2014 sVGP Economic Analysis

Page 1 of 106 EO12866_NPDES VGP_2040

- ZA13_ s VGP 2013_ E A _201 30110



# ECONOMIC AND BENEFIT S ANALYSIS OF THE

FINAL 2014 SMALL VESSEL GENERAL PERMI T ( S VGP)

Office of Wastewater Management

U.S. Environmental Protection Agency

August 20142014 sVGP Economic Analysis

Page 2 of 106 

## Table of Contents

1 Introduction

................................ ................................ ................................ ................................ ................. 11

1.1 Background

................................ ................................ ................................ ................................ .................... 11

1.2 Organization of the Report

................................ ................................ ................................ ............................ 12

2 Population of Affected Vessels

................................ ................................ ................................ .................... 13

2.1 Domestic Vessel Population

................................ ................................ ................................ .......................... 13

2.1.1 Commercial Fishing Vessels

................................ ................................ ................................ ............ 15

2.1.2 Other Non

- recreational Vessels

................................ ................................ ................................ ........ 16

2.2 Foreign Vessel Population

................................ ................................ ................................ ............................. 17

2.3 Uncertainties and Limitations

................................ ................................ ................................ ........................ 18

3 Permit Overlap with Existing Regulations

................................ ................................ ................................ 21

3.1 Overlap with Clean Water Act Provisions

................................ ................................ ................................ .... 21

3.2 Graywater

................................ ................................ ................................ ................................ ...................... 22

3.3 Anti

- fouling Hull Coatings

................................ ................................ ................................ ............................ 22

3.4 Transport of Aquatic Nuisance Species

................................ ................................ ................................ ......... 23

4 Profile of the Fishing, Water Transportation, and Mining Industries

................................ ................... 24

4.1 Introduction

................................ ................................ ................................ ................................ ................... 24

4.1.1 Data Sources Used

................................ ................................ ................................ ............................ 24

4.1.2 Organization of This section

................................ ................................ ................................ ............ 25

4.2 Number of Vessels by Industry Sector

................................ ................................ ................................ .......... 25

4.3 Overview of the Fishing, Water Transportation, and Mining Industries

................................ ....................... 27

4.3.1 Definition of the Fishing, Water Transportation, and Mining Industries

................................ ......... 27

4.3.2 Fishing

................................ ................................ ................................ ................................ .............. 28

4.3.3 Water Tr ansportation

................................ ................................ ................................ ........................ 29

4.3.4 Support Activities for Mining

................................ ................................ ................................ .......... 34

4.3.5 Other Industries

................................ ................................ ................................ ................................ 35

4.4 Recent Trends

................................ ................................ ................................ ................................ ................ 35

4.4.1 Numb er of Establishments by Industry Sector

................................ ................................ ................. 35

4.4.2 Establishment and Employment Births and Deaths

................................ ................................ ......... 37

4.4.3 Financial Performance

................................ ................................ ................................ ...................... 39

4.5 Industry Market Structure

................................ ................................ ................................ .............................. 40

4.5.1 Firms and Revenues

................................ ................................ ................................ ......................... 402014 sVGP Economic Analysis

Page 3 of 106 4.5.2 Small Businesses

................................ ................................ ................................ .............................. 46

4.5.3 Employment and Payroll

................................ ................................ ................................ .................. 48

5 Cost of Effluent Limits and Related Requirements

................................ ................................ .................. 50

5.1 Summary

................................ ................................ ................................ ................................ ........................ 50

5.2 Methodology

................................ ................................ ................................ ................................ .................. 50

5.2.1 Genera l Requirements

................................ ................................ ................................ ...................... 51

5.2.2 Fuel Management

................................ ................................ ................................ ............................. 53

5.2.3 Engine and Oil Control

................................ ................................ ................................ ..................... 59

5.2.4 Solid and Liquid Waste Management

................................ ................................ .............................. 63

5.2.5 Discharges of Deck Washdown and Runoff and Above Water Line Hull Cleaning

........................ 64

5.2.6 Vessel Hull Maintenance

................................ ................................ ................................ .................. 66

5.2.7 Graywater

................................ ................................ ................................ ................................ ......... 69

5.2.8 Fish Hold Effluent

................................ ................................ ................................ ............................ 70

5.2.9 Ballast Water

................................ ................................ ................................ ................................ .... 72

5.2.10 Overboard Cooling Water Discharge

................................ ................................ ............................... 73

5.3 Paperwork Burden and Monitoring Requirements

................................ ................................ ........................ 73

5.4 Total National Costs

................................ ................................ ................................ ................................ ...... 74

5.5 Issues and Uncertainties

................................ ................................ ................................ ................................ 76

6 Analysis of Impacts on Firm Revenues and Financial Performance

................................ ...................... 78

6.1 Methodology

................................ ................................ ................................ ................................ .................. 78

6.1.1 Assign Each Vessel to a NAICS Code

................................ ................................ ............................. 78

6.1.2 Estimate the Number of Vessels per Firm

................................ ................................ ........................ 79

6.1.3 Estimate Compliance Costs per Vessel

................................ ................................ ............................ 80

6.1.4 Compare Firm

- Level Costs to Firm

- Level Revenues

................................ ................................ ....... 81

6.2 Results of Firm

- Level Analysis

................................ ................................ ................................ ..................... 81

6.3 Breakout of Small Commercial Fishing Firms

................................ ................................ .............................. 82

6.4 Issues and Uncertainties

................................ ................................ ................................ ................................ 84

6.5 Discussion

................................ ................................ ................................ ................................ ...................... 85

7 Benefits

................................ ................................ ................................ ................................ ......................... 87

7.1 Pollutants of Concern Found in Vessel Discharges

................................ ................................ ....................... 87

7.1.1 Introduction and Background

................................ ................................ ................................ ........... 87

7.1.2 Pollutants Commonly Found in Vessel Discharges

................................ ................................ ......... 872014 sVGP Economic Analysis

Page 4 of 106 7.1.3 Pollutant Impacts

................................ ................................ ................................ .............................. 89

7.1. 4 Benefits of Reducing Pollutant Discharges

................................ ................................ ...................... 92

7.2 Aquatic Nuisance Species Impacts

................................ ................................ ................................ ................ 93

7.2.1 Introduction and Background

................................ ................................ ................................ ........... 93

7.2.2 ANS Impacts

................................ ................................ ................................ ................................ .... 94

7.2.3 Benefits of Reducing ANS Introductions

................................ ................................ ......................... 97

7.3 Summary of Benefits

................................ ................................ ................................ ................................ ... 99

References

................................ ................................ ................................ ................................ ............................. 1002014 sVGP Economic Analysis

Page 5 of 106 

## List of Tables

Table 2

- 1: Estimate Population of Operational, Domestic Vessels Potentially Subject to sVGP, by Size and Type.

............... 14

Table 2

- 2: Foreign Vessel Population.

................................ ................................ ................................ ................................ ...... 18

Table 4

- 1: Number of Vessels and Operators by Industry Sector.

................................ ................................ ............................ 26

Table 4

- 2. Principal 2007 NAICS Codes and Descriptions Relevant to the sVGP.

................................ ................................ .. 28

Table 4

- 3: Percentage of Vessels Less than 79 Feet, by Vessel Type.

................................ ................................ ...................... 30

Table 4

- 4: Number of Establishments by Industry Sector, 2002 and 2007.

................................ ................................ .............. 36

Table 4

- 5: Nonemployer Statistics for the Fishing Industries in 2008.

................................ ................................ ..................... 37

Table 4

- 6: Establishment Births and Deaths, Five

- Year Annual Average: 2002

- 2007.

................................ ............................ 38

Table 4

- 7: Net Change in Employment: Five

- Year Annual Average, 2002

- 2007.

................................ ................................ .... 39

Table 4

- 8: Revenues by Industry Sector, 2002 and 2007.

................................ ................................ ................................ ......... 40

Table 4

- 9: Firms and Revenues by Employment Size, 2007.

................................ ................................ ................................ .... 44

Table 4

- 10: Number of Firms According to Revenue Size.

................................ ................................ ................................ ...... 46

Table 4

- 11: Small Businesses by Industry Sector.

................................ ................................ ................................ ..................... 47

Table 4

- 12: Employment by Industry Sector, 2002

- 2007.

................................ ................................ ................................ ......... 49

Table 4

- 13: Payroll by Industry Sector, 2002

- 2007.

................................ ................................ ................................ .................. 49

Table 5

- 1: Universe of Vessels Requiring Installat ion of Fuel

- Air Separator System (FASS).

................................ ................ 54

Table 5

- 2: Vessel Counts for Oil Pad Requirements for Fuel System Management

................................ ................................ . 55

Table 5

- 3: Incremental Compliance Cost for New Diesel Vessels to Install a Fuel

- Air Separator System.

.............................. 56

Table 5

- 4: Unit Cost for Oil Absorbent Pads Used for Fuel Management

................................ ................................ ................ 57

Table 5

- 5: Annual Incremental Cost for Oil Absorbent Material Used for Fuel Management

................................ ................. 58

Table 5

- 6: Summary of Annual Costs for Fuel Management.

................................ ................................ ................................ ... 58

Table 5

- 7: Vessel Counts for Oil Pad Requirements for Engine and Oil Control.

................................ ................................ .... 60

Table 5

- 8: Unit Cost for Oil Absorbent Pads and Socks for Engine and Oil Control

................................ ................................ 61

Table 5

- 9: Annual Cost for Engine and Oil Control

................................ ................................ ................................ .................. 61

Table 5

- 10: Incremental Cost for Environmentally Acceptable Lubricants.

................................ ................................ ............. 62

Table 5

- 11: Summary of Annual Costs for Engine and Oil Control.

................................ ................................ ......................... 63

Table 5

- 12. Cost for Trash Receptacle.

................................ ................................ ................................ ................................ ..... 642014 sVGP Economic Analysis

Page 6 of 106 Table 5

- 13: Vessel Counts for BMPs Applicable to Deck Runoff.

................................ ................................ ........................... 66

Table 5

- 14: Vessel Counts for BMPs Applicable to Vesse l Hull Maintenance.

................................ ................................ ........ 68

Table 5

- 15: Total and Annual Costs for BMPs Associated with Vessel Hull Maintenance.

................................ ..................... 69

Table 5

- 16: Vessel Counts for Graywater BMPs.

................................ ................................ ................................ ..................... 70

Table 5

- 17. Recordkeeping and Inspection Burden.

................................ ................................ ................................ .................. 74

Table 5

- 18: Total Annual Compliance Costs over the Five

- Year Duration of the sVGP (2010$).

................................ ........... 75

Table 6

- 1: Number of Vessels by Firm in Each Industry Sector.

................................ ................................ .............................. 80

Table 6

- 2: Estimated 1% and 3% Revenue Thresholds by NAICS Code for Firms in Smallest Revenue Category.

................ 82

Table 6

- 3: Statistics on the Number of Alaska Fishery Permits in Revenue Quartiles below Specified Values (Based on Preliminary 2010 data from Alaska Commercial Fisheri es Entry Commission (2011)).

................................ ................. 83

Table 7

- 1: Pollutants Found in Discharges Incidental to the Normal Operations of Vessels Less than 79 Feet.

...................... 88

Table 7

- 2: Impairment Status of the Top 20 Hailing Ports.

................................ ................................ ................................ ....... 93

Table 7

- 3: Estimates of ANS in Several Major Water Systems.

................................ ................................ ............................... 94

Table 7

- 4: Estimates of ANS Damages by Type of Species.

................................ ................................ ................................ ..... 95

Table 7

- 5. Benefits of Reducing the Im pacts of Vessel Discharges.

................................ ................................ ......................... 992014 sVGP Economic Analysis

Page 7 of 106 

## List of Figures

Figure 2

- 1: Number of Vessels Potentially Subject to the sVGP, by Vessel Service (Type).

................................ ................... 15

Figure 4

- 1: Cumulative Distribution of Per

- Vessel Revenue, Northeast Groundfish Vessels Ac tive in 2010 (Source: NOAA, 2011b).

................................ ................................ ................................ ................................ ................................ .............. 42

Figure 4

- 2: Distribution of Average Earnings of Holders of Commercial Fishing Permits in A laska in 2010, by Permit Type (Catch, Equipment, and Region) (Based on data from Alaska Commercial Fisheries Entry Commission (2011)).

......... 44

Figure 5

- 1: Share of Total Annual Compliance Cost (Lower/Upper Bound Estimate), by sVGP Requirement Category.

...... 752014 sVGP Economic Analysis

Page 8 of 106 

## A bbreviations

ADEC Alaska Department of Environmental Conservation
AFS Anti

- fouling hull system
ANS Aquatic nuisance species
BMP Best management practice BOD Biochemical oxygen demand
CBA Clean Boating Act
COD Chemical oxygen demand
COTP Captain of the Port
CPI Consumer Price Index
CWA Clean Water Act
ECI Employment Cost Index
EEZ Exclusive Economic Zone
FASS Fuel

- air separator system
FIFRA Federal Insecticide, Fungicide, and Rodenticide Act
FTVEC Foreign Traffic Vessel Entrances and Clearances
GESAMP Group of Expe rts on the Scientific Aspects of Marine Environmental Protection
GRT G ross registered tons (1 GRT = 1.875 gross tons)
ICST International Classification of Ships by Type
ICW Intracoastal Waterway
IMO International Maritime Organization
MISLE Marine Inf ormation for Safety and Law Enforcement
NAICS North American Industry Classification System
NANCPA Nonindigenous Aquatic Nuisance Prevention and Control Act of 1990
NISA National Invasive Species Act
NMFS National Marine Fisheries Service
NMMA Nationa l Marine Manufacturers Association
NOAA National Oceanic and Atmospheric Administration
NOI Notice of Intent
NPDES National Pollutant Discharge Elimination System NRWQC National Recommended Water Quality Criteria
PAH Polycyclic aromatic hydrocarbon
PARI Permit Authorization and Record of Inspection
PFOA Perfluorooctanoic acid
PFOS Perfluorooctane sulfonate
RFA Regulatory Flexibility Act
RO

- RO Roll

- on/roll

- off
SBA Small Business Administration
SBREFA Small Business Regulatory Enforcement and Fa irness Act SIC Standard Industrial Classification
sVGP Small Vessel General Permit
SVOC Semivolatile organic compounds
TBT Tributyltin
TDS Total dissolved solids
USACE U.S. Army Corps of Engineers
USCG U.S. Coast Guard
VGP Vessel General Permit
VO C Volatile organic compounds
WTLUS Waterborne Transportation Lines of the United States2014 sVGP Economic Analysis

Page 9 of 106 

## Executive Summary

EPA is developing permitting requirements for discharges incidental to the normal operation of non

- recreational,

non

- military vessels less than 79 feet into inland waters or the territorial sea of the United States under the National Pollutant Discharge Elimination System (NPDES). The proposed Vessel General Permit for Discharges Incidental to the Normal Operation of Vessels Less than 79 Feet (herein referred to as the Small Vessel General
Permit or s VGP) covers non

- r ecreational and non

- military vessels l ess than 79 feet in length

. 1

To obtain authorization under the sVGP , vessel operators must :
 M eet the sVGP eligibility requirements.

 M aintain a Permit Authorization and Record of Inspection (PARI) form onboard their vessel to certify that they have read and understood the terms of the permit and to document performance of the required annual inspection. Vessel operators are not required to submit a Notice of Intent (NOI) to obtain coverage under this permit.

 I mplement the effluent limits according to the requirements in Part 2 of the sVGP, including by conducting routine inspections that may be needed to verify compliance with the dischar ge limits.

 C onduct the required annual self

- inspection.
In addition to general requirements, the sVGP defines effluent limits for seven discharge categories. EPA estimates that between 115,000 and 138,000 vessels are potentially affected by the sVGP requir ements. This report presents EPA’s economic and benefits analyses of the impact of the sVGP on all affected vessels. Though the issuance of this permit is not a f ederal regulation, EPA is conducting these analyses due to the potential impacts of the permit requirements

. The entities or firms that own and operate vessels that will be subject to the sVGP are primarily associated with the fishing and water transportation industries, and with the oil and gas sector within the mining industry. Section
4 : Profile of the Fishing

, Water Transportation, and Mining Industries summarizes the characteristics of these
industries.

To estimate the effect of sVGP requirements on an industry as a whole, EPA’s analysis takes into account existing conditions and determine s how the industry would act in the future in the absence of p ermit requirements. The baseline for this analysis is full industry compliance with existing federal and state regulations and with current industry practices or standards that exceed current re gulations to the extent that t hey can be empirically observed

. Section 5 : Cost of Effluent Limits and Related Requirements presents EPA’s analysis of potential compliance costs to vessels associated with each of the practices and discharge categories identified in the sVGP

, and with the inspection and recordkeeping requirements . Overall, EPA finds that s VGP requirements could result in total annual incremental costs for domestic vessels ranging between $ 7. 1 million and $ 16.9 million (2010$), in the aggregate. This includes the paperwork burden costs and the sum of all practices for applicable discharge

1 If auxiliary vessels or craft, such as lifeboats or rescue boats less than 79 feet onboard larger vessels, require permit cov erage, they are eligible for coverage under this permit and are covered by submission of the NOI for larger vessels. R ecreational vessels as defined in section 502(25) of the Clean Water Act are not subject to this permit

.2014 sVGP Economic Analysis

Page 10 of 106 categories. Per

- vessel incremental compliance costs average between $ 17 and $ 133 per year , depending on the number of applicable discharge categories and baseline practices.
To evaluate economic impacts o f revised s VGP requirements on the affected industries, EPA performed a firm

level analysis , described in Section 6 : Analysis of Impacts on Firm Revenues and Financi al Performance . The
firm

- level analysis examines the impact of any incremental cost per vessel to comply with the s VGP requirements on model firms that represent the financial conditions of “typical” businesses in each of the examined industry
sectors. Since nearly all firms in the affected industries are small, the firm

- level analysis focuses on assessment of impacts on small businesses. Further, given the distribution of revenue among firms in the affected industry

sector s , which suggests a relatively greater potential for impacts to small firms in the commercial f ishing industry

, EPA looked more specifically at this industry when assessing the significance of impacts. To evaluate the potential impact of the sVGP on small entities, EPA used a cost

- to

- revenue test to evaluate the potential severity of economic impact on vessels and facilities owned by small entities. The test calculates annualized pre

- tax compliance cost as a percentage of total revenues and uses a threshold of 1 and 3 percent to identify facilities that would be significantly impacted as a result of this p ermit. Based on this firm

- level analysis , EPA concludes that that the sVGP is unlikely to have a significant economic impact on a subst antial number of small entities given the preponderance of evidence showing that relatively few firms have revenue below those where the compliance costs would exceed the one percent cost

- to

- revenue threshold under high

- end cost assumptions.
Although EPA was unable to evaluate the expected benefits of the p ermit in dollar terms due to data limitations, the Agency coll ected and developed relevant information to enable qualitative consideration of ecological benefits and to assess the importance of the ecological gains from implementation of the s VGP. This information is
included in Section 7 : Benefits

. EPA expects that the sVGP will benefit society in two broad categories: (1) enhanced water quality from reduced pollutant discharges and (2) reduced risk of invasive species introduction. Many of the discharges regulated by EPA’s s VGP are associated with a wide variety of harmful pollutants in substantial con centrations ( U

. S

. EPA, 2010b) . Because many of the nation’s busiest ports are considered to be impaired by a variety of pollutants found in vessel discharges, reducing pollutant loadings from these discharges is expected to have benefits associated with th e reduction of concentrations of nutrients, metals, oil, grease, and toxics in waters with high levels of vessel traffic.2014 sVGP Economic Analysis

Page 11 of 106 

### 1 INTRODUCTION

1.1 BACKGROUND

On Dece mber 18 , 2008, EPA finalized the first iteration of the Vessel General Permit (VGP) for discharges incidental to the normal operation of a vessel into inland waters or the 3

- mile territorial sea of the United States under the National Pollutant Discharge Elimination System (NPDES) ( U.S. EPA, 2010a )

. The VGP cover s incidental discharges from non

- recreational 2 , non

military vessels greater than 79 feet. As a result of P.L. 110

- 299 (as amended by P.L. 111

- 215) 3

,
non

- recreational vessels less than 79 feet and most commercial fishing vessels regardless of size did not get NPDES permit coverage except for their ballast water discharges

. EPA finaliz ed revisions to the VGP requirements that became effective in late 2014 . Among several changes, the 2013 VGP provides for permit coverage for commercial fi shing vessels 79 feet or more in length.
EPA is proposing the Small Vessel General Permit for Discharges Incidental to the Normal Operation of Vessels Less Than 79 Feet (herein referred to as the Small Vessel General Permit or sVGP) for discharges incidental to the normal operation of non

- recreational, non

- military vessels less than 79 feet (including commercial fishing vessels)

. EPA is proposing the sVGP to provide permit coverage to these classes of vessels at the ex piration of the P.L. 110

- 299 moratorium.

N on

- recreational , non

- military vessels less than 79 feet are eligible for coverage under the sVGP

. To obtain authorization under the sVGP :
 Meet the sVGP eligibility requirements.

 Maintain a Permit Authorization and Record of Inspection (PARI) form onboard their vessel to certify that they have read and understood the terms of the permit and to document performance of the required annual inspection. Vessel operators are not required to submit a Notice of Intent (N OI) to obtain coverage under this permit.

 Implement the effluent limits according to the requirements in Part 2 of the sVGP, including by conducting routine inspections that may be needed to verify compliance with the discharge limits.

2 Recreational vessels are not subject to the requirement to obtain an NPDES permit to authorize discharges incidental to their normal operation, in a ccordance with Senate bill S. 2766 (“the Clean Boating Act of 2008”, P.L. No.
110

- 288). This law directs EPA to evaluate recreational vessel discharges, develop management practices for appropriate discharges, and promulgate performance standards for those management practices. It then directs the Coast Guard to promulgate regulations for the use of the management practices developed by EPA and requires recreational boater compliance with such practices. For more information about EPA’s activities under the Clean Boating Act, please see: http://water.epa.gov/lawsregs/lawsguidance/cwa/vessel/CBA/about.cfm.

3 On July 31, 2008, Senate bill S. 3298 was signed into law (P.L. No. 110

- 299). This law generally imposes a two

- year moratorium during which time neither EPA nor states can require NPDES permits for discharges incidental to the normal operation of vessels of less than 79 feet and commercial fishing vessels of any length. It also directs EPA to conduct a study of vessel discharges and issue a report to Cong ress within 15 months. Among other things, the moratorium does not apply to ballast water. The law was subsequently amended by P.L. 111

- 209 to set the end of the moratorium to December 18, 2013.2014 sVGP Economic Analysis

Page 12 of 106  Conduct the required annual self

- inspection.
Based on an analysis of vessel data sources (described in Section 2 ), EPA estimated that between
115 ,000 and 138 ,000 vessels are potentially affected by the sVGP requirements. In addition to general requirements, t he sVGP defines effluent limits for seven dis charge categories. This report presents EPA’s economic and benefits analyses of the impact of the sVGP on all affected vessels. Though the issuance of this permit is not a f ederal regulation, EPA is conducting these analyses to inform its assessment of the potential impacts of this permit.

1.2 

### ORGANIZATION OF THE REPORT

This report is organized in seven sections , including this introduction , as follows:

Section 2 : Population of Affected Vessels presents an assessment of the numbers and types of

ve ssels likely to be affected by the new permitting requirements.

Section 3 : Permit Overlap with Existing Regulations summarizes laws and associated regulations that already cover certain discharges that would be subject to the new permitting regime.

Section 4 : Profile of the Fishing

, Water Transportation, and Mining Industries provides an economic profile of sectors that have vessels subject to the s VGP

. Section 5 : Cost of Effluent Limits and Related Requirements presents EPA’s analysis of complian ce costs to commercial vessels associated with each of the best management practices ( BMPs ) identified by EPA in the p ermit at the vessel level. This section also presents an estimation of national

- level industry compliance costs.

Section 6 : Analysis of Impacts on Firm Revenues and Financi al Performance presents EPA’s assessment of the cost and economic impact of regulatory requirements on firms in the shipping industry, and the implications of a p ermit in terms of financial viability of shipping industry firms subject to the p ermit.

Section 7 : Benefits presents EPA’s assessment of the en vironmental effects associated with vessel discharges and the benefits of reducing these discharges.2014 sVGP Economic Analysis

Page 13 of 106 

### 2 POPULATION OF AFFECT ED VESSELS

The sVGP is applicable to discharges incidental to the normal operation of a vessel into the navigable waters within the meaning of Clean Water Act (CWA) Section 502(7). All non

military, non

- recreational vessels operating in a capacity of transportation and that meet the specified maximum size limits (less than 79 feet) are eligible for coverage under the sVGP for their incidental discharges . Vessels of the armed forces of the United States are not eligible for coverage by this permit.
In estimating the number an d characteristics of vessels potentially subject to the sVGP , EPA relied primarily on information presented in Report to Congress: Study of Discharges Incidental to Normal Operation of Commercial Fishing Vessels and Other Non

- Recreational Vessels Less
than 79 Feet ( U

. S

. EPA, 2010 b ) , but adjusted the population estimates to subtract commercial fishing vessels 79 feet or larger

. As characterized in that report, the vessel population potentially subject to the sVGP includes various types of commercial fishing vessel s (purse seiner, troller, crabber/lobster, gillnetter, trawler, longliner, etc.), tugs and towing vessels, water taxis and small ferries, tour boats, and various other types of vessels used for non

- recreational purposes (law enforcement, fire/rescue, research, etc.). EPA estimates that approximately 115 ,000 to 138 ,000 vessels are potentially subject to the sVGP.
According to the Clean Boating Act of 2008 (CBA) (P.L. 110

- 288), vessels that are manufactured or used primarily for pleasure are “recreation al vessels” subject to regulations under that Act. As discussed below, because the number of vessels that are manufactured for pleasure but used for commercial service is difficult to estimate, EPA generally included these vessels in the upper bound estima te of the number of vessels potentially subject to the sVGP.

2.1 DOMESTIC VESSEL POPU LATION

The domestic vessel population estimates presented in U

. S

. EPA (2010 b ) were derived primarily from data gathered by the U.S. Coast Guard in the U.S. Coast Guard’s Mari ne Information for Safety and Law Enforcement (MISLE) database (U

. S

. C oast G uard , 2009)

. While the database’s main purpose is to allow the tracking of safety and law enforcement incidents, MISLE also provides a wide range of information regarding vessel and facility characteristics, accidents, marine pollution incidents, and other pertinent information tracked by the U.S. Coast Guard. Where possible, EPA complemented the data available in MISLE with in formation obtained from published sources or from consultations with U.S. Coast Guard personnel or port authorities.

MISLE includes data for a total of nearly one million vessels that operate in U.S. waters. The database covers a wide ensemble of vessels (e.g., recreational vessels, commercial fishing vessels, freight barges, tank barges, tank ships, passenger vessels, utility vessels), and provides data on various characteristics for each individual vessel . These data includ e :
 Identification number(s)

 Ves sel category (e.g., class, type, subtype, service)

 Size (e.g., tonnage, length, breadth, depth)

 Area of operation (e.g., hailing port, route type)2014 sVGP Economic Analysis

Page 14 of 106  Passenger and crew capacity

 Propulsion (i.e., method, engine type, and horsepower)

 Construction material and design (e.g., hull material, design type, hull configuration/shape)

 Year built or age
EPA’s analysis of the MISLE data suggests that approximately 115 ,000 to 138 ,000 vessels may meet the sVGP applicability criteria. Table 2

- 1 summarizes the distribution of vessels potentially subject to the sVGP by size category and type

.

Table 2

- 1 : Estimate Population of Operational, Domestic Vessels Potentially Subject to sVGP, by Size and Type

.

Size Commercial Fishing Other Non

Recreational Unspecified

Vessel Type TOTAL b

Less than 79 ft 54,176 32, 799 15, 01 1 114,99 6 137,58 3 Zero or Null a 13,537 9, 6 96 12, 36 4 Total (lower bound estimate ) c 67,178 32,806 15,012 Total (upper bound estimate ) d 6 7 , 713 42,495 27,375
Source: U.S. EPA, 2010 b

, as determined from data compiled by the U. S. Coast Guard, MISLE database, 2009

.
a MISLE indicates a length of zero or the vessel length field is blank.

b Range indicates number of vessels when excluding (lower bound) vs. including (higher bound) vessels with zero or unknown length. Note that the estimates may include some vessels that are used in non

- recreational service (e.g., co mmercial fishing or law enforcement) but that were manufactured as pleasure vessels.

c Includes a fraction of vessels with length reported as zero or null in the MISLE database, based on the share of vessels in the overall vessel population for each vessel type that are reported to be less than 79 feet (96% of commercial fishing vessels, 0.1% of other non

- recreational vessels, and 0.0% of vessels of unspecified type).

d Assumes all vessels with length reported as zero or null in the MISLE database are less than
79 ft.

Figure 2

- 1 illustrates the estimated distribution of vessels within the potentially affected vessel population by vessel service (type). Approximately one

- half of these vessels are commercial fishing ve ssels involved in such activities as fish catching (e.g., longliner, shrimper, and trawler), fish processing, fishing tenders, and charter fishing. The other half are distributed among a variety of vessel classes, including passenger vessels (e.g., water t axis, tour boats, harbor cruise ships, dive boats), utility vessels (e.g., tug/tow boats, research vessels, offshore supply boats), and freight barges.2014 sVGP Economic Analysis

Page 15 of 106 Figure 2

- 1 : Number of Vessels Potentially Subject to the sVGP, by Vessel Service (Type)

.

Note: The figure is based on operational, U.S.

- flagged commercial fishing vessels (regardless of length) and other non

- recreational vessels less than 79 feet in length.

Source: U.S. EPA, 2010 b , based on data from U. S. Coast Guard, MISLE database, 2009

.

2.1.1 COMMERCIAL FISHING V ESSELS

As shown in Figure 2

- 1

, as many as 68 ,000 commercial fishing vessels represent the l argest category of domestic vessels potentially covered by the sVGP

. According to the vessel service categories used by the U.S. Coast Guard in MISLE, “commercial fishing vessels” are vessels involved in such activities as fish catching (e.g., longliner, s hrimper, and trawler ), fish processing, and charter fishing. 4

4 Several charter fishing vessels are categorized as “commerc ial fishing vessels” in MISLE even though they are generally not considered commercial fishing vessels by the U.S. Coast Guard Fishing Vessel Safety Program . That program considers these vessels to be passenger vessels (Source: Personal communication with Jack Kemerer, Fishing Vessel Safety Program, May 26, 2009 ). According to the Coast Guard definition, the key difference between vessels formally classified as commercial fishing vessels and recreational vessels or passenger vessels that may be used in fish ing activities is whether the catch is sold.2014 sVGP Economic Analysis

Page 16 of 106 The U.S. Coast Guard generally describes commercial fishing vessels as including fishing vessels, fish tender vessels, and fish processing vessels as follows:

 Fish processing vessel 5 means a vessel that commercially prepares fish or fish products other than by gutting, decapitating, gilling, skinning, shucking, icing, freezing, or brine chilling.

 Fish tender vessel means a vessel that commercially supplies, stores, refrigerates, or

tr ansports fish, fish products, or materials directly related to fishing or the preparation of fish to and from a fishing, fish processing, or fish tender vessel or a fish processing facility.

 Fishing vessel means a vessel that commercially engages in the ca tching, taking, or harvesting of fish or an activity that can reasonably be expected to result in the catching, taking, or harvesting of fish.
While there is some overlap in service use for commercial fishing vessels and other vessel categories

, such as pa ssenger vessels (e.g., charter fishing), EPA assumed that the categorization used in MISLE generally follows the U.S. Coast Guard definition of commercial fishing vessels. 6

According to MISLE data, approximately 13 percent of vessels (8,854 vessels) class ified as commercial fishing vessels are 50 to 79 feet in length, 58 percent (39,179 vessels) are between 26 and 50 feet, and the remaining 29 percent (19,679 vessels) are less than 26 feet. 7 While MISLE does not provide sufficient information to break out the population of vessels according to their original design (e.g., built as pleasure craft) , EPA expects that a significant share of vessels less than 26 feet may consist of vessels originally manufactured as pleasure craft and therefore defined as “recre ational” vessels in the CBA

. 8 These vessels would not be covered under this permit. Later sections of this report discuss the implications of this understanding on the estimated costs of the sVGP.

2.1.2 OTHER NON

- RECREATIONAL VESSELS

Excluding the approximately 27,000 “unspecified” vessels shown in Figure 2

- 1 , “passenger vessels” have the second highest number of domestic vessels potentially covered by the sVGP, with up to 21,000 vessels , when counting all vessels potentially less than 79 feet in length . These

5 The moratorium provided by P.L. 110

- 299 applies only to discharges incidental to the normal operation of a vessel when acting in the mode of transportation. EPA requires NPDES permits for seafood processing vessel discharges when they are created by the p rocessing of seafood as an industrial activity.

6 The MISLE classification also depends on the information provided directly by the vessel owner or operator on the application for documentation or renewal ( Source: Personal communication with Jack Kemerer, Fishing Vessel Safety Program, May 26, 2009 ).

7 This distribution by size assumes that vessels with length recorded as zero are to be included among the vessels less than 26 feet.

8 The CBA of 2008 defines recreational vessels as follows: (A) IN GENERAL.

— The term ‘recreational vessel’ means any vessel that is

— (i) manufactured or used primarily for pleasure; Or (ii) leased, rented, or chartered to a person for the pleasure of that pe rson. (B) EXCLUSION.

— The term ‘recreational vessel’ does not include a vessel that is subject to Coast Guard inspection and that

— (i) is engaged in commercial use; or (ii) carries paying passengers.2014 sVGP Economic Analysis

Page 17 of 106 vessels are further divided into subtypes according to the types of activities in which they are involved (e.g., diving vessels, charter fishing v essels, ferry, harbor cruise vessels, sailing vessels )

. The service category labeled “public vessel, unclassified” accounts for about 600 vessels (e.g., lighthouse tender vessels, hospital ships, law enforcement vessels, ice breakers). The “utility
vessel s” category covers remaining types of vessel s, including tug/tow boats , school ships, research vessels/ships, mobile offshore drilling units, offshore vessels, offshore supply vessels, oil recovery vessels, and industrial vessels. More than 11,000 vessels are classified as utility vessels in MISLE. 9 Freight barges (8

, 016 vessels), freight ships (768 vessels), tank barges (622 vessels)

, and tank ships (179 vessels) account for the remain ing non

- recreational vessels potentially covered by the sVGP

. According to MISLE data, approximately 19 percent of other non

- recreational vessels (13,111 vessels) are in the 50 to 79 feet range, 38 percent (26,210 vessels) are between 26 and 50 feet, and the remaining 44 percent (30,547 vessels) are less than 26 feet. The prop ortions of vessels in each of the three size categories vary by vessel type, however, with almost two

- thirds of passenger vessels in the 26

- to

- 50

- feet range, as compared to 91 percent of public vessels less than 26 feet. Similar to commercial fishing vesse ls, EPA expects that a significant share of vessels less than
26 feet may consist of vessels originally manufactured as pleasure craft and therefore defined as “recreational” vessels in the CBA. These vessels would not be covered under this permit. Later

s ections of this report discuss the implications of this understanding on the estimated costs of the
sVGP.

2.2 FOREIGN VESSEL POPUL ATION

The Foreign Traffic Vessel Entrances and Clearances (FTVEC) database provides information on foreign vessels entering or cle aring U.S. Customs ports

. The data are compiled by the U.S. Army Corps of Engineers from information originally collected by U.S. Customs and Border Protection

. They include entrance/clearance statistics such as the date a vessel made entry into or cleared the U.S. Customs port or waterway, as well as vessel characteristics such as the name, type by rig or International Classification of Ships by Type ( ICST ) code, flag of registry, last (for entrances) or next (for clearances) port of call, whether foreign or domestic, n et and g ross r egistered t onnage, and draft in feet. The database includes both foreign flagged and domestic vessels. However, only foreign flagged vessels are included in estimate s of the fo reign vessel population presented here

. To estimate the number of foreign vessels that could be potentially subject to the sVGP requirements , EPA used FTVEC data from 2008, 2009, and 2010. Since the database does not provide data on the length of each ves sel, EPA imputed a vessel length for each reported vessels by using a relationship between gross registered tonnage and vessel length previously derived from MISLE data ( U.S. EPA, 2010 b )

, which indicated that 79 feet is roughly equivalent to 150 gross regi stered tons.

9 Some vessel service categories did not fall into one of the listed categories. EPA determined an appropriate service category based on information provided in other vessel classification fields (class, type, subtype).2014 sVGP Economic Analysis

Page 18 of 106 A review of the clearance data show that 156 unique foreign vessel s less than 150 gross registered

tons received clearance in 2008 , 2009, and 2010

. This relatively small number of foreign vessels may be in part attributable to the Jones Act

, 10 which requires that all goods transported by water between U.S. ports be carried by U.S. flagged ships. Most vessels in the relevant size category are likely to be engaged in trade within U.S. waters.
EPA used ICST codes to group foreign flagged vessels into the classes used in the analysis of the domestic vessel population. Table 2

- 2 presents the nu mber of foreign flagged vessels by vessel type . As shown in Table 2

- 2

, the majority of foreign flagged vessels entering U.S. ports are utility vessels ( 5 4 percent), followed by commercial fishing vessels ( 24 percent). Over 60 percent of the vessels are from Canada, with the Bahamas ( 6 percent ) and Panama ( 4 percent ) the only other countries with more than five vessels each.

Note that foreign flagged vessels are excluded from the analysis of the total costs of BMPs described later in this report because the compliance cost for foreign flagged vessels is not expected to have a direct impact on U.S. firms. There is also considerable uncer tainty regarding management practices employed by these vessels under the baseline scenario.

Table 2

- 2 : Foreign Vessel Population.

Vessel Type Total Foreign Vessels a
Count Percentage of Total Utility Vessel 85 54 Commercial Fishing Vessel 38 24 Freight Ship 18 12 Tank Ship 6 4 Freight Barge 6 4 Passenger vessel 2 1
Other 1 1
Total 156 100

Source: Based on data from FTVEC data for 2008, 2009, and 2010.

a I ncludes only vessels less than 150 gross registered tons in weight.

2.3 UNCERTAINTIES AND LI MITATIONS

This section discusses limitations and uncertainties in the estimation of the affected vessel population. Whether these limitations and uncertainties, taken together, are likely to lead to an understatement or overstatement of the estimated vessel population is not known.
The domestic vessel population was estimated using the MISLE database. The main limitations of this data source include : 11

 Incomplete data

. While MISLE represents the most comp rehensive national dataset currently available, it does not capture the entire universe of vessels operated on U.S.

10 Section 27 of the Merchant Marine Act of 1920 (P.L. 66

- 261).

11 See EPA (2010) for a more det ailed discussion of the limitations of MISLE data.2014 sVGP Economic Analysis

Page 19 of 106 waters. O nly limited information is available for certain classes of vessels, such as smaller vessels

, due to the way in which vessel data a re gathered since these vessels are not subject to documentation or regular inspection requirements

. In compiling MISLE data, the U.S. Coast Guard largely relies on documents submitted by vessel owners or operators in accordance with vessel documentation r equirements (e.g., certificate of documentation) or on information gathered by U.S. Coast Guard staff directly (e.g., during inspections, vessel boardings, or accident investigations). Thus, the database incorporates data also reported separately in Mercha nt Vessels of the United States ( VESDOC ) for documented vessels. 12 T he scope of the MISLE database is not limited to a certain size or class of vessel, but the content of the database is nonetheless driven in part by the regulatory requirements to which different types of vessels are subject or by activities conducted by Coast Guard offices. MISLE therefore is generally considered to be most comprehensive for those vessels that are documented, state registered, and/or subject to inspection requirements. M ost recreational vessels are not subject to documentation or regular inspection requirements and thus are not captured in MISLE. 13
D ata omissions are believed to affect primarily recreational vessels. Since recreational vessels are not covered by the sVGP a nd are therefore not the primary focus of this report, EPA believes that data limitations do not preclude the use of the MISLE data for the current analysis to generally describe the characteristics of study vessels.

 Missing data fields. While MISLE captu res a wide range of characteristics for each vessel it records, the information is at times incomplete (e.g., length may be missing or recorded

as zero) or may be outdated (e.g., a vessel may no longer be operating while its status in the database may not have been updated). EPA conservatively included in the potentially affected vessel population all vessels for which the length was unknown and all vessels that met the sVGP applicability criteria

.  Recreational vessels

. The CBA defines as recreational vess els any vessel that is “

— (i) manufactured or used primarily for pleasure ; or (ii) leased, rented, or chartered to a person for the pleasure of that person.” According to this definition, vessels that have been manufactured as pleasure crafts may be conside red recreational vessels (subject to exclusions in the CBA). The vessels ’ data contained in MISLE , however, do not distinguish vessels according to their design or manufacture. EPA conservatively included all vessels used in relevant types of service (comm ercial vessels, freight vessels, utility vessels, etc.), but expects that some of these vessels may have been manufactured as recreational vessels and therefore may not be covered by the sVGP. The population of vessels subject to sVGP requirements could th erefore be smaller than assumed in most of the analysis presented in this report. Further, EPA expects that smaller vessels (e.g., less

12 VESDOC is a data file of merchant and recreational vessels documented under the laws of the United States by the U.S. Coast Guard. That dataset was used for the economic analysis of the 2008 VGP (Abt Ass ociates, 2008).

13 While the number of recreational vessels recorded in MISLE is high (over 700,000), the database accounts for only a small fraction of the 16.9 million recreational vessels estimated to operate in U.S. waters, according to EPA’s
Economic I mpact Analysis of the Recreational Vessel Permit ( U.S. EPA, 2008 a ) and to the National Marine Manufacturers Association ’s (NMMA ’s ) 2007 U.S. Recreational Boat Registration Statistics (NMMA, 2009).2014 sVGP Economic Analysis

Page 20 of 106 than 26 feet) are more likely to have been originally intended as recreational vessels but repurposed to other service.

The estimated number of foreign vessels affected by the sVGP was estimated using vessel entrances and clearances data for 2008 , 2009, and 2010

. The data source does not include vessel length. EPA imputed the vessel length based on a relationship previously derived between tonnage ( as gross registered ton ) and length (in feet) for different classes of vessels. It is possible that some vessels are larger or smaller than estimated using the relationship.
Finally, the estimate of the p opulation of affected vessels is also subject to the reporting accuracy of the data providers. Typographical errors and incorrect entries (including potential duplicate entries) exist to an unknown extent. Those that were discovered were corrected

.2014 sVGP Economic Analysis

Page 21 of 106 

### 3 PERMIT OVERLAP WITH EXISTIN G REGULATIONS

Several categories of BMPs outlined in the sVGP overlap with existing regulations and statutes at the federal and state level. In accordance with these regulations, some vessels have adopted BMPs required under the sVGP . T his section cross

- references existing regulations affecting vessel discharges and BMP requirements under the sVGP . EPA used the analysis of the overlap to adjust the number of vessels that are likely to incur incremental costs as a result of sVGP implement ation.

3.1 OVERLAP WITH CLEAN W ATER ACT PROVISIONS

Section 311 of the CWA states that it is U.S. policy that there should be no discharges of oil or hazardous substances 14 into waters of the U nited S tates , adjoining shorelines, into or upon the waters of the co ntiguous zone, and in certain other specified instances, except where permitted under International Convention for the Prevention of Pollution from Ships/Act to Prevent Pollution from Ships ( MARPOL/APPS ), or where in quantities the president has, by regula tion, determined not to be harmful (33 U.S.C. §§ 1321(b)(1)

- (b)(3)).
The term discharge excludes discharges in compliance with a n NPDES permit under CWA § 402. However, certain discharges are exempt from the NPDES requirements under the CWA

. Discharges occ urring more than 3 nautical miles ( nm ) from shore and discharges by Armed Forces vessels are exempt from the previous 122.3(a) exclusion, and are therefore excluded from the requirements of this permit. Sewage/blackwater is covered by performance standards for sanitation equipment, and is excluded from the definition of pollutant contained in Section 502(6)(A) of the CWA and thus is not subject to NPDES permitting. These discharges, as well as discharges from vessels not operating as a means of transportati on or discharges by recreational vessels covered by the CBA of 2008, are outside the scope of this analysis. 15
EPA’s Regulations of the Discharge of Oil at 40 CFR P art 110 defines discharges of oil in quantities as may be harmful, pursuant to the CWA. Notably, the regulation prohibits discharges of oil that “(a) Violate applicable water quality standards; or (b) Cause a film or sheen upon or
dis

- coloration of the surface of the water or adjoining shorelines or cause a sludge or emulsion to be deposited beneath the surface of the water or upon adjoining shorelines.” The prohibition applies to oil as broadly defined in the CWA to include “ oil of any kind or in any form, including petroleum, fuel oil, sludge, oil refuse, and oil mixed with wastes other than dredged spoil .” Additionally, the regulation prohibits the addition of dispersants or emulsifiers to oil to mitigate the appearance of a sheen. Finally, the regulation requires notification to the National Response Center as soon as a vessel owner has kno wledge of any discharge of oil.

14 A list of hazardous substances EPA has designated under the CWA can be found at 40 CFR § 116.1. It includes both ethylene glycol and methanol.

15 An unknown number of vessels included in the populations of commercial fishing and other non

- recreational vessels may have been originally manufactured as pleasure cra fts and would therefore be “recreational” vessels as defined by the CBA of 2008. Implications of excluding these vessels are discussed later in this report.2014 sVGP Economic Analysis

Page 22 of 106 EPA’s 1996 revisions to its Regulations of the Discharge of Oil, implemented under the authority of the CWA, specifically addressed the discharge of bilge slops containing sufficient oil to create
a film or sheen in the terr itorial waters of the United States. This requirement regarding oil levels in bilge water for non

- MARPOL vessels remains the same in the new p ermit.
Given the existing statutory and regulatory requirements applicable to discharges of oil, owners and operators are expected to already make every effort to prevent and mitigate discharges of oil from their vessels. To the extent that practices called for i n the sVGP to control such discharges are already being implemented, there will be no incremental cost to vessel owners for implementing these practices in compliance with the sVGP. Assumptions regarding baseline implementation are discussed in Section 5 of the report.

3.2 GRAYWATER

Graywater is defined in the sVGP as the discharge derived from “ galley, bath, and shower water, as well as wastewater from lavatory sinks, laundry, and water fountains

. ” Several states have requirements that apply specifically to graywater discharges from cruise ships. 16 These regulations, however, do not generally apply to the smaller passenger vessels addressed by the
sVGP.

T wo federal regulations are relevant to graywater discharges . First, under Section 312(a) of the CWA, graywater discharges from commercial vessels in the Great Lakes region as defined in § 312(a)(10) are currently treated as sewage and thus are excluded from the scope of the new

p ermit. Second, the National Marine Sanctuaries Act authorizes the National Oceanic and Atmospheric Administration (NOAA) to designate National Marine Sanctuaries. There are

cu rrently 13 national marine sanctuaries and one marine national monument. Additional restrictions and requirements may be imposed on vessel owners/operators who operate in and around these areas to protect sensitive ecosystems, including notably the dischar ge of graywater. For example, regulations governing the Gulf of the Farallones National Marine Sanctuary prohibit the discharge “from within or into the Sanctuary, other than from a cruise ship, any water or other organic matter except... clean vessel deck w ash down, clean vessel engine cooling water, clean vessel generator cooling water, clean bilge water, or anchor wash.” (15 CFR § 922.82(a)(2)(iii))

. EPA assumes that p ermit requirements that reiterate practices already implemented to comply with existing r egulations of graywater discharges do not impose incremental costs on vessel owners.

3.3 ANTI

- FOULING HULL COATING S

The sVGP prohibits the use of organotin

- based anti

- fouling hull coatings. The Organotin Anti

fouling Paint Control Act of 1988 , U.S.C. §§ 2401

- 2 410, already prohibits the use of these compounds on vessels under 25 meters or less in length , unless the vessel hull is aluminum or the paint is applied to an outboard motor ; therefore, these vessels will not incur any additional costs

16 States with regulations specific to graywater discharges from cruise ships include, for example, Alaska, California, Hawaii, Maine, and Washington.2014 sVGP Economic Analysis

Page 23 of 106 under this provisi on. In September 2008, the U.S. Senate gave its advice and consent to ratification of the International Convention on the Control of Harmful Anti

- fouling Systems on Ships, which bans the use of all organotin compounds and enacted implementing legislation i n January 2010

. EPA has already cancelled all U.S. Federal Insecticide, Fungicide, and Rodenticide Act ( FIFRA ) registration for tributyltin ( TBT ) anti

- fouling paints (the last cancellation became effective December 31, 2005). Any current use of these prod ucts is dwindling because there are very
limited or no s t ock of the products remaining on the market.
As a result, the organotin provisions of the sVGP are assumed to impose no incremental cost on vessel owners

.

3.4 TRANSPORT OF AQUATIC NUISANCE SPECIES

The Na tional Invasive Species Act of 1996 (NISA) , which reauthorized and amended the Non

Indigenous Aquatic Nuisance Prevention and Control Act of 1990, aims to prevent, monitor and control the unintentional introduction and dispersal of nonindigenous species in to waters of the
U nited S tates through ballast water and other pathways. In addition to ballast water guidelines, NISA requires the development of guidelines to prevent the spread of nonindigenous species from other vessel operations such as hull fouling. Among the guidelines contained in NISA are regular hull cleaning either in

- water or during drydock . For example, the implementing Coast Guard regulations require that all vessels equipped with ballast water tanks that operate in waters of the U nited S tates have fouling organisms removed from their hulls, piping, and tanks on a regular basis, and that any removed substances be disposed of in accordance with local, state, and other federal regulations (33 CFR § 151.2035(a)(6))

. NISA focuses on vessels with ballast water tanks that travel outside the exclusive economic zone ( EEZ ) or along the coasts inside the EEZ. The sVGP requirements to minimize the discharge of ballast water and to visually inspect and as necessary clean the vessel hull of attached organisms are expected to complement NISA for small

non

- recreational vessels. These practices have the potential to impose an incremental cost on owners of vessels subject to the sVGP as discussed later in Section 5.2.6

.2014 sVGP Economic Analysis

Page 24 of 106 

### 4 PROFILE OF THE FISHI NG , WATER TRANSPORTATION , AND MINING
INDUSTRIES

4.1 INTRODUCTION

The establishments that own and operate a large share of the vessels that will be s ubject to the sVGP are primarily associated with the fishing and water transportation industries, and with the oil and gas sector within the mining industr y

. According to the most recent Census figures, t he water transportation industry is a $48 billion
i ndustry that employs over 157,000 people on a payroll of over $8 billion. The fishing industry is much smaller, with total revenues of $1.66 billion, employing 5,600 people on a payroll of $302 million. The drilling oil and gas wells sector (a subset of th e mining industry) is a $22.5 billion sector that employs nearly 106,900 people on a payroll of almost $6 billion.
Water transportation accounts for a majority of the vessels sailing on U.S. waters and the second largest share of vessels potentially covere d by the sVGP. The industry is made up of several sectors, described in Section 4.3.2 3

. Overall, the industry has experienced growth in the revenues, payroll

, and number of employees , but a decline in the number of establishments

. It is important to note that the most recent r evenue, employment

, and establishment data are for 2007

. The global economic crisis and U.S. recession likely impacted the water transportation as a reduced overall flow of goods reduced shipping volume and other leisure water transportation activities dec reased ; it also likely also affected the fishing and mining industries

. The drilling oil and gas wells sector, which covers some of the utility vessels covered by the sVGP, has experienced strong growth, showing robust gains in revenue, employment

, and pa yroll from 2002 to 2007.

4.1.1 DATA SOURCES USED

Data for the number of vessels and their respective industry sector were extracted from the MISLE database and from information EPA had previously obtained as part of its analysis of the VGP (U.S. EPA, 2008 a ) (det ailed further in Section 2.1 : Domestic Vessel Population )

. North American Industry Classification Codes ( NAICS ) co des were assigned to vessels according to the NAICS codes of their owner/operators, as obtained from the Dun & Bradstreet (2006)

, ReferenceUSA (2006) , or Manta.com business databases. In selected instances, EPA assigned the most likely NAICS code based on key words in the reported name of the vessel owner where it could do so with reasonable confidence. 17 In cases where owner/operator information was unavailable, no corresponding company was found in the business databases, or the name of the owner was not d escriptive enough to assign a NAICS sector, the most likely NAICS code was

17 For example, companies whose name contained the term “dredging” had their vessels assigned to NAICS 2349: Other Heavy Construction ; the terms “charter,” “tour,” or “adventure” were associated with establ ishments operating in the sector NAICS 487210: Scenic and S ightseeing T ransportation, W

ater

.2014 sVGP Economic Analysis

Page 25 of 106 assigned to a vessel using information on vessel type and area of operation. Finally, in instances where it was not possible to determine the NAICS code based on vessel type or loca tion, the vessel was not matched.
Overviews of the various industry sectors were created using information from industry groups, trade associations, and other reference sources. Data for numbers of firms, establishments

, 18 revenues, and employment were obt ained from the U.S. Census Bureau, with the exception of data for NAICS code 11411

- Fishing , because it is not covered by the Economic Census. In this case, the data come from the U.S. Small Business Administration (SBA).

4.1.2 ORGANIZATION OF THIS SECTION

This s ection presents an overview of the fishing

, water transportation, and mining industries.

Section 4.2 identifies the sectors associated with the vessels addressed by the sVGP, as classified by NAICS industry groups.

Section 4.3 provides definitions and overviews of the industr y groups and their respective sect ors.

Section 4.4 summarizes recent trends in each industry , including changes in the number of establishments and financial performance.

Section 4.5 describes the industries’ market structures, including details of performance according to employment size, numbers

, and percentages of small businesses, employm ent trends, and payroll trends.

4.2 NUMBER OF VESSELS BY INDUSTRY SECTOR

Table 4

- 1 summarizes the number of vessels by NAICS code and industry sector , bas ed on the industry sector associated with each vessel ’s reported managing owner

. There are approximately 115,000 to 138,000 commercial fishing vessels and other non

recreational vessels less than 79 feet long

. Of these vessels, as many as 68,000, or about half, are involved in the commercial fishing industry. The sector with the next largest number of vessels is inland water transportation with 7,317 vessels , followed by scenic and sightseeing transportation wit h 1, 437 vessels

. Establishments in the mining sector (specifically oil and gas drilling and support activities) are associated with 592 vessels. Deep sea, coastal and Great Lakes water transportation has relatively fewe r vessels within the sVGP vessel popu lation with 133

, which is

not altogether surprising given that one would expect few commercial deep sea vessels will be

18 According to the Census, a n establishment is a single physical location at which business is conducted and/or services are provided. It is not necessarily identical with a company or enterprise, which may consist of one establishment or more. An establishment may be the local office of a shipping company and may operate several vessels, or it may be a single vessel operated as a single physical location. In the analysis, we generally relied on Census data for the number of firms and separate vessel databases as sources of our estimates of the number of firms and vessels, respectively.2014 sVGP Economic Analysis

Page 26 of 106 less than 79 feet. Overall, the water transportation industry has 9

, 493 vessels of the vessels for which NAICS codes could be determined

. The number of operators generally follow similar trends with the largest number of operators in the fishing industry , followed by water transportation and mining. The average number of vessels operated by each managing owner seems to vary across the ind ustry sectors from 1.3 for Scenic and Sightseeing Transportation, Water, to about seven for owners in the mining sector. On average, managing owners of commercial fishing vessels operate about three vessels each, although a closer look at the data reveals that the distribution is skewed by one large company that operates 96 fishing vessels. Only 7 percent of operators in the fishing have more than one vessel. 19 T hese statistics are based on the number of vessels corresponding to uniquely named

owners or oper ators and are therefore potentially subject to uncertainty due to potential
differences in spelling of owner names for the same entity or possible relationships among seemingly distinct owners (e.g., subsidiaries of a same corporate entity)

.

Table 4

- 1 : Number of Vessels and Operators by Industry Sector.

Industry Sector Number of Vessels a Number of

Operators b Water Transportation Industry and Related Sectors Deep Sea, Coastal, and Great Lakes Water Transportation 133 72 Inland Water Transportation 7,317 2,208 to 5,096 d Scenic and Sightseeing Transportation, Water 1
, 437 1,144 Support Activities for Water Transportation 606 163 Water Transportation Industry Total 9
, 493 3,587 to 6

, 475 d Fishing Industry Fishing 67,713 23, 70 2 to 65,401 d Mining Industry Support activities for mining 592 90 to 400 d Other mining 15 2 Other Industries Other Industries 1,894 715 Unspecified c Vessels without NAICS code information 57
, 891 11,338

Source: U.S. Coast Guard, MISLE

, 20 09; Dun & Bradstreet, 2006; ReferenceUSA, 2006.

a Count represents an upper range estimate as it includes all vessels that have a length of zero or null in MISLE.

b Reflects the number of “unique” operators (defined by unique name) associated with vessels in each industry sector.

c Almost half the vessels did not have owner information and were not easily categorized into a NAICS code by vessel type or location

. These vessels are included in the “unspecified” category.

d A large number of vessels have no recorded managing owner. The upper bound of the range assumes that each of these vessels is owned by a different entity , while the lower bound represents the number of unique ly named entities

.

19 These statistics are based on the vessels that have named managing opera tors in the MISLE database. This field is blank for 41,669 of the commercial fishing vessels in the database.2014 sVGP Economic Analysis

Page 27 of 106 Nearly 1,900 vessels are categorized in various, diverse industries not included in this industry profile

. In general

, these vessels belong to a few broad sectors: construction, remediation

, and governmental services

. Nearly 600 vessels are used in the construction industry, incl uding in “other heavy construction” and “other specialty trade construction.” A review of these vessels suggests that many are used in dredging operations or to tow barges carrying aggregates or other construction material

. Over 300 vessels are categorized as NAICS 5629 : R emediation and other waste management

. As most of the companies classified in this sector are oil spill response contractors or cooperatives, these vessels are likely involved with cleaning up oil spills

. Over 400 vessels are involved with government services (NAICS code 92) , primarily in transportation programs and utilities, but also police protection and environmental quality programs. There are also vessels working in miscellaneous sectors, including about 200 vessels in the “other

amus ement and recreation services” and slightly fewer in scientific research

. Unfortunately, EPA was unable to classify 57

, 891 vessels or just under half of the vessels potentially subject to sVGP requirements, according to MISLE data

. These vessels did not h ave owner/operator information that mapped to D&B or other business databases , had a non

descriptive owner name, and could not readily be assigned to a specific industry sector based on
the vessel type or location. Because we assigned commercial fishing ve ssels to the fishing industry, the vessels with unknown industry sector are assumed to be in the water tra nsportation or other industries and were distributed among the NAICS code in proportion to shares of vessels with known sectors.

4.3 OVERVIEW OF THE FISH I NG
, WATER TRANSPORTATION
, AND MINING
INDUSTRIES

4.3.1 DEFINITION OF THE FI SHING
, WATER TRANSPORTATION
, AND MINING
INDUSTRIES

The fishing industry includes NAICS code 11411 : Fishing. The water transportation industry, for the purpose of this section , includes NAI CS codes 483 : Water Transportation; 4872 : Scenic and Sightseeing Transportation, Water; and 4883 : Support Activities for Water Transportation. The support activities for mining industry includes two industry sectors that are most relevant to vessels covere d by the sVGP: NAICS 213111 : Drilling oil and gas wells and NAICS 213112 : Support activities for oil and gas.

Table 4

- 2 lists the relevant NAICS codes for the fishing

, water transportation, support activities for mining , and other industries associated with vessels potentially covered by the sVGP

. These
indust ry sectors are described in the remainder of this section in order of the relative number of vessels estimated to be potentially covered by the sVGP.2014 sVGP Economic Analysis

Page 28 of 106 Table 4

- 2

. Principal 2007 NAICS Codes and Descriptions Relevant to th e sVGP

.

Industry Group/ NAICS Code Description Fishing
1141 Fishing
114111 Finfish Fishing
114112 Shellfish Fishing
114119 Other Marine Fishing Water Transportation
4831 Deep Sea, Coastal, and Great Lakes Water Transportation
483111 Deep Sea Freight Transportation
483112 Deep Sea Passenger Transportation
483113 Coastal and Great Lakes Freight Transportation
483114 Coastal and Great Lakes Passenger Transportation
4832 Inland Water Transportation
483211 Inland Waterways Freight Tr ansportation
483212 Inland Waterways Passenger Transportation
4872 Scenic and Sightseeing Transportation, Water
4883 Support Activities for Water Transportation
488310 Port and Harbor Operations
488320 Marine Cargo Handling
488330 Navigational Services to Shipping and Salvage
488390 Other Support Activities for Water Transportation Support Activities for Mining
2131 Support Activities for Mining
213111 Drilling Oil and Gas Wells sector
213112 Support Activities for Oil and Gas Operations
Other Industries
2379 Other Heavy and Civil Engineering Construction
5417 Scientific Research and Development Services
5629 Remediation and Other Waste Management Services
7139 Other Amusement and Recreation Industries
9261 Administration of Economic Program Source: U.S. Census Bureau, 200 7 a

.

4.3.2 FISHING 20

The fishing industry includes commercial catching or taking of finfish, shellfish, or miscellaneous marine products from a natural habitat, such as the catching of bluefish, eels, salmon, tuna, clams, crabs, lobsters, mussels, oysters, shrimp, frogs, sea urchins, and turtles (U.S. Census Bureau,
2007 a ).
Since the 1990s, finfish volume has been declining, due to severely depleted fisheries in the Atlantic and loss of breeding grounds to pollution, as we ll as to increasingly strict regulations aimed at preventing these problems (Reference for Business, 2007a, b). Demand has not been

20 Vessels subject to the ballast water requirements of the Permit include an estimated 26 commercial fishing vessels.2014 sVGP Economic Analysis

Page 29 of 106 strong enough to prevent declines in the value of the catches. Shellfish volume has remained relatively constant, with the t otal value of the catch increasing slightly. Fish and seafood imports have increased over the same period, intensifying the competition in this industry (National Marine Fisheries Service, 2003).

In 2009, Alaska led the nation in both volume and value of f ish caught

. Louisiana and Virginia were second and third

, respectively

, in volume of fish caught , while Massachusetts and Main e were second and third in terms of value of fish landings (National Marine Fisheries Service,
2011 a )

. According to MISLE data, a n estimated 96 percent of the commercial fishing vessels operating domestically are less than 79 feet in length.

4.3.3 WATER TRANSPORTATION

Establishments in the water transportation industry provide water transportation of passengers and cargo using watercraft , such as ships, barges, and boats. The industry is composed of two industry groups , depending on the area they operate in : (1) deep sea, coastal, and Great Lakes water transportation; and (2) inland water transportation. This split typically reflects the difference in equipment used (U.S. Census Bureau, 200 7 a ).
Scenic and sightseeing water transportation services (NAICS 4872) are also included under this industry heading, as are support activities for water transportation (NAICS 4883) . These two industry g roups are technically classified outside of the “Water Transportation” industry grouping by the Census Bureau, but will be included under water transportation for the purposes of this
section

. Total waterborne commerce in the United States has increased s teadily over the past 50 years, fueled mostly by growth in foreign commerce, which overtook domestic shipments (in terms of weight) in the mid

- 1990s. Foreign com merce accounted for over 60 percent of total waterborne commerce by weight in 200 9

, amounting t o 1.3 billion short tons out of total U.S. waterborne

commerce of 2. 1 b illion short tons (U

. S

. ACE, 2009)

. The types of v essels associated with the water transportation sector ( e.g., freight barges, freight ships, passenger vessel s , tank barges, and tank ships) have varying shares of vessels less than
79 feet, as shown in Table 4

- 3 . While vessels less than 79 feet represent a relatively small share
of vessels used to transport cargo (4 to 39 percent), over 90 percent of vessels used to transport passenger are less than 79 feet and therefore potentially covered by the sVGP.2014 sVGP Economic Analysis

Page 30 of 106 Table 4

- 3 : Percentage of Vessels L ess than 79 Feet, by Vessel Type.

Vessel Type Percent age of Vessels Less Than 79 feet a Commercial Fishing Vessels 96% Freight Barge 10% Freight Ship 39% Tank Barge 4% Tank Ship 12% Passenger Vessel 91% Utility Vessels 63%

Source: U.S. Coast Guard, MISLE

, 20 09.

a Fraction of total number of vessels in MISLE that are less than 79 feet.

DEEP SEA, COASTAL, A ND GREAT LAKES WATER TRANSPORTATION (NAICS 4831) This industry group comprises establishments primarily engaged in providing deep sea, coastal, and Great Lakes water transportation, as well as transportation via the St. Lawrence Seaway. Marine transportation establishments using the facilities of the St. Lawrence Seaway Authority Commission are considered to be using the Great Lakes Water Transportation System (U.S. Census Bureau, 2002 b ). Firms in this NAICS grouping are further classified based on their area of operation (deep sea or coastal/Great Lakes) and payload type (cargo or passengers) , as described below for the freight (NAICS 483113) and passenger transportation sectors (NAICS 483114)

. While this industry group also includes deep sea freight and passenger transportation (NAICS 483111 and 483112, respectively), EPA expects that few vessels covered by the sVGP are engaged in these types of activities given their relatively small size.

Coastal and Great Lakes Freight Transportation : NAICS 48311 3 Firms transporting cargo in coastal waters

, the Great Lakes System (including the St. Lawrence Seaway)

, or deep seas between ports of the United States, Puerto Rico, and U.S. island possessions or protectorates fall into this NAICS code classification (U .S. Census Bureau, 200 7 a )

. The Jones Act of 1920 requires that all domestic waterborne trade (between two points in the United States) be conducted on vessels built in the United States, documented in the United States, and owned by U.S. citizens or compan ies (Transportation Institute, undated). Thus, vessels operating in the Coastal and Great Lakes Freight Transportation sector are subject to this law.
The majority of the vessels in this sector are barges, though the sector is also characterized by its

us e of other freight transport vessels, as well as tugboats (Transportation Institute, undated)

. In the Great Lakes, t he transportation system comprises bulk cargo carriers, ocean going vessels and smaller cruise ships

. Predominant players are the bulk lake carriers , including, in 2002, 65 large
self

- propelled vessels and another 20 smaller tug/barge units (Quinn, 2002).
Coastal domestic trade to and from Alaska, Hawaii, and U.S. Territories consists mainly of the shipment of petroleum and petroleum products, chemicals, and agricultural products. The primary2014 sVGP Economic Analysis

Page 31 of 106 products transported on the Great Lakes System are coal, limestone, and iron ore (Transportation Institute, undated ; Quinn, 2002 ). As described above, however, a relatively small share of the vessels invol ved in these activities is expected to be less than 79 feet.
Coastal and Great Lakes freight t ransportation accounts for nearly 30 percent of all U.S. domestic waterborne shipments by weight in 2009

. Coastal and Great Lakes freight transport accounts for

a lmost 90 percent of all self

- propelled traffic, but only 13% of barge traffic by weight (U

. S

. ACE, 2009)

. Great Lakes freight transportation was relatively constant from 1990 to 2005, hovering around 150 million tons per year; however

, since 2006, there ha s been a significant dip in tonnage with only about 100 million tons shipped in 2009 (U

. S

. ACE, 2009)

. Generally, approximately

two

- thirds of Great Lakes tonnage is domestic cargo and one

- third is foreign (this pattern remained even after the drop in tonna ge) (U

. S

. ACE, 2009).
Coastal freight transportation experienced the same post

- 2005 dip with 1.4 billion tons shipped in 2009 down from 1.6 billion shipped in 2009. Coastal freight did experience the same growth from 1990 to 2005 increasing from around 1.1 billion tons per year to more than 1.6 billion tons, as a result of increased foreign shipments (U

. S

. ACE, 2009)

. It is likely that the dip in freight travel beginning in 2006 is due to the global economic crisis

, which decreased the overall flow of goods and thus decreased shipping volume

.

Coastal and Great Lakes Passenger Transportation : NAICS 483114 This industry sector contains establishments primarily engaged in providing water transportation of passengers i n coastal waters, the Great Lakes System (including the St. Lawrence Seaway), or deep seas between ports of the United States, Puerto Rico, and United States island possessions and protectorates. This industry sector includes many coastal and Great Lakes f erries used to travel short distances between coastal ports, or from shores to nearby islands, as well as larger vessels used on the Alaska Marine Highway, which travels between ports on the southern coast of Alaska and northwestern Canada (Reference for B usiness, 2007c).

As described above, most of the vessels involved in these activities are less than 79 feet and would therefore be addressed by the sVGP.

INLAND WATER TRANSPO RTATION (NAICS 4832) Businesses primarily engaged in providing inland water transp ortation of passengers and cargo on lakes, rivers, or intracoastal waterways (except on the Great Lakes System) are classified under this NAICS grouping, and are further classified between freight and passenger transportation (U.S. Census Bureau, 200 7 a )

. A s required by the Jones Act, all vessels in this industry sector are domestic flagged and owned.2014 sVGP Economic Analysis

Page 32 of 106 Inland Waterways Freight Transportation : NAICS 483211 The companies in this industry sector are primarily engaged in providing inland water transportation of c argo on lakes, rivers, or intracoastal waterways 21 (except on the Great Lakes System) (U.S. Census Bureau, 200 7 a ) . This sector contains a large portion of the total number of vessels in the United States, as it encompasses river barges (generally more than 79 feet in length) , as well as the tug and towboats that propel them (often in the 40

- to 100

- foot range) expected to be covered by the sVGP . The vast majority of boats in this sector overall are barges, which outnumber other inland freight vessels by abou t 10 to 1 (Transportation Institute, undated). Since barges tend to be more than 79 feet in length, however, vessels from this industry are outnumbered by commercial fishing vessels when considering only the vessels potentially subject to the sVGP (mostly the smaller tug and towboats)

. The products carried by this industry sector include more than half of U.S. grain shipments, a quarter of chemical and petroleum exports, and a fifth of domestic coal shipments (Transportation Institute, undated). Barges acco unt for 79 percent of domestic waterborne freight.
Inland waterways freight transportation, similar to Great Lakes and coastal water transportation, has experienced a decrease in cargo tonnage since 2006, although the total tonnage transported had remained constant over two dec ades prior to that (U

. S

. ACE, 2009) . Nevertheless, inland waterways transport accounts for over 50 percent of all domestic waterborne fr eight shipments (U

. S

. ACE, 2009 ).

Inland Waterways Passenger Transportation : NAICS 483212

This ind ustry sector provides inland water transportation of passengers on lakes, rivers, or intracoastal waterways (except on the Great Lakes System) (U.S. Census Bureau, 200 7 a ) . This sector includes water taxis and ferries (except coastal and Great Lakes ferries ), usually traveling short distances between inland ports, such as in New York harbor or in San Francisco Bay.
The ferry industry has been rebounding from historic lows in the 1970s, and short

- distance ferries in urban areas have become alternatives to cro wded highways and urban transit systems. In 2000, the 677 ferries operating in the United States served 578 destinations along 352 routes, transporting 113 million passengers (these figures include coastal and Great Lakes ferries) (Reference for Business, 2007c). Continued population growth in coastal metropolitan area coupled with increase d vehicle traffic on the nation’ s highway systems, makes commuter

passenger

- vehicle ferries attractive transportation options in the future (U.S. Commission on Ocean Policy, 2004).

SCENIC AND SIGHTSEEI NG TRANSPORTATION, W ATER (NAICS 4872) This industry group comprises establishments primarily engaged in providing scenic and sightseeing transportation on water. The services provided are usually local and invol ve same

- day return to place of origin (U.S. Census Bureau, 200 7 a )

.

21 The Intracoastal Waterway (ICW) is a 3,000

- mile waterway running along the Atlantic and Gulf coasts of the United States. Composed of natural water bodies (inlets, saltwater rivers, bays, and sounds) and artificial canals, it provides a navigable route along the coast and to sever al navigable rivers and inland ports.2014 sVGP Economic Analysis

Page 33 of 106 This sector encompasses a wide variety of vessel types, from small “swamp buggies” used to tour the Florida Everglades

, to chartered dinner cruisers , sailing vessels, or whale

- watching boa ts. The range of services offered has continued to expand over the past decade, with gambling boats becoming popular in Indiana and Iowa, and similar gaming “cruises

- to

- nowhere” becoming popular in Florida (Reference for Business, 2007d).

This leisure

- base d industry sector is more vulnerable to economic fluctuations, since its revenues draw on discretionary consumer spending. The global economic crisis and recession greatly reduced consumers’ disposable income and thus their leisure spending (U.S. BEA, 2011 a )

. It is likely that the scenic and sightseeing transportation sector was impacted by the recession

.

SUPPORT ACTIVITIES F OR WATER TRANSPORTAT ION (NAICS 4883) This NAICS grouping includes establishments classified in the following NAICS sectors : 48831, Port and Harbor Operations; 48832, Marine Cargo Handling; 48833, Navigational Services to Shipping and Salvage; and 48839, Other Support Activities for Water Transportation (U.S. Census Bureau, 2002 b )

. Businesses in th e s e sector s are the link betw een a vessel’s load (cargo or passengers) and that load’s final destination. This sector provides the highest percentage of employment in the industry, as many of these services are labor

- intensive.

Port and Harbor Operations : NAICS 488310

Businesses in th is industry sector operate ports, harbors (including docking

, pier

, and waterfront terminal facilities), or canals (U.S. Census Bureau, 2002 b ) . Vessels in port and harbor operations may be involved in maintaining upkeep of harbor via dredging si lt, clearin g foreign debris, or assisting with construction projects (Reference for Business, 2007f)

. Vessels, such as tugboats, may also be responsible for assisting larger vessels in docking maneuvers in harbors and towing vessels. As of July 2002, there were 5,445 towboats in the entire U.S. fleet

. The private tugboat industry experienced a boom in late 1990s when the U.S. Navy began chartering tugs instead of replacing its fleet (Reference for Business

, 2007g).

Marine Cargo Handling : NAICS 488320 This industry co mprises establishments primarily engaged in providing stevedoring and other marine cargo handling services (except warehousing) (U.S. Census Bureau, 2002 b ) . This sector contains only a small number of vessels, as most of its business is land

- based.
This p articular industry sector, along with port and harbor operations, has been growing over the last decade or two as a result of the increase in foreign trade, mostly with Asian countries. Marine cargo handling and port and harbor operations on the Pacific Co ast account for about half of all such operations in the United States (Reference for Business, 2007e).
Despite the increase in volume of shipments handled, employment in marine cargo handling, as well as in port and harbor operations, has been on the decl ine in recent years, due to increased automation of tasks and other technological advances that reduce the need for manual labor. The industry’s unions, the International Longshoremen’s Association and the International Longshore and Warehouse Union, are n evertheless still strong and maintain high membership rates2014 sVGP Economic Analysis

Page 34 of 106 (Reference for Business, 2007e)

. Additionally, the decline in volume of shipments due to the recession undoubtedly impacted employment in these indirect industries.

Navigational Services to Shippi ng and Salvage : NAICS 488330 This NAICS classification includes two main types of businesses: navigational services to shipping and marine salvage (U.S. Census Bureau, 200 7 a )

. Vessels in this industry do not typically carry passengers or cargo, but rather assist larger vessels in entering and leaving port, or in other operations. The salvage subsector of this industry sector includes maintenance vessels that prepare ships for salvage and scrap.

Other Support Activities for Water Transportation : NAICS 48839 0 Other auxiliary services of the water transportation industry are grouped into this category, which includes maintenance

, repair and salvaging of vessels, inspections, security, and other operations.

4.3.4 SUPPORT ACTIVITIES F OR MINING

The mining industry com prises establishments that extract naturally occurring mineral solids, such as coal and ores; liquid minerals, such as crude petroleum; and gases, such as natural gas.
W ithin the mining industry , the drilling oil and gas wells and support activities for oi l and gas operations sector s (NAICS 213111 and 213112, respectively ) operate vessels covered by the

s VGP , including a subset of the nearly 11,000 utility vessels identified in MISLE.

This sector comprises establishments primarily engaged in drilling oil a nd gas wells or performing support activities on a contract or fee basis for oil and gas operations (except site preparation and related construction activities). V essels are used primarily to support offshore and coastal drilling and production activities and their distribution therefore follows the distribution of

near

- shore and offshore oil and gas extraction activities

. Services included are exploration (except geophysical surveying and mapping); excavating slush pits and cellars, well surveying; runnin g, cutting, and pulling casings, tubes, and rods; cementing wells ; shooting wells; perforating well casings; acidizing and chemically treating wells; and cleaning out, bailing, and swabbing wells (U.S. Census Bureau, 2007 a ). Smaller vessels are also used t o transport personnel and equipment to coastal and near

- offshore locations.
The industry relies on offshore supply vessels or specialized industrial vessels to accomplish these activities. These vessels are classified as “utility vessel” in the MISLE datab ase. Primary areas of operation are expected to follow major oil and gas production areas in the Gulf of Mexico, California

, and Alaska.

As summarized earlier in Table 4

- 3 , vessels less than 79 feet in length account for most (63 percent ) of the utility vessels operating in U.S. waters.
In the remainder of this report, unless otherwise noted, the term mining industry refers more specifically to these two segments within the industry rather than the mining industry as a whole.2014 sVGP Economic Analysis

Page 35 of 1 06 4.3.5 OTHER INDUSTRIES

Vessels addressed by the sVGP are associated with several other industry sectors. These include Other Heavy and Civil Engineering Construction (NAICS 2379), which comprises establishments engaged in dredging operations, and the development of marine facilities, among other activities.
The Scientific Research and Development Services (NAICS 5417) is associated with vessels used in physical and life sciences research (e.g., oceanography, marine ecology).
Remediation and Other Waste Management Services (NAICS 5629) include establishments engaged in remediation and waste management services. Most notably in the context of the sVGP, firms and organizations in this indust ry operate vessels involved in spill response and oil recovery operations.

The Other Amusement and Recreation Industries (NAICS 7139) industry sector includes marinas and similar establishments engaged in operating docking and/or storage facilities for ple asure craft owners, with or without one or more related activities, such as retailing fuel and marine supplies and repairing, maintaining, or renting pleasure boats . While recreational vessels are outside the scope of the sVGP, vessels operated for commercial purposes by marinas (e.g., launches for transporting persons from pleasure boats to shore) and similar establishments are potentially subject to the permit requ irements.
A large number of vessels potentially subject to the sVGP are operated by establishments classified in the Administration of Economic Program (NAICS 9261) industry. These include tender, law enforcement, and other types of vessels operated by fed eral, state, and local government agencies and departments.

4.4 RECENT TRENDS

This section reviews the recent trends in the fishing and water transportation industries in terms of number of firms, numbers of vessels, and financial performance. It also highlight s trends in the oil and gas production and drilling sector s of the mining industry.

Overall, from 2002 to 2007

, there was a slight downward trend in number of firms for water transportation; however

, there were upward trends in total revenues, emp loyment, and payroll

. The fishing industry experienced an upward trend in the number of establishments, but a downward trend in employment (no data were available on the change in the commercial fishing vessels fleet during that time ). The drilling oil and gas wells sector experienced relatively strong firm, revenue, and employment growth.
The reference period is from 2002 through 200 7 , the years of the tw o most recent Economic
Censuses. There were no changes to the NAICS codes for these industries between these years.
Where Fishing Industry data were not available from the Census Bureau, they were taken from the SBA.

4.4.1 NUMBER OF ESTABLISHM ENTS BY INDUSTRY SEC TOR

Table 4

- 4 summarizes the changes in numbers of establishments for each sector of the water transport
, fishing , and mining industries between 2002 and 2007

. The Census defines an2014 sVGP Economic Analysis

Page 36 of 106 establishment as a sing le physical location where business transactions take place and for which payroll and employment records are kept . Each establishment, therefore, may operate one or more vessel.

As shown in the table, t he water transportation industry experienced a decrea se of 4.1 percent in the number of establishments over this period, though deep sea, coastal

, and great lakes water transportation experienced a much greater decline in number of establishments. Conversely, inland water transportation and scenic and sights eeing transportation experienced a marginal
increase in the number of establishments

. Mining industry also experienced an increase in number of establishments.

Table 4

- 4 : Number of Establishments by Industry Sector, 2002 and 2007.

NAICS Description 2002 2007 % Change Water Transportation Industry Deep Sea, Coastal, and Great Lakes Water Transportation 1,334 1,126

- 16.0% Inland Water Transportation 590 595 0.8%
Scenic and Sightseeing Transportation, Water 1,726 1,740 0.8% Support Activities for Water Transportation 2,502 2,440

- 2.5%
TOTAL

- Water Transportation 6,152 5,901

- 4.1% Fishing Industry Fishing a 1,916 2,062 7.6% Mining Industry Drilling O il & G as W ells S ector 1,926 2,109 9.5%

Source: U.S. Census Bureau, 2002 a, 2002b

, 2007 a , 2007b

.

a Based on reporting requirements for the data source, the number of establishments includes only firms with full

- time employees

. The number of commercial fishing vessel operators (see Table 4

- 1 ) is much larger, likely because they also include self

- employed and seasonal fishermen

.

The number of establishments presented in Table 4

- 4 represents those establishments with paid employees. This number is considerably smaller than the number of managing owners of commercial fishing vessels potentially covered by the sVGP ( up to 65,401 , as shown in Table
4

- 1 ) . It is also considerably smaller than the number of nonemployer establishments reported by the Census based on Internal Revenu e Service data , summarized in Table 4

- 5

. As shown in that table, there were 65,237 fishing establishments with no employees reported that year, each wi th average receipts of about $45,000. Based on this information, EPA assumes that a large fraction of the managing owners of commercial fishing vessels potentially covered by the sVGP consist of nonemployer establishments ( e.g., individual proprietorships that operate a single commercial fishing vessel )

.2014 sVGP Economic Analysis

Page 37 of 106 Table 4

- 5 : Nonemployer Statistics for the Fishing Industries in 2008.

NAICS Description Number of Establishments Receipts

(‘000 , 2008$ ) Average Receipts

per Establishment ( 2008 $) Fishing Industry All Establishments 65,237 $ 2,926,929 $44,866 Corporations 3,754 $ 584,479 $155,695 Individual Proprietorships 60,703 $ 2,237,248 $36,856 Partnerships 780 $ 105,202 $134,874

Source: U.S. Census Bureau, 2010. Statistics are based on tax return information of the Internal Revenue Service.

4.4.2 ESTABLISHMENT AND EM PLOYMENT BIRTHS AND DEATHS

Table 4

- 6 summarizes average establishment birth and death rates for each industry sector for which these data were available. The reference period for these trends is 2002

– 200 7

. B irth and death rates in the water transportation and fishing industries average between about 5 a nd
1 5 percent of their total numbers of establishments. 22
For deep sea, costal

, and great lakes water transportation and support activities for water transportation, deaths outnumber births

. However, for inland water transportation and scenic and sightseeing transportation births outnumber deaths

. The largest average net change came in scenic and sightseeing transportation, water with an average of over 25 establishment births per year.
The fishing industry ave raged a net change of eight establish m ent births per year between 2002 and 200 7

, while the support activities for mining sector average d a net change of over 450 births per year between 2002 and 2007

.

22 For the mining industry, the fraction is based on births and deaths relative to the 9,935 establishments reported in the 2007 Economic Census for NAICS 213: Support activities for mining. According to the 2007 Econo mic Census, the drilling oil and gas wells sector (NAICS 213111) represented about a fifth (2,109 establishments) of the establishments reported in the support activities for mining sector (NAICS 213) that year.2014 sVGP Economic Analysis

Page 38 of 106 Table 4

- 6 : Establishment Births and Deaths, F ive

- Year Annual Average: 2002

- 2007.

Industry Sector Net Change Births Deaths Water Transportation Industry Deep Sea, Coastal, and Great Lakes Water Transportation

- 9.8 133.8 143.6 Inland Water Transportation 9.6 90.0 80.4 Scenic and Sightseeing Transportation, Water 27.6 192.0 164.4 Support Activities for Water Transportation

- 5.6 182.0 187.6 Water Transportation Industry Average 6.7 184.7 178.0 Fishing Industry Fishing 8.0 228.8 220.8 Mining Industry Support Activities for Mining a 458.6 1,155.6 697.0
Source: U.S. SBA, 2007a.

a Data w ere available only for NAICS 213 (Support Activities for Mining) and were not available at the 6

- digit NAICS level.

Table 4

- 7 summarizes the net change in employment (difference between births and deaths) for each industry sector for which these data are available. Specific information on job creation and eliminatio n was not available for many industry sectors.
All the water transportation sectors had an average net gain of jobs over the five years. S upport activities for water transportation averaged the largest change in employment per year, with an

avera ge of 2,11 1 jobs created per year. Scenic and sightseeing transportation also averaged more than 1, 0 0 0 jobs created per year between 2002 and 2007 . Inland water transportation and deep sea, coastal

, and Great Lakes water transportation averaged net job creation rate s of 573 and 510 employees per year, respectively.
The fishing ind ustry averaged a reduction of 149 jobs per year over the same period whereas the support activities for mining sector (NAICS 213) average d an increase of nearly 3 3

, 115 job s per
year

. Accordi ng to the 200 7 Economic Census, the d rilling oil and gas wells sector (NAICS 213111) account s for a little under a third of the paid employees reported overall in the support activities for mining sector (NAICS 213) ( 106,859 paid employees as compared to 368,613 paid employees).2014 sVGP Economic Analysis

Page 39 of 106 Table 4

- 7 : Net Change in Employment: Five

- Year Annual Average, 2002

- 2007.

Industry Sector Net Change Water Transportation Industry Deep Sea, Coastal, and Great Lakes Water Transportation 509.8 Inland Water Transportation 573.2 Scenic and Sightseeing Transportation, Water 1,058.8 Support Activities for Water Transportation 2,111.6 Water Transportation Industry Average 983.9 Fishing Industry Fishing

- 149.2 Mining Industry Support Activities for Mining a 33,115.0
Source: U.S. SBA, 2007a.

a Data were available only for NAICS 213 (Support Activities for Mining) and were not available at the 6

- digit NAICS level. The number of paid employees re ported for NAICS 213 in the 2007 Economic Census is 368,613

.

4.4.3 FINANCIAL PERFORMANC E

Overall, the water transportation industry experienced robust growth of 22 percent over the period
2002

– 2007 (see Table 4

- 8 ), which is more robust than the overall U. S. economy’s growth of
15 percent during this period (U.S. BEA, 2011b). There was significant variability in the performance of the various industry sectors, with revenues increasing 106 percent in inland water transportation and 20 percent in deep sea, coastal

, and Great Lakes water transportation sectors

. None of the water transportation industries saw a decrease in revenue.
The drilling oil and gas wells sector experienced an increase of almost 115 percent over the same period.
No revenue data were available for the fishing industry in 2007

. Instead

, EPA found data on total value of commercial fish landings in 2007 and used these data as proxy for r evenues

. Other industry data

— employment, payroll

— are from the U.S. SBA and the Census’ County Business
Patterns dataset because fishing is not included in the Economic Census.2014 sVGP Economic Analysis

Page 40 of 106 Table 4

- 8 : Revenues by Industry Sector, 2002 and 2007.

Industry Sector 2002 ($ millions) a 2007

($ millions) Percent

Change Water Transportation Industry Deep Sea, Coastal, and Great Lakes Water Transportation $ 23,778 $ 28,513 19.9% Inland Water Transportation $ 2,873 $ 5,934 106.5% Scenic and Sightseeing Transportation, Water $ 1,111 $ 1,271 14.4% Support Activities for Water Transportation $ 11,296 $ 12,128 7.4%
TOTAL

- Water Transportation $ 39,058 $ 47,845 22.5% Fishing Industry Fishing b $ 3,646 $4,199 15.2% Mining Industry Drilling O il & G as W ells S ector $10,450 $22,512 115.4%
Source: U.S. Census Bureau, 2002b, 2007a; U.S. SBA, 200 7 b ; NOAA, 2011a.

a 2002 Economic Census revenue data updated to $2007 by using Consumer Price Index (CPI) deflator (U

. S

. BLS, 2011)

. All data in $2007.

b No revenue data are available for the commercial fishing industry in the Economic Census 2007 . The 2007 value of fish landing is used a s a proxy of revenue for that industry. For consistency, revenue for 2002 are also based on the value of fish landing.

4.5 INDUSTRY MARKET STRU CTURE

T he fishing and water transportation industries and the drilling oil and gas wells segment of the mining industry include a large number of small businesses, whether classified by employment size or by annual revenues. The vast majorities of firms in these industries employ fewer than 100 people and earn revenues of less than $1 million per year.
This large concentration of small firms earning relatively low amounts of revenue may make the water transportation and fishing industries and the drilling oil and gas wells segment of the mining industry more sensitive to changes in operating costs.

4.5.1 FIRMS AND REVENU ES

Table 4

- 9 details the number of firms and revenues by employment size in 200 7 . In the w ater transportation industry, 78 percent of firms employ few er than 20 people, though these firms only account for 6 percent of the industry’s revenue. Large firms employing more than 500 people, on the other hand, account for only 1 percent of businesses in the industry, but earn nearly a quarter of its revenue.
The drilling oil and gas wells sector also contains a larger percentage of firms employing fewer than 20 people (68 percent), and these firms account for only a tiny share of total industry revenue (3 percent). The large firms in this sector account for ap proximately 2 percent of total firms, but earn over 30 percent of the sector’s revenue

. Firms not operating the entire year do not report employment data and are classified under “NR” in the table. There are large numbers of these in the water transportati on industry

. The drilling oil and gas wells and fishing sectors do not distinguish between firms operating year round and those operating part

- time.2014 sVGP Economic Analysis

Page 41 of 106 In the fishing industry, the vast majority of firms (97 percent) employ fewer than 20 people

. Less than 0.1 percent of fishing firms employ over 500 people

. The share of small firms may be even greater, however, since nonemployer statistics suggest that firms without employees outnumber those with at least one paid employee by a ratio of over 30 to 1 (about 65, 000 compared to 2,000)

. Unfortunately, Census data on the fishing industry are generally not detailed enough to allow a distribution of the firms by revenue category

. Statistics available from other sources regarding revenue to commercial fishermen by reg ion and type of catch or operational configuration offer some insight on the distribution of revenue in the fishing industry . For example, data for California salmon and Dungeness crab fisheries suggest average revenue per vessel ranging from $23,142 for s mall vessels to $75,715 for medium and large vessels ($ 25,031 to $ 81,897 in 2010 dollars) (Hackett and Hansen, 2008). Data for northeast multispecies ( groundfish ) fisheries 23 show average per

- vessel revenue in 2010 of $16,509 for
vessels less than 30 feet, $128,907 for vessels between 30 and 50 feet, and $333,323 for vessels
between 50 and 75 feet (NOAA, 2011 b )

. 24 The majority of northeast groundfish vessels ( 440 out of the total 847 active vessels) were in the 30 to 50 feet category , while there were 226 act ive vessels between 50 and 75 feet and only 33 vessels less than 30 feet

. Revenue s vary within each of the size categories, however, and across the overall fleet. This is illustrated in Figure 4

- 1

, which shows the cumulative distribution of revenue for the groundfish vessel fleet in the Northeast in 2010. Each point on the chart corresponds to the average revenue for a given vessel dec ile (e.g., the chart shows that 60 percent of vessels (508 vessels) have average revenues less than $172,176).
The same source provides statistics on the average revenue per trip for vessels of different sizes. For vessels less than 30 feet, the average re venue per trip ranges between $384 and $734 for

grou n dfish and nongroundfish trips, respectively, with each trip averaging 0.35 to 0.38 days

.

23 Includes cod, winter flounder, with flound er, yellowtail, American plaice, haddock, hake, redfish, and pollock.

24 Per vessel revenue standard deviations were quite large for all vessel categories: $40,963 for vessels less than 30 feet; $117,891 for vessels 30

- 50 feet; $298,878 for vessels 50

- 75 f eet.2014 sVGP Economic Analysis

Page 42 of 106 Figure 4

- 1 : Cumulative Distribution of P er - Vessel Revenue, Northe ast Groundfish Vessels Active in 2010 (Source: NOAA, 2011 b ).

Permit data for Alaska fisheries show similarly wide variability in average revenue per active permit , illustrated in Figure 4

- 2 . Average revenues for 2010 range d from less than $2,000 for the lower quartile of permit holders for halibut fishing by hand troll, to nearly $2.5 million for the upper quartile of permit hol ders for king crab fishing ( Alaska Commercial Fisheries Entry Commission , 2011). Within each type of Alaskan fishery (catch, type of equipment, or region)

, the ratios of revenues earned by the top quartile permit holders and those earned by the bottom

quar tile permit holders can be as high as 20 to one. In general, larger vessels (60 feet or greater in length) have higher revenue than smaller vessels.
As the two fisheries data sets show, there is considerable variability in per

- vessel revenue reported, depe nding on the type of fishery and vessel characteristics. This variability has implications for understanding the distribution of revenue among firms with vessels covered by the sVGP , particularly among the smaller firms

. Thus, although fishing is a season al occupation in many regions and annual revenue may therefore be lower than if it were conducted throughout the entire year , the very low revenue reported for certain smaller vessels (below fuel costs) and the small number of days fished suggest that ther e is a fraction of commercial permit holders for which commercial fishing may not be a primary economic activity.2014 sVGP Economic Analysis

Page 43 of 106 In addition, t he estimated population of fishing vessels covered by the sVGP includes vessels less than 26 feet. As discussed earlier in Secti on 2.1.1 , these vessels may have been originally manufactured as pleasure crafts, but used in commercial fishing activities. On the basis of their definition as recreational vessels under the CBA, how ever, these vessels are not covered by the
sVGP. Therefore, revenue for small vessels is not necessarily indicative of the types of firms that would incur incremental costs as a result of sVGP compliance.
We discuss the implications of these two factors w hen considering the distribution of impacts among firms of different size in Section 6 of this report.2014 sVGP Economic Analysis

Page 44 of 106 Table 4

- 9 : Firms and Revenues by Employment Size, 2007.

Number of Firms Revenues ($ millions) Number of Employees 1

- 19 20

- 99 100

- 499 500+ NR a 1

- 19 20

- 99 100

- 499 500+ NR

Water Transportation Deep Sea, Coastal, Great Lakes Water Transportation 461 133 68 18 126 1,119 b 2,090 7,671 3,389 b 163

Inland Water Transportation 321 78 35 5 109 335 b 678 1,667 2,664 D c Scenic and Sightseeing Transportation, Water 933 103 8 2 656 410 379 D c D c 218 Support Activities for Water Transportation 1,287 271 82 27 239 1,154 2,503 2,700 5,589 181
TOTAL

- Water Transportation 3,002 585 193 52 1,130 3,019 5,649 12,037 11,642 563 Percentage of Industry 78.3% 15.3% 5.0% 1.4% 29.5% 6.3% 11.8% 25.2% 24.3% 1.2% Fishing Fishing d 2,002 37 11 3

-- -- -- -- -- -- Percentage of Industry 97.5% 1.8% 0.5% 0.1%

-- -- -- -- -- -- Mining Industry Drilling O il & G as W ells S ector e 1,454 439 180 36

-- 632 4,011 8,382 7,721

-- Percentage of Sector 68.9% 20.8% 8.5% 1.7%

-- 2.8% 17.8% 37.2% 34.3%

-- Source: U.S. Census Bureau, 2007 a ; U.S. SBA, 2007b

. Notes:

a NR = Firms that do not report revenue or employment data because they do not operate the entire year.

b Revenue data are not complete; some revenue data w ere not included in data set due to disclosure concerns.

c D = D ata withheld to avoid disclosing dat a for individual companies.

d Data only include firms with employees

, which represent only a small subset of fishing industry establishments.

e Revenue data for NAICS code 213111 taken from “total value of shipments and receipts for services” representing gross sales.

Figure 4

- 2 : Distribution of Average Earnings of Holders of Commercial Fishing Permits in Alaska in 2010, by Permit Type (Catch, Equipment, and2014 sVGP Economic Analysis

Page 45 of 106 Region) (Based on data from Alaska Commercial Fisheries Entry Commission (2011) )

.2014 sVGP Economic Analysis

Page 46 of 106 Table 4

- 10 details the number of firms according to annual revenue in each sector of the water transportation industry (revenue data are not available for the fishing and mining industry)

. As shown in the table , f irms earning less than $1 million per year account for 65 percent of the industry’s firms, and firms earning between $1 and $5 million add another 21 percent. A large majority (86 percent) of firms are thus earning revenues less than $5 million.
Similarly

, deta iled data are not available for the fishing and relevant subset of the mining industry. However, nonemployer statistics described above suggests that the vast majority of the firms in this industry have annual revenue less than 1 million dollars.

While no data could be found for 2007, 2002 data for the drilling oil and gas wells segment of the minin g industry suggested that 77 percent of all firms earn ed less than $1 million in revenues and approximately 95 percent earn ed less than $5 million in that year (U.S. Census Bureau, 2002 b )

. EPA has not found indication that the general distribution of firms by revenue size has changed significantly since 2002.

Table 4

- 10 : Number of Firms According to Revenue Size.

N umber of Firms

Revenues (millions of dollars) <1 a 1

- 5 5

- 25 25

- 100 100+ Water Transportation Deep Sea, Coastal, and Great Lakes Water Transportation 284 180 113 56 47

Inland Water Transportation 227 120 59 21 12 Scenic and Sightseeing Transportation, Water 834 178 31 3 0 Support Activities for Water Transportation 998 402 188 57 22 TOTAL

- Water Transportation 2,343 880 391 137 81 Percentage of Industry 61% 23% 10% 4% 2% Fishing Industry Fishing ND ND ND ND ND Percentage of Industry ND ND ND ND ND Mining Industry Drilling O il & G as W ells S ector ND ND ND ND ND Percentage of Sector ND ND ND ND ND

Source: U.S. Census Bureau 2 007b

.

a The Economic Census breaks down this category further into firms with revenue less than $100,000; $100,000 to $249,999; $250,000 to $499,999; and $500,000 to $999,999.

ND = No data available on distribution of establishments by revenue size

.

4.5.2 SMALL BUSINESSES

The U.S. SBA defines small businesses for the various sectors of these industries as follows:
Fishing : revenues less than $4 million

. Deep sea, coastal, and Great Lakes water transportation; inland water transportation : fewer than 500 employees

. Scenic and sightseeing transportation; navigational services t o shipping and salvage; other support activities for water transportation : revenues less than $ 7 million

. Port and harbor operations; marine cargo handling : revenues less than $ 25.5 million

. Drilling oil and gas wells sector : fewer than 500 employees

.2014 sVGP Economic Analysis

Page 47 of 106 Supp ort activities for oil and gas operations : revenues less than $7 million (U.S. SBA, 2010 ).

Table 4

- 11 summarizes the number of small businesses in each sector of the water transportation

, fishing , and mining industries. On the whole, all industries contain more than 90 percent small businesse s. Inland waterways freight transportation, the industry sector encompassing barges, has the lowest number of small businesses, which may also contribute to its high number of vessels per establishment.
These percentages were calculated based on the number of employer firms operating the entire year, as employment figures are not available for firms operating only part of the year.
As discussed above, the number of establishments in the commercial fishing industry is much larger when including nonemployer statistics (and entities that may operate only seasonally). Including these entities means that practically 100 percent of firms in the industry are considered small, according to the SBA definition.

Table 4

- 11 : Small Businesses by Industry Sector.

Industry Sector Small Business Threshold Firms

Operated Entire Year Small

Businesses Percent

Small Business Water Transportation Industry Deep Sea, Coastal, and Great Lakes Water Transportation Deep Sea Freight Transportation 500 Employees 188 183 97

. 3 % Deep Sea Passenger Transportation 500 Employees 41 38 9 2.7 % Coastal and Great Lakes Freight Transportation 500 Employees 344 336 97

. 7 % Coastal and Great Lakes Passenger Transportation 500 Employees 123 122 9 9.2 % Subtotal

- Deep Sea, Coastal, and Great Lakes 696 679 97. 6 % Inland Water Transportation Inland Waterways Freight Transportation 500 Employees 264 2 59 98.1 % Inland Waterways Passenger Transportation 500 Employees 176 176 100.0% Subtotal

- Inland 440 435 98.9% Scenic and Sightseeing Transportation, Water Scenic and Sightseeing Transportation, Water $7 million 1,046 1,012 96.7% Support Activities for Water Transportation Port and Harbor Operations $25.5 million 197 172 87.3% Marine Cargo Handling $25.5 million 262 222 84.7% Navigational Services to Shipping and Salvage $7 million 640 545 85.2% Other Support Activities for Water Transportation $7 million 626 572 91.4% Subtotal

- Support Activities 1,725 1,511 87.6%
TOTAL

- Water Transportation 3,907 3,637 93.1% Fishing Industry Fishing a $4 million 1
, 916 1
, 843 96.2% Mining Industry Drilling O il & G as W ells S ector 500 Employees 2,109 1,893 89.8%
Source: U.S. Census Bureau, 2007 a

.

a Includes only employer firms. Nonemployer statistics suggest that the vast majority of firms in the fishing industry earn sig nificantly less than $4 million annually.2014 sVGP Economic Analysis

Page 48 of 106 4.5.3 EMPLOYMENT AND PAYRO LL

Employment in the water transportation industr y increased by se ven percent while employment in the fishing
industries declined by 14 percent over the period between 2002 and 200 7 (see Table 4

- 12 : Employment by Industry Sector, 2002

- 2007. ). However, payroll in both industries increase d despite th e decline in fishing employment numbers. In fact , all sectors with in the water transportation industry grouping saw an increase in

pa yroll, including support activities for water transportation

, which experienced a slight ( 2 percent) decrease in employment. Employment and payroll in the drilling oil and gas wells sector increased by 76 percent and 108 percent , respectively, over the sam e period.
Note that these figures , and those discussed in the rest of this section, reflect the detailed data available from the most recent Economic Census . They do not capture the impact of the subsequent recession

, which likely reduced employment and pa yroll in these sectors, as in many other sectors of the U.S. economy

.

TOTAL NUMBER OF EMPL OYEES BY INDUSTRY SE CTOR

In 2007 , the water transport ation industry employed about 157 ,000 people. Nearly half of these people (44 percent) were employed by businesses providing support activities for water transportation. Another third worked in the deep sea, coastal, and Great Lakes water transportation sector, with the remaining 20 percent being split between inland water transportation an d scenic and sightseeing transportation on water. The fishing industry

emp loyed about 5

, 6 00 people in 2007 , while the drilling oil and gas wells sector employed about 107,000 people.

Overall, the wate r transportation industry saw a 7.3 percent increase in its number of employees between 2002 and 200 7

. The drilling oil and gas wells sector saw a large (77 percent) increase in employment

. The only industry to experience a decline was the fishing industry

, which had a 14.3 percent decline in employment

. Overal l, the U.S. unemployment rate decreased from 6.0 percent to 5.0 percent between 2002 and 2007 (U.S. BLS, 2011). 25
Deep sea, coastal

, and Great Lakes transportation, inland water transportation

, and scenic and sightseeing transportation all had increases in employment

. The largest increase was in the inland water transportation sector, where employment increased almost by half

. Deep sea, coastal

, and Great Lakes transportation and scenic and sightseeing transportation both increased by about 10 percent

. All t hese sectors saw huge increases in revenue, including support activities for water transportation

, which had a 1.7 percent decline in employment, but a 23 percent increase in revenue. 25

25 Note that these statistics represent changes between 2002 and 2007, the latest year for which detailed Economic Census data a re available. The data predate the recession and therefore do not reflect the subsequent drop in overall employment across m ost sectors of the U.S. economy.2014 sVGP Economic Analysis

Page 49 of 106 Table 4

- 12 : Employment by Industry Sector, 2002

- 2007.

Industry Sector 2002 Number of Employees 200 7 Number of

Employees Percent Change

Water Transportation Industry Deep Sea, Coastal, and Great Lakes Water Transportation 52,009 56,398 8.4%

Inland Water Transportation 13,317 19,599 47.2% Scenic and Sightseeing Transportation, Water 11,557 12,692 9.8% Support Activities for Water Transportation 69,569 68,396

- 1.7%
TOTAL

- Water Transportation 146,452 157,085 7.3% Fishing Industry Fishing 6,537 5,600

- 14.3% Mining Industry Drilling O il & G as W ells S ector 60,450 106
, 859 76.8%
Source: U.S. Census Bureau, 2002a, 2002b , 2007 a, 2007b

.

PAYROLL BY INDUSTRY SECTOR Payroll in the water transportation and fishing industries rose by almost 18 percent and 4 percent, respectively

, from 2002 to 2007 (see Table 4

- 13 ). Consistent with the large increase in employment, t he drilling oil and gas wells sector also saw a large increase in payroll, with payroll increasing by 10 8 percent.
No sectors profiled bel ow saw any decrease in payrolls. Generally

, every sector saw large increases, with the most modest increase at 20 percent in support activities for water transportation

. Inland water transportation saw the largest increase in the water transportation secto r with 78 percent increase in payroll.
The fishing industry’s payroll rose by a robust nearly 4 percent, despite a relatively large 14 percent decrease in its employment base.

Table 4

- 13 : Payroll by Industry Sector, 2002

- 2007.

Industry Sector 2002 Annual Payroll ($ millions) a 2007 Annual

Payroll ($ millions) Percent Change

Water Transportation Industry Deep Sea, Coastal, and Great Lakes Water Transportation $2,809 $3,486 24.1% Inland Water Transportation $685 $1,059 54.5% Scenic and Sightseeing Transportation, Water $307 $350 13.8% Support Activities for Water Transportation $3,186 $3,338 4.8%
TOTAL

- Water Transportation $6,987 $8,233 17.8% Fishing Industry Fishing $291 $302 3.8% Mining Industry Drilling O il & G as W ells S ector $2,871 $5,984 108.4%
Source: U.S. Census Bureau, 2002a, 2002b , 2007 a ; U.S. SBA, 2007b

.

a 2002 Economic Census revenue data updated to $2007 by using CPI deflator (U

. S

. BLS, 2011)

. All data in $2007.2014 sVGP Economic Analysis

Page 50 of 106 

### 5 COST OF EFFLUENT LIMITS AND RELATED REQUIREMENTS

5.1 SUMMARY

The first step in assessing costs of the sVGP permitting requirements involves determining the population of vessels that will be affected by the p ermit. As detailed in Section 2

, the total population of domestic vessels is as high as 138 ,000 vessels , and the total population of foreign vessels is 156 . NPDES requirements for discharges incidental to the normal operation of a vessel will impact virtually every commercial fishing vessel and other non

recreational vessel less than 79 feet in length . However, some vessels will be implementing only certain management practices or activities because some discharges are not applicable to all vessel types. For example, practices associated with graywater discharges are not applicable to barges since this vessel class does not produce this type of discharge (e.g

., they do not have a galley) , while practices associated with fish hold discharges apply only to commercial fishing vessels

. To estimate the effect of the sVGP on the industry as a whole, a baseline must be identified from which to measure this effect. T he baseline takes into account previous conditions and determines how the industry would
act in the future in the absence of the p ermit. The baseline for this analysis is full industry compliance with existing federal and state regulations and current indu stry practices or standards that exceed current regulations to the extent that they can be empirically observed.

As summarized in Section 3 , a numb er of laws and associated regulations (including NISA; APPS; the Comprehensive Environmental Response, Compensation, and Liability Act; the Organotin Anti

- fouling Paint Control Act; Regulations of the Discharge of Oil; EPA’s VGP for ballast water discharge s; and others) already cover certain discharges that would be subject to the new permitting regime. In analyzing economic impacts of
sVGP , EPA has assumed that the entities subject to existing regulations will not incur significant incremental

costs.

The s econd step in assessing costs of the new sVGP permitting requirements involves establishing per

- vessel (or

per

- firm) costs for each management practices

. Some of these costs are derived from industry communication and

survey responses compiled as part of the development of the VGP ( U

. S

. EPA, 2008 a ) . Additional cost inputs we re obtained from manufacturers and field experts. Per

- vessel costs are established for the discharge categories in which vessels are expected to incur incremental c osts. The annual per

- vessel cost of each required practice is estimated based on the per

- instance cost of performing each practice the number of times per year the practice needs to be performed.

Several practices that may be implemented to comply with req uirements under each discharge category were not analyzed for incremental costs because (1) the industry is already complying with the requirement or (2) the expected cost of the relevant practice is negligible.
Finally, the total annual cost per discharge category is estimated by multiplying the cost of each compliance activity or practice per vessel by the number of vessels expected to incur incremental costs due to the sVGP requirements.

5.2 METHODOLOGY

The approach to estimating the incremental co mpliance cost consists of four general steps, applied to each of the discharge categories in this section:2014 sVGP Economic Analysis

Page 51 of 106  Step 1 : Review the sVGP requirement s to identify those requirements that may involve incremental practices beyond what vessel owners are currently do ing to comply with existing laws and regulations or as part of their current operating practices.

 Step 2 : Estimate the number of vessels that will implement the practices identified in Step 1

. This accounts for discharges that are applicable to different t ypes of vessels. As appropriate, the estimated number of vessels also takes into account the fraction of vessels that may already be implementing a practice.

 Step 3 : Estimate the incremental annual compliance cost to each vessel owner. This cost considers equipment or labor costs and the frequency with which a practice may be conducted each year. Some of the sVGP requirements result in a change in customary operating practices and involve the use of material or equipment or additional labor hours. EPA estim ated the cost of individual practices based on information obtained from industry representatives, outside research

, as well as additional data sources. For practices involving additional labor, EPA used the same industry average labor rates used in the

ec onomic analysis of the VGP, updated to 2010 dollars using the Employment Cost Index (ECI) , or $33.72/hour . These rates are multiplied by the incremental number of hours estimated to be necessary to implement the practice. If any of the practices require eq uipment purchase

, costs are annualized considering the life of the equipment , assuming a discount rate of 7 percent (OMB, 2009)

.  Step 4 : Calculate the total annual compliance costs by multiplying the number of vessels by the annual

per

- vessel compliance costs (these costs include annualized capital costs, if any)

. The sections below go through these steps for each of the major discharge categories contained in the sVGP.

5.2.1 GENERAL REQUIREMENTS

PERMIT REQUIREMENTS To comply with r equirements pertaining to th is category , vessel owners must ensure that discharges from their vessel meet the following standards :

For all discharges, as applicable, you must:

(a) Minimize the potential for pollutants to accidentally enter the effluent, including spills.
(b) Not discharge ga rbage in the effluent.
(c) Not use any dispersants, cleaners, chemicals, or other materials or emulsifiers that would remove the appearance of a visible sheen in the discharge. 26
(d) Minimize the discharge of constituents of concern or pollutants, such as foam or f loating solids.
(e) Not discharge oil, including any oily mixture, in quantities that may be harmful or cause a visible sheen. (f) Not discharge antifreeze with toxic or known carcinogenic additives, such as ethylene glycol and methanol. Minimize the discharge of all other antifreeze, such as antifreeze containing propylene glycol.

26 40 CFR § 110.4 states that: “addition of dispersants or emulsifiers to oil to be discharged that would circumvent the provisions of this part is prohibited.” 33 CFR § 151.10 (g) states that: “No discharge into the sea sh all contain chemicals or other substances introduced for the purpose of circumventing the conditions of discharge specified in this regulation.”2014 sVGP Economic Analysis

Page 52 of 106 For vessel engines that have been winterized, minimizing the discharge includes capturing antifreeze drained from the engine.
(g) When feasible, perform major cleaning, maintenance, and repair jobs while the vessel is out of the water or in drydock.
(h) Use only minimally

- toxic, phosphate

- free, and biodegradable soaps, detergents or cleaners. Phosphate

free soap contains by weight 0.5% or less of phosphates or derivatives of phosphates.
(i) Immediately report any spill of oil or other harmful chemicals that are discharged in a quantity that may be harmful or cause a visible sheen as established under 40 CFR Part 110, 40 CFR Part 117, or 40 CFR Part 302, to the National Response Center at 1

- 80 0

- 424

- 8802. The National Response Center can also be contacted through their website at: www.nrc.uscg.mil

. (j) Not add any pollutant that is not incidental to the normal operation of a vessel to any discharge.

(k) While the vessel engine is operating, frequently check the area around and behind the vessel to ensure that no visible sheen, dust, chemicals, or discoloration is originating from the vessel.

Many of the requirements listed under this category are already requi red under other regulations, such as provisions contained in 40 CFR P art 110 regarding discharges of oil or other prohibitions under the CWA, or are common practices already being implemented by vessel owners.
For example, EPA assumes that vessels already avoid discharging oil or oily mixtures given the existing requirements of 40 CFR 110 that prohibit harmful discharges of oil, where harmful is defined as any discharge that violates water quality standards or causes a film or sheen or discoloration of surf ace water. 40 CFR 110 also bans the use of dispersants or emulsifier s to “circumvent the provisions,” and thus vessels are already assumed not to be using dispersants, cleaners, chemicals

, or other products to remove a sheen

. Additionally vessels are
alrea dy assumed to be minimizing introduction of pollutants or substances such as foam, floating solids

, or those that cause a visible sheen

. Under the CWA , it is unlawful to discharge any pollutant from a point source without a permit

. The definition of pollu tant includes garbage and illegal substances (these were not considered incidental discharges) ; therefore

, vessel discharges are assumed not to include garbage or any substances banned by U.S. law as these were not previously authorized

. The provisions of the CWA also address accidental discharges and require spill prevention, and thus vessels will incur no cost to “prevent substances or pollutants from accidentally enter ing effluent and prevent spills into effluent.” Similarly, the requirement that antifre eze not be discharged into any waterbody is assumed to impose no incremental cost on vessel owners since alternative disposal methods are readily available and EPA assumes that vessels owners already comply with the requirement given CWA existing discharge prohibitions. Furthermore, the two constituents of antifreeze specifically identified in the permit requirement, ethylene glycol and methanol, are both defined as hazardous substances under the CWA.

Also

, EPA assumes that significant maintenance, cleaning

, and repair jobs are already done out of the water when
feasible given current practices that involve hauling out boats regularly to conduct a variety of vessel maintenance tasks and guidance provided by most marinas and harbors on activities that may not be performed on water

. One requirement that could potentially involve incremental costs to vessel owners is the one specifying the use of

non

- toxic and phosphate

- free soaps. The cost implications of this are discussed below.2014 sVGP Economic Analysis

Page 53 of 106 AFFECTED VESSEL POPU LATION

Ba sed on the general nature of practices within this discharge category, general requirements are potentially applicable to all 115,000 to 138,000 non

- recreational vessels less than 79 feet

. However, as described above, EPA generally expects that most of the practices listed in this category are already widely implemented the vessels addressed by the sVGP.

COST ESTIMATES To evaluate whether the practices listed in this discharge category have the potential to impose incremental costs on vessel owners, EPA gathered information on the cost difference between “green” and conventional boat cleaning products

, in particular

, the cost of phosphate

- free and safer/clean products that carry third

- party certification

, compared to the cost of conventional cleaning products without such third

- party certification

. EPA found that there was no systematic cost difference between soaps certified by third parties as more

“ environmentally friend ly” and conventiona l products; in fact, the certified “green products” were often less expensive

. Based on a review of retail prices for 32 unique boat soaps, EPA found that the average per

- unit cost of certified cleaners ( $20.27/gallon ) was slightly less than the average pe r

- unit cost of non

- certified, conven tional cleaners ($20.98/gallon) (prices taken from West Marine, Jamestown Distributors, Amazon.com

, and Greenboatstuff.com ; see Appendix A for source data)

. EPA could find no evidence that the certified cleaners are
less effective. Based on these findings, EPA assumes that the sVGP requirement to use non

- toxic, phosphate

- free

soaps does not result in an incremental cost

. Given that other practices listed in this category of the sVGP are already being implemented by vessel s, EPA assumes that requirements listed under this discharge category will not result in incremental costs.

5.2.2 FUEL MANAGEMENT

PERMIT REQUIREMENTS Requirements pertaining to this category include :
(a) For all motorized vessels constructed on or after December 19, 2014, use a functioning fuel

- air separator or a fuel tank vent to prevent a fuel spill.
(b) Prevent overfilling, for example, by not topping off your fuel tanks in a way that causes spillage.
(c) For motorized vessels, if the vessel does not have a functioning fuel

- air separator or a fuel tank vent, use an oil absorbent material or other appropriate device while fueling the vessel to prevent any fuel or oil from entering waters subject to this permit.
(d) Regularly inspect the fuel and hydraulic systems for any damage or leaks, e.g., when fueling and/or performing routine maintenance, and if needed, repair or replace damaged parts as soon as possible.
(e) Unless impracticable, fill portable fuel tanks onshore, instead of on the dock or on the vessel.

While many of the fuel management requirements are part of proper boating procedure and thus have no incremental cost, vessels will potentially incur incremental cost for a fuel

- air separator or tank vent (in the c ase of a new vessel) or use of oil absorbent material (in the case of existing vessels not already equipped with a fuel

- air separator or tank vent). The implications of these two requirements are discussed below.2014 sVGP Economic Analysis

Page 54 of 106 AFFECTED VESSEL POPU LATION

New Vessels

Und er the requirements, all new commercial vessels less than 79 feet in length constructed after December 19,
2013

, will be required to have a fuel

- air separator system (FASS) or tank vent to prevent spilling of fuel

. According to standards already promulgate d by EPA under 40 CFR 1060, all new boats built after 2012 that use gasoline as fuel will be equipped with new fueling equipment to prevent spilling of fuel and therefore automatically comply with the sVGP requirement. T he requirement to install a fuel

- air separator on all new vessels would therefore impose only an incremental cost for vessels not already subject to the standards: new diesel vessels

. EPA used the shares of gasoline

- vs. diesel

- fueled non

- recreational vessels to estimate how many new vessel s would likely need to install a FASS to comply with the sVGP

. I nformation provided in U.S. EPA (2010 b ) on the characteristics of non

- recreational vessels suggests that nearly 100 percent of commercial fishing vessels are
diesel fueled . Accordingly, assumi ng that new vessels have similar characteristics as the existing fleet, all new fishing vessels may be diesel fueled and could be required to install a FASS . The same sources suggest that possibly as many as 9 0 percent of all non

- fishing non

- recreational v essels use diesel engines (U.S. EPA 1998,
2010 b ).
To estimate the number of new vessels potentially covered by the sVGP, EPA assumed that the average life of a

non

- recreational vessel is 30 years (Abt Associates, 2008) and about 1/30 th of the vessel fleet may be replaced by new vessels each year , assuming a constant vessel population

. Based on these assumptions, of the 4,661 new vessels subject to the sVGP each year

, the subset of vessels with diesel engines (100 percent of fishing vess el and 90 percent of other vessels) that will be required to install a fuel air separator system is shown in Table 5

- 1

.

Table 5

- 1 : Universe of Vessels Requiring Installation of Fuel

- Air Separator System (FASS).

Type of Vessel Total Number of Existing Vessels ( L ower/ U pper B ound
E stimate) Proportion

New Per Year Percent

Diesel Number of New Vessels

Requiring FASS Per Year ( L ower/ U pper B ound
E stimate)

Commercial F ishing V essels 67,178

- 67,713 1/30 100% 2,239

- 2,257 Other N on

- recreational V essels 43,243

- 60,931 1/30 90% 1,297

- 1,828

Source : U.S. Coast Guard, MISLE

, 2009

.

EPA further assumes that the distribution of new vessels by size category will follow that observed in the baseline, namely 11 percent of commercial fishing vessels are less than 26 feet, 72 percent are between 25 and
50 feet, and 16 percent are more than 50 feet. In the case of other non

- recreational vessels, the shares are 20 percent, 52 percent, and 28 percent, respectively.

Existing Vessels

A ll existing vessels not already equipped with a fuel

- air separator or tank vent will be required to utilize oil pads for fuel management. EPA assumes that existing vessels are not currently equipped with a fuel

- air separator (this is likely to be a conservative assumption given the wide availability of this equipment); this permit will not2014 sVGP Economic Analysis

Page 55 of 106 require that existing vessels install equipment; ins tead, owners of existing vessels may comply with permit requirements by using oil absorbent material during fueling to catch drips and prevent spills

. Since only self

- propelled vessels may be expected to conduct fueling activities as part of their normal operations

, vessels subject to these requirements are expected to include all existing vessels except barges (barges often have no engine but are instead towed by another vessel ( U

. S

. EPA, 2010 b ) )

. According to the vessel population derived from MISLE data, the number of vessels potentially subject to this requirement ranges from about 110,000 to over 128,000, as presented in Table 5

- 2

. 27 Note that while existing vessels will be progressively replaced by new vessels as described above, for the purpose of this estimate, EPA is using the total population of existing vessels as a conservative estimate of the vesse ls that may incur incremental cost during any one year of the five years of the p ermit.

Table 5

- 2 : Vessel Counts for Oil Pad Requirements for Fuel System Management

Vessel Class Vessel Count ( L ower Bound Esti mate ) Vessel Count ( Upper Bound Estimate ) Commercial Fishing Services 67,178 67,713 Freight Ships 579 768 Passenger Vessels 18,660 20,953 Public Vessels, Unclassified 67 622 Tank Ships 49 179 Utility Vessels 8,876 11,034 Unspecified 15,012 27,375
TOTAL 110,421 128,644

COST ESTIMATES

Fuel

- Air Separators

In order to determine the costs of the FASS , EPA contacted leading boating suppliers, and found a range of costs for these systems (Boatstore.com; Boater’s World; PBS Supply Store; West Marine Supply) . Unit costs per FASS ranged from $50 to $930 for the one

- time cost of purchasing and installing the system . In general, the range reflects differences in vessel and engine sizes or conf iguration. A small commercial boat with an outboard motor will pay significantly less for purchasing and installing a FASS than a 70

- foot commercial fishing vessel. The cost for FASS often also depends on the engine horsepower. Amortizing this cost over th e 30

- year assumed life of a vessel is equivalent to an annual cost of $4 to $75 per vessel

. 28 For the purpose of the analysis, EPA assumed that vessels less than 26 feet incur a cost equal to the lower range estimate ($50), vessels greater than 50 feet woul d incur the maximum cost ($930), and vessels between 26 and 50 feet incur the average cost ($490).

Table 5

- 3 shows the total costs for this requiremen t on an upfront and annualized basis

.

27 The population depends on whether the universe includes all ships potentially less than 79 feet in length or only those presumed to be less than 79 feet when excluding a certain number of vessels with length reported as zero or null.

28 This is based on a 7 percent discount rate and 30

- year life.2014 sVGP Economic Analysis

Page 56 of 106 Table 5

- 3 : Incremental Compliance Cost for New Diesel Vessels to Install a Fuel

- Air Separator System.

Type of Vessel Vessel Size Category Number of

New Vessels per Year Unit Cost Total Cost Annualized
cost a

New D iesel C ommercial
F ishing V essels Less than 26 feet 254 $50 $12,710 $1,024
26

- 50 feet 1,619 $490 $793,381 $63,936 50 feet or greater 366 $930 $340,308 $27,424
Sub t otal 2,239 $1,146,399 $92,384

Less than 26 feet 256 $50 $1,146,399 $92,384
26

- 50 feet 1,632 $490 $12,811 $1,032 50 feet or greater 369 $930 $799,699 $64,445
Sub t otal 2,257 $1,155,529 $93,120

New D iesel O ther N on

recreational V essels Less than 26 feet 260 $50 $343,018 $27,643
26

- 50 feet 676 $490 $1,155,529 $93,120 50 feet or greater 361 $930 $12,986 $1,046
Sub t otal 1,297 $1,155,529 $93,120
Less than 26 feet 366 $50 $331,316 $26,700
26

- 50 feet 953 $490 $336,122 $27,087 50 feet or greater 509 $930 $680,423 $54,833
Sub t otal 1,828 $958,742 $77,262
Total Lower Bound 3,53 7

-- $ 1,826 , 822 $147,217 Total Upper Bound 4,085 $ 2 , 114 , 271 $170,381

Source: Estimates for unit cost taken from Boatstore.com

, West Marine Supply store

, Boater’s World

, and PBS Boat Store

.

a Costs annualized over 30 years at a 7% discount rate.

Absorbent Material EPA assumes that existing vessels are not currently equipped with a fuel

- air separator or similar device to prevent spills during fueling

. T he sVGP will not r equire that existing vessels install equipment; instead, owners of existing vessels may comply with permit requirements by using oil absorbent material during fueling to catch drips and prevent spills

. A search of boating equipment suppliers found that r et ail costs for oil absorbent pads

range between $0. 15 to $0.48 per pad (Best Value Supply, Inc; Pacific Environmental; AbsorbentsOnline.com)

. Costs may be higher in remote areas due to limited availability or additional shipping costs. For example, EPA

rece ived comments on the sVGP noting that oil pad costs range from $0.75 to $1.25 in Southeast Alaska (United Fishermen of Alaska and Fishing Vessel Owners Association). To reflect potentially higher regional costs, EPA used $0.75 per pad as its higher bound unit cost estimate. 29 EPA a ssumes that a ll existing vessels , both diesel

- and gasoline

- fueled

, are assumed to use a pad each time they refuel (see Table 5

- 4 ).

29 The upper bound estimate of $0.75/pad is higher than the weighted average cost ($0.56/pad) obtained by multiplying the fraction of vessels with hailing ports located in Alaska (11 percent) by $1.25/pad, assuming that all Alaskan vessels face this higher co st, and the remaining fraction of vessels (89 percent) by $0.48/pa d (1.25 x 0.11 + 0.48 x 0.89 = 0.56).2014 sVGP Economic Analysis

Page 57 of 106 Table 5

- 4 : Unit Cost for Oil Absorbent Pads Used for Fuel Management

Application Unit Cost ( Low er B ound E stimate) Unit Cost ( High er

B ound E stimate) Number of Pads Range of Unit
Costs ( P er F ueling A ctivity) All Engine and Oil Control Activities $0.15/pad $ 0.75 /pad 1 $0. 15

- $ 0.75

Source: U.S. EPA estimates. Cost obtained from Best Value Supply, Inc

, Pacific Environmental

, AbsorbentsOnline.com

, United Fishermen of Alaska and Fishing Vessel Owners Association

.

The number of pads used each year will depend on fueling frequencies. EPA estimated average fueling frequency by combining data on the average fuel tank capacity of fishing vessels, the average fuel intensity of the U.S. fishing fleet (gallons of fuel used per ton of c atch), the tons of catch per year, and the number of fishing vessels. A report on vessel traffic in the Cook Inlet, Alaska

, reported the median fuel tank capacities for fishing vessels based on size (Cape International, Inc

. and Nuka Research and Planning, 2006)

. Overall, for the 558 fishing vessels less than 80 feet long, the median fuel capacity ranged between 30 and 1,200 gallons ( with the lower end of this range for one vessel under 20 feet in length) (Cape International, Inc

. and Nuka Research and Plan ning, 2006). Generally, the authors conclude from the data that fishing vessels typically have a fuel capacity of about
300

- 1,000 gallons (Cape International, Inc

. and Nuka Research and Planning, 2006)

. Kitts (2010) estimated that in 2007

, otter trawling fishing vessels consumed 900 liters of fuel per metric ton of ‘all species’ catch, or 238 gallons per metric ton of catch

. Tyedmers et al. (2005) estimated fuel intensity in the ra n ge of 50 to 2,000 liters of fuel per metric ton of catch, d epending on the species, which overlaps with Kitts’ estimate

. According to the National Marine Fisheries Service ( NMFS ) , in 2007, there were 4.2 million metric of commercial landings by U.S. fishermen (NOAA, 2008). Multiplying fuel intensity by the total c atch suggest s a total fuel consumption of 1 billion gallons of fuel for all vessels in the U.S. commercial fishing industry

. According to the MISLE database, there are 69,944 fishing vessels (of any size) in the U nited S tates
, approximately 96 percent of w hich are less than 79 feet in length. The fuel consumption data are therefore expected to be reasonably representative of the vessels addressed by the sVGP. Dividing the total gallons of fuel by the total number of fishing vessels leads to an estimate aver age consumption of 14,266 gallons of fuel per vessel per year

. Dividing this value by the estimated fuel tank capacity of fishing vessels (300 to 1,000 gallons) suggests that fishing vessel refuel anywhere from 14 to 48 times per year.
While refueling freq uencies may differ for other vessel types, in the absence of similar data for other vessel types, EPA assumes that other non

- recreational vessels refuel at the same frequency as commercial fishing vessels

.2014 sVGP Economic Analysis

Page 58 of 106 Table 5

- 5 : Annual Incremental Cost for Oil Absorbent Material Used for Fuel Management

Application Number of Vessels Frequency per

Year Unit Cost

(Lower / Upper Bound Estimate) Total Cost Per Year

Low Refueling Frequency

Use oil absorbent material to catch drips from vent overflow and intake 110,421 14 $0.15 $231,884 $ 0.75 $1,159,421

128,644 14 $0.15 $270,152 $ 0.75 $1,350,762 High Refueling Frequency

Use oil absorbent material to catch drips from vent overflow and intake 110,421 48 $0.15 $795,031 $ 0.75 $3,975,156

128,644 48 $0.15 $926,237 $ 0.75 $4,631,184

Total Lower Bound $ 231,884 Total Upper Bound $4,631,184 Source: Kitts, 20 1 0; Tyedmers et al. 2005; NOAA, 2008; Cape International, Inc

. and Nuka Research and Planning, LLC, 2006; MISLE, 2010

.

The cost for using absorbent materials during refueling varies from approximately $232,000 to over $ 4.6 million dollars, depending on the assumed unit cost value , fueling frequency , whether a pad is consumed every time the vessel is refueled, and the range in the population of vessels estimated to implement the practice (see Table 5

- 5 )

. The inc remental cost may be overestimate d to the degree that vessel operators already use absorbent pads to catch spills and drips or do not consume a pad each time they refuel

. As discussed at the start of this section, EPA assumes that vessels already perform all other requirements listed under the fuel management category

. For example, EPA assumes that operators routinely inspect fuel and hydraulic system for damage or leaks and prevent overfilling fuel tanks

. EPA further assumes that operators examine the sur round ing water for presence of visible sheen and suspend fueling if a visible sheen is detected

. Therefore, aside from the incremental costs for oil absorbent material and fuel

- air separator system s , no other requirements within the fuel management categ ory are believed to impose a non

- negligible incremental cost on vessel owners

. Table 5

- 6 summarizes the total incremental costs associated with this discharge category.

Table 5

- 6 : Summary of Annual Costs for Fuel Management

.

Practice Total Annual Cost s ( Low er Bound) Total Annual Cost s ( High er Bound) Oil A bsorbent M aterial for E xisting C ommercial V essels $231,884 $4,631,184
FASS for N ew D iesel C ommercial F ishing V essels $92,384 $93,120
FASS for N ew D iesel O ther N on

- recreational V essels $54,833 $77,262 Total Fuel Management Costs $379,101 $4,801,5652014 sVGP Economic Analysis

Page 59 of 106 5.2.3 ENGINE AND OIL CONTR OL

PERMIT REQUIREMENTS Requirements pertaining to this category include:
(a) Periodically inspect the engine at least once per quarter for any loose or leaking hoses, gaskets, and/or seals and if needed, repair or replace damaged parts as soon as possible.
(b) Place oil absorbent material or other spill response equipment under the ve ssel engine or use other preventative practices to minimize oil entering the bilgewater.
(c) Clean up any spill or overflow of oil or other engine fluids immediately. Keep a supply of absorbent pads, pillows, or other materials onboard as appropriate for use i n containing or remediating any such spills or overflows, and check supplies quarterly and restock as necessary.
(d) Dispose of used oil

- absorbent materials onshore consistent with applicable solid waste regulations (e.g., in containers designed and intended f or oily waste disposal).
(e) If the vessel has a bilge oily water separator, check for the presence of a visible sheen in surrounding waters periodically while discharging and if a visible sheen is observed as a result of this discharge, suspend discharge unti l the problem is corrected and clean up immediately. (f) For vessels without a U.S. Coast Guard type

- approved bilge oily water separator, use an oil

- absorbent material to remove any oil from the bilge before discharging.
(g) Not discharge packing gland or stuffing box effluent containing oil, including oily materials, in quantities that may be harmful or that produce a visible sheen of oil or oily materials.

1. If accessible while the vessel is operational and manned, check segregated water which contains drips from p acking gland effluent or stuffing box effluent daily for the presence of a visible sheen. If not accessible while the vessel is operational and manned, check the surrounding water for the presence of a visible sheen while the vessel is operating. If a visi ble sheen is observed, use appropriate measures, such as the use of oil absorbent materials, to remove the presence of oil before the effluent is discharged. Use of dispersants or emulsifiers that remove the appearance of a visible sheen are prohibited.

2. If a visible sheen is observed in surrounding waters as a result of this discharge, suspend the discharge until the problem is corrected and clean up immediately.

(h) Unless technically infeasible, use environmentally acceptable lubricants (“EALs”) (as defined in Part 5 of this permit) in all machinery and equipment, including but not limited to stern tubes, wires, and two

stroke engines, where discharges of oil to surrounding waters are likely to occur. For purposes of requirements related to EALs, technically infeasible means that no EAL products are approved for use in a given application that meet manufacturer specifications for that equipment, products which come pre

lubricated (e.g., wire ropes) have no available alternatives manufactured with EALs, produc ts meeting manufacturer specifications are not available within any port in which the vessel calls, or change over and use of an EAL must wait until the vessel’s next drydocking.

(i) Prior to pumping the bilge, inspect the bilgewater for an oily sheen if pract icable. While pumping the bilge, examine the surrounding water for the presence of a visible sheen.

1. If a visible sheen is observed as a result of this bilge pumping, suspend the discharge until the problem is corrected and clean up immediately. (j) Not add to the bilge any substance, including dispersants, detergents, emulsifiers, chemicals or other substances that remove the appearance of a visible sheen.2014 sVGP Economic Analysis

Page 60 of 106 While many of the requirements listed in this category overlap with existing regulations, vessel opera tors could incur some incremental cost as a result of purchasing, utilizing, and disposing of oil absorbent pads and utilizing environmentally acceptable lubricants

. All other requirements under this section of the sVGP are assumed to be performed as part of current operational practices, have negligible incremental costs, or overlap with existing requirements under 40 CFR 110

, which prohibits the discharge of oil or oily residue into water.
For example, as part of general overall operation and ongoing mai ntenance of vessels, operators are assumed to inspect engines for loose or leaking hoses, gaskets, and seals and replace as necessary, and thus this requirement is assumed to have zero incremental cost

. Additionally, many of the other oil discharge prohib itions emphasized in the sVGP are already required under 40 CFR 110

. Under 40 CFR 110, vessels may not discharge any oil that will be harmful or cause a visible sheen or use dispersants or emulsifiers to remove sheen

. 40 CFR 110 covers all requirements for bilge water and packing gland or stuffing box effluents and any discharge from an oil water separator

. All vessel operators are assumed to already comply with the requirements to prevent any harmful oily discharge that may leave a visible sheen ; therefore

, there is zero incremental cost for re

- emphasizing these requirements as part of the sVGP.
The sections below discuss more specifically the potential implications of requirements related to the use of absorbent material and environmentally acceptable lubr icants.

AFFECTED VESSEL POPU LATION Based on the general nature of practices within this discharge category, EPA estimated that general requirements are potentially applicable to the entire universe of vessels potentially subject to the sVGP ( i.e., about 11 5,000 to 138,000 vessels )

.

Table 5

- 7 : Vessel Counts for Oil Pad Requirements for Engine and Oil Control.

Vessel Class Total Vessel Count (Lower Bound Estimate ) Total Vessel Count (Upper Bound Estimate ) Commercial Fishing Services 67,178 67,713 Freight Barges 4,288 8,016 Freight Ships 579 768 Passenger Vessels 18,660 20,953 Public Vessels, Unclassified 67 622 Tank Barges 287 923 Tank Ships 49 179 Utility Vessels 8,876 11,034 Unspecified 15,012 27,375
TOTAL 114,996 137,583

COST ESTIMATES

Oil Absorbent Material

Based on data collected from boating equipment retailers, EPA estimates that the cost for oil absorbent material

ranges between $0.31 per pad to $8.96 per sock (Best Value Supply, Inc

, Absorbent Specialty Products

, AmericanMarineSupply.com

, Pacific Environmental

, AbsorbentsOnline.com)

. As noted in Section 5.2.2 : Fuel Management , c osts of ad sorbent pads may be higher in remote areas due to limited availability or additional shipping costs. To reflect potentially higher regional c osts, EPA assumed costs that are 2.4 times larger than the2014 sVGP Economic Analysis

Page 61 of 106 estimates above as its higher bound unit cost estimate s (based on the difference between $0.31 and $0.75 per pad for national average and regional costs in Southeast Alaska , respectively ). 30 I nformation pro v ided by BoatUS on practices followed by recreational boaters suggests that boaters will generally put an absorbent sock in their bilge at the start of the season and that the sock lasts the entire season

. While no specific information could be found for the vessels covered by the sVGP, given similarity in the application but potentially higher utilization rates for these vessels, EPA assumes that non

- recreational vessels may use two socks or 50 pads per year for all these three practices comb ined (minimizing oil entry to the bilge, accidental spills, and removing oil from the bilge)

. Note that this is assumed to be distinct from pads used to clean spills during refueling.

EPA assumes that all covered vessels will be required to comply with th ese requirements, al though this may be overestimating the incremental cost for the sVGP since the permit requirement does not contain a uniquely new practice and many operators already utilize oil absorbent pads. The estimates are therefore assumed to be r ather conservative.

Table 5

- 8 : Unit Cost for Oil Absorbent Pads and Socks for Engine and Oil Control

Type of Vessel Unit Cost (Lower
B ound) Lower Bound

Costs (Average) Unit Cost (Upper
B ound) Upper Bound

Cost (Average)

All Engine and Oil Control
Activities $0.31/pad x 50 pads or $8.96/sock x 2 socks $15.50

- $17.92

($16.71) $0. 75 /pad x 50

pads or $21.68/sock x 2

socks $37.50

- $43.35

($40.43)

Source: EPA estimates

.

Table 5

- 9 : Annual Cost for Engine and Oil Control

Practice a Number of Vessels Unit Cost Total Cost Per Year Oil C ontrol using P ads 114 ,996 $ 16.71 $1,921,583
137,583 $2,299,012

Oil C ontrol using S ocks 114 ,996 $ 40.43 $4,648,992
137,583 $5,562,126

Total Lower Bound $1,921,583
Total Upper Bound $5,562,126

Source: EPA estimates

.

a The two practices are not additive.

Lubricants Vessel operators could also incur incremental cost s as a result of the requirement to utilize environmentally preferred lubricants in all machinery and equipment where discharges to surrounding waters are likely to occur. EPA reviewed publicly available cost data for a variety of lubricants marketed for ma rine applications to determine whether lubricants classified as environmentally safer and biodegradable are more expensive than

30 The upper bound costs are based on comments on the proposed sVGP from the United Fishermen of Alaska and Fishing Vessel Owners Association, which indicated that the costs of oil pads range from $0.75 to $1.25 in So utheast Alaska.2014 sVGP Economic Analysis

Page 62 of 106 conventional formulas. EPA found significant variability in the cost of the two categories of lubricants, with the most notable differences being for lubricants targeted at very specific applications (e.g., dry lubricants and gear oils as compared to generic engine oils)

. Four different categories of lubricants were reviewed: lower gear (gear case) lubricant

, dry lubricant

, engine oil

, and general application lubricant (penetrant, multi

- purpose lubricant). EPA obtained cost data from retailers of marine lubricants for over 50 products classified across the four categories, with at least one product in each category being adv ertised as biodegradable or environmentally safe. Whether the environmentally safer products were more expensive than conventional products depended on the type of lubricant ; environmentally preferred dry lubricants and gear oils were 54 and 32 percent mor e expensive than their counterpart s , respectively, but engine oils and lubricants for general application were less expensive ( by 28 and 24 percent, respectively)

. Whether the requirement imposes an incremental cost on vessel owners, therefore, will depend on the relative quantities of different types of lubricants used on vessels . Although EPA contacted boat repair shops to get insight on the amounts of lubricants commonly consumed by different types of vessels, these data were not readily available . As a rough estimate of quantities, EPA used the common package sizes as a proxy for the amount that may be purchased at retail by a vessel owner and assumed that vessel owners would make such purchases twice in any given year

. While admittedly crude, this appro ach assumes that lubricant manufacturers package their products in quantities roughly equivalent to a single use

. EPA further assumes that all vessels will incur this cost, though this may over estimate the total costs , because

non

- self

- propelled vessels m ay use less lubricant (no engine and fewer moving parts ) and some vessel owner s already us e environmentally prefer red lubricant s ; manufacturer information suggests that conventional lubricants still account for the bulk of the lubricants produced and sold

, however, and the number of vessel owners that use only environmentally preferred lubricants may be relatively small

.

Table 5

- 1 0 : Incremental Cost for Environmentally Acceptable Lubricants.

Type of Lubricant Vessels Incremental Unit Cost a Amount Per

Year Total Cost Per Year

Lower G ear $0. 16 /oz. 64 ounces Dry L ubricant $0. 52 /oz. 22 ounces Engine O il

- $0. 07 /oz. 128 ounces General A pplication

- $0. 23 /oz. 48 ounces Total 114,996

- 137,583 $ 1.68 /year $ 193
, 193

- $ 231
, 139

Source: Estimates for unit cost developed based on data from boating equipment retailers, West Marine, Jamestown Distributors, Amazon.com, and GreenBoatStuff.com

.

a Negative values represent average cost savings for biodegradable products as compared to conventional lubricants

.

Table 5

- 11 summarizes the total annual costs for engine and oil control practices

.2014 sVGP Economic Analysis

Page 63 of 106 Table 5

- 11 : Summary of Annual Costs for Engine and Oil Control

.

Practice Total Cost Per Year ( Low er Bound Estimate ) Total Cost Per Year (Upper Bound Estimate ) Oil C ontrol P ractices $1,921,583 $5,562,126
Use E nvironmentally A cceptable L ubricant $193,193 $231,139 Total Engine and Oil Control $2,114,776 $5,793,265

5.2.4 SOLID AND LIQUID WASTE MANAGEM ENT

PERMIT REQUIREMENTS Requirements pertaining to this category include:

(a) Prevent trash or garbage, including food waste, cigarette butts, bottles, and caps from entering and being discharged in any waste stream covered by this permit. This can be accomplished, in part, by maintaining a tidy deck.
(b) Have and maintain appropriate receptacles for retaining trash or garbage onboard the vessel. Examples of appropriate receptacles include secured trash bags or coolers, bins, or trash cans with secure lids. Store any used antifreeze, paint, out

- of

- date flares, or other toxic or hazardous materials in secure containers and dispose of them properly at onshore disposal facilities.
(c) Secure or otherwise prevent loose items on deck from entering any wa ste stream covered by this permit.
(d) Prevent monofilament line, fishing nets, lines, lures, rope, bait boxes, and hooks from entering any waste stream covered by this permit.
(e) Not discard any unused live bait overboard, except for bait caught in that waterbod y or watershed. Unused live bait purchased from a bait shop or dealer may not be discharged overboard unless the vessel operator has documentation from the dealer that the bait was caught in that waterbody or watershed.
(f) To the extent practicable, remove a ll accumulated bilgewater prior to transporting the vessel from one waterbody to another over land to reduce the risk of transporting invasive species and to remove other potential pollutants.

EPA expects that vessel owners already implement operating pra ctices that comply with most of the requirements or that doing so involves no significant incremental change in existing operations . Thus, EPA assumes that vessel operators currently prevent trash, fishing equipment (lines, nets, lures, rope, hooks, etc.)

, and loose items on deck from being discharged into water

, generally do not discard unused live bait overboard, and remove accumulated bilgewater as part of preparations for transporting the ir vessel to another waterbody over land

. 31
The only potential exception may be the need to procure a container to contain trash and other debris. While the requirement does not specify the design or size of the container, some vessel owners may not have an existing receptacle with a secure lid. The potential implications of this requirement are discussed below.

31 It is not in a vessel operator’s interest to discard live bait overboard or to haul extra water at unnecessary expense.2014 sVGP Economic Analysis

Page 64 of 106 AFFECTED VESSEL POPU LATION Based on the general nature of practices within this discharge category, EPA estimated that general requirements are potentially applicable to all 115

, 000 to 138

, 0 00 non

- recreational vessels less than 79 feet

. 32

COST ESTIMATES

EPA assumes that all commercial fishing vessels and small non

- recreational vessels would have to procure a receptacle for trash, which can include a secured bag, cooler , bin

, or trash cans wit h secure lids. This analysis assumes that because EPA does not require the container to follow a specific design . M any vessels will therefore already have suitable trash receptacles or may have other receptacles that can be repurposed to fulfill this requi rement . As a conservative estimate, EPA assumes that up to 10 percent of vessel owners will need to purchase a new container

. EPA obtained purchase cost s for various sizes of outdoor trash cans

. The price from online retailers (Amazon.com, Sears, and Home Depot) ranged from $12.98 for a 20

- gallon plastic can to $65.59
for a 44

- gallon outdoor plastic can

.

Table 5

- 12 . Cost for Trash Receptacle.

Requirement Number of Vessels Unit Cost Number Required Total Annua lized Cost Per Year a

Purchase T rash
R eceptacle 11,500 $12.98 1 $21,252 13,758 $25,426 11,500 $65.59 1 $107,389 13,758 $128,482
Total Lower Bound $ 21 , 252 Total Upper Bound $ 128 , 482

Source: Cost for trash receptacle estimated from online retailers including Amazon.com, Sears, and Home Depot

.

a Cost annualized over 10

- year assumed life for the container, using a 7% discount rate.

As discussed as the start of this section, EPA assumes that the other three solid and liquid waste mana gement
p ermit requirements are performed as part of general operating practices and therefore v essel operators will incur

no incremental cost to comply with these other requirements

. The total cost for solid and liquid waste management, then, is the cost t o certain vessel owners to purchase a n appropriate trash receptacle . This cost ranges from approximately $ 21

, 200 to $ 128

, 500 (annualized)

.

5.2.5 DISCHARGES OF DECK WASHDOWN AND RU NOFF AND ABOVE WATER LINE HULL CLEANING

PERMIT REQUIREMENTS Requirements pertaining to this category include:
(a) Use all soaps and cleaners as directed by the label.

32 Although the requirement regarding fishing lines and nets is assumed to only affect the roughly 68,000 commercial fishing ves sels, as discussed at the start of the section, EPA does not anticipate that the requirement will impose significant changes beyon d current practices2014 sVGP Economic Analysis

Page 65 of 106 (b) Use only minimally

- toxic, phosphate

- free, and biodegradable soaps, detergents, or cleaners on the vessel. The use of soaps that are labeled toxic or highly toxic is prohibited under this permit.
(c) Prevent the introduction of on

- deck debris, garbage, residue , and spills into deck washdown and runoff discharges.
(d) Minimize the discharge of paint chips and residue, especially during cleaning, maintenance, paint application, and reapplication. When performing these activities, collect and then dispose of chips and residues onshore in accordance with applicable requirements for the facility where operations are performed.

Based on review of public comment documents from the June 2007 EPA information request and information compiled for the VGP Economic Analysis ( U

. S

. EPA, 2008 a ), large vessels already generally implement several of the practices listed under this discharge category. 33 It is unknown whether this is also the case of vessels less than 79 feet

. Therefore, EPA conservatively assumes that the requirement to use minimally toxic and phosphate

- free cleaners has the potential to impose incremental costs on vessel owners, to the extent that these products may be more expensive than the conventional cleaners and vessel owners do not already use these products a s part of their current practices

. Similarly, EPA reviewed information available on the current maintenance practices for smaller vessels to assess whether the requirement to minimize the discharge of paint chips and residue has the potential to impose inc remental costs. The implications of these two requirements are discussed below.

AFFECTED VESSEL POPU LATION Based on the description of practices within this discharge category, deck washdown and runoff is potentially applicable to all 114,996 to 137,583 ve ssels

. The population potentially affected by BMPs applicable to the deck runoff discharge category is shown in Table 5

- 13

.

33 The American Waterways Operators, an industry organization representing barges and towing vessels, provided information regar ding vessel practices in their public comments for the 2008 VGP . All their member tank barges currently use drip pans on machinery, and all perform drip pan cleaning and/or draining. Furthermore, towing vessels currently clear decks of debris, garbage, residue, and spills before conducting deck washdowns, and all currently use environmentally friendly cleaners. Additionally, based on preliminary responses from industry representatives, most deck runoff BMPs are already practiced by other vessels: (1) deck cleanup is currently pe rformed prior to deck washdowns, and (2) passenger vessels are assumed to practice dec k cleanup prior to departing from port. However, most towing vessel/barge companies responded that it is not as common to perform deck cleanup prior to departing from port.2014 sVGP Economic Analysis

Page 66 of 106 Table 5

- 13 : Vessel Counts for BMPs Applicable to Deck Runoff.

Vessel Class Number of Vessels ( Lower Bound Estimate ) Number of Vessels ( Upper Bound Estimate ) Commercial Fishing Services 67,178 67,713 Freight Barges 4,288 8,016 Freight Ships 579 768 Passenger Vessels 18,660 20,953 Public Vessels, Unclassified 67 622 Tank Barges 287 923 Tank Ships 49 179 Utility Vessels 8,876 11,034 Unspecified 15,012 27,375
TOTAL 114,996 137,583

COST ESTIMATES EPA assumes that vessel operators already use soaps and cleaners as directed as a normal practice. Similarly, EPA assumes that vessel operators minimize the introduction into water of on

- dec k debris, garbage, residue, and spill s as part of their normal boating practices. Therefore, there will not be any costs associated with these activities.
Although vessels are not currently required to utilize biodegradable, phosphate

- free soaps, as discu ssed in Section 5.2.1 , a comparison of the cost of different cleaners marketed to the boating community indicates that biodegradable, phosphate

- fre e soaps are not necessarily higher (and are often cheaper) than conventional products. There should therefore be no incremental costs associated with the purchase of these products to comply with the sVGP requirements

. EPA assumes that vessel operators already minimize the discharge of paint chips and residue as a standard practice. When these activities are performed in the water, industry best practices described in EPA (2008a) suggest that efforts are already made to minimize discharges. When performed onshore, it is unlikely that minimizing discharge will require any additional effort on the part of vessel owners.

5.2.6 VESSEL HULL MAINTENA NCE

PERMIT REQUIREMENTS Requirements pertaining to this category include:
(a) If the vessel is equipped with an anti

- foulant system, minimize the impact of that system or the discharges resulting from anti

-

foulant paints to the aquatic environment, including:

1. Consider whether the use of non

- copper based paints adequately meets vess el anti

- foulant needs and use less toxic alternatives to the extent practicable and available.

2. Where drying or hull cleaning at haul

- out is adequate for managing fouling (e.g., for vessels that are hauled frequently or for over

- winter storage), not use ant i

- fouling coatings

.
3. Not discharge tributyltin (TBT) (i.e., zero

- discharge standard). Two potential ways to meet this standard are to:

 Have no TBT coatings; or2014 sVGP Economic Analysis

Page 67 of 106  Have an effective overcoating that completely eliminates TBT discharges.

4. Not use any other organ otin compound (e.g., dibutyltin) as a hull coating except when the organotin compound is used as a catalyst and the hull coating contains no more than 2,500 milligrams total tin per kilogram of dry paint. Furthermore, the coating shall not be designed to slough or otherwise peel from the vessel hull. Incidental amounts of coating discharged by abrasion during cleaning or after contact with other hard surfaces (e.g., moorings) are not prohibited.

(b) Not clean anti

-

foulant paint, which releases biocides, for t he first 90 days after application un less the vessel’s hull is substantially fouled.

(c) If the anti

-

foulant paint requires cleaning, gently clean hulls on a regular basis (this minimizes the need for stronger cleaners and more abrasive brushes).

(d) Examine the w ater while cleaning hulls coated with anti

- fouling paint while the vessel is in the water to assure that it is not causing a plume or cloud of paint to form. Stop immediately if any visible plume or cloud of paint appears in the water. Production of a plu me or cloud of sediment or hull growth is normal in some cases during vessel hull cleaning, but this plume or cloud must be substantially paint free (e.g., paint should not be clearly identifiable in the plume or cloud). Consider hiring a qualified, profes sional hull cleaner to do the work, and ensure that they follow environmental guidelines.

(e) When cleaning hulls coated with anti

- fouling paint while the vessel is out of the water, always work away from the water in a location where paint chips and dust will not be washed into the water. Place a tarp under the area to catch loose particles, and properly dispose of paint chips, dust, and other particles. If working in an area that is covered by an NPDES permit (e.g. marina or drydock), follow the cleaning
requ irements of that permit.

(f) Inspect the vessel hull at least once per quarter for any attached living organisms and clean, if necessary, to prevent the spread or dispersal of potentially invasive species.

(g) Minimize the transport of any visible living aquatic o rganisms from one waterbody to another by regularly cleaning and maintaining the hull.

(h) Prior to transporting the vessel from one waterbody to another overland, inspect the visible areas of the vessel for any attached or visible stowaway living organisms. I f organisms are found, remove and appropriately discard these organisms onshore. Do not discharge removed organisms into waters subject to this permit.

EPA assumes that vessel owners using anti

- foulant systems already make reasonable efforts to reduce the impact of the system or related discharges from anti

- fouling paints as part of normal operating procedures. Therefore, this requirement has no associated incremental cost.
Due to the requirements of the Global Anti

- fouling System Treaty, which took effect in 2008, TBT

- based coatings are banned in most countries, and few if any vessels are still using TBT coatings. The corresponding sVGP requirements are therefore assumed to impose no incremental cost.
The implications of other substantive requirements spec ified for this discharge category are discussed below.

AFFECTED VESSEL POPU LATION Based on the general nature of practices within this discharge category, EPA estimated that general requirements are potentially applicable to about 115,000 to 138,000 vessel s, as shown in Table 5

- 14

.2014 sVGP Economic Analysis

Page 68 of 106 Requirements applicable to vessels transported overland are assumed to affect only to a subset of vessels that are trailere d from one waterbody to another. Since data are not available on the number of vessels that are trailered, EPA conservatively assumed that all vessels in the lower size category (less than 26 feet) have the potential to be trailered.

Table 5

- 14 : Vessel Counts for BMPs Applicable to Vessel Hull Maintenance.

Vessel Class Total Vessel Count (Lower Bound Estimate) Total Vessel Count

(Upper Bound Estimate) Trailered Vessel

Count (Lower Bound Estimate) Trailered Ves sel Count (Upper Bound Estimate) Commercial Fishing Services 67,178 67,713 7,626 7,687 Freight Barges 4,288 8,016 53 99 Freight Ships 579 768 34 45 Passenger Vessels 18,660 20,953 1,761 1,978 Public Vessels, Unclassified 67 622 10 94 Tank Barges 287 923 39 126 Tank Ships 49 179 2 7 Utility Vessels 8,876 11,034 767 954 Unspecified 15,012 27,375 5,859 10,685
TOTAL 114,996 137,583 16,152 21,674

COST ESTIMATES The requirement to not clean anti

- fouling paint within 90 days of application will not result in any incremental costs, because this is currently considered a best practice for vessel owners (for example, the Clean Marinas Program guidelines already recommend against cleaning anti

- fouling paints within 90 days of application ), and it does not require any additional effort for vessel owners.
Likewise, requirements to clean hulls regularly are assumed not to result in incremental costs, as ves sel owners are likely to perform regular cleanings as part of standard operating procedures. The recommendation to consider hiring a qualified hull cleaner to clean the vessel in the water is not a mandatory requirement and therefore will not result in inc remental costs. Additionally, some marinas and harbors discourage the practice or already specify precautionary measures to be taken during the cleaning such that a qualified hull cleaner can more readily implement those precautions.

Based on information collected by EPA as part of the analysis of the VGP ( U

. S

. EPA, 2008 a )

, the use of soft sponges to clean hulls with anti

- fouling paint is already standard practice (in accordance with guidance provided by numerous marinas and harbors)

. This is because more aggressive cleaning could damage the anti

- fouling paint or shorten its life. Therefore, EPA expects that there will be no incremental costs associated with this activity.
The review of the various requirements leaves two practices with the potential to imp ose incremental costs on vessel owners: use of a tarp to collect debris and hull inspections.
EPA assumes that the requirement to utilize a tarp to collect paint chips and dust when cleaning hulls with toxic anti

- fouling paint could require vessel owners to purchase a tarp to collect the paint chips. While the frequency with which inspections to ensure that vessel hulls do not carry invasive species may need to be conducted would depend where vessels operate and travel to and whether the vessel is trailere d over land to another waterbody , for the purpose of the analysis, EPA assumed that these inspections may be conducted on average four times a year

. EPA separates the cost for fishing vessels and other commercial vessels to perform these inspections, becau se the2014 sVGP Economic Analysis

Page 69 of 106 average labor rate for an employee on a fishing vessel is lower than in other industries

. The costs of the two practices are summarized in Table 5

- 15

.

Table 5

- 15 : Total and Annual Costs for BMPs Associated with Vessel Hull Maintenance

.

Activity Labor Hours Unit Cost Frequency Number of Vessels (Upper/Lower Bound) Total

Annualized Cost per Year a

Purchas e a tarp to collect paint chips when cleaning hulls with toxic anti

- fouling paint out of the water N/A $0.96

- $2.27 b 1 114,996 $110,396

- $261,041
$0.96

- $2.27 b 1 137,583 $132,080

- $312,313
Perform inspection to prevent spread of invasive species

– non fishing vessel 0.5 $8. 82 c 4 times per
year d 8,526 $1,503,981

13,988 $2,467,443

Perform inspection to prevent spread of invasive species

-- fishing vessel 0.5 $6.71 e 4 times per
year d 7,626 $1,023,406

7,687 $1,031,556

Total Lower Bound $ 2,637,783 Total Upper Bound $ 3 , 811 , 312

a Cost annualized using a 7% discount rate for the private sector.

b Unit Cost is estimated based on estimates from a Florida wholesaler (dpciwholesale.com) and Amazon.com for blue tarps. Low is a 15x15 blue tarp from the wholesaler. High is a 12x16 dry top blue tarp from Amazon. Value is annualized based on assumed life of 10 years and 7 % discount rate

.

c Unit cost is estimated by multiplying the labor hours by the average hourly labor rate of $16.53 for deck washdown given in t he EA for the Final VGP, updated to 201 0 $ ($17. 64 ) using the ECI . Inspections are by the vessel c rew.

d Inspections are assumed to be performed on average 4 times per year

.

e Unit cost for fishing vessels is estimated by multiplying the labor hours by the mean hourly labor rate of $13.41 ($2010) fro m BLS Occupational and Employment Statistics for code 45

- 3011 “Fishers and Related Fishing Workers.”

The total per year cost of vessel hull maintenance activities ranges between $ 2.6 million and $ 3.8 million, depending on the vessels included in the universe and the low and high unit cost s

. The annualized cost of the tarp is approximately $ 300 ,000 per year, and thus the vast majority of the cost stems from inspections to prevent the spread of invasive species for vessels that move overland

.

5.2.7 GRAYWATER

PERMIT REQUIREMENTS Requirements pertaining to this category include:
(a) Minimize graywater discharges in areas that have heavy vessel traffic or heavy recreational use and in marine sanctuaries, national wildlife refuges, national wild and scenic rivers, and national wilderness areas. If the vessel ha s the capacity to store graywater, it should be stored and discharged outside these waters, preferably at an appropriately equipped and permitted onshore facility where available.
(b) Minimize the production of graywater while the vessel is stationary in confi ned waters (e.g., marinas, harbors). If the vessel has the capacity to store graywater, it should be stored and discharged at an appropriately equipped and permitted onshore facility or discharged while the vessel is underway.2014 sVGP Economic Analysis

Page 70 of 106 (c) Use soaps, detergents and cl eaners that are phosphate free, minimally

- toxic, and biodegradable for any activities that may result in their introduction into graywater. Do not add excess oils (e.g., residual frying oils from pans), including animal fats and vegetable oils used during cooking, to the graywater system or into any other discharge covered by this permit.

AFFECTED VESSEL POPU LATION Based on the description of practices within this discharge category, graywater discharges are applicable to every vessel class except for barg es. However, there is some overlap with the CWA ’s existing provisions and with 33 CFR159.309, as well as overlap regarding the number of vessels that currently practice specific BMPs. The American Waterways Operators, within the public comments, stated tha t all towing vessels currently use environmentally friendly detergents.
The population potentially affected by BMPs applicable to the graywater discharge category is shown in Table
5

- 16

. The number of vessels excludes those not anticipated to have discharge graywater

.

Table 5

- 16 : Vessel Counts for Graywater BMPs.

Vessel Class Total Vessel Count (Lower Bound Estimate ) Total Vessel Count (Upper Bound Estimate ) Commercial Fishing Services 67,178 67,713 Freight Ships 579 768 Passenger Vessels 18,660 20,953 Public Vessels, Unclassified 67 622 Tank Ships 49 179 Utility Vessels 8,876 11,034 Unspecified 15,012 27,375
TOTAL 110,421 128,644

COST ESTIMATES

B ased upon research presented in the economic analysis of the 2008 VGP ( U

. S

. EPA, 2008) , p ractices associated with minimizing graywater production are not anticipated to impose incremental cost s on vessel owners . The majority of vessels (excluding passenger vessels) produce little to no graywater , and most that do produce graywater do not have the ability to store it

. For those that do, it is current practice to discharge onshore at appropriate facil ities.

Furthermore, as described in Section 5.2.1 , EPA’s review of the retail cost of available cleaning and detergent products suggests that phosphate

- free detergents are not more exp e nsive than alternative products that contain phosphate. Consequently, the requirement to use only phosphate

- free detergents is not expected to impose an incremental cost on vessel owners

5.2.8 FISH HOLD EFFLUENT

PERMIT REQUIREMENTS Requirements pertaining to this category include:
(a) Take all reasonable steps to prevent the discharge of excess fish hold water and ice while the vessel is stationary at the pier. If large solid pieces of fish waste are contained in the fish hold effluent (e.g., fish2014 sVGP Economic Analysis

Page 71 of 106 heads, internal organs) the fish hold effluent may not be discharged while the vessel is pierside and stationary, unless a physical separation method is used (e.g., 1⁄2 inch coarse screens or smaller, a screened hose having 1⁄2 inch screen openings or smaller, filters, or other methods to remove large solids).
(b) Dispose of solid fish w aste shoreside on land or at sea (but outside of harbors or other protected and enclosed coastal waters, and other areas where EPA has found that such deposits could endanger health, the environment, or ecological systems in a specific location under the M arine Protection, Research and Sanctuaries Act, 33 U.S.C 1412(d)).
(c) Discharge your effluent (including dirty ice) to an available shore

- based facility if you are unloading your catch at a shore

- based seafood processor or other pier and:

 The shore

- based faci lity’s use is economically achievable, and

 The shore

- based facility has a valid NPDES permit, or

 That shore

- based facility discharges to an NPDES

- permitted sewage treatment facility.

Discharges from holding tanks for the sole purpose of keeping the catch alive during transit by pumping continuous “once through” ambient water into and through the tank prior to immediate discharge (e.g., crabbing/lobster vessels) are not subject to this requirement.

(d) When cleaning the fish hold, use minimally

- toxic, phosphate

- free, and biodegradable soaps and cleaners. Furthermore, while pierside and stationary, do not wash any residual solids into surrounding waters.

AFFECTED VESSEL POPU LATION Based on the description of practices within this discharge category, fish hold per mit requirements are potentially applicable to all commercial fishing vessels , with the exception of small troller and sh r imper vessels

, which typically use coolers to offload these coolers directly to shore

. MISLE data on the characteristics of commercia l fishing vessels indicate that there are 172 sh r impers and 258 trollers less than 26 feet. Therefore, between 66,748 and 67,713 commercial fishing vessels are assumed to have
fish holds.

COST ESTIMATES

The sVGP requires that vessel operators use a physical separation method to remove excess fish waste and residuals from the water

. Codex Alimentarius provides a recommended International Code of Practice for Fresh Fish with technological guidelines for the handling and processing of fresh fish intended for human consumption (F ood and A griculture O rganization , 1976)

. The Codex specif ies that vessels should use coarse filters for their fish hold effluent

. When present, t hese coarse filters should help ensure that no excess fish debris is discharge d

, consistent with the sVGP requirements. Another way that vessels can remove solids is to use of a De

- Watering Box (DWB) or Wetpump Separator as a physical separation barrier. A DWB is standard commercial fishing industry chamber

- type separation equipment used by vessel owners and processing plants to separate fishery products from the vessel’s chilled seawater. The fish hold contents are pumped directly from the vessel into the DWB chamber by conveyor belt and across a screen grate to separate seawater an d organic matter.
According to a review of available information, two ports were identified that offer the option to discharge fish hold effluent to a shore

- based facility instead of discharging to surrounding waters

. These two ports are the Port of San Fr ancisco, CA

, and the Port of Sitka, AK

. It is unclear whether either port passes on the cost of shore

based fish hold discharge treatment to vessel operators as part of their docking fees, and if so, whether these costs may change if a larger number of ves sels were to use the service.2014 sVGP Economic Analysis

Page 72 of 106 5.2.9 BALLAST WATER

PERMIT REQUIREMENTS Requirements pertaining to this category apply to ballast tank

- equipped vessels with less than 8 cubic meters of ballast water capacity. 34 They include:

(a) Minimize or avoid the discharge or upta ke of ballast water in areas within, or that may directly affect marine sanctuaries, marine preserves, marine parks, shellfish beds, or coral reefs.
(b) Minimize or avoid uptake of ballast water in the following areas and situations:

1. Areas known to have infestations or populations of harmful organisms and pathogens (e.g., toxic algal blooms).

2. Areas near sewage outfalls.

3. Areas near dredging operations.

4. Areas where tidal flushing is known to be poor or times when a tidal stream is known to be turbid.

5. In darkness, when bottom

- dwelling organisms may rise up in the water column.

6. Where propellers may stir up the sediment.

7. Areas with pods of whales, convergence zones, and boundaries of major currents.
(c) Discharge only the minimal amount of ballast water es sential for vessel operations.

(d) When feasible and safe, use ballast water pumps instead of gravity draining to empty your ballast water tanks.

(e) When feasible, use one of the following measures to reduce the potential for transfer or introduction of organisms to waters of the U.S.:

1. Use potable water for ballasting.

2. Use onshore treatment or disposal methods for ballast water.

3. For vessels that conduct fixed routes, capture and reuse ballast water in each port, for example, by internally transferring ballast wat er within a vessel’s ballast tanks rather than discharging it.

AFFECTED VESSEL POPU LATION Few vessels covered under the sVGP are believed to be affected by the requirements pertaining to ballast water discharge. As noted by the U.S. Coast, vessels less tha n 100 feet “typically operate in more sheltered environments and do not load and discharge ballast. Their stability characteristics generally accommodate the amount and type of cargo they carry, precluding the need to use ballast as a stability enhancer.” (U

. S

. C oast G uard , 2008) Further, several types of vessels (e.g., towing vessels, crew boats, passenger vessels) in the sVGP vessel population typically do not rely on ballast for stability.

34 Vessels with 8 cubic meters or greater of ballast water capacity that discharge b allast water are not authorized to discharge under this permit, and must instead seek coverage under the VGP.2014 sVGP Economic Analysis

Page 73 of 106 COST ESTIMATES The sVGP requires that vessel operators implement simple BMPs to minimize the potential harm posed by ballast water discharges. EPA believes that the practices are sensible ways to minimize the risk of invasions, while being flexible enough to impose no incremental costs on vessel owners

.

5.2.10 OVERBOARD COOL ING WATER DISCHARGE

PERMIT REQUIREMENTS The sVGP requires:

(a) To reduce the production and discharge of cooling overboard discharge, consider using shore

- based power when the vessel is in port if:

1. Shore power is readily available for vessel owner/operators from utilities or port authorities;

2. Shore

- based power supply systems are capable of providing all electricity required for vessel operations; and

3. The vessel is equipped to connect to shore

- based power and such systems are compatible with the available shor e power.
The sVGP recommends practices that will help minimize the potential harm posed by cooling water discharges. EPA believes that the recommendations reflect practices already in place and therefore impose no incremental costs on vessel owners.

5.3 PAPE RWORK BURDEN AND MONITORING REQUI REMENTS

Recordkeeping, periodic inspections, and annual inspections are already required or performed as a matter of regular business for non

- recreational vessels. 35 However, additional time for these tasks may be required to comply with certain requirements specific to the sVGP

. For recordkeeping, the sVGP introduces additional paperwork in the form of the PARI form and the recording of the quarterly inspection s

. Based on the relatively simple form, EPA assumes that 0.5 h ours will be required to comply with the sVGP paperwork burden per year

. To calculate the total annual cost per vessels, EPA used the average hourly labor rate provided by the industry survey responses performed for the VGP Economic Analysis , updated to 2 010 dollars, or $33.72

. 36 EPA assumes that all 115,000 to 138

, 000 vessels will incur this 0 .5 hour burden per year of compliance costs, regardless of their

35 The sVGP requires that vessel owner conduct a visual inspection on a quarterly basis to ensure that areas are clear of garbage, exposed

raw mate rials, oil, or any other materials that could be discharged into any waste stream or receiving waters and that there is no uncontrolled or unmanaged sources of these pollutants. EPA believes that these inspections are already being performed as a matter of regular business (and therefore no incremental cost will be incurred by vessel owners). The recording of the inspections in t he PARI form, however, is accounted for in the burden estimated in this section.

36 The hourly labor rate of $31.61 was updated to 2010 dollars using the ECI from the Bureau of Labor Statistics (U.S. BLS, 2011).2014 sVGP Economic Analysis

Page 74 of 106 type, and that all vessels must perform these tasks each. The annual cost of these requirements is $ 1 6

. 86 per vessel

. Table 5

- 17 presents the total cost estimates for recordkeeping and routine and annual inspections.

Table 5

- 17 . Recordkeeping and Inspection Burden.

Requir ements Vessel Count Burden Hours per Vessel per
Year Total Burden

Hours Hourly Rate a Total Annual
Cost

Lower B ound E stimate 114,996 0.5 57,498 $33.72 $1,938,833 Upper B ound E stimate 137,583 0.5 68,792 $33.72 $2,319,649

a Average labor rates for industry sectors with vessels covered by the sVGP, in 2010 dollars

.

Each year, annual recordkeeping and inspection requirements will cost between $1.9 million to $2.3 million

, depending on the number of vessels assumed to be covered by the sVGP

.

5.4 TOTAL NATIONAL COSTS

The estimated annual total compliance costs for all activities conducted under the sVGP are provided in Table
5

- 18

. The estimated s VGP c ompliance costs vary because of the different assumptions made regarding the
number of vessels expected to be covered by the sVGP, the frequency with which incremental costs will be incurred by different vessels, and the unit costs for each activity or practice

. The total incremental costs for each category of activities are presented for the overall set of vessels covered by the sVGP; as appropriate, the costs reflect the subset of vessels to which an activity is expected to apply (e.g., fish hold r equirements apply only to commercial fishing vessels). As shown in the table, estimated total annual costs range between $ 7. 1 million and $ 16.9 million per year

. Figure 5

- 1 illustrates the fraction of the estimate compliance costs represented by the different requirement categories. A significant share of total compliance costs is represented by engine and oil control practices (about 32 percent of tota l costs) , with hull maintenance accounting for about 30 percent of total

costs
, and recordkeeping and inspection requirements for about 21 percent

. These shares may differ depending on costing assumptions. For example, fuel management practices represent o ver a quarter of the total for the upper bound estimates, but only 5 percent of costs for the lower bound estimates

.2014 sVGP Economic Analysis

Page 75 of 106 Table 5

- 18 : Total Annual Compliance Costs over the Five

- Year Duration of the sVGP (2010$)

.

Permitted Discharge Category Total Annual Cost ( Low er Bound Estimate ) Total Annual Cost

(Upper Bound Estimate ) General Requirements $0 $0 Fuel Management $379,101 $4,801,565 Engine and Oil Control $1,975,631 $5,793,265 Solid and Liquid Waste Management $21,252 $128,482 Discharges of Deck Washdown and Runoff and Above Water Line Hull Cleaning $0 $0

Vessel Hull Maintenance $2,637,783 $3,811,312 Graywater $0 $0
Fish Holds $0 $0
Ballast Water $0 $0 Recordkeeping and Inspection $1,938,833 $2,319,649
Total Permit Costs $7,091,745 $16,854,275

Figure 5

- 1 : Share of Total Annual Compliance Cost (Lower/Upper Bound Estimate), by sVGP Requirement Category.2014 sVGP Economic Analysis

Page 76 of 106 To calculate a n average per

- vessel cost, EPA divided the low and high total annual compliance cost s by the corresponding lower and upper bound estimates of the number of vessels covered by the sVGP

. C osts for individual vessel are expected to vary depending on the vessel type an d characteristics . For example, some vessels (e.g., barges), may not incur compliance costs for some requirements. A vessel owner that already implements practices to control discharges covered by the p ermit incurs only the incremental cost associ ated with the paperwork burden. These requirements amount to approximately $17 per year. For other vessels, average incremental compliance costs range from $ 63 to $ 133 per year , per vessel

.

5.5 ISSUES AND UNCERTAIN TIES

There is considerable uncertainty regarding estima ted compliance costs. Major areas of uncertainty relate to practices implemented in the baseline, variability in practice costs among vessels of different types and sizes, and variability in the frequency with which various practices will have to be conduc ted. These issues are discussed below.

 Baseline level of implementation . The relevant costs for the analyses are those that are imposed by compliance with the sVGP, beyond what vessel owners are already doing to comply with existing regulations and as part of their normal operations. To the degree that a practice is already being conducted, compliance with the sVGP requirement would not impose an additional cost on the vessel owner. Little information is publicly available, however, to assess whether some o f the practices for which EPA estimated a cost are already included under baseline conditions. In general, EPA conservatively assumed that all vessels would incur incremental costs. For several requirements, this assumption is believed to overstate the cos ts of the sVGP. For example, EPA assumed that vessels owners do not currently use absorbent material to catch drips and clean spills during fueling or absorb oil that accumulates in the bilge. However, absorbent material are widely available (in some cases they are distributed free of charge to boaters), and the oil spill prohibition in the CWA makes it likely that at least some vessel owners currently implement the practice. Given the magnitude of incremental costs associated with fuel management practices , if even a fraction of sVGP vessels do not incur incremental cost for this practice, the total costs of the p ermit would be much lower.

 Variability in cost for different vessel types and sizes

. The cost of some of the practices discussed in this section varies depending on the type of vessel, its size, and the type of service. For example, the cost of installing a fuel

- air separator depends on the engine size and configuration, while the type of equipment present on a vessel may determine the type and qua ntity of lubricants used. The cost of certain materials and equipment may be higher in remote regions of the country due to limited availability and/or higher shipping costs

. B ased on comments received during the public comment period, EPA has increased th e upper bound price of certain products (e.g., oil pads) to account for this cost variability. The resulting estimate likely overstates the costs incurred by most vessel owners that operate in regions where products are available at a lower cost. Informati on available to EPA was not sufficiently detailed to develop cost estimates that would be sensitive to each of the possible cost factors. Consequently, EPA instead used ranges of costs that are aimed to illustrate the variability in costs among vessels add ressed by the sVGP. Depending on the distribution of vessel types and sizes relative to the cost of the individual practices, the total costs of the sVGP may be closer to either the lower bound or upper bound estimates.2014 sVGP Economic Analysis

Page 77 of 106  Practice frequency

. Cost estimates f or several practices depend on the number of times a given vessel may need to implement the practice during each year of the p ermit. As for the unit cost of the practice, the frequency of implementation is expected to potentially vary depending on the type of vessel, vessel size, area of operation, and other factors. For example, fueling frequency will determine the number of times a vessel owner may need to catch drips or clean spills

, yet this frequency is a function of the vessel use, fuel tank volume, a nd numerous other factors for which there is no detailed information readily available

. EPA developed reasonable ranges based on indirectly related data such as fuel efficiency statistics. These

ranges may over estimate /underestimate the frequency of practi ce implementation for different types of vessels, and depending on the distribution of these vessels among the population of vessels addressed by the sVGP, may over estimate or underestimate the sVGP costs.2014 sVGP Economic Analysis

Page 78 of 106 

### 6 ANALYSIS OF IMPACTS ON FIRM REVENUES AND FINANCI AL PERFORMANCE

The previous sections assessed total compliance costs to vessels covered in the sVGP. As summarized
in Section 4 , the majority of th ese vessels are associated with firms in the fishing and water transportation industries, and in the drilling oil and gas wells sector of the mining industry

. Section 5 presents the ranges of compliance costs that may be incurred by each vessel covered by the sVGP, depending on the assumed unit costs of each required practice , which may vary by vessel type, size, and operating characteristics

. To determine the economic impacts of the sVGP, EPA must examine the incremental compliance costs relative to the financial conditions of “typical” businesses associated with the affected vessels

. Since approximately 95 percent of the firms in the water transportation and the drilling oil and gas wells sector , and practically all firms associated with commercial fishing vessels, are small (see Section 4.5.2 : Small Businesses ), it is unlikely
that a significant number of large firms would incur material impacts. Large firms are also more likely to operate larger vessels. In case where they also operate small vessels covered by the sVGP, large firms are likely to have revenue that are comparatively m uch greater than the compliance costs estimated in Section 5

. Therefore, because the relative impact of sVGP compliance and the number of affected e ntities are expected to be much greater for small businesses, 37 the firm

- level analysis focuses on assessing impacts on small businesses

.

6.1 METHODOLOGY

The analysis involves combining the estimated incremental operating costs attributed to compliance with t he sVGP with information about baseline financial conditions of model firms in each industry to examine the potential financial impact s on firms

. C ost

- to

- revenue ratios are used as metrics for potential financial stress

, where financial stress may reveal i tself as a lack of profitability, cash deficiencies, or even bankruptcy. Firms expected to experience financial stress may need to change their business operations, including potentially downsizing or closing operations.

The key steps of the analysis involve : (1) assigning each vessel in the vessel database to a NAICS code, (2) estimating the number of vessels per firm in each industry , (3) estimating the distribution of compliance costs per vessel and per firm , and (4) comparing the costs to the firm revenues

. These steps are described below.

6.1.1 ASSIGN EACH VESSEL T O A NAICS CODE

The framework for the model firms reflects the range of firm types across the major industry groups. Financial data for each major industry group are available in the Economic Ce nsus while SBA provides firm data by revenue bracket

. Since the Economic Census does not provide data specific to individual vessels or firms necessary to estimating compliance costs, EPA used the data in MISLE ( which contain more complete numbers of all p otentially regulated vessels and firms) to identify the affected vessels and firms

, and cross

- referenced the

37 Small businesses are either: a small business according to SBA size standards; a small governmental jurisdiction that is a go vernment of a city, county, town, school distric t, or special district with a population of less than 50,000; or a small organization that is a not

- for

- profit enterprise that is independently owned and operated and is not dominant in its field.2014 sVGP Economic Analysis

Page 79 of 106 vessel data to financial information from the Economic Census and other sources using NAICS industry categories

. The number of firms likely to incu r costs as a result of the p ermit was identified using the MISLE data based on the number of uniquely named managing owners for vessels expected to be covered by the sVGP

. The approach to assigning NAICS codes to each managing owner (which is generally ass umed to be the relevant firm for this analysis), and for each vessel, was described earlier in Section 4.2

. 38

Once the number of firms with vessel permits was estimated for each NAICS code, EPA distributed these firms

across revenue size categories proportionally to the distribution of firms by revenue size categor y indicated in Economic Census data. This estimated distribution of firms b y revenue size category is assumed to be more accurate than estimates that could be derived solely from the Economic Census

, since the Economic Census include s firms that are not expected to be covered by this p ermit , such as firms that operate vessels 79 feet in length o r larger

, It also excludes nonemployers, which represent the vast majority of entities in the fishing industry

. 39

6.1.2 ESTIMATE THE NUMBER OF VESSELS PER FIRM

To establish the baseline and post

- cost financials for each model firm, the per

- vessel BMP costs developed from
Section 5 are applied at the firm level. To determine the total sVGP compliance costs that a firm could incur, EPA first estimated the average number of vessels owned and operated by firms in each NAIC S sector using information from the MISLE database.

For each NAICS code, EPA determined the number of vessels that were listed with a firm name as well as the number of firms corresponding to these vessels . Based upon the total number of firms and vessels within the subset in each NAICS code, the average number of vessels per firm was determined for each NAICS code

. This average number was estimated using MISLE data based on the number of vessels associated with each uniquely named managing owner. As shown in Table 6

- 1 , the average number of vessel s varies across the NAICS sectors from about on e vessel per owner in the fishing industry, to nearly four ve ssels per owner in the support activities for water transportation sector.

38 Of the total 138,000 vessels in the database that are est imated to be potentially subject to sVGP, 57,891 vessels could not be assigned a NAICS code.

39 As discussed in Section 4.3.3 , vessels less than 79 f eet represent a relatively small share (4 to 39 percent, depending on the type of vessel) of vessels used for freight transportation.2014 sVGP Economic Analysis

Page 80 of 106 Table 6

- 1 : Number of Vessels by Firm in Each Industry Sector.

Number of Vessels Associated with the Same Managing Owner
NAICS Description Minimum Maximum Average Water Transportation Industry Deep Sea, Coastal, and Great Lakes Water Transportation 1 32 1.8 Inland Water Transportation 1 72 2.0 Scenic and Sightseeing Transportation, Water 1 24 1.3 Support Activities for Water Transportation 1 74 3.7 Fishing Industry Fishing 1 96 1.1 Mining Industry Drilling O il & G as W ells S ector 1 34 3.1

Source: EPA analysis of MISLE data (U

. S

. C oast G uard , 2009)

.

Since the number of vessels operated by a firm is expected to vary among the different firm sizes, EPA assumed that smaller firms (in revenue term s ) have fewer vessels than the larger firms

. The firms in the smallest revenue category in each industry (e.g., firms in the water transportation industry wi th less than $50,000 in revenue) are assumed to operate a single vessel , with the number of vessels assumed to increase with revenue such that the average number of vessels across each industry matches the value indicated in Table 6

- 1

.

6.1.3 ESTIMATE COMPLIANCE COSTS PER VESSEL

For each vessel type and practice , EPA already estimated in Section 5 : (1) the total number of vessels, (2) the probability of a vessel incurring incremental costs, and (3) the incremental cost of each practice

. A detailed analysis of the cost impact s to each model firm would consider the probability that each of a firm’s
vessel s incur s cost under each of the practices and would estimate the expected annual compliance cost for the firm based on this probability

. Given the approximate compliance cost e stimates developed in Section 5

, which do not differentiate costs by vessel size or operational characteristics, EPA applied a simple approach to provide a
first

- o rder screening

- level assessment of the cost impacts. This approach considers the potential impacts on firms assuming that all vessels are subject to costs at the extreme ends of the estimated range. Using this approach, the minimum and maximum cost s per ve ssel are simply multiplied by the number of vessels per firm in each industry for a given revenue size category to estimate firm

- level costs (see Section 6.1.2 )

. Accordingly, firms in the smallest revenue size category, which are assumed to operate a single vessel, are assumed to have firm

- level compliance cost s ranging from $ 17 to $ 133 per year . T h e lower bound estimate corresponds to vessels that already implement practices required by the sVGP and which therefore incur only the paperwork burden associated with the p ermit

. The upper bound estimate corresponds to vessels that incur the maximum cost assumed for each individual practice. These would be vessels that currently implement none of the practices (vessels that do not use pads to absorb spills during fueling before th ey can reach waters, do not have a trash receptacle on board, etc.). Given th e nature of the practices contained in the permit, EPA expects that relatively few vessels will incur this maximum cost.2014 sVGP Economic Analysis

Page 81 of 106 6.1.4 COMPARE FIRM

- LEVEL COSTS TO FIRM

- LEVEL REVENUES

Data from the Economic Census as well as from the SBA’s Statistics of U.S. Businesses were used to determine
the firm

- level financial data for the transportation and mining industries . These sources provided the distribution of firms across several revenue brackets as well as the average revenue value in each revenue bracket. For firms

asso ciated with commercial fishing vessels, EPA also used fisheries statistics from NOAA and other sources on revenue per vessel in different geographic regions (see Section 4.5 ) to characterize the distribution of revenue among firms of different sizes. These other sources provide the revenue per vessel for different vessel characteristics (size, equipment) and types of fisheries.
To evaluate the potent ial impact of the sVGP on small entities, EPA used a cost

- to

- revenue test to evaluate the potential severity of economic impact on vessels and facilities owned by small entities. The test calculates annualized pre

- tax compliance cost as a percentage of tot al revenues and uses a threshold of 1 and 3 percent to identify facilities that would be significantly impacted as a result of this p ermit.
The cost values equivalent to the 1 and 3 percent thresholds were estimated from the average revenue in each revenue bracket, or the midpoint of the revenue bracket when average revenue was not reported. EPA estimated the percentage of firms that would be significantly impacted as a result of this p ermit as the percentage of firm s for which the estimated firm

- level costs (number of vessels times the per

- vessel compliance costs) exceeded the
1 percent or 3 percent revenue thresholds.

6.2 RESULTS OF F IRM

- L EVEL AN ALYSIS

After calculating the distribution of per

- firm costs, the number of firms where costs exceed 1 percent and 3 percent of revenue was estimated (by NAICS sector and revenue bracket). The costs used in the economic analysis are annualized costs, which reflect the annual equivalent value of first

- year (one

- time) costs and recurring

costs.

Table 6

- 2 summarizes the average firm

- level revenue

, number o f firms, and cost thresholds across industry

sectors for the 1 percent and 3 percent cost

- to

- revenue tests

. The cost thresholds indicate the compliance costs that would correspond to 1 percent and 3 percent of revenue, and yield a significant impact based on the cost

- to

revenue test. Because the impact of sVGP compliance is likely to be most significant for firm s at the lower end of the firm

- size spectrum , the table focuses on firms in the smallest revenue category in each industry. For the water transportation industry

, this category includes firms earning less than $100,000 each year. For the fishing industry, this category include s all nonemployer establishments (which are assumed to be single

- establishment and single

- vessel firms).2014 sVGP Economic Analysis

Page 82 of 106 Table 6

- 2 : Estimated 1% and 3% Revenue Thresholds by NAICS Code for Firms in Small est Revenue Category

.

NAICS Industry Average Revenue of Firms in Category Number

of Firms in
Revenue Category Compliance

Cost at 1%
Revenue
T h reshold Complianc

e Cost at 3%
Revenue
T h reshold Water Transportation
483111 Deep S ea F reight T ransportation $33,143 7 $331 $994
483112 Deep S ea P assenger T ransportation $49,417 12 $494 $1,483
483113 Coastal/Great Lakes F reight T ransportation $56,765 17 $568 $1,703
483114 Coastal/Great Lakes P assenger T ransportation $53,154 13 $532 $1,595
483211 Inland W aterways F reight T ransportation and

T owing T ransportation $35,200 15 $352 $1,056

483212 Inland W aterways P assenger T ransportation and

O ther W ater T ransportation $50,000 a 34 $500 $1,500

487210 Scenic and S ightseeing T ransportation, W ater $48,283 247 $483 $1,448
488310 Port and H arbor O perations $60,636 11 $606 $1,819
488320 Marine C argo H andling $68,000 11 $680 $2,040
488330 Navigational S ervices to S hipping and S alvage $55,661 56 $557 $1,670
488390 Other S upport A ctivities for W ater

T ransportation $59,742 120 $597 $1,792

Fishing
1141 C ommercial F ishing b $44,866 65,237 $449 $1,346 Mining
213111 Drilling O il and G as W ells $ 48,316 237 $ 483 $1, 449

a No average revenue per firm is available. The value reflects the mid

- point of the revenue size category

.
b Data reflect nonemployer statistics.

As shown in the table

, compliance cost thresholds range between $331 and $2,040 per year for the 1 percent and
3 percent levels, respectively , depending on the industry

. The estimated sVGP compliance costs ($ 17 to $ 133 per year) are well below these thresholds . B ased on the average characteristics of firms in the lowest revenue category, therefore, sVGP compliance costs are below th e 1 percent and 3 percent cost

- to

- revenue threshold s

.

6.3 BREAKOUT OF SMALL C OMMERCIAL F ISHING F IRMS

The use of average firm revenue in the screening

- level analysis above masks the variability among the firms within a revenue size category. N onemployer statistics for the fishing industry report average receipts of $44,866 for these establishments, which are assumed to correspond generally with the smallest category of firms, on a revenue basis. As described in the profile for the commercial fi shing sector in Section 4.5 , however, data from other sources suggest that within these small operators, annual revenue can vary depending on the c atch, type of equipment used , and other operational characteristics.
For example, Northeast groundfish vessels have revenue averaging $16,509 for vessels less than 30 feet (NOAA,
2011 b ), while small vessels involved in the salmon and Dungeness crab fisher y in California and Oregon have revenue of $25,031 (CADFG, 2008). Average revenues per vessel for slightly larger vessels are significantly higher: $128,907 for groundfish vessels in the 30

- to 50

- foot range, and $81,897 for medium and large
salmon/crab ve ssels. As discussed in Section 4.5 , r evenue also varies within each vessel size class and across the2014 sVGP Economic Analysis

Page 83 of 106 overall vessel population. T he average revenue among vessels in the lowest decile is $2,176 per year, and about
30 percent of vessels have average revenue less than $47,392.

Permit data for Alas k a fisheries show similarly wide variability

, with reported average earnings per permit holder ranging from l ess than $2,000 for the lower quartile for halibut fishing by hand troll, to nearly $2.5 million for the upper quartile for kin g crab fishing. Within each type of fishery, the ratios of revenues earned by the top quartile permit holders and those earned by the bottom quartile permit holders can be as high as 20 to 1 . In general, larger vessels (60 feet or greater in length) have higher revenue than smaller vessels.

T o assess the likelihood for the smallest of firms to have cost

- to

- revenue ratios exceeding the 1 percent and
3 percent threshold s , EPA tested alternative distribut ions of small firms according to imputed annual revenue derived from the performance statistics described above . This more detailed assessment focuse s on firms in the fishing industry since it has by far the largest number of firms anticipated to be cover ed by the sVGP

. Using the average per

- vessel revenues reported by NOAA (2011 b ) for the Northeast groundfish ing fleet, EPA estimated the percentage of vessels for whic h per

- vessel compliance costs would exceed the 1 percent and 3 percent cost

- to

- revenue thresholds. Based on the revenue distribution provided in NOAA (2011 b ) and described
in Section 4.5

, 81 and 172 commercial fishing vessels ( 10 percent and 20 percent of vessels ) have costs that could exceed 1 percent of revenue when considering compliance costs of $ 17 and $ 133 , respectively

.
E PA did a similar analysis using commercial fishing statistics published by Alaska’s Commercial Fisheries Entry Commission

, which break out the average revenue by fishery (catch, equipment, and region) into permit quartiles. For the purpose of this anal ysis, EPA assumed that a single

- vessel firm holds a single permit and that all vessels within a quartile have the same revenue as the average for the group (i.e., distribution follows a step function)

. Table 6

- 3 summarizes the findings. According to the 2010 data, 2,380 permits out of the 11

, 822 permits active that year ( 20 percent) had average revenues that were below $ 13

, 300 , the revenue level necessary for compliance costs of $ 133 to be below the 1 percent threshold. For an assumed compliance cost of $ 17 , the percentage of permits with revenue below the 1 percent threshold is 2 percent.

Table 6

- 3 : Statistics on the Number of Alaska Fishery Permits in Revenue Quartiles below Specified Values (Based on P reliminary 2010 data from Alaska Commercial Fisheries Entry Commission (20 1 1)).

Annual Compliance Cost Cost

- to

- Revenue
Test Relevant

Revenue Thresho lds Number of Permit Holders

in Earnings Quartile Below Threshold Percentage of Permits Below T h reshold ( 11 , 822 Permits Total) a $ 133 1% $ 13,300 2,380 20 % $ 17 1% $ 1,700 278 2 % $ 133 3% $ 4,433 977 8 % $ 17 3% $ 567 0 0 %

Source: EPA A nalysis of Quartile Downloadable Data from State of Alaska

, Commercial Fisheries Entry Commission ( 2011 )

.

a Excludes permits for fisheries involving exclusively vessels larger than 79 feet and permits for clam harvest by shovel.

Similar to findings when using the distribution of revenues for Northeast groundfish vessels, therefore, the data for Alaska permit revenue suggests that even with relatively low compliance cost s , s ome permit holders c ould still potentially incur costs tha t exceed the 1 percent of their revenue

. A closer look at the revenue data per vessel and per permit, however, suggest that these data may underestimate revenue for commercial fishing firms, and therefore overestimate the impacts of sVGP compliance on the commercial fishing sector. As discussed in Section 4.5.2 and elsewhere in this report (see Section 2 ), a certain2014 sVGP Economic Analysis

Page 84 of 106 number of small vessels used in commercial fishing activities were likely manufactured as pleasure crafts and therefore would fall under the CBA definition of recreational vessels and would not be covered by the sVGP requirements. This is expected to affect more strongly the smaller vessels (e.g., less than 26 feet). Additionally,

per

- vessel or per

- permit revenue data suggest that commercial fishing may not be a primary economic ac tivity for at least some permit holders, even when accounting for the seasonality of fisheries in the N ortheast and in Alaska

. First, fuel costs alone are likely to be greater than $2,000 for any sustained vessel use. Second, and perhaps more significant, s tatistics on the revenue per trip for vessels of less than 30 feet show average revenue of $384 and $734 for grou n dfish and nongroundfish trips, respectively, with trips averaging 0.35 to 0.38 days each (N OAA

, 2011 b ). Even when accounting for potential va riability in landed value at the end of each trip, annual rev enue of $2,000 per vessel per year suggest s a relatively low level of effort in terms of the mere number of fishing trips.
On the basis of average revenue per trip, the $ 13

, 300 revenue threshold corresponding to a 1 percent cost

- to

revenue ratio for compliance costs of $ 133 per year would only be exceeded for a vessel making fewer than 35 groundfish or 18 nongroundfish trips, each year.
For these reasons, EPA expects that impacts to the commercia l fishing sector are much less than estimated on the basis of revenue reported per vessel or per permit

.

6.4 ISSU ES AND UNCERTAINTIES

There is considerable uncertainty regarding the percentage of firms that may incur economic impacts above
1 percent or 3 percent of their annual revenue. This uncertainty largely stems from limitations of the data regarding the financial and operational characteristics of firms in the affected industries , and from compliance costs estimated to be incurred by these firms

. Th e number and percentage of firms estimated to incur economic impacts is based upon the firm number estimated from the MISLE database. EPA assumes that the Economic Census distribution of firms by revenue size is the same as the MISLE distribution of firms by revenue size. These assumptions may result in a
distribution that differs from the actual distribution of affected firms

. There is also uncertainty surrounding EPA’s assumption that the average number of vessels per firm is proportional to their revenu e. EPA assumes that firms in the smallest revenue category have only one vessel , with the number of vessels operated by each firm growing proportionally to the firm revenue. These assumptions may result in underestimation or overestimation of the number of vessels per firm, and the underestimation or overestimation may vary by revenue size category. In instances where EPA underestimates the number of vessels per firm, market impacts may be underestimated. In instances where EPA overestimates the number of v essels per firm, market impacts may be overestimated. Overall, EPA expects that few large firms will incur material impacts as a result of sVGP compliance either because their revenue far exceeds their relative costs or because these firms tend to operate vessels 79 feet or larger that are not subject to the sVGP but are instead covered by the VGP.

EPA assumed the same range of cost per vessel for all industry sector s, based on the best and worst case scenarios. There is uncertainty associated with this sim plifying assumption, because some vessels may already be implementing certain practices and would therefore not incur additional costs as a result of the sVGP. Further, as described elsewhere in this document, even within the subset of vessels less than 79 feet, smaller vessels may have relatively lower compliance costs than larger vessels, and therefore would be less likely to be faced with the upper bound cost ($ 98 ) EPA estimated. Finally, given the relationship between vessel size and revenue, firms with lower revenue are more likely to be using smaller vessels

. Incremental compliance costs may therefore be2014 sVGP Economic Analysis

Page 85 of 106 lower for some firms than estimated by simply multiplying the number of vessels time s the extreme ends of the compliance costs estimates

. For each rev enue bracket

, EPA first assumed that firm revenues were equal to the average revenue in the bracket (or the midpoint when the average was not available). There is uncertainty associated with this simplifying assumption, because calculating an average firm cost results in less variation compared to an alternative approach that simulates a distribution of firm revenues within revenue size ranges. EPA tested the impacts of assuming a distribution of revenue for firms in the fishing industry. The use of this al ternative revenue distribution highlights
that some of the smallest firms may, in fact, incur costs that exceed the cost

- to

- revenue thresholds indicating material impacts

. Thus, while the analysis based on average revenue identified no firm with costs that exceed the 1 percent cost

- to

- revenue threshold, using statistics on per

- vessel revenue from Northeast and Alaska fisheries suggest that as many as 44 percent of active commercial fishing permit holder s have annual revenue that are below the $ 13,300 necessary not to exceed the threshold for compliance costs of $ 133 per year. Finally, in determining firm

- level revenue, EPA relied on data available at the level of individual permits or vessels. Implicit in the firm

- level revenue determination was the assumption that small firms hold single permits and operate a single vessel and that the fishing activities constitute the only source of revenue for the firm. Also implicit is the assumption that entities reporting revenue have commercial fishing as their primary economic activity. Data on revenue per level of effort (e.g., per trip or per day) suggest that it is unlikely that firms or permit holders with revenue below about $10,000 per year have commercial fishing as their primary economic activity
and fu rther suggest that firms with vessels covered by the sVGP are unlikely to incur compliance costs that exceed 1 percent or 3 percent of their revenue.

6.5 DISCUSSION

The analysis results suggest that it is unlikely that a significant number of firms in the comm ercial fishing industry would incur material economic impacts as a result of complying with the sVGP

. These results are subject to uncertainty in the revenue data for firms in this sector and on the number of firms that have vessels covered by the sVGP. Th us, on the basis of fishing permit revenue data, up to 20 percent of permit holders could incur material impact s

. According to EPA guidance, these results would suggest that compliance with sVGP requirements may impose costs that are significant for small businesses, and further, that the sVGP may also have substantial impacts given the large number of small businesses affected. However, o ther data on fishing revenue as a function of effort (per trip) for small vessels suggest that using the distribution of per

- vessel revenue tends to grossly overestimate impacts to firms for which commercial fishing is the primary economic activity, irrespective of the fact that such activity may be seasonal.
Even where the analysis suggests a relatively significant number of affected small firms, the findings follow in part from the structure of the affected industries since the vast majority of the firms (almost all firms) are small

. The commercial fishing sector, in particular , is characterized by a large number of nonemp loyer firms, many of which operate only seasonally

. The very large number of small operators means that the p ermit can be expected to have some effect on small firms

. The exact impacts on the profitability of these small businesses are difficult to quantify, however, due to limitations of the data. More detailed analyses would consider the degree to which firms may be able to pass through incremental compliance costs to their customers, consider various measures of the financial health of affected entities, or compare the relative impact s on small versus large firms, but would require much more detailed data on operational and financial characteristics of firms.2014 sVGP Economic Analysis

Page 86 of 106 Further , g iven the regulatory framework applicable to different types of vessels, EPA expects that compliance with sVGP requirements will not differentially affect the small firms in a way that would make them less competitive vis

- à

- vis larger firms in the same i ndustry. In designing the sVGP, EPA purposefully limited the requirements to the minimum set necessary to accomplish water quality objectives set forth in the CWA (see
Section 7 for a discussion of the benefits expected to follow from implementation of the sVGP)

. For example, the sVGP significantly streamlines requirements contained in the VGP, which address es vessels 79 feet or greater. Within the c ontext of controlling discharges incidental to the operation of vessels, therefore, EPA has aimed to provide relief to small businesses within each industry that operates non

- recreational vessels by setting separate requirements that are specifically targe ted at the characteristics of small vessels and streamlining the administration of these requirements wherever possible.2014 sVGP Economic Analysis

Page 87 of 106 

### 7 BENEFITS

EPA expects that reductions in discharges incidental to the operation of small non

- recreational vessels will benefit societ y in two broad categories, discussed below: (1) enhanced environmental quality from reduced loadings of several categories of pollutant s ( Section 7.1 ) and (2) reduced risk of invasive species introduction and spread ( Section 7.2 ).

7.1 POLLUTANTS OF CO NCERN FOUND IN VESSE L DISCHARGES

7.1.1 INTRODUCTION AND BAC KGROUND
The CWA and its associated regulations have greatly improved the quality of the nation’s waters over the past 40 years. Nevertheless, large portions of the United States’ fresh and saline waters remain degraded by elevated concentrations of harmful pollutants. As summarized by EPA, 50 percent of assessed rivers and streams

, 66 percent of assessed lakes, ponds, and reservoirs

, 64 percent of assessed bays and estuaries

, and 38 percent of coastal sho relines were classified as impaired for at least one of their designated uses ( U

. S

. EPA, 2011). 40 Impairments of designated uses

– the protection and propagation of fish, shellfish, and wildlife and the harvesting of aquatic life, among others

– are associa ted with a variety of economic and ecological damages. The causes of impairment vary by waterbody, but commonly include pathogens, oxygen enrichment/oxygen depletion, nutrients, metals, turbidity, oil and grease, and nuisance exotic species. 41

As detailed in EPA’s 2010 vessels study, several of these causes have associated pollutants that have be en found in discharges incidental to the normal operation of vessels subject to the sVGP. For example, EPA found significant concentration s of nutrients in deck run off, graywater, bilgewater, and fish hold tanks.
The sVGP contains provisions for reducing pollutant loadings incidental to vessel operation, either by minimizing the introduction of pollutants in the vessel effluents (e.g., use of environmental preferred cleaners or lubricants, good housekeeping practices), us ing technologies to prevent or contain pollutant discharges, and regular inspecti ng and monitoring to identify and address potential problems. In the section below, EPA describe s the types of pollutan ts that may be found in vessel discharges and discuss es how the sVGP requirements may help reduce loadings of these pollutants to waters of the U nited S tates and therefore generate potential benefits for aquatic ecosystems. These benefits will be likely to occur mostly in waterways receiving the greatest amount of vessel traffic.

7.1.2 POLLUTANTS COMMONLY FOUND IN VESSEL DISC HARGES

In its 2010 study characterizing discharges incidental to the operation of commercial fishing vessels and small

non

- recreational v essels, EPA grouped individual harmful constituents of vessel discharges into six broad

40 States are responsible for assessing impairment of water bodies. States assessed 26 percent of rivers and streams, 42 p ercent of lakes, ponds, and reservoirs, 21 percent of bays and estuaries, and 4 percent of coastal shorelines in the reporting cycle summarize d in this report (generally ranging from 2002 and 2010, depending on the state, with data for most states reflecti ng assessments completed as of 2008).

41 The risk of introduction of aquatic nuisance species (ANS) is discussed in the next section.2014 sVGP Economic Analysis

Page 88 of 106 categories: classical pollutants 42 ; nutrients; pathogens; metals; volatile and semivolatile organic compounds (VOCs and SVOCs); and nonylphenols ( U

. S

. EPA, 2010 b ). Many of the nine types of discharges covered by the sVGP are associated with one or more of these six types of pollutant categories , as summarized in Ta ble 7

- 1 . The characteristics of selected vessel discharge sources are summarized briefly in the following sections; a more detailed and comprehensive discussion of the pollutant loadings associated with vessel discharges can be found in EPA (2010).

Ta ble 7

- 1 : Pollutants Found in Discharges Incidental to the Normal Operations of Vessels Less than 79 Feet

.

Type of Discharge Classical Pollutants Nutrients Pathogens Metals VOCs and
SVOCs Nonylphenols

Bilgewater      
Stern T ube P acking G land     Deck W ashdown    a    Fish H old     Fish H old C leaning E ffluent      Graywater      Propulsion E ngine E ffluent  
Generator E ngine E ffluent  
Firemain S ystem    Vessel H ull M aintenance 

Source: U.S. EPA (2010 b )

.

a Fishing vessels only.

BILGEWATER Depending on the ship design and function, bilgewater may contain contaminants such as oil, fuel, graywater, detergents, solvents, chemicals, pitch

, and particulates. The volume of bilgewater that accumulates during regular vessel operations depends on the vessel construction, size, precipitation, frequency of deck cleaning, amount of spray reaching the deck, accidental spills, integrity of pipi ng systems, and the potential for condensate formation in below

- deck areas. During the 2010 study, EPA estimated that small non

- recreational vessels generate between 10 and 15 gallons per day of bilgewater.
In analyzing bilgewater collected on selected non

- recreational vessels, EPA found oil and grease in all samples. Several metals were also present (e.g., aluminum, arsenic, barium, lead, iron, copper, zinc) either in a majority of samples, or in all samples. Several of these metals consistently measured a t concentrations exceeding the most stringent National Recommended Water Quality Criteria ( NRWQC )

. Current regulations require the use of oily

- water separators prior to discharging bilgewater for all vessels weighing more than 400 tons, but do not apply t o the smaller vessels addressed by the sVGP. Not all of the vessels addressed in the sVGP, therefore, use an oil

- water separator. The sVGP addresses pollution associated

42 “Classical pollutants” include the following 14 pollutants or water quality indicators: temperature, conductivity, salin ity, turbidity, dissolved oxygen, total suspended solids, biochemical oxygen demand, chemical oxygen demand, total organic carbon, oil and gr ease, pH, sulfide, and total residual chlorine.2014 sVGP Economic Analysis

Page 89 of 106 with bilgewater discharge by requiring either that the vessel operator visually monito r discharges from the oil

water separator, or remove oil that entered the bilge using absorbent material. Though these requirements will not eliminate all discharges of harmful pollutants via bilgewater, they will reduce the loads in areas with heavy vesse l traffic that are in nearshore environments.

GRAYWATER Untreated graywater, as defined in Section 3.1 2

, contains multiple constituents of concern, including path ogenic bacteria indicators, oil and grease, organic and inorganic compounds, nutrients, and metals ( U

. S

. EPA, 2010 b ). The same study highlighted the variability in graywater volumes discharged by different vessels, depending on the vessel type, size, trip duration, and number of crew members.

Under the new p ermit, all vessels must minimize production of graywater while stationary in confined waters such as marinas or harbors. The p ermit also recommends that vessel owners minimize discharges in areas that
h ave heavy traffic or recreational use or marine sanctuary or other similar sensitive areas. Finally, the sVGP requires the use of biodegradable, phosphate

- free and non

- toxic detergents, soaps

, or cleaners for any activity where these products may find thei r way to graywater. These practices will reduce harmful constituents of discharges. Phosphate

- based soaps and detergents are a source of phosphorus, which is a limiting nutrient in freshwater systems.

ANTI

- FOULING HULL COATING S

Anti

- fouling hull coatings are specialized paints and other coatings intended to retard the growth of algae, weeds, and encrusting organisms such as barna c les and zebra mussels on the underwater portion of vessel hulls. Copper oxide is by far the most common of the metallic biocides used in more than 90 percent of approximately 180 anti

fouling hull systems (AFS) registered in California (Singhasemanon, 2008; cited in U

. S

. EPA, 2010 b ). Biocides used in AFSs can be toxic to a range of aquatic organisms, not just to fouling organisms. Conventional copper

based AFSs fall into two general categories: copolymer or ablative paints and hard contact leaching paints. Each of these coating formulations can benefit from periodic hull cleaning to remove fouling growth, maintain a smooth surface, and improve the copper release, but underwater cleaning can be a source of pollution if not done carefully. Several studies summarized in EPA (2010) have documented the plume of dissolved copper release during hull cleaning and quantified AFS biocide loadi ngs into marinas and closed embayments or basins

. Elevated copper levels affect the growth, development, feeding, reproduction, and survival of various life stages of fish, mussels, oysters, scallops, crustaceans, and sea urchins. They also change the type s of phytoplankton that thrive in boat basins, and have sublethal effects on fish (e.g., hinder metabolic processes, reproduction, development, activity levels, and behavior).
By reducing the use of copper

- based AFS where possible, and limiting the release of copper from existing systems, the sVGP practices will help reduce the adverse environmental impacts of A F S on the aquatic fauna and biota.

7.1.3 POLLUTANT IMPACTS

Vessel discharges contain a wide variety of pollutants with the potential to cause ecological and economic harm to aquatic species and their habitat. In the 2010 report, EPA summarized the potential impacts of vessel discharges, concluding that, while vessels may not be solely responsible for exceedances of aquatic life or human health NRWQC, vesse l discharges could nonetheless have significant local impacts in small waterbodies or in confined areas with little to no flushing

.2014 sVGP Economic Analysis

Page 90 of 106 OIL AND GREASE Oil and grease is another known component of vessel discharges with potentially harmful impacts to humans and to aquatic life. Oil in vessel discharges may not exceed concentrations that may not be harmful, consistent with existing regulation under 40 CFR P art 110. The Gro up of Experts on the Scientific Aspects of Marine Environmental Protection (GESAMP), a United Nations body, found that voluntary vessel discharges account for
less than 1 percent of vessel oil discharges into the marine environment (GESAMP, 2007). However, vessel discharges may still contain enough oil to do ecological damage, even if they meet existing concentration requirements and account for a small percentage of total oil discharges worldwide. Oils are highly toxic and carcinogenic, and may inhibit rep roduction and cause organ damage or even mortality (AMSA, 2003). Additionally, oil can taint organisms that are consumed by humans, which is a potential source of adverse health impacts.
The sVGP seeks to minimize and reduce discharges of oil and grease f rom several sources, including during fueling, when emptying the bilge

, or in response to accidental spills. For bilgewater, for example, the permit requires the visual monitoring of the oily water separator effluent, if a separator is present, or the remo val of accumulated oil using absorbent material prior to pumping, when the vessel is not equipped with an oil separator. The sVGP also requires the use of environmentally acceptable lubricants in selected applications where the lubricant may come in contac t with water and except when technically infeasible, to reduce loading of harmful compounds into the aquatic environment.

METALS Metals are a diverse group of pollutants, many of which are toxic to aquatic life and humans. Vessel discharges can contain a variety of metal constituents. For example, EPA’s 2010 study found a total of 15 different metals in samples from selected vessel discharges , with copper and arsenic generally posing the greater threat to human health and aquatic life.

While some metals, including copper, nickel, and zinc, are known to be essential to organism function, many others, including thallium and arsenic, are non

- essential or are known to have only adverse impacts. Even essential metals can do serious damage to organism function i n sufficiently elevated concentrations. Adverse impacts can include impaired organ function

, impaired reproduction and birth defects

, and, at extreme concentrations, acute mortality. Additionally, through a process known as bioaccumulation, metals may not be fully eliminated from blood and tissues by natural processes, and may accumulate in predator organisms further up the food chain (EPA, 2007b). This process can result in adverse health impacts for humans, who may consume
contaminated fish and mollusks.
The impacts of metals on any given ecosystem are difficult to predict, however, due to the relatively complicated circumstances by which they are available to organisms. Bioavailability of metals, and therefore impacts, varies by species of organism, as w ell as by climate and chemistry of a waterbody (John and Leventhal, 1996). Moreover, background levels of metals can vary substantially by location ( U

. S

. EPA, 2007b).
Modeling of hypothetical harbors conducted by EPA showed potentially significant metal l oadings coming from vessels. Environmental impacts from dissolved copper leaching from anti

- fouling hull coatings have been well documented in low

- flushing environments in harbors with large number of recreational vessels ( U

. S

. EPA, 2010 b ). Arsenic contain ed in vessel deck washdown or bilgewater can bioaccumulate throughout the food chain.
Practices required under the sVGP aim to reduce metal loadings

, for example by minimizing the introduction of contaminants into the discharge (e.g., minimizing debris, p aint chips, or residue on deck) or encouraging the use of non

- copper

- based paints.2014 sVGP Economic Analysis

Page 91 of 106 NUTRIENTS Nutrient pollution, including nitrogen and phosphorus, is a component of vessel discharges and a major source of water quality degradation throughout the United St ates (USGS, 1999). Though traditionally associated with agricultural runoff from fertilizer, sewage treatment facilities, and urban stormwater, a variety of other sources do exist, including graywater and bilgewater discharges from vessels.
Nutrient pollu tion is associated with a variety of negative environmental impacts, the most notable of which is eutrophication, which can lead to reduced levels of dissolved oxygen due to increased demand (sometimes to the extremes of hypoxia), reduced levels of light p enetration and turbidity, and changes in the composition of aquatic flora and fauna (National Research Council, 2000).
The impacts of these water quality reductions on recreation and fishing can be significant, particularly in estuaries. For example, a 198 9 study found that a hypothetical 20 percent reduction in nitrogen and phosphorus loading in the Chesapeake Bay would result in an increase in recreation worth $34.6 million (in 1984 dollars) from increased public beach usage (National Research Council, 20 00). Nutrient pollution has also contributed to the decline of the Chesapeake crab fishery, due to its role in degrading underwater vegetation, which serves as an important habitat for post

- larval crabs (Boesch et al. 2001; Kemp et al., 2005). While the c ontribution of vessels covered by the sVGP to nutrient pollution is hard to quantify, any reduction in nutrient loadings would contribute to decreasing their adverse impacts.

PATHOGENS Pathogens are another important constituent of discharges from vessels, particularly in graywater. EPA’s study of graywater discharges and in deck washdown (fishing vessels only) found elevated levels of pathogen indicator bacteria ( U

. S

. EPA, 2010 b ). Specific pathogen indicator s found in graywater include d E. coli

, enterococci, and
fecal coliforms . Elevated levels of these indicators have been linked to a higher incidence of gastrointestinal illness in swimmers and are used to indicate potential fecal contamination at swimming beaches. Beach managers use pathogen indicators to issue advisories or close beaches when levels exceed the ambient recr eational water quality standard

, reduc ing the recreational value of impacted beaches.

OTHER POLLUTANTS WIT H T OXIC EFFECTS Other constituents of vessel discharges are known to have a broad array of adverse impacts on aquatic species and human health. For example, the 2010 study detected a total of 49 different VOCs and SVOCs in sampled vessel discharges. Several o f the compounds were detected at levels that exceed their respective human health criteri a

. EPA also detected endocrine disruptor nonylphenols in bilgewater, stern tube/packing gland, deck washdown , and graywater discharges

. VOCs and SVOCs , including most notably benzene, a known carcinogen, can cause a variety of adverse impacts on ecosystems, including fisheries, as well as on human health. Phthalates are known to interfere with reproductive health and liver and kidney function in both animals and humans (Sekizawa et al., 2003; DiGangi et al., 2002). Chlorine, though toxic to humans at high concentrations, is of much greater concern to aquatic species, which can experience respiratory problems, hemorrhaging, and acute mortality even at relatively low

conce ntrations ( U

. S

. EPA, 2007a).
Nonylphenols are manmade organic compounds that are used in a wide variety of applications, such as the manufacturing of detergents

, given their surfactant properties. They are synthetic estrogens and can mimic the natural ver tebrate hormone estrogen and evoke an estrogen

- like response, such as the disruption of male sexual development. They are highly toxic to fish, aquatic invertebrates, and aquatic plants. Both freshwater and2014 sVGP Economic Analysis

Page 92 of 106 saltwater invertebrates, plants

, and fish are sen sitive to this category of chemicals and have demonstrated toxicity to it in varying degrees. Because nonylphenols are persistent, they have the potential to bioaccumulate in the food
chain

.

OTHER NON

- TOXIC POLLUTANTS The category “ other non

- toxic polluta nts” includes all nonconventional pollutants except fecal coliform (discussed in pathogens) . A s applied to vessel discharges , the category consists of multiple pollutants with disparate impacts. The most important types are biochemical oxygen demand (BOD) and chemical oxygen demand (COD), which were elevated in the samples EPA collected of vessel bilgewater , deck washdown, fish hold, and graywater discharges. The two pollutants are measures of oxygen

- demanding substances present in the discharges (e.g., organic matter) that can contribute to low dissolved oxygen levels in receiving waters. In particular, EPA found BOD levels in fish hold effluent and graywater that are comparable to those present in raw sewage ( U

. S

. EPA, 2010 b ).

7.1.4 BENEFITS OF REDUCING POLLUTANT DISCHARGES

Impacts of vessel discharges, and therefore the benefits of reducing pollutant loading in these discharges, may be particularly significant whe re the waters are already impaired, the number of vessels is large, or flushing is limited.
Many of the nation’s busiest ports are considered to be impaired by a variety of pollutants found in vessel discharges

. This includes hailing ports popular with sm all fishing vessels and other non

- recreational vessels. For example, the ports of Boston, MA, Gloucester, MA, Houma, LA, Houston, TX, New York, NY, New Orleans, LA, and Seattle, WA

, are all listed as impaired in the EPA Waters database (see Table 7

- 2 ). Causes of impairments include toxic organics, pathogens, noxious aquatic plants, oil and grease, nutrients, and organic enrichment/oxygen depletion. The sVGP is expected to reduce discharges of nutrients, metals, oil, grease, toxics, and other pollutants in waters with high levels of vessel traffic.2014 sVGP Economic Analysis

Page 93 of 106 Table 7

- 2 : Impairment Status of the Top 20 Hailing Ports.

Po rt Causes of Impairment
Boston, MA Toxic organics, p athogens, n oxious a quatic p lants Cordova, AK None listed Gloucester, MA Pathogens Homer, AK None listed Houma, LA Total toxics, o il and grease, s alinity/ t otal dissolved solids (TDS) /chlorides/sulfates, t oxic organics, n utrients, o rganic enrichment/oxygen depletion, p athogens, t urbidity Houston, TX (Houston Ship Channel) PCBs, d ioxins, t otal toxics, p athogens, m ercury, p esticides, o rganic enrichment/oxygen depletion, m etals (other th an mercury) Juneau, AK None listed Ketchikan, AK None listed Key West, FL None listed Kodiak, AK None listed Miami, FL None listed New Orleans, LA Pathogens New York City, NY Nitrogen, o rganic enrichment/oxygen depletion, c admium, m ercury Norfolk, VA None listed Petersburg, AK None listed Portland, OR None listed San Diego, CA Metals (other than mercury), t otal toxics San Francisco, CA (San Francisco Bay) Dioxins, PCBs, p esticides, m ercury, m etals (other than mercury), n uisance exotic species

S eattle, WA PAHs, p athogens, pH Sitka, AK None listed
Source: Battelle (2007); EPA Waters database (accessed May 13, 2011)

.

7.2 AQUATIC NUISANCE SPECIES IMPACTS

7.2.1 INTRODUCTION AND BAC KGROUND

Introductions of non

- indigenous species have occurred in the United States for centuries, with more than 50,000 total non

- native species thought to be successfully established with reproducing populations in U.S. territory (Pimentel et al., 2005). Scientists and governments have long recognized the economic and ecological damages associated with land

- based invaders, but attention turned toward ANS in the 1980s, when the extent of the zebra mussel invasions in the Great Lakes region first became a serious problem (Ruiz and Reid, 2007). ANS invasions have caused tremendous ec onomic and ecological damages to critical coastal and inland waters throughout the United States.
ANS may be introduced through a variety of vectors, including intentional introductions, escape from a confined environment, or transport on the hull of a ves sel or in ballast water and sediment from ballast tanks. One of the major known vectors for ANS introduction is through the ballast water tanks of commercial vessels, although transport of organisms from one waterbody to another may also occur when organis ms attach themselves to the vessel hull.2014 sVGP Economic Analysis

Page 94 of 106 The U.S. Coast Guard’s 2004 Rulemaking for Mandatory Ballast Water Management (codified in 33 CFR 151) mandated open ocean ballast water exchange for ships traveling outside the 200

- nautical mile EEZ of the United
States. EPA’s current VGP contains stringent ballast water exchange requirements for non

- recreational vessels larger than 79 feet.
The inspection provisions of the sVGP will help further reduc e the possibility of ANS introductions or their spread . Specifi cally, the p ermit requires a visual inspection of the visible areas of the vessel to detect any attached or stowaway living organisms and their removal as applicable

.

7.2.2 ANS IMPACTS

ANS invasions are a persistent problem in U.S. coastal and inland waters. AN S invade U.S. waters through a number of dispersal mechanisms including releases from fisheries

, research and education facilities

, restoration efforts

, public aquaria and the aquarium pet industry

, and by being attached to or within ships, drydocks, amphi bious planes, floating marine debris, drilling platforms, navigation buoys and marine floats, canals, and recreational equipment (Carlton et al., 2003).
Though no reliable and comprehensive estimates of total ANS introductions nationwide exist, case studie s of several major bodies of water across the country, as summarized in Table 7

- 3

, provide a sense of the extent of the problem.

Table 7

- 3 : Estimates of ANS in Several Major Water Systems.

Region Estimated Rate of Invasion a Estimated Total Invasions to Date b

Great Lakes Once every 28 weeks c 162 Mississippi River System Unknown 100 San Francisco Bay Once every 24 weeks d 212 Lower Columbia River Basin Once every 5 months e 81 Gulf of Mexico Unknown 579

a Ruiz and Reid (2007) suggest that these figures may not reliably represent the true rate of introduction, as they are based o n discovery data, which may not always track with the underlying rate of introduction.

b All figures in this column are taken from U

. S

. C oast G uard (2004b).

c NOAA (2007).

d Cohen and Carlton (1995).

e Sytsma et al. (2004).

The total costs associated with ANS in the United States are staggering. A study suggests that expenditures on control alone for ANS in the United States total approximately $9 billion annually (Pimentel et al., 2005). A broad range of damages are associated with any introduction of a given type of species, summarized in Table 7

- 4

.2014 sVGP Economic Analysis

Page 95 of 106 Table 7

- 4 : Estimates of ANS Damages by Type of Species

.

Type of Species Range of Potential Damages per Invasion per Year (Million 2010 $)

Fish 0

– 161 a Mollusks 0

– 6,415 b
Non

- Mollusk Invertebrates 0

– 23.8 c

Plants 0

– 36.9 d Pathogens 0

– 0.764 e

a Based on Ruffe (Leigh, 1998), adjusted to 2010 $ using CPI.

b Based on Zebra Mussel (Pimentel et al., 1999), adjusted to 2010 $ using CPI.

c Based on European Green Crab (EPA, 2008 b ), adjusted to 2010$ using CPI.

d Based on hydrilla (OTA, 1993), adjusted to 2010 $ using CPI.

e Based on an outbreak of epidemic cholera (Lovell and Drake, 2007), adjusted to 2010 $ using CPI.

Although some species cause no economic damage, others may cause hundreds of millions of dollars in damages. The majority of these damages may be broken down into six broad categories of impacts, which are described in the subsequent subsections. 43

COMMERCIAL AND RECRE ATIONAL F ISHERIES As noted above, the introduction of ANS can cause the imbalance of native ecosystems. ANS pose an especially serious risk to commercial and recreational fisheries, which like other aquatic resources could be devastated by ANS (IDNR, 2003). Selecte d examples of ANS impacts on fisheries include the European green crab and the zebra mussel, described below.

 European Green Crab: The most likely mode of the initial European green crab introduction on the East Coast of North America was ship fouling (Cohen et al., 1995). Other possible pathways of introduction include ballast water and solid ballast. Grosholz (2006) and Cohen (1997 ) believe that incidental transport with commercial fishery products is the most likely vector for the initial introduction of C. maenas to the West Coast. The annual estimated economic damages from European green crab predation to commercial and recreatio nal shellfisheries and eelgrass restoration efforts range from $18.6 to $22.6 million per year in the United States ( U.S. EPA, 2008 b ).

 Zebra Mussel: An invasion of zebra mussels, which are native to the Caspian Sea and were introduced to U.S. waters in bal last water, has led to a halt in the $3 billion dollar Mississippi River shelling industry (Randall, 2001).
Additionally, w hile vector s for several recent ANS introductions are believed to be ballast water, even vessels without ballast water onboard may f acilitate the spread of ANS to other waterbodies. Visual inspection of vessel hull and removal of attached or stowaway organisms can therefore be an effective way to curb the progression of ANS and their associated damage to fisheries.

43 Portions of a previous analysis of benefits associated with ANS i ntroduction reductions are incorporated into this analysis (Abt Associates Inc., 2005).2014 sVGP Economic Analysis

Page 96 of 106 OTHER WATER

- BASED RE CREATION AND TOURISM ANS have also had adverse impacts on recreation and tourism nationwide by damaging water quality and flow. Two invasive plants, hydrilla and water lettuce, have caused significant damages in U.S. waters. Both clog the water’s surface, blocking boating and swimming, impeding water flow, and disrupting plant and animal communities. Florida spends an estimated $1 million or more annually to control water lettuce, and the rest of the

e astern U.S. states spend approximately $100,000 annually (Van Driesche et al., 2002). Studies of two lakes in Florida affected by hydrilla found that degradation caused by the hydrilla cost the state $11 million in lost recreation expenditures (Pimentel et al., 1999). 44

Invasive mollusks such as zebra mussels ca n also adversely affect a number of recreational activities, including boating and swimming. Zebra mussels often cover shorelines with sharp

- edged shells and rotting mussel flesh, which can diminish interest in visiting infested beaches. Biofouling can als o be a deterrent to recreational boaters who would rather avoid zebra mussel fouling and the resulting necessity of extensive vessel cleaning (U

. S

. ACE, 2002). A study by Vilaplana and Hushak (1994) estimated that incremental annual costs to boat owners in the Great Lakes related to the mussel included $94 for protective anti

- fouling paints, $171 for additional maintenance, and $207 for insurance.

BIODIVERSITY AND ECO SYSTEMS Introductions of ANS can drastically alter virtually every characteristic of an aqu atic ecosystem. ANS can affect the “composition, density, and interactions of native species” that can then cause “significant changes to the ecosystem, such as alterations to the food webs, nutrient dynamics and biodiversity” (IDNR, 2003). Ecosystems

prov ide a variety of services, including water quality maintenance, detoxification and decomposition of waste, climate stabilization, mitigation of natural disaster impacts, and a source of income. S ignificant instances of adverse ecosystem impact include

, mos t notably

, the introduction of the zebra mussel in the Great Lakes region. The mussels achieved densities as high as 700,000 per square meter, which led to a much greater filtration rate of particulate matter, resulting in much lower turbidity (Griffiths et al., 1991; MacIsaac et al., 1995). This in turn led to much greater filtr ation of light through the water column, which affected plant viability and substantially increased competition for food for indigenous mollusks. 45 Another example is Carijoa riisei , or snowflake coral, an invasive coral species that spreads through vessel fouling and is threatening the ecosystem stability of the ecologically sensitive Northwestern Hawaiian Islands Coral Reef Ecosystem Reserve (NOAA, 2004a; Toonen, 2005). It is a threat to the native bottom

- dwelling community and to black coral, which a loc al industry valued at $30 million harvests and uses to make jewelry.

THREATENED AND ENDAN GERED SPECIES Invasions have had especially adverse impacts on threatened and endangered species by predation, alteration of habitat, or further competition for limite d resources. It is estimated that non

- indigenous species are a contributing factor to the endangered status of 70 percent of listed fish species, and more than half of combined endangered and threatened listings (OTA, 1993). They are also estimated to have contributed to 68 percent of fish extinctions in the last 100 years (Larson and Sytsma, 2006).

44 This cost may have an adverse impact locally, but because the money is still available to be spent elsewhere, this adverse im pact does not represent a true net welfar e loss.

45 Other examples include the introduction of the round goby and the European Ruffe in the Great Lakes via ballast water.2014 sVGP Economic Analysis

Page 97 of 106 DAMAGE TO INFRASTRUC TURE Industrial facilities, such as those that purify water, generate electricity, and manufacture goods, depend on water intake structures to perform their services. These structures can often be adversely affected by ANS.
So far, zebra mussels have been the most damaging ANS introduced into U.S. fresh waters, causing particularly severe problems with water intake structures (U

. S

. ACE, 2002 ). Zebra mussels attach to surfaces of water intake structures, navigation dams, pumping stations, and gears, often making them inoperable, which inconveniences the public and costs industry significant financial losses and damages (U

. S

. ACE, 2002).

Husha k (1996) reports on the results of 398 surveys of Great Lakes users with lake water intake structures from 1989 to 1994 for private and public utilities, municipal water facilities, and industrial users. Extrapolating the results of this survey to all faci lities in the Great Lakes yielded total monitoring and control costs of $120 million from 1989 to 1994 with an average cost of $30 million annually (Park and Hushak, 1998). Another study done in 1995 of the economic impact of zebra mussels (O’Neill, 1997) found that the total costs of zebra mussels control and monitoring were $69 million, with a mean cost of $205,570 per facility. The study results also showed that total annual expenses rose from $234,140 in 1989 to $17,751,000 in 1995 as the range of musse ls increased (O’Neill, 1997).
Another invasive bivalve species, the Asian clam, is estimated to have caused fouling damage that cost the nuclear industry about $1 billion per year in the early 1980s (OTA, 1993). Two other invasive bivalves, the brown

musse l and the green mussel, have also caused fouling damages in the Gulf Coast region and Tampa Bay, respectively, where each has become established, although the total economic value of the damages is not known (Benson et al., 2002; GSMFC, 2003).
Finally, in vasive plant species such as hydrilla and water hyacinth can disrupt water flow in irrigation canals and in utility cooling reservoirs. Annual expenditures on aquatic weed control in the United States, much of which is spent on ANS weeds specifically, are estimated at $110 million (Pimentel et al., 2005).

7.2.3 BENEFITS OF REDUCING ANS INTRODUCTIONS

The evidence presented in Section 7.2.3 demonstrates that introductions o f ANS are associated with significant detrimental impacts throughout the United States. The ANS inspection provisions of EPA’s sVGP, to the degree that they fill a gap in the existing ANS prevention practices, can therefore be expected to generate benefits by reducing the risk of such damages in the future. Benefits would include the prevention of damages to fisheries, tourism, and recreation, of damages to infrastructure, and of adverse human health impacts, as well as prevention of further stresses on nat ive biodiversity and ecosystems.
The issue of ANS invasions and their impacts presents unique challenges for the estimation of the benefits associated with this p ermit. Although overwater transport is one of the pathways for the spread of invasive species , estimating changes in risk of introduction or further spreading of invasive species from the p ermit requirements is not feasible due to the lack of data on rates of invasive species introduction or spread associated with attached or stowaway organisms. M oreover, because the type of species introduced in the future is unknown and the range of potential economic impacts associated with each species type is very large, estimating the monetary value of benefits from preventing or mitigating future invasions w ith a reasonable degree of certainty would not be possible.

 Commercial and recreational fisheries . A reduction in the numb er of ANS introductions due to hull maintenance requirements may prevent significant future damages to commercial and recreational fis heries that play a critical role in the U.S. economy. In 2009

, 7.9 billion pounds of fish and shellfish2014 sVGP Economic Analysis

Page 98 of 106 were landed by U.S. commercial fishermen at U.S. ports, and were valued at $ 3.9 billion (N OAA

, 201 1b ). An additional 29.9 million anglers aged 16 and older spent an average of 17 days fishing in 2006, spending more than $40 billion dollars on trips, equipment, licenses, and other costs (U

. S

. DOI, 2007). Leigh (1998) estimated the annual reduction in value of yellow perch, walleye, and whitefish fisherie s due to ruffe invasion under moderate scenario assumptions to be $119 million (in 1998 dollars; $ 159 million ( 2010 $) inflated using the CPI).

 Other Water

- Based Recreation and Tourism . Another source of potential benefits from the reduction of ANS introduc tions under the p ermit will be the prevention of damages to valuable recreation and tourism sites. A report by NOAA (2004b) estimated the annual revenue associated with coastal tourism in the United States to be $54 billion, and found that beaches are the most popular tourist destinations in the United States. One invasive plant species alone, hydrilla, is associated with $14.5 million annually in control costs, and reduces lake recreation on two Florida lakes alone by $11 million in years when hydrilla cov ers the lakes (Pimentel et al., 1999). Since data are limited on the impacts of invasive species on recreation and tourism in ecosystems for which estimated rates of invasion exist, it is not possible to calculate the level of expected benefits for other w ater

- based recreation and tourism. However, EPA projects that there will be some incremental benefits.

 Biodiversity and Ecosystems. Additional significant benefits from the p ermit will accrue to biodiversity and ecosystems. As detailed in Section 7.2

, ANS are associated with substantial adverse impacts on the composition of ecosystems and the biodiversity therein. The quantification of biodiversity benefits will

not be attempted in this analysis due to the great deal of uncertainty surrounding the impact of a single ANS introduction on a given ecosystem relative to other factors, as well as the difficulty. However, potential benefits in the form of preservation of hab itat and species are likely.

 Threatened and Endangered Species

. The p ermit requirements, by reducing the impacts of invasive species introductions or spread o f threatened and endangered species, will have benefits in terms of prevention of reduction in species population and species extinction. Total federal spending nationwide on programs related to the Endangered Species Act for 2008 , the most recent year for which data are available, was nearly $1 billion, and state spending was more than $ 115 million ( Congressional Research Service

, 2010 ). As mentioned above, ANS are considered likely contributors to the threatened or endangered status of 70 percent of listed fish species (Larson and Sytsma, 2006). Combined federal and state expenditures per listed species of fish in 2004 , the most recent year with this detailed information, ranged from $25,000 to $1.09 million (USFWS, 2005) . It is not possible to calculate a range of benefits to threatened and endangered species associated with EPA’s p ermit requirements, due to the lack of research linking specific invasions with quantifiable impacts on particular species. However, it is likely that some proportion of potentia l future expenditures on endangered and threatened fish, as well as expenditures on other aquatic endangered species, would be averted by reduced ANS introductions or spreading under the

p ermit requirements.

 Damage to Infrastructure

. Another benefit of the sVGP requirements will result from averting damages to infrastructure by invasive species of plants and mollusks. Fouling by species such as the Asian clam, zebra mussel, and hydrilla has caused substantial economic damage to a variety of municipal and
in dustrial entities in the past. Most of this damage takes the form of clogging water intake structures and disrupting the flow of water. One study estimated fouling damage to water intake infrastructure by zebra mussels for the year 2000 to be $5 billion (K halanski (1997), and cited in Pimentel et al. (1999); $6.1 billion in 2007$ using CPI).2014 sVGP Economic Analysis

Page 99 of 106  Human Health

. Estimating expected human health benefits of EPA’s p ermit is not feasible due to very limited data on the rates of non

- endemic pathogen invasions and the human health effects of these pathogens. Nevertheless, the p ermit provisions are likely to reduce the probability of introduction of harmful exotic pathogens and thus are expected to benefit human health.
The hull visual inspection requirements established in the sVGP are designed to directly address the likelihood of future ANS invasions and their ultimate spread across waterbodies. The categories of potential damages from such ANS invasions have been discussed above and studies referenced as to the potent ial magnitude of these damages for each. To the degree that these damage estimates provide an indicator of the likely payback that can be anticipated from reducing ANS invasions or spread, EPA believes the benefits of this p ermit could be expected to be si gnificant. However, the complexity of the ANS issue, 46 the wide range and varied nature of impacts these invasions can cause, and the great breadth of the scope of this p ermit prohibit EPA from developing a quantified
estimate of these benefits.



### 7.3 SUMMARY OF BENEFITS

The evidence presented in the pollutant impacts section demonstrates that vessel discharges, particularly ANS spread, are associated with significant detrimental impacts throughout the United States. Controls on specific discharges, as well as gen eral housekeeping requirements of the p ermit, can be expected to generate benefits through reducing the risk of damages in the future and making water quality improvements in already impaired waters. Monetized benefits will include the prevention of fisher y closures and of adverse human health impacts, as well as increased opportunities for recreation. Non

- monetized benefits will include prevention of further stresses on biodiversity and ecosystems.
Though the magnitude of benefits is not calculable, Table 7

- 5 summarizes the categories of potential benefits resulting from compliance with sVGP requirements.

Table 7

- 5 . Benefits of Reducing the Impacts of Vessel Discharges.

Type of Benefit ANS Nutrients Pathogens Oil &
Grease Metals Other Toxics Other Non

Toxics
Human Health       Biodiversity       Ecosystem Function       Improved Fishery Conditions       Increased Opportunities for
Recreation    

46 This includes characterizing the probability of any unregulated or non

- compliant vessel to introduce or spread an ANS to a waterbody and the marginal effect of the regulation in preventing damage from ANS introduction or spread.2014 sVGP Economic Analysis

Page 100 of 106 

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