. These phased-in requirements have dramatically reduced both operational 

and accidental discharges of oil through enforceable international standards regarding design, construction, alteration, repair, maintenance, operation, equipping, personnel qualification, and manning of vessels. These international standards have 

contributed substantially to prevention of accidents the creation and maintenance 

of resources to respond effectively if an accident were to occur. 

Second, there is greater industry interest and concern over protecting the marine 

environment. The industry reflects the greater public concern over the damage 

caused due to the oil spill.


rq1.eps
92

Finally, various flag and port states, charterers, insurers, and classification societies have developed their own systems to enhance safety and environmental protection. This all has contributed to a multi-layered ‘‘safety net’’ of requirements that 

has reduced accidents and the possibility of discharge of oil into the marine environment. 

As an example, please note the graph below that shows the dramatic decrease of 

pollution accidents after the implementation of the new Enhanced Survey Program 

(ESP) for inspection of tankers. The Inspection Program increases the extent and 

the scope of the inspection in accordance with the tanker’s age.

These achievements are similarly reflected by the Port State Control detention 

records, on which the tankers’ share is only a fraction of the total, with an excellent 

record in the U.S.

Question 6. The charts you have submitted with your statement are very helpful 

in explaining the impact of OPA–90, MARPOL 13G, and the EU proposal on the 


rq2.eps rq3.eps
93

phase-out of single-hull vessels. It appears to me that today, OPA–90 is effectively 

the governing law since it generally phases out single-hull vessels sooner than the 

international regulations. For the benefit of the Committee, could you explain the 

phase-out under each regulatory regime? 

Answer. The three phase-out systems (OPA–90; MARPOL 13G and the new EU 

proposals) are difficult to compare. Each has its own implementation schedule based 

on size, age and type. In other words, they are similar but different. For easy reference, here is a comparison of the single-hull tanker phase-out, 5,000 dwt and 

above (by number of tankers) between the OPA–90, MARPOL 13G and the new EU 

proposals.

Phase-out year OPA ’90 MARPOL 13 G EU new proposal 

2002 201 N/A N/A 

2003 120 238 697

2004 99 173 133

2005 217 184 25

2006 67 219 62

2007 76 201 98

2008 56 123 123

2009 57 94 94

2010 401 76 563

2011 33 83 40

2012 28 83 32

2013 28 71 21

2014 31 79 29

2015 159 476 183

N/A* 527

Grand Total 2,100 2,100 2,100

* MARPOL 5,000 dwt and above, but OPA 5,000 GT and above OPA–90 exemptions for LOOP and dedicated 

lightering areas not taken into account for reasons explained above. 

Be aware that OPA deadline in 2002 has already eliminated from the U.S. waters 

quite a lot of single-hull tankers. For instance PRESTIGE was not allowed to trade 

in U.S. Any differences in phase-out would have the same effect as far as trading 

of single hulls to U.S. ports is concerned. 

In cases where MARPOL Regulation 13G might phase-out some tankers before 

the OPA–90 schedule, these tankers would anyway have to phase-out because their 

Flag Administrations would not give them Certificates. As almost all Maritime Administration are Party to MARPOL, the IMO deadline is final for single-hull tankers.

Question 7. Could you explain what actions INTERTANKO has taken to improve 

the transparence of vessel ownership and operation? What actions are being undertaken by the international community as a whole? 

Answer. Information regarding the INTERTANKO Membership, the tankers registered and who control the ships is public information. We provide this information 

quarterly to the Equasis database. Equasis is a database which is administered by 

EU and which makes available data on ships, their operators, information of PSC 

and Vetting Inspection results, etc. 

In December 1999, INTERTANKO took the initiative to promote transparency of 

information within the shipping industry. INTERTANKO was actually the first 

maritime association to adopt a concrete, defined transparency policy. The decision 

was taken by the INTERTANKO Council at its meeting in April 2000 in Sydney, 

Australia. Appendix 3 gives a more detailed explanation of the INTERTANKO contribution to promote transparency. 

The issue of transparency has been given specific attention in IMO within the 

context of the new security regulations. The IMO and its Legal Committee will soon 

promulgate guidance on listing of a responsible entity for each ship. 

We hope this information is helpful. Please do not hesitate to contact me or our 

U.S. legal and governmental affairs representative, Jonathan Benner (202–274–

2880) if you or your colleagues have additional questions or require amplification 

of any of this material.

APPENDIX 1

General information: M/T PRESTIGE (as on 25 November 2002) 

Ship name and type: M/T PRESTIGE (single-hull crude oil tanker) 

Cargo: Heavy fuel oil (typically used as bunker fuel with specific gravity 0.99) 

94

Load port: Ventspils, Latvia 

Discharge port: Singapore 

Owner: Mare Shipping Inc (registered in Liberia) 

Manager: Universe Maritime Ltd, Greece 

INTERTANKO member: INTERTANKO member of good standing entered in 1989 

Charterer: Crown Resources 

Flag: Bahamas (since 1994 and white-list flag under Paris MoU) 

Class: American Bureau of Shipping (ABS) built and maintained to ABS class 

P&I coverage: London Steamship Owners Association 

IMO number: 7372141 

Year of build: 1976 at Hitachi Shipbuilding & Engineering Co. in Japan 

Gross tonnage: 42,820 

Design deadweight: 81,564 

Capacity: 100,813 cubic metres 

Sister vessels: None in service 

Crew: 27 with Greek officers, Filipino and Romanian crew 

Regulatory regime 

The PRESTIGE was subject to a comprehensive regime of safety and environmental regulations, including those of the main IMO Conventions, i.e. the Safety of 

Life at Sea Convention (SOLAS) and the International Convention for the Prevention of Pollution from Ships (MARPOL), to both of which the Flag State of the Bahamas is a Party. 

Phasing-out of single-hull tankers 

The revised MARPOL Convention contains a timetable by which single-hull tankers will be phased out in favour of double-hull ships. The PRESTIGE was a singlehull tanker built in 1976, that is before the MARPOL Convention (which had been 

adopted in 1973) entered into force in 1982. In April 2001, the Parties to the 

MARPOL Convention agreed to accelerate the timetable for phasing out existing 

single-hull tankers in a revised regulation 13G of that Convention. According to the 

revised regulation which entered into force internationally in September 2002, single-hull tankers built in 1976 would be required to be scrapped by 2005. The PRESTIGE phase-out date was 11 March 2005. 

Survey and inspection 

In addition to their routine annual and other surveys, since 1995 all tankers aged 

five years and over have been subject to a specially enhanced inspection programme 

which is intended to ensure that any deficiencies—such as corrosion or wear and 

tear resulting from age or neglect—are detected. Guidelines on enhanced surveys on 

tankers are contained in IMO Assembly resolution A.744(18) and in 1994 it was 

given mandatory status under the SOLAS Convention. The PRESTIGE was therefore subject to the International Association of Classification Societies (IACS ) Enhanced Survey Programme (ESP). 

PRESTIGE Class survey:

• special survey No 5 conducted by ABS in Guangzhou, May 2001

• annual survey conducted in Dubai, UAE by ABS and certificates issued on 25 

May 2002

PRESTIGE Port State Control (PSC) inspection:

• Equasis database indicates the last PSC inspection was conducted in Rotterdam 

on 1 September 1999. There were no detentions (3 deficiencies—2 lifesaving and 

1 general)

PRESTIGE ISM certification:

• Issued by Bureau Veritas from 19 July 2001 to 20 June 2006

Oil spill clean up 

In July 1989, a conference of leading industrial nations in Paris called upon IMO 

to develop further measures to prevent pollution from ships. This call was endorsed 

by the IMO Assembly in November of the same year and work began on a draft 

convention aimed at providing a global framework for international cooperation in 

combating major incidents or threats of marine pollution. The International Convention on Oil Pollution Preparedness and Co-operation (OPRC) entered into force 13 

May 1995. 

Parties to the OPRC convention are required to establish measures for dealing 

with pollution incidents, either nationally or in cooperation with other countries. 

95

Ships are required to carry a shipboard oil pollution emergency plan. Operators 

of offshore units under the jurisdiction of Parties are also required to have oil pollution emergency plans or similar arrangements which must be co-ordinated with national systems for responding promptly and effectively to oil pollution incidents. 

Ships are required to report incidents of pollution to coastal authorities and the 

convention details the actions that are then to be taken. The convention calls for 

the establishment of stockpiles of oil spill combating equipment, the holding of oil 

spill combating exercises and the development of detailed plans for dealing with pollution incidents. 

Parties to the convention are required to provide assistance to others in the event 

of a pollution emergency and provision is made for the reimbursement of any assistance provided. 

The Convention provides for IMO to play an important co-ordinating role. 

As Parties to OPRC, Spain and Portugal have established a national system for 

dealing with pollution incidents, either nationally or in co-operation with other 

countries. 

Oil pollution liability and compensation 

Liability and compensation for spills of oil from tankers are covered by two complementary legal regimes adopted by IMO, the International Convention on Civil Liability for Oil Pollution Damage, 1992 and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 

1992 (IOPC Fund). 

i) CLC 1992—regulating liability and compensation from the shipowner 

The Civil Liability Convention was adopted to ensure that adequate compensation 

is available to persons who suffer oil pollution damage resulting from maritime casualties involving oil-carrying ships. 

The Convention places the liability for such damage on the owner of the ship from 

which the polluting oil escaped or was discharged without regard to fault.

• For a ship not exceeding 5,000 gross tonnage, liability is limited to 3 million 

SDR (about U.S.$4.0 million)

• For a ship 5,000 to 140,000 gross tonnage: liability is limited to 3 million SDR 

plus 420 SDR (about U.S.$559) for each additional unit of tonnage

• For a ship over 140,000 gross tonnage: liability is limited to 59.7 million SDR 

(about U.S.$79.4 million)

The Convention covers pollution damage resulting from spills of persistent oils 

suffered in the territory (including the territorial sea) of a State Party to the Convention. Included in the scope of the Convention is also pollution damage caused in 

the exclusive economic zone (EEZ) or equivalent area of a State Party. The Protocol 

covers pollution damage as before but environmental damage compensation is limited to costs incurred for reasonable measures to reinstate the contaminated environment. It also allows expenses incurred for preventive measures to be recovered 

even when no spill of oil occurs, provided there was grave and imminent threat of 

pollution damage. 

The Convention covers spills from sea-going vessels constructed or adapted to 

carry oil in bulk as cargo so that it applies to both laden and unladen tankers, including spills of bunker oil from such ships. 

A shipowner cannot limit liability if it is proved that the pollution damage resulted from the shipowner’s personal act or omission, committed with the intent to 

cause such damage, or recklessly and with knowledge that such damage would probably result. 

The Convention requires ships covered by it to maintain insurance in sums equivalent to the owner’s total liability for one incident. The PRESTIGE held such insurance cover for oil pollution as all tankers engaged in the carriage of persistent oil. 

ii) International Oil Pollution Compensation Fund (1992) 

Although the original 1969 Civil Liability Convention provided a useful mechanism for ensuring the payment of compensation for oil pollution damage, it did not 

deal satisfactorily with all the legal, financial and other questions raised during the 

Conference adopting the CLC Convention. 

Some States objected to the regime established, since it was based on the strict 

liability of the shipowner for damage which they could not foresee and, therefore, 

represented a dramatic departure from traditional maritime law which based liability on fault. On the other hand, some States felt that the limitation figures adopted 

were likely to be inadequate in cases of oil pollution damage involving large tankers. 

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They therefore wanted an unlimited level of compensation or a very high limitation 

figure. 

In the light of these reservations, the 1969 Brussels Conference considered a compromise proposal to establish an international fund, to be subscribed to by the cargo 

interests, which would be available for the dual purpose of, on the one hand, relieving the shipowner of the burden by the requirements of the new convention as very 

high or unlimited liability without regard to fault was untenable and, on the other 

hand, providing additional compensation to the victims of pollution damage in cases 

where compensation under the 1969 Civil Liability Convention was either inadequate or unobtainable. This conventions was amended in 1992 to broaden its scope 

and to increase the levels of compensation available. Its was also amended in 2000 

in order to provide for higher levels of compensation (see below). 

The purposes of the Fund Convention are:

• To provide compensation for pollution damage to the extent that the protection 

afforded by the 1969 Civil Liability Convention is inadequate.

• To give relief to shipowners in respect of the additional financial burden imposed on them by the 1969 Civil Liability Convention as cargo interests were 

also deemed a party in the transportation venture.

Under the first of its purposes, the Fund is under an obligation to pay compensation to States and persons who suffer pollution damage, if such persons are unable 

to obtain compensation from the owner of the ship from which the oil escaped or 

if the compensation due from such owner is not sufficient to cover the damage suffered. 

Under the Fund Convention, victims of oil pollution damage may be compensated 

beyond the level of the shipowner’s liability. Where, however, there is no shipowner 

liable or the shipowner liable is unable to meet their liability, the Fund will be required to pay the whole amount of compensation due. 

Contributions to the Fund should be made by all persons (above a threshold of 

minimum 20,000 tonnes) who receive oil by sea in Contracting States. 

Under the 1992 Protocol, the maximum amount of compensation payable from the 

Fund for a single incident, including the limit established under the 1992 CLC Protocol, is 135 million SDR (about U.S.$179.6 million). However, if three States contributing to the Fund receive more than 600 million tonnes of oil per annum, the 

maximum amount is raised to 200 million SDR (about U.S.$266 million), but this 

level have not yet been reached. 

PRESTIGE incident notes 

November 13, 2002—INTERTANKO received the alert message that the PRESTIGE was in trouble. The ship was at that time reported to be listing 25 to 30 degrees and in danger of sinking with its cargo of fuel oil in the rough seas off the 

north-west Spanish coast. Twenty four crew members were evacuated by helicopter. 

The Captain, Chief Officer and Chief Engineer stayed on board. 

November 14, 2002—The PRESTIGE drifted close to the Spanish coast but was 

stable enough to allow Coast Guard and inspectors aboard for an assessment of the 

condition. 

November 15, 2002—The PRESTIGE was taken in tow by salvage tugs away from 

the Spanish coastline. 

November 18, 2002—The PRESTIGE was towed further out to sea. 

November 19, 2002—The PRESTIGE broke in two at around 0700 hours GMT 

some 160 miles from the shore. The two parts of the ship sank later in the afternoon 

with no loss of life.

Appendix 2

MEMBERSHIP CRITERIA AS APPROVED AT COUNCIL MEETING NOVEMBER 2002

1. IACS Classification Society 

All members’ tankers are to be classified by a Classification Society audited and 

approved by a full member of IACS. 

2. Insurance Cover 

All members are to be entered in an International Group P&I Club or have an 

appropriate arrangement for insurance including third party oil pollution liability 

cover. 

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3. ISM Certification 

A member must have a certified and implemented ISM System. (The tanker industry embraced the International Ship Management Code at a very early stage.) 

4. Ownership Control 

We will hold on the members’ area of our web site information pertaining to the 

member’s vessels’ Owner(s), (or the Registered Owning Company(s)), Operator(s), 

Technical Manager(s), as well as identification, which of the above bodies holds’ the 

Company DOC. 

5. Detention Criteria 

INTERTANKO shall monitor members’ detentions over a continuous rolling period of 12 months. The central database of members’ detentions will be held by the 

Secretariat. 

If in the opinion of the Vetting Committee Chairman and the Marine Manager 

the detention or repeated detentions are grounds for concern then the detention will 

be referred to the Review Board. The review Board will consist of the: Vetting Committee Chairman, ISTEC Chairman, Marine Manager INTERTANKO, Technical Director INTERTANKO, Managing Director INTERTANKO, General Counsel 

INTERTANKO.

In addition the following members may be invited to assist with the review as appropriate and depending upon the nature of the detention and/or the geographical 

location of the detention: Chemical Tanker Committee Chairman, Latin American 

Panel Chairman, North American Panel Chairman, Hellenic Panel Chairman, Asian 

Panel Chairman and Secretariat expertise as appropriate. 

6. Entry with INTERTANKO 

All members tank vessels’ having a gross tonnage of 1000 tons or over and which 

is adapted for the carriage of oil in bulk, petroleum products and other liquids, including all kinds of combined bulk/tank vessels as ore/oil carriers, bulk/oil carriers, 

shall, in respect of all tank vessels which the applicant owns and/or manages including tank vessels of affiliated and associated companies be entered with 

INTERTANKO.

Appendix 3

Summary 

The discussion about transparency in shipping is not new. The tanker industry 

considered a voluntary tanker information register called VISTA already in 1980. 

The purpose was to contribute to the dissemination of information, possibly to the 

Port State Control authorities and other governmental schemes, charterers and 

other parts of the industry. The transparency issue has regularly been on the 

INTERTANKO agenda in various forms and INTERTANKO has been in the forefront of the drive for increased transparency. 

Review 

In April 2000 INTERTANKO endorsed the principle of transparency with the following definition ‘‘Information on transfers, changes, suspensions, and withdrawals 

of class, including information on all overdue surveys, overdue recommendations, 

overdue conditions of class, operating conditions or operating restrictions issued 

against the vessel.’’ The definition means that INTERTANKO’s members agree that 

Class should disseminate the above information from the normal operations on their 

ships. This information should be made available to interested parties, such as PSC, 

Flag States and charterers. 

INTERTANKO also agreed that, in addition to the information that class should 

provide on a regular basis, members would be encouraged to release a number of 

data in case of a major incident/accident on one of their ships. Such a list should 

be as follows but not limited to:

Information to be released by Owners after a major incident:

• relevant initial design information 

• any significant design modifications (which, when and where/by which yard)

• Flag, Class, Authority issuing DOC and SMC Certificate 

• details of the voyage when incident occurred 

• historical record of the last 24 months PSC inspections table with:

all previous names 

all owners/managers and the time for each of these periods 

all flags and time period 

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all class societies and time period 

all significant casualties (what, when, where) 

all significant repairs (what, when, where/by which yard)

In August 2002, a Transparency Working Group was established to examine how 

progressively increasing and structured transparency could serve to enhance safety 

and quality, while mitigating any negative impact of the isolated information that 

the industry is now required to make public. The Working Group would also assist 

in suggesting responses to questions regarding the INTERTANKO position on transparency. 

INTERTANKO position 

INTERTANKO recognises and supports the need for transparency in tanker shipping and indeed in the entire shipping industry INTERTANKO encourages and supports initiatives aimed at ensuring that transparency is promoted to enhance the 

efficiency of tanker operations and provide value to the industry and benefits to the 

consumers and the environment. 

INTERTANKO considers that there should be an accountable entity (‘‘the company’’) having the necessary expertise for the ownership, operation and management 

of the ship. (The definition of ‘‘the Company’’ is contained within the ISM SOLAS 

IMO etc. This definition also encompasses owner, manager and operator.)

INTERTANKO supports the use of the continuous synopsis record. IMO is currently considering whether this should be made mandatory. This encompasses the 

name of the ship, flag, registered owner, company and class/recognised organization. 

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. JOHN MCCAIN TO

ROBERT N. COWEN

Question 1. What effect would U.S. adoption of the EC proposal have on your company? 

Answer. The EU Commission has recommended that the EU Council and Parliament adopt an outright ban, effective immediately, on the use of any single-hull 

vessel to carry fuel oil or certain heavy grades of crude oil into EU ports. The Commission has also proposed to ban the oldest single-hull tankers (so called Pre 

MARPOL tankers which are generally those built before 1982) when they reach 23 

years of age and to ban all single-hull tankers effective 2010. 

Because OSG’s international tanker fleet consists primarily of modern double-hull 

vessels, the EU rules will have only a limited effect on the trading life of our fleet. 

Most of the single-hull vessels in OSG’s international flag fleet do not carry fuel 

oil or the heaviest grades of crude. Accordingly, these vessels are not impacted by 

the immediate ban on single-hull vessels carrying such cargoes. Rather, OSG’s relatively modern single-hull vessels, many with double sides, are likely to have their 

trading lives shortened by only a few years if the new EU rules are made applicable 

to the U.S. 

OSG’s Very Large Crude Carrier fleet (vessels of over 200,000 deadweight tons 

that typically move long haul cargoes from the Middle East and West Africa) of 21 

vessels includes 17 double-hull tankers that would not be affected at all by the new 

rules. The remaining four vessels are single-hull vessels that were built in 1990 (one 

vessel) and 1993 (three vessels); two have double sides. If the proposed EU rules 

were made applicable to the U.S., these four vessels could not carry certain heavier 

crudes to the U.S. Gulf and could not trade to the U.S. Gulf at all after 2010; under 

existing rules they would be permitted to trade to the U.S. Gulf until 2015. 

Similarly, OSG’s 14 vessel fleet of Aframax crude carriers (100,000 deadweight 

ton) includes 13 modern double-hull units that would not be affected by the EU 

rules. The remaining Aframax is a double-sided vessel built in 1992 that can trade 

to the U.S. under current rules until 2015; under the EU rules it could no longer 

carry certain heavier crudes and would be barred from trading in 2010. 

OSG has eight double-sided international flag product carriers that would be classified as single-hull vessels under the EU rules. They range in age from 14 to 17 

years. Under existing U.S. and international rules, these vessels phase-out between 

2012 and 2015. Under the EU proposal, these vessels would all phase-out in 2010, 

thereby losing between two and five years of trading life. 

OSG has one single-hull Suezmax (145,000 deadweight ton) crude carrier built in 

1989. Under the new EU rules, it would no longer be permitted to carry certain 

grades of heavy crude, but it would not otherwise be affected because it is barred 

from trading to the U.S. beginning in 2010 in any event by the Oil Pollution Act 

of 1990 (‘‘OPA–90’’). 

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OSG’s U.S. flag fleet of tankers includes four crude carriers engaged in the Alaskan trade which cease to be eligible for U.S. trading between 2004 and 2006 under 

the existing phase-out rules mandated by OPA–90. OSG also operates two U.S. flag 

single-hull product carriers with double bottoms that were built in 1982 and 1983. 

OSG bareboat charters these vessels under long-term charters expiring in 2011. If 

the EU rules were to apply to these vessels, they would lose approximately one year 

of trading eligibility and would have to leave the Jones Act trade in 2010.

Question 2. Do single-hull vessels operating off the coast of Louisiana at LOOP 

or at lightering areas off-shore pose the same level of risk as single-hull ships entering U.S. ports? 

Question 2a. Isn’t it because the risk of collision or grounding is significantly 

lower that these vessels are allowed to continue in those operations until 2015 

under OPA–90? 

Answer. The risk of grounding is no doubt reduced dramatically when tankers are 

operating offshore in the U.S. Gulf, whether trading to LOOP or operating in designated lightering areas 60 miles offshore. However, the risk of collision certainly 

remains if such vessels are moving in established trade lanes and approaching active lightering areas and offloading facilities such as LOOP. Moreover, the process 

of lightering itself necessarily places two vessels in close proximity to each other. 

The recent disastrous pollution incidents involving the sinking of the ERIKA in 

1999 off the coast of France and the PRESTIGE in 2002 off the coast of Spain, however, demonstrate clearly that collision and grounding are not the only environmental risks associated with operating older, single-hull vessels. While the precise 

cause of the break-up and sinking of the PRESTIGE has not yet been officially established, there is a general consensus that structural failures associated with these 

older single-hull vessels were major factors in both incidents. The PRESTIGE came 

apart over 130 miles from shore and yet it poses a continuing source of pollution 

and grave environmental damage for the Atlantic coast of Spain and France. Clearly, a structural failure of this nature, or a mechanical failure, involving an older single-hull vessel in the U.S. Gulf, whether 18 miles off the coast of Louisiana at LOOP 

or 60 miles off the U.S. Gulf coast in a designated lightering area, could have dire 

environmental consequences.

Question 2b. Do you have any single-hull tankers involved in those operations? 

Answer. As noted, OSG’s fleet of 21 VLCCs includes four single-hull vessels. 

Three of these vessels, all built in 1993, typically move crude cargoes to the U.S. 

Gulf Coast where they are lightered. OSG’s Aframax fleet includes one single-hull 

vessel that may from time to time engage in lightering activities in the U.S. Gulf.

Question 3. In your written testimony, you state that you operate a fleet of 50 

vessels. How many are operated under the U.S. Flag? 

Answer. OSG’s fleet includes nine vessels registered under the U.S. flag. This includes four crude tankers engaged in the Alaskan oil trade: the Overseas Washington, Overseas Chicago, Overseas New York and Overseas Boston. All four are 

single-hull tankers, but three of them have double bottoms. OSG also operates two 

U.S. flag product tankers, the Overseas Philadelphia and Overseas New Orleans, 

which are single-hull vessels with double bottoms. OSG’s remaining three U.S. flag 

vessels are not tankers. These include two dry bulk carriers and one car carrier.

Question 3a. What flag are the remaining vessels registered under? 

Answer. OSG’s international tanker fleet is primarily registered under the flag of 

the Marshall Islands, a U.S. protectorate. The only exceptions are three vessels registered under the Panamanian flag, five vessels under the flag of the Bahamas and 

three vessels under the Liberian flag.

Question 3b. What type of safety and security requirements do those other flag 

states impose on your vessels? Are they substantially different from the requirements imposed on vessels under the U.S. flag? 

Answer. OSG vessels comply with the rules of the International Maritime Organization and all applicable international conventions included SOLAS (Safety of Life 

at Sea) and MARPOL (Marine Pollution) OSG’s vessels also comply with all regulations and requirement of relevant classification societies, and with all flag state and 

port state requirements. Almost all of OSG’s international flag tankers come to U.S. 

ports, LOOP or the U.S. Gulf lightering areas on a regular and frequent basis and, 

therefore, must comply with all U.S. Coast Guard requirements. OSG vessels are 

subject to frequent inspections both by the U.S. Coast Guard and by other port state 

authorities throughout the world. OSG serves all of the major oil companies and is 

subject to frequent vetting inspections by their operational staffs. 

Because OSG’s international flag tankers must regularly pass inspections by the 

U.S. Coast Guard as well as by other port state authorities, classification societies 

and charterers, our international flag vessels are effectively subject to the same rigVerDate 0ct 09 2002 08:49 Mar 03, 2006 Jkt 020249 PO 00000 Frm 00103 Fmt 6601 Sfmt 6621 S:\WPSHR\GPO\DOCS\20249.TXT JACK PsN: JACKF
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orous operating, safety and security requirements and standards as apply to OSG’s 

U.S. flag fleet.

Question 3c. How many of your vessels are Jones Act qualified? Do those vessels 

cost more to operate? 

Answer. OSG operates two Jones Act product tankers engaged in the domestic 

coastwise trade and four U.S. flag crude carriers engaged in the Alaskan crude 

trade. Jones Act vessels are typically much more expensive to own and operate than 

foreign flag vessels, reflecting both substantially higher capital costs associated with 

U.S. construction as well as higher operating costs. OSG estimates that the cost of 

operating a tanker under U.S. flag is approximately $8,000 to $10,000 per day higher than the cost of operating under a foreign flag.

Æ