1622 Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations

DEPARTMENT OF TRANSPORTATION

Coast Guard

33 CFR Part 157

[CGD 91–045c]

RIN 2115–AF27

Structural Measures to Reduce Oil

Spills From Existing Tank Vessels

Without Double Hulls

AGENCY: Coast Guard, DOT.

ACTION: Final rule.

SUMMARY: This final rule represents the

last phase in the Coast Guard’s threephased effort to establish economically

and technologically feasible structural

and operational measures to reduce the

threat of oil spills from tank vessels

without double hulls, as required by the

Oil Pollution Act of 1990. No structural

measures are contained in this final rule

because the Coast Guard has determined

that there are no interim structural

measures that are both technologically

and economically feasible for existing

tank vessels without double hulls.

DATES: This final rule is effective

February 10, 1997.

ADDRESSES: Unless otherwise indicated,

documents referenced in this preamble

are available for inspection or copying

at the office of the Executive Secretary,

Marine Safety Council (G–LRA/3406),

U.S. Coast Guard Headquarters, 2100

Second Street SW., room 3406,

Washington, DC 20593–0001, between

9:30 a.m. and 2 p.m., Monday through

Friday, except Federal holidays. The

telephone number is (202) 267–1477.

FOR FURTHER INFORMATION CONTACT:

LCDR Suzanne Englebert, Project

Manager, Project Development Division,

at (202) 267–6490.

SUPPLEMENTARY INFORMATION:

Regulatory History

Section 4115(b) of the Oil Pollution

Act of 1990 (OPA 90) directs the Coast

Guard to develop structural or

operational requirements for tank

vessels of 5,000 gross tons (GT) or more

without double hulls that will serve as

regulations until the year 2015. After

2015, all tank vessels operating in U.S.

waters will be required to have double

hulls under section 4115(a) of OPA 90

(46 U.S.C. 3703a). Regulations issued

under the authority of section 4115(b)

must provide as substantial protection

to the environment as is economically

and technologically feasible. A detailed

review of structural measure issues, as

they pertain to the Congressional

mandates of OPA 90, appears in the

supplemental notice in proposed

rulemaking (SNPRM) entitled

‘‘Structural Measures to Reduce Oil

Spills from Existing Tank Vessels

without Double Hulls’’ published on

December 28, 1995 (60 FR 67226).

This final rule represents the final

phase of the Coast Guard’s three-phased

effort to reduce oil pollution from

certain existing tank vessels. The first

phase was completed on August 5,

1994, by issuing a final rule entitled

‘‘Emergency Lightering Equipment and

Advanced Notice of Arrival

Requirements for Existing Tank Vessels

Without Double Hulls’’ (59 FR 40186),

which requires the carriage of

emergency lightering equipment and the

inclusion of the vessel’s International

Maritime Organization number in the

advance notice of arrival report. The

second phase was completed on July 30,

1996, by issuing a separate final rule

entitled ‘‘Operational Measures to

Reduce Oil Spills from Existing Tank

Vessels without Double Hulls’’ (61 FR

39769). That rule, which focused on

reducing the risk of groundings,

collisions, or fires, requires existing tank

vessels without double hulls to comply

with certain operational measures until

the year 2015.

To complete the third phase, the

Coast Guard evaluated several different

structural measures to determine their

economical and technological

feasibility. Such measures included

retrofitting double bottoms or sides,

implementing hydrostatic balance

loading (HBL) for all vessel

configurations, and restricting certain

existing tanks from carrying cargo or

retrofitting spaces so that they are

located protectively around tanks

carrying oil as cargo. As a result of

further economic cost-benefit analysis

and the comments on the SNPRM, the

Coast Guard is not requiring structural

measures. The Coast Guard has

determined that structural measures are

not economically feasible and that the

measures required under phase one and

two of this rulemaking meet the

Congressional mandate of OPA 90

section 4115(b).

Discussion of Comments

Background information on proposed

structural measures for existing vessels

without double hulls is provided in the

preambles to the advanced notice of

proposed rulemaking (56 FR 56284;

November 1, 1991), the notice of

proposed rulemaking (58 FR 54870;

October 22, 1993), and the SNPRM (60

FR 67226; December 28, 1995). The

Coast Guard received a total of 29 letters

on the SNPRM. These letters addressed

several issues and presented more than

180 comments. Twelve comments

supported operational measures and

two comments supported emergency

lightering measures as finalized. The

remaining comments discussed issues

related to reducing oil outflow after an

accident occurs on an existing tank

vessel and are addressed in the

following sections. All comments

received on this rulemaking are

available for inspection in docket [CGD

91–045c] at the address listed under

ADDRESSES. For the purposes of this

preamble discussion, the term ‘‘singlehull’’ means an existing tank vessel

without a double hull. Pre-MARPOL

vessels are defined as vessels that are

not required to meet the pollution

prevention requirements of the 1973

International Convention for the

Prevention of Pollution from Ships

(MARPOL 73). MARPOL 73/78 vessels

are defined as vessels that meet the

requirements of the MARPOL 73

convention and vessels that meet the

MARPOL 73 convention as amended by

the 1978 Protocol (MARPOL 78). The

term ‘‘Regulation 13G’’ refers to

Regulation 13G of Annex I of MARPOL

73 as amended by the 1978 Protocol.

I. Applicability

Twenty-three comments pertained to

the application of structural measures.

Nine comments made general remarks

on the applicability of structural

measures and the OPA 90 mandated

phase-out schedule’s relationship to the

implementation of structural measures.

The remaining comments suggested that

the Coast Guard exempt various types of

vessels from the application of

structural measures.

Two comments shared the opinion

that the current OPA 90 phase-out

schedule effectively creates an orderly

transition to a future double-hull fleet,

thus making additional measures

unnecessary. One of these comments

specifically noted that tank barges, in

particular, would accrue no benefit from

structural measures due to impending

OPA 90 phase-outs. A separate

comment agreed that the Coast Guard

should maintain OPA 90 phase-out

dates, but did not request that vessels be

excluded from the application of

structural measures or that structural

measures not be required.

Five comments recommended that the

Coast Guard require structural measures

for all existing tank vessels, including

non-petroleum oil carriers and tank

barges. The comments stated that nonpetroleum carriers may periodically

transport petroleum and that nonpetroleum oil spills pose an equal or

greater risk to the environment as

petroleum oil spills. In addition, the

comments claimed that standards
Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations 1623

should be uniform throughout industry

to encourage equal competition and an

even distribution of costs.

Two comments suggested alternatives

to the broad application of structural

measures. One comment encouraged the

use of company historical performance

as a basis for requiring implementation

of structural measures. For example, the

comment claimed that companies with

a history of minimal oil spillage should

not be required to implement structural

measures to the same degree as frequent

offenders. The second comment

recommended that the Coast Guard

establish an enforceable performance

standard, as opposed to a one-size-fitsall approach, for the implementation of

specific measures to ensure a high

degree of spill prevention.

During this rulemaking, the Coast

Guard extensively researched the cost

and benefit of requiring a multitude of

measures on single-hull tankships and

tank barges prior to their phase-out

dates. No tank barge or tankship

company commented that their sole

cargo carriage consisted on nonpetroleum products. Consequently, all

tank vessels, including those with the

ability to transport non-petroleum

products for one charter and change to

carrying petroleum products for the

next, were considered for this

rulemaking.

The anticipated cost to single-hull

tank vessels until 2015, or their phaseout dates, was strictly taken into

account for this final rule assessment.

The OPA 90 phase-out dates and current

differences between U.S. and

international fleet pollution prevention

requirements were also considered in

the cost and benefit analysis. Because

this rulemaking addresses out-flow

prevention measures typically requiring

architectural or loading changes, and

not human performance factors that are

usually the reason for a company’s

lower spill record, the Coast Guard did

not consider equivalencies or

exemptions based on individual

company performance.

Several comments claimed vessels

trading at deepwater ports or offshore

lightering zones should be exempt from

the application of structural measures

because most already operate with

protection adequate for trading in these

low risk areas and would experience no

benefit from the use of structural

measures. Other comments requested

exemptions for vessels carrying nonpetroleum oil or product cargo because

most are already equipped with double

bottoms and pose an insignificant risk to

the environment. Comments also

recommended excluding all tank vessels

equipped with double bottoms from the

implementation of structural measures

since these already have the ability to

reduce oil outflow due to grounding

incidents. Comments suggested that

spill response tank barges, which

transport oil for a limited purpose only,

be held to lower standards than

structural measures for routine oil

carriers. In addition, several comments

requested that clean product tankers

less than 30,000 deadweight tons (dwt)

be exempt from structural measures

because spillage from these vessels has

historically proven to be less damaging

and less difficult to contain than spills

from other vessels. Finally, some

comments claimed that vessels which

meet the requirements of MARPOL 78,

should be exempt from these

requirements because they already meet

the highest international standards.

Vessels that are solely engaged in oil

spill response are already exempt from

the structural measures required by 33

CFR 157.08. Vessels operating at

deepwater ports, offshore lightering

zones, and those vessels fitted with

double bottoms were considered in this

rulemaking because, although

groundings are less frequent, collisions

and structural failures remain potential

hazards. Non-petroleum carrying vessels

were included in this rulemaking

because the Coast Guard has determined

that bulk spills of animal fat, vegetable

oil, and other non-petroleum oil can be

damaging to the environment. The cost

and benefit of applying structural

measures to single-hull tank vessels

were separately identified by

deadweight tonnage categories in this

final rule regulatory assessment to

determine if tank vessels, such as those

product carriers operating at 30,000 dwt

or less, were disproportionately

affected. MARPOL 73/78 vessels were

also considered separately in the

regulatory analysis for this final rule to

ensure anticipated benefits from any

structural measures accurately reflected

their currently pollution prevention

construction.

Several comments requested

exemption of specific vessels from

implementation of HBL because it is not

technically feasible for their operation.

Specific vessels included: Type 2 Bulk

Chemical/Integrated Cargo parcel

tankers, which encounter difficulties in

implementing HBL when dealing with

heterogeneous cargoes; and vessels

engaged in multi-port voyages, due to

problems resulting from the

implementation of HBL multiple times

during a single voyage.

The Coast Guard agrees that the

difficulty of implementing HBL directly

correlates with cargo variety and

discharge schedules. The technical

feasibility analysis for the structural

measures SNPRM assumed tank vessels

were carrying homogeneous cargoes and

had limited off-loads. Small tankships,

such as parcel tankers and vessels

making multiple port discharges, have

valid concerns about the practical

application of HBL to their operations,

and would most likely incur voyage

delays or higher cargo shutout rates than

originally assumed in the SNPRM for

HBL. The regulatory assessment for this

final rule analyzed the effect that HBL,

assuming a higher cargo shutout cost

and expense of delayed operations for a

product or parcel tankship, would have

on the cost-benefit ratio.

2. Consistency With International

Standards

The Coast Guard received 12

comments expressing support for the

development or adoption of regulations

that are equivalent to international

standards such as Regulation 13G and

International Maritime Organization

(IMO) standards. Arguments in favor of

harmonization included concerns that

country-specific legislation would be

difficult for industry to implement, and

would introduce technical risks and

disproportionate costs. Another

comment specifically noted that the

combination of protectively located void

spaces (PL/Spaces) and HBL analyzed in

the SNPRM would be too expensive and

complex to implement. Consequently,

the comment recommended adoption of

Regulation 13G because it permits use of

HBL or PL/Spaces on an individual

basis. Another comment stated that a

requirement to fit PL/Spaces would be

onerous to the international fleet

because it affects a vessel’s ability to

trade, unlike HBL, even when not

trading in U.S. waters.

Other comments encouraged the Coast

Guard to work in cooperation with the

IMO to ensure high standards of

environmental performance for all

newly-built tank vessels. One comment

also encouraged the Coast Guard to

consider enforcement issues when

preparing a structural measures

regulation, stressing the importance of

maintaining competition on an equal

level.

In contrast, only one comment

disagreed that uniformity would be

achieved by drafting measures

commensurate with international

standards. This comment reasoned that,

theoretically, Regulation 13G and OPA

90 express somewhat opposing

objectives, since Regulation 13G works

to extend the operating life of singlehull vessels, while OPA 90 limits the

operating life of single-hull vessels by

setting a maximum retirement date.
1624 Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations

Consequently, it was suggested that

other options be considered, including

an alternative PL/Space configuration

that splits the protected area between

the side and bottom of the vessel.

The Coast Guard’s goal is to

implement its statutory mandates in

regulations that are consistent with

international standards wherever doing

so is lawful, appropriate, and practical.

Based on comments from the SNPRM,

the Coast Guard considered adoption of

international regulations including

Regulation 13G, as well as other

requirements not presently required by

IMO. However, based on the revised

cost and benefit analysis of these

structural measures for existing tank

vessels, the Coast Guard has determined

that no measures, international or

otherwise, are economically feasible.

3. Congressional Intent

Four comments argued that Congress

directed the Coast Guard to consider

implementation of both structural and

operational measures for existing tank

vessels without double hulls, but did

not require the adoption of both types

of measures. Three of the four

comments also stated that no structural

measures are required to be

implemented unless they are both

economically and technologically

feasible. Another comment stated that

Congress mandated strict standards to

protect our nation’s waters, obligating

the Coast Guard to develop measures

that closely approximate the protective

effect of double hulls on single-hull tank

vessels.

The Coast Guard has done extensive

research on the requirements of section

4115(b) of OPA 90, including an

analysis of the Congressional guidance

offered for its implementation. The

three final rules promulgated under

CGD 91–045 make up a comprehensive

evaluation of section 4115(b) that

implements those measures the Coast

Guard deems are both economically and

technologically feasible as required by

law.

4. Alternative Measures and Economic

Incentives

The Coast Guard received five

comments that encouraged the adoption

of alternative systems to reduce oil

outflow. One comment recommended

that intermediate oil tight decks (IOTD)

be required or offered as an equivalent

measure for compliance with structural

measures. The comment challenged the

Coast Guard’s refusal to consider IOTD

on the basis of its alleged failure to meet

the benchmark equivalency for

alternative compliance found in

Regulation 13G. The comment argued

that the Coast Guard’s interpretation of

the Regulation 13G standards was

misleading and incorrect as it pertained

to IOTD. According to the comment, the

estimated installation costs for IOTD, $2

million per vessel, would be

approximately identical to fitting PL/

Spaces. However, the comment asserted

that cargo shutout amounts would vary

from 2 percent for an IOTD equipped

tanker to 19 percent for a tankship fitted

with PL/Spaces. The comment also

contended that the IOTD concept

should be considered equivalent to a

double hull.

The basis of the Coast Guard’s

determination of appropriate alternative

measures for single-hull tank vessels in

this final rule remains as stated in the

SNPRM: the alternative must be

approved by IMO’s Marine Environment

Protection Committee (MEPC) as an

alternative structural arrangement

meeting the requirements of Regulation

13G. Although IMO has accepted the

concept of IOTD as a method for

complying with the HBL alternative to

Regulation 13G, this acceptance was not

the only factor considered for this

rulemaking. This final rule’s regulatory

assessment found that PL/Spaces, a

combination of PL/Spaces and HBL, and

HBL alone are all economically

infeasible for pre-MARPOL tank vessels.

A separate analysis using the IOTD

shutout estimate of 2 percent and the

refit costs of fitting PL/Spaces over 30

percent of the cargo tank area revealed

that even with the reduced cargo

shutout of IOTD, the cost-benefit of such

a measure is not economically feasible.

Calculations from this analysis

estimated that the cost-benefit of

implementing IOTD for vessels

operating on U.S. coastal voyages

ranged from $62,200 to $211,000, and

from $32,200 to $159,300 per barrel of

unspilled oil on those vessels operating

on international voyages. The Coast

Guard estimates that these ranges are a

conservative representation of the

IOTD’s cost-benefit because the cost of

fitting IOTD for the entire cargo area

would be substantially higher than the

cost of fitting bulkheads or double

bottoms over 30 percent of the cargo

area. The determination of equivalency

between IOTD and a double hull is

outside the scope of this rulemaking.

Another comment suggested that the

Coast Guard adopt the American

Underpressure System. This comment

claimed that this inert gas controlled

system dynamically controls the

underpressure in the tank ullage space

and would prevent oil spills above the

line of rupture. This comment reasoned

that since the Coast Guard has endorsed

HBL and PL/Spaces it should also

accept alternative concepts, such as the

American Underpressure System, that

are similarly effective and result in

comparable levels of risk regardless of

IMO approval. According to the

comment, the American Underpressure

System is comparable in performance to

the double hull, is significantly more

effective than either HBL or PL/Spaces,

and introduces no unmanageable risks.

The comment estimated that the cost of

implementing the American

Underpressure System would be

between 1 and 1.5 percent of the

construction cost required to build a

new single-hull tanker, while the cost to

install a double hull would be between

30 to 40 percent of the construction cost

required to build a new single-hull

tanker. In addition, the comment

claimed that the out-of-service time to

retrofit the American Underpressure

System was 1 to 3 weeks, compared to

the 6 to 12 months typically required to

install a double hull. Considering the

loss of cargo capacity that would result

from the installation of the double hull,

as well as the comparison between the

refit cost and out-of-service time

required for the implementation of both

measures, this comment concluded that

no quantitative support exists to

exclude the American Underpressure

System as a viable alternative measure.

While underpressure systems could

be less costly than PL/Spaces or HBL,

they were not included in the regulatory

assessment for this final rule because

they have not been approved by IMO as

an alternative to comply with

Regulation 13G. Underpressure systems

were specifically examined and

discussed by IMO. These systems were

expressly rejected by IMO due to

various safety concerns.

Two comments recommended that the

Coast Guard require emergency transfer

systems (ETS). Another comment

suggested that the Coast Guard develop

industry-wide economic incentives that

encourage companies to employ spillreduction measures such as effective

combinations of PL/Spaces and HBL

prior to the regulatory phase-in dates

and to engage in further development of

promising new measures such as

Underpressure Systems and ETS.

While ETS could be less costly than

PL/Spaces or HBL, they were not

included in the regulatory assessment

for this final rule because they have not

been approved by IMO as an alternative

to comply with Regulation 13G and

there are indications that, in some

instances, they may be unsafe. The

Coast Guard is using IMO approval of

Regulation 13G alternatives as a

benchmark because it provides

international consistency as well as
Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations 1625

general operational and safety

requirements. Alternative measures

creating conditions such as exposure of

the tankship to stress, creation of fire or

explosion hazards, stability

considerations, and loading

requirements are not approved by IMO.

The Coast Guard’s 1995 report to

Congress entitled, ‘‘The Feasibility of

Using Segregated Ballast Tanks (SBT)

for Emergency Transfer of Cargo and

Storage of Recovered Oil,’’ concludes

that when a vessel casualty occurs,

fundamental changes in the vessel’s

stability often result. These stability

changes make it potentially unsafe and

inadvisable to use SBT for the

emergency transfer of cargo. The Coast

Guard did not consider an economic

incentive program because it is beyond

the scope of this rulemaking and

Section 4115(b) does not provide the

authority for incentives.

5. Phase-In Alternatives

The Coast Guard received 15

comments on phase-in alternatives.

Four comments claimed they could

meet the 3-year phase-in period in the

SNPRM, but would rather have one of

the following options: (1) A phase-in

period commencing no earlier than the

date of a tank vessel’s first scheduled

dry docking following issuance of the

final rule; (2) a requirement for industry

to begin compliance in 1997 at a vessel’s

next scheduled dry dock, but no later

than the year 2000; (3) a phase-in period

no earlier than 1999 to 2001 for PL/

Spaces to avoid substantial economic

hardships on U.S. coastwise crude

trading resulting from reduced cargocarrying capacity; or (4) a phase-in for

PL/Spaces at the vessel’s next scheduled

or emergency dry docking period, or at

the next Certificate of Inspection

renewal following issuance of the final

rule, if dry docking is not required.

Another comment urged the Coast

Guard to delay the implementation of

structural measures until at least 2000,

which is the time when pre-MARPOL

tank vessels reaching 25 years of age are

required to comply with international

standards. This comment explained that

if the implementation dates were

delayed, it would be easier for industry

to meet the requirements, and, in

addition, the Coast Guard would not

have to account for the cost of

implementing structural measures on

these vessels in its final rule regulatory

assessment. Another comment did not

express support for structural measures,

but suggested a standardized

implementation period for domestic and

foreign fleets.

In contrast, five comments strongly

urged the Coast Guard to implement

structural measures immediately. Two

of these comments limited their request

to the implementation of HBL only,

while another recognized the potential

for delays in implementing structural

measures on the pre-MARPOL fleet. One

comment claimed that companies

presently operating double-hull tank

vessels are already providing higher

levels of environmental protection, and

consequently, are suffering economic

penalties because single-hull tank

vessels are still operating. Another

comment alleged that the Coast Guard

has failed to provide substantial

protection to the environment by

neglecting to promulgate a rulemaking

within the deadlines established by

OPA 90 and has harmed the public.

The Coast Guard has taken action to

implement interim measures for existing

tank vessels by issuing regulations for

emergency lightering equipment and

advanced notice of arrival requirements

(59 FR 40186; August 5, 1994), and

operational measures (61 FR 39769; July

30, 1996). These efforts reduce the risk

of oil discharges from existing singlehull tank vessels. In order to ensure the

equal consideration of economic burden

on each facet of the industry, this final

rule did not consider a staggered

implementation schedule across the

single-hull fleet. The regulatory

assessment for this final rule analyzes

the costs and benefits of implementing

HBL on MARPOL as well as preMARPOL vessels starting in 1997. The

assessment also considers

implementation of PL/Spaces with

ballast on pre-MARPOL vessels starting

in 1997, assuming completion by 2000.

The Coast Guard notes the comment

pertaining to the OPA 90 deadline.

6. Increased Potential for Environmental

Harm

The Coast Guard received a total of 17

comments suggesting that the

implementation of structural measures

would lead to a greater risk of oil

outflow, resulting in an increased risk of

environmental harm. Eight comments

attributed the greater environmental risk

to the reduction in cargo capacity.

Reduced cargo capacity would lead to

more vessels or voyages necessary to

transport cargo, thus increasing tank

vessel traffic. Increased tank vessel

traffic would create a greater potential

for accidents, in opposition to the

objectives of OPA 90.

Six comments claimed that

complications resulting from physical

structural modifications would increase

the risk of vessel damage and instability,

eventually leading to a greater

probability of structural failure. The

three remaining comments suggested

that the implementation of structural

measures would pose an increase in

safety hazards for vessel personnel.

Estimated cargo shutout from

measures similar to Regulation 13G

revealed that the resultant increase in

the tank vessel traffic would be about 12

percent. This represents an approximate

2 percent increase in the total U.S. port

deep draft traffic volume. The Coast

Guard assumes that this small increase

in traffic volume would be offset by the

accident reduction measures

implemented through operational

measures. The Coast Guard agrees that

some measures studied would modify

the distribution of hull girder stresses

and shear forces. In some instances,

vessel owners may have to conduct

additional structural analyses to

determine how these stresses change the

vessel’s structural integrity. In those

cases where the stresses would not be

within allowable tolerances, additional

structural safeguards such as swash

bulkheads may be required. In the cost

analysis for this final rule, refitting

expense was considered for all

measures, including HBL on MARPOL

tankships. The Coast Guard recognizes

that material stresses on a vessel’s hull

can develop due to hot work,

specifically from the marriage of large

areas of new metal to existing plate or

framing. In some cases, this type of

material stress has contributed to

structural failure. If however, proper

shipyard procedures are followed and

there is thorough oversight of vessel

construction or refits by the Coast Guard

inspectors or classification societies,

material stresses can be prevented.

Corrosion damage due to converting

cargo tanks to ballast tanks is valid and

the cost to coat tanks has been

considered in the regulatory assessment

for this final rule. The Coast Guard

disagrees with the claim that structural

measures would pose a safety hazard for

vessel personnel. Oil outflow reduction

measures are incorporated directly into

the vessel’s design or provide passive

protection with little human interface.

7. State Regulation

The Coast Guard received four

comments regarding Federalism issues.

Two comments urged the Coast Guard

to unambiguously declare that

regulations promulgated for structural

measures preempt State laws to avoid

confusion arising from many

independent laws. In contrast, two

remaining comments strongly

recommended that the Coast Guard

declare that Federal law does not

preempt State law on structural

measures. The Coast Guard believes the

clear and manifest purpose of Congress
1626 Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations

is to confer upon the Federal

government, through the Coast Guard,

the exclusive authority to set structural

standards for vessels to protect the

environment from harm. The Coast

Guard has determined that no

additional structural measures are

required for single-hull tank vessels.

Nevertheless, the Coast Guard believes

that States are precluded from imposing

structural measures on tank vessels

operating in interstate or foreign

commerce.

8. Technical Feasibility of PL/Spaces

and HBL

Seven comments addressed

implications of required

implementation of PL/Spaces. One

comment suggested that the Coast Guard

consider alternative PL/Space

configurations such as splitting the

protected area between the vessel’s side

and bottom as an option. Another

between the vessel’s side and bottom as

an option. Another comment

encouraged the Coast Guard to conduct

further studies on potential PL/Space

configurations prior to mandating

MARPOL requirements for the sake of

uniformity. In addition, another

comment recommended that the Coast

Guard designate the location of PL/

Spaces to ensure all vessels have the

same built-in protection. One comment

specifically urged the Coast Guard not

to require PL/Spaces as this

modification would lead to a greater

demand on the ship-building industry,

resulting in the production of inferior

vessels. In contrast, one comment

asserted that PL/Spaces are

technologically feasible and

recommended that PL/Spaces be

required on all single-hull vessels.

For most tank vessel designs, the most

technologically feasible place to install

PL/Spaces is in the tankship’s midbody.

However, due to unique design

considerations and the need to vary a

vessel’s draft or cargo-carrying capacity,

the Coast Guard researched and

analyzed the cost and benefit of

allowing the owner to designate the

location of PL/Spaces on their vessels.

The Coast Guard assumes that by

mandating the location of PL/Spaces for

all tank vessels, the installation costs

and benefits realized would be similar

to those realized in the event that vessel

owners were able to choose the PL/

Space locations. While the Coast Guard

has determined that PL/Spaces are

technologically feasible, fitting them on

pre-MARPOL tankships is economically

infeasible.

A total of 15 comments were received

pertaining to HBL. Eight opposed HBL

for reasons including the following: (1)

The implementation of HBL would

place pre-MARPOL vessels at a

competitive disadvantage with

MARPOL vessels, because they are

already required to contain PL/Spaces

under Regulation 13G; (2) HBL would

be practically impossible to use because,

depending on the type of cargo carried,

problems may arise due to variances in

density, tank coating compatibility,

heating and cooling requirements, and

permissible last cargoes; (3) HBL would

necessitate revisions to vessel manuals

and equipment; and (4) HBL would

represent a significant regulatory

challenge requiring strong, effective

operational enforcement through Coast

Guard oversight of industry compliance.

Additionally, two comments suggested

that HBL would provide only minimal

oil outflow protection during

groundings. One of these comments

specifically explained that based on the

static model used by the Coast Guard to

test HBL’s effectiveness, HBL may

indicate a theoretical reduction in oil

outflow for some grounding scenarios.

However, after an accident, HBL may

have limited effectiveness due to highly

dynamic situations, such as weatherrelated impacts, tide ranges, and

changes in ship trim and heel. Another

two comments contended that HBL is

not a structural measure requiring

physical modifications, but an

operational measure requiring a skilled

knowledge of certain operating

procedures.

In contrast to the opposing comments,

the Coast Guard received seven

comments supporting implementation

of HBL. One comment noted that

compliance with HBL requirements

could be easily verified by tank gauging

report examinations and draft mark

inspections. Another comment

recommended implementation of HBL

on all single-hull vessels. An additional

two comments suggested employment of

HBL in all vessel cargo tanks, as

opposed to only those tanks that are

probabilistically located. One comment

based this recommendation on two

assumptions: (1) HBL would be easy to

implement immediately as structural

refits would be unnecessary; and (2)

HBL would effectively reduce oil

outflow in grounding incidents.

The Coast Guard has determined that

HBL, in general, is technically feasible

for single-hull tankships. Multi-port

voyages and complex cargo carriage

operations make HBL more timeconsuming and difficult to meet. Also,

some vessels would have costs

attributable to HBL that are beyond the

cargo shutout costs assumed in the

SNPRM regulatory assessment. The

regulatory assessment for this final rule

accounts for some costs associated with

HBL measures on smaller tankships

since these vessels are most likely to

have difficulty implementing HBL. The

effectiveness estimates associated with

HBL in reducing the outflow of oil in a

grounding were not changed for this

final rule assessment because the Coast

Guard deems the estimates to be

representative of static, as well as

limited dynamic conditions. The Coast

Guard recognizes that enforcement of

HBL would require its direct oversight

to ensure compliance by all single-hull

vessel owners or operators and that tank

gauging reports could be used as tools.

Since no structural measures are

economically feasible, the Coast Guard

will be using its resources to ensure

operational measures are met. The Coast

Guard did not analyze the cost-benefit

of requiring tank vessel owners or

operators to use HBL in all cargo tanks.

However, if the cost to benefit ratio of

applying HBL to those cargo tanks that

are located in areas of higher damage

risk is prohibitive, then the cost to

benefit ratio for applying HBL to all

cargo tanks is also infeasible.

Four comments suggested that the

Coast Guard require a combination of

PL/Spaces and HBL. One comment

suggested a combination of PL/Spaces

covering 30 percent of the vessel’s side

or bottom with HBL for the remaining

tanks to the extent necessary for

compliance with Regulation 13G.

Another comment recommended

employment of PL/Spaces covering 100

percent of center tank bottoms, if HBL

is used in wing tanks.

The Coast Guard has analyzed the

cost and the resultant oil outflow

benefits attributable to a combination of

fitting PL/Spaces and applying HBL

measures to pre-MARPOL tankships in

accordance with Regulation 13G. The

cost for this measure when compared to

its benefits make this measure

economically infeasible. If the

combination of PL/Spaces and HBL is

not cost-effective, then employing the

more onerous requirement of 100

percent PL/Spaces would also be

infeasible.

Amendments to 33 CFR 157

This final rule amends the subpart G,

H, and I heading to reflect that no

structural measures are required as

interim measures for existing tank

vessels without double hulls to meet the

requirements of Section 4115(b) of the

Oil Pollution Act of 1990. The measures

required under subparts G, H, and I are

all measures the Coast Guard has

determined are economically and

technologically feasible for enhancing
Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations 1627

the oil pollution prevention efforts of

existing single-hull tank vessels.

Assessment

This rule is a significant regulatory

action under section 3(f) of Executive

Order 12866 and has been reviewed by

the Office of Management and Budget

under that Order. It required an

assessment of potential costs and

benefits under section 6(a)(3) of that

Order, and is significant under the

regulatory policies and procedures of

the Department of Transportation (44 FR

11040; February 26, 1979). An

Assessment has been prepared and is

available in the docket for inspection or

copying where indicated under

ADDRESSES. The Assessment is

summarized in the following

discussion.

This rulemaking applies to all existing

vessels of 5,000 gross tons (GT) or more

that do not have double hulls and that

carry oil, animal fat, vegetable oil, and

other non-petroleum oil in bulk as

cargo. An estimated 995 existing

tankships (51 U.S. tankships, 944

foreign tankships) that will be operating

on U.S. navigable waters in 1997 were

considered to be affected by this

rulemaking.

This final rule assessment revises the

benefits assumptions and calculations of

the regulatory assessment conducted for

the supplemental notice of proposed

rulemaking (SNPRM). Cost estimates

were appropriately reduced to account

for implementation of Regulation 13G of

Annex I of the International Convention

for the Prevention of Pollution from

Ships, 1973, as modified by the Protocol

of 1978 (Regulation 13G) within the

international fleet. Costs were also

revised where comments indicated that

costs were underestimated or omitted in

the SNPRM analysis. The vessel

population not required to meet the

pollution prevention requirements of

the 1973 International Convention for

the Prevention of Pollution from Ships

(pre-MARPOL) was also reassessed and

reduced based on port call data and

certificate of financial responsibility

applications. The cost and benefits for

vessels meeting the requirements of the

1973 International Convention for the

Prevention of Pollution from Ships

(MARPOL 73) and vessels meeting the

MARPOL 73 convention as amended by

the 1978 Protocol (MARPOL 78), were

combined in this final assessment.

MARPOL 73/78 refers to vessels

meeting MARPOL 73 and vessels

meeting MARPOL 78 requirements.

General Comments on the SNPRM

Regulatory Assessment

The Coast Guard received 36

comments addressing general regulatory

assessment issues. Most of the comment

criticized the Coast Guard’s use of oil

spill data from accidents occurring prior

to the promulgation of the Oil Pollution

Act of 1990 (OPA 90), because using

this data resulted in the

underestimation of costs and

overestimation of benefits. The majority

of these comments were based on a

general impression that little benefit

would result from the implementation

of proposed structural measures in

relation to the extensive costs involved.

One comment specifically noted that

studies performed by the International

Maritime Organization (IMO), the Coast

Guard, and Herbert Engineering

Corporation failed to indicate that these

measures were cost-effective.

The Coast Guard has revised its

regulatory assessment for this final rule.

The major difference between its

assessment for the SNPRM and this final

rule is the recalculation of anticipated

oil outflow benefits based on the

accident data for single-hull tankships

from 1990 through 1994. This five-year

period indicates a reduction of singlehull tankship accidents and reflects

many of the improvements industry has

made to reduce oil spills since OPA 90.

Another comment contended that a

cost-benefit analysis was not authorized

by OPA 90. The comment asserted that

OPA 90 requires the Coast Guard to

adopt measures providing the maximum

protection to the environment that are

economically feasible, not the ones that

are least costly. Two other comments

argued that economic feasibility should

not be determined solely by a limited

cost-benefit analysis. One of these

comments maintained that economic

feasibility should be based on whether

the costs are wholly disproportionate to

the benefits on an industry-wide scale,

with the fate of one isolated firm or

facility immaterial to the outcome of the

rule. The other comment contended that

economic feasibility should be based on

the industry’s ability to pass on or

absorb costs without threatening the

competitive structure of the industry.

Several requirements to conduct a

cost-benefit analysis exist in law. One

law requiring such analysis, which is

specifically applicable to this

rulemaking, is the Small Business

Regulatory Enforcement Fairness Act of

1996. For this final rule, an evaluation

of cost and its relationship to the

anticipated benefits was performed with

respect to structural measures. The

evaluation included a review of the

potential impact of such measures on

small entities, as well as a comparison

of the impact on domestic versus

international fleet vessels. The

disproportionate cost to U.S. tankship

companies operating on coastal routes,

considering the little anticipated benefit

in oil outflow reduction, was key in the

Coast Guard’s determination of

economic infeasibility for structural

measures.

Industry Costs

This final rule reassessed the cost of

implementing structural measures in

order to estimate the cost-benefit of

requiring pre-MARPOL tankships to

meet the requirements of Regulation

13G earlier than the 25 year age limit it

imposes. In addition, costs were also

reassessed to reflect the range of cargo

shutout amounts realized by vessels

depending on the type of cargo carried,

i.e., crude or product. Finally, to ensure

that a thorough examination of the cost

to benefit ratio was conducted, costs

were broken down by deadweight

tonnage.

Cost Comments on the SNPRM

Regulatory Assessment

(a) General: The Coast Guard received

over 40 comments regarding various

cost issues. Only two of the comments

believed that the proposed structural

measures would be economically

feasible. One of these comments

specifically disagreed with the

hydrostatic balance loading (HBL) cost

estimates attributed to vessels

complying with the Ports and

Waterways Safety Act or otherwise

equipped with segregated ballast tanks

(SBT). The comment argued that HBL

would not result in a loss of cargo

capacity for either vessel type.

The majority of the comments

claimed that structural measures would

not be economically feasible due to the

excessive cost resulting from the

reduction in cargo capacity. Most

comments predicted a cargo capacity

reduction of between 8 and 25 percent,

but a few indicated that cargo capacity

would be reduced by as much as 30 to

50 percent. If measures were applied to

all vessels, one comment contended that

a level economic playing field could be

achieved throughout the industry and

the high costs of cargo shutout could be

adequately offset by an indirect

distribution of costs to the public. Other

comments stated that the cost estimates

for structural measures did not

adequately address opportunity costs

(such as lost transportation time), time

charter rates, dry dock fees, depreciation

losses, and transportation, delivery,

crew, fuel, financing, and insurance
1628 Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations

costs. In addition, four comments

claimed that some vessels would be

unable to continue operations to U.S.

ports if structural measures were

implemented. Five more comments

stated that the proposed measures

would not be economically feasible for

their fleet because their vessels would

be phased-out of service shortly after

incurring the cost of any structural

measures. One of these comments

suggested that rather than depleting

limited financial resources to

implement structural measures, vessel

owners and operators should use the

finances to support their fleet’s

transition to double hulls, which will

become effective in 2015.

Another comment claimed that HBLrelated cargo shutout amounts for the

pre-MARPOL fleet were overestimated

by the Coast Guard, and would amount

to only 8 percent or less, as opposed to

the 19 percent estimated in the SNPRM

regulatory assessment. Consequently,

this comment believed that HBL would

be economically feasible, and that

structural measures would cause a

relatively insignificant 1.5 percent

increase in tonnage demand on the

international, import-trading fleet. In

contrast, four other comments strongly

stated that when costs are reviewed

with respect to freight rates and

worldwide tonnage capacity, the

implementation of structural measures

would not be economically feasible.

Two comments stated that the SNPRM

cost analysis substantially

underestimated costs by not recognizing

the cost of replacing lost oil-carrying

capacity, and by not accounting for an

increase in charter rates (and oil prices)

caused by the consequent loss of

capacity in the world fleets. The

comments further explained that while

there is some slack cargo carriage

capacity remaining in the world’s very

large crude carrier (VLCC) tankship

fleet, it is disappearing rapidly as older

ships continue to retire, and any

requirement reducing cargo capacity

would inevitably exert substantial

upward pressure on charter rates and

transportation costs worldwide. The

comments also calculated that the world

scale spot charter market rate would

increase as much as four times the cost

attributed by the SNPRM to a VLCC

tankship owner implementing HBL.

Another comment estimated that the

significant increase in daily time charter

rates (from 27 to 78 percent to recover

the costs of implementing protectivelylocated spaces (PL/Spaces) to its preMARPOL fleet, and from 6 to 32 percent

to recover the costs of fitting double

sides to its MARPOL 73/78 fleet) on

their tankships of less than 30,000 dwt

would severely impact their ability to

recover their capital investment.

Consequently, the comment stated this

would reduce its current fleet of 42

tankships trading in U.S. waters to 6

tankships. The fourth comment

calculated that the total tonnage

available for the U.S. trades in the

25,000 to 30,000 dwt product carrier

category would be reduced 45 percent

because of increased charter rates and

reduced cargo-carrying capacity. The

comment went on to state that due to

the costs associated with the

implementation of structural measures,

8 clean product tankers currently

providing 64 percent of the clean

product to the U.S. Gulf and East Coast

would be forced from U.S. trade.

The Coast Guard has revised the cost

and benefit calculations for this final

rule in consideration of the comments

submitted to the docket. This final rule

assessment is extensive and uses factors

such as cargo loss, or lack thereof for

vessel’s fitted with SBT, opportunity

costs, and a wide range of costs a

company might incur from refitting a

vessel. Financing, insurance costs,

vessel depreciation, the replacement of

lost tonnage (resulting in time charter

rate increases), and a vessel’s limited

remaining life under the OPA 90 phaseout schedule were used, in general, to

evaluate the cost-effectiveness of

replacing single-hull vessels with

double hull vessels earlier than their

OPA 90 mandated dates. Concerns such

as the loss of a substantial portion of a

company’s fleet due to structural

measures, as well as the possibility of

disproportionate indirect costs to

consumers in geographic areas

dependent on a single oil source were

key in the Coast Guard’s determination

of economic infeasibility.

(b) Pre-MARPOL Tank Vessels: Two

comments supplied specific data for

their international pre-MARPOL vessels

between 5,000 to 29,000 dwt. One of

these comments estimated a cargo

shutout of 25 to 27 percent and refit

costs of $225,000 per vessel to

implement structural measures on these

smaller product tankers. The second

comment indicated that each of their

parcel tankers would be subjected to a

cargo shutout of 35 percent with an

average refit cost of $10.3 million.

Another comment supplied only cargo

shutout information for international

pre-MARPOL product tankers of 5,000

to 50,000 dwt. This comment calculated

a cargo shutout of 20 to 25 percent for

PL/Spaces, with HBL increasing the

shutout to 28 to 35 percent. One

comment estimated that the

implementation of HBL would result in

a cost of $2 million per vessel for the

pre-MARPOL fleet. Another comment

contended that the cost to pre-MARPOL

tankships operating as very large crude

carriers (VLCC) was overestimated in

the SNPRM regulatory assessment, and

that the pre-MARPOL VLCC tanker

model used in the SNPRM regulatory

assessment was not representative of a

typical tanker of that size. As a result,

according to this comment, the Coast

Guard’s assumption that all VLCC preMARPOL tankships will have to refit

PL/Spaces to meet the requirements of

Regulation 13G is false. This comment

indicated that five vessels researched

would be able to meet the requirements

of Regulation 13G by using the HBL

criteria approved as an IMO alternative.

In a similar vein, another comment

disagreed with the Coast Guard’s

assumption that pre-MARPOL tankers

reaching the age of 25 before 2002

would have to implement PL/Spaces to

meet Regulation 13G. This comment

explained that these tankers can

implement HBL to meet the

international requirement of 13G and

continue to trade; thus, if PL/Spaces are

mandated without allowing for the HBL

alternative, the cost to fit such spaces on

pre-MARPOL tankers reaching 25 years

old before 2002 should be included in

the regulatory analysis.

For this final rule, the Coast Guard

reassessed the costs and benefits of

implementing different structural

measures on the international preMARPOL tankship fleet. Measures

studied for this reassessment included

the combination of PL/Spaces and HBL,

the use of HBL only in order to meet the

requirements of Regulation 13G, and the

implementation of HBL requirements on

the identical timeline required by

Regulation 13G. The per vessel, per

voyage cost for implementing HBL in

the final assessment varied depending

on deadweight tonnage and ranged from

$121,000 to $2.4 million. The Coast

Guard recognizes that the assessment for

the SNPRM only reflected cargo shutout

cost for crude carriers. In the assessment

for the final rule, costs were broken

down by deadweight tonnage. A

separate analysis was done to estimate

the effect higher cargo shutout amounts

realized by small product tankers may

have on the cost-effectiveness of each of

the structural measures researched. The

Coast Guard did not increase the refit

cost assumed in the SNPRM for small

tankships because it deems the original

onetime refit cost estimate of $328,000

to be reasonable.

(c) MARPOL 73/78 Tank Vessels:

Three comments supplied information

on U.S. coastal fleet, MARPOL 73/78

vessels. For product tankers in the 5,000
Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations 1629

to 49,000 dwt category, one comment

submitted cargo shutout amounts

approximating 207,515 long tons (LT)

per year (yr), and opportunity costs

(which include structural refit costs

needed to meet the HBL requirement) of

$1 to $3 million per vessel. Another

comment supplied shutout percentages

for product vessels carrying heavy

(bunker C), medium (diesel oil), and

light (gasoline) cargoes, using three

different variations of structural

measures. According to their

calculations, shutout using HBL only

would equal 5.5 percent for heavy cargo,

19.5 percent for medium weight cargo,

and 38 percent for light cargo. Clean

ballast tanks (CBT) with HBL would

impose cargo shutouts of 29 percent,

41.6 percent, and 50 percent,

respectively. Ballasted empty wing

tanks with HBL would result in

shutouts amounting to 53.6 percent,

59.2 percent, and 64.5 percent,

respectively.

A comment estimated that crudecarrying U.S. MARPOL 73/78 vessels

ranging from 5,000 to 49,000 dwt would

experience shutouts of 113,077 LT/yr,

and refit costs of $1 to $3 million per

vessel following the implementation of

structural measures. For crude-carrying

tankers of the 50,000 to 89,000 dwt

category, shutouts were approximated at

326,195 LT/yr, with refit costs again

ranging from $1 to $3 million per vessel.

Crude-carrying vessels operating in the

90,000 to 199,000 dwt range were

estimated to potentially experience

shutout amounts of 724,655 LT/yr and

refit costs of $1 to $3 million per vessel

following implementation of structural

measures. For those crude-carrying

vessels comprising 200,000 dwt or

greater, a comment indicated that

shutout would amount to 861,785 LT/yr

plus $1 to $3 million in refit costs per

vessel.

Two comments supplied information

relating to the international MARPOL

73/78 fleet. For product-carrying vessels

of 30,000 to 49,000 dwt, a cargo shutout

cost was calculated to be $300,000 per

year (or $1.5 million for the remainder

of the ship’s life). For parcel tankers

operating in the 5,000 to 29,000 dwt

category, cargo shutout was estimated at

34 percent for the implementation of

HBL, plus 10 percent for the

implementation of PL/Spaces when

required, while refit costs amounted to

an average $7.4 million per vessel.

Calculations submitted for parcel

tankers operating in the 30,000 to

49,000 dwt category, showed 34 percent

shutout using HBL, plus an additional

10 percent for PL/Spaces where

required, with refit costs averaging

$11.9 million per vessel.

For this final rule, the Coast Guard

reassessed the costs and benefits of

implementing HBL on the MARPOL 73/

78 tankship fleet. A range of cargo

shutout amounts was used to

demonstrate the variance between the

cost of implementing HBL on crudecarrying and product-carrying vessels.

Per vessel, per voyage cargo shutout

estimates for implementing HBL in this

final assessment also varied depending

on a vessel’s deadweight tonnage, and

ranged from $151,000 to $2.4 million.

The Coast Guard recognizes that the

assessment for the SNPRM did not

include a refit cost for MARPOL 73/78

vessels. Onetime refit costs to MARPOL

73/78 vessels for swash bulkheads or

other associated structural changes were

added to the cost estimates for this final

assessment. This onetime refit cost was

assumed for MARPOL 73/78 vessels

between 5,000 and 50,000 dwt in order

to account for the practical application

of HBL to these smaller tankships,

which would necessarily have to fit

some proportion of PL/Spaces to

account for the high shutout

consequences of HBL. Refit costs were

not included for larger MARPOL 73/78

vessels because it was assumed that

these vessels have sufficient CBT or PL/

Spaces to practically apply HBL,

assuming the cargo shutout amounts

estimated in this final rule’s regulatory

assessment.

(d) Tank Barges: One comment

estimated that for tank barges, the

installation of PL/Spaces would impose

average costs of $3 million per tank

barge, while the implementation of HBL

would reduce cargo capacity by 33 to 50

percent, and in some cases, 100 percent

per barge. This comment went on to

explain that such costs are not readily

absorbed, and are even exacerbated by

the limited service life remaining for

some of these barges, the enormous

capital expenditure necessitated by the

OPA-mandated transition to double

hulls, and the diminution in value of

the existing barge fleet brought on by

the OPA-mandated replacement

schedule. Another comment surmised

that is was not technologically feasible

for barges to meet the requirements of

PL/Spaces or HBL without eliminating

cargo tanks or performing major

modifications at a significant cost. This

comment estimated that PL/Spaces

would reduce cargo capacity by 25

percent on barges with three

longitudinal bulkheads, while HBL

would impose a cargo shutout of 50

percent for barges with one longitudinal

bulkhead. In addition, the costs of

installing longitudinal bulkheads were

estimated at $800,000 to $1.2 million

per barge, ballast systems and tank

coatings at $400,000 to $500,000 per

barge, and opportunity costs at $600,000

to $800,000 per barge.

The Coast Guard reviewed and

reassessed the cost for U.S. tank barge

owners to comply with PL/Spacing

requirements using either added

bulkheads or existing tanks, and HBL

requirements. The costs analyzed for the

PL/Space options were similar to those

used in the SNPRM assessment, but the

costs studied for HBL measures were

estimated by using figures provided in

the comments. The phase-out dates for

these barges were also factored into this

cost analysis, along with costs similar to

those incurred by the pre-MARPOL

fleet. Through this final rule, the Coast

Guard verifies that because of the high

cost of implementing structural

measures on tank barges, such measures

are not economically feasible.

Final Rule Cost Assessment

The cost assessment for this final rule,

as presented in Table 1, provides an

estimate of costs for each tank vessel

category (pre-MARPOL or MARPOL 73/

78) and deadweight tonnage range. In

general, these costs were calculated

using a methodology similar to that

done for the SNPRM assessment.

However, additional analyses were used

to calculate the projected costs of

several variations of measures

researched for the SNPRM including: (1)

Implementation of Regulation 13G on

the pre-MARPOL fleet in 1997, 1998, or

1999; (2) implementation of Regulation

13G on the pre-MARPOL fleet using the

same timeline mandated by that

regulation; (3) implementation of the

HBL alternative allowed under

Regulation 13G on the pre-MARPOL

fleet; and (4) implementation of HBL on

tank barges. An estimated range of costs

was also developed to represent the

difference in cargo shutout amounts

attributable to vessels carrying crude

oils (low number) and vessels carrying

lighter products (high number). As a

summary, the present-value cost of

implementing certain structural

measures in 1997 is presented in Table

1.

BILLING CODE 4910–14–M
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BILLING CODE 4910–14–C
Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations 1631

Benefits

The benefit analysis for this final

assessment, in general, uses a

methodology similar to that used in the

SNPRM for evaluating the incremental

reduction in volume of oil spilled as a

result of structural measures. Although

effectiveness ratios for international preMARPOL vessels were reevaluated

based on the implementation of

Regulation 13G, other effectiveness

ratios remained the same as those

reported in the SNPRM assessment.

However, the volume of oil spilled due

to accidents was estimated based on

revised historical oil spill data

reflecting: (1) The accident history of

single-hull tankships since the

enactment of OPA 90; (2) the

anticipated reduction in oil spills due to

the effect of the operational measures

final rule on the frequency and severity

of future accidents; and (3) the

elimination of operational discharge

benefits from the calculation, since

operational discharge is not allowed in

U.S. navigable waters.

Benefit Comments on the SNPRM

Regulatory Assessment

Six comments included remarks

regarding the potential environmental

benefits that may result from the

implementation of structural measures.

Three comments urged the Coast Guard

to provide equal or greater consideration

to the environmental benefits derived

from the use of structural measures. Yet

another comment contended that the

SNPRM regulatory assessment failed to

properly assess the benefits of the

measures considered, citing the Coast

Guard’s failure to state the value of

avoiding spills in comparable terms

such as cleanup costs, natural resource

damages, restoration costs, and

commercial and recreational losses.

Another comment urged the Coast

Guard to include the potential reduction

of both environmental and economic

damages from oil not spilled in its

regulatory analysis.

Although the Coast Guard recognizes

the value of assessing benefits in terms

of the cost of third-party cleanup and

damage to natural resources, the Coast

Guard, for all OPA 90 rulemakings, has

reviewed benefits from the perspective

of the amount of oil not spilled, rather

than a dollar value figure. Details on the

extensive work that NOAA has done on

this subject can be found in its final rule

entitled, ‘‘Natural Resource Damage

Assessments’’ published in the Federal

Register on January 5, 1996 (61 FR 440).

When calculating benefits using NOAA

natural resource guidance, a wide range

of benefits can be estimated depending

on the sensitivity of the habitat,

restoration costs, compensable value,

and damage assessment costs. However,

the inclusion of these factors would not

significantly increase the benefits

resulting from the implementation of

structural measures to make them costeffective.

The remaining comments minimized

the potential benefits that may arise

from the use of structural measures, and

essentially concluded that structural

measures would contribute little to the

reduction of oil spill volume in U.S.

waters. One comment noted that the

environmental benefits resulting from

the implementation of PL/Spaces would

likely be minimal because the most costeffective location for such spaces, the

vessel’s mid-body, would not provide

adequate protection to the fore and aft

sections of the vessel, which are the

areas most likely to sustain damage in

collisions. Another comment contended

that the Coast Guard overestimated

operational discharge benefit amounts

by wrongly assuming that foreign

tankers are not operating to the same

operational discharge criteria as U.S.

tankers, explaining that discharge

criteria established by the 1973

International Convention for the

Prevention of Pollution from Ships was

brought into force in the late 1970s and

applies to over 90 percent of the world’s

tanker tonnage. Two comments argued

that the Coast Guard overestimated

benefits for pre-MARPOL vessels by

using the MARPOL 73 maximum

allowable discharge amounts and

underestimated the operational

discharge benefits from MARPOL 73/78

vessels, which were incorrectly

assumed to have no discharges. One of

these comments questioned the Coast

Guard’s incorporation of operational

discharges into the regulatory

assessment for the SNPRM in the first

place, because all operational discharge

is forbidden in U.S. waters. Therefore,

the comment asserted that the quantities

of unspilled oil occurring from

operational discharge were significantly

overestimated in the SNPRM regulatory

assessment and should be removed from

the benefit calculations. The other

comment calculated that the quantity of

oil not spilled from operational

discharges from pre-MARPOL vessels

when converting to SBT/CBT was

overestimated by the Coast Guard by a

factor of 10 to 20.

A total of nine comments challenged

the Coast Guard’s use of pre-OPA 90 oil

spill data in the regulatory assessment

for the SNPRM, primarily on the

grounds that it did not reflect the

significant gains achieved in oil spill

reduction within recent years. In

addition, several comments

recommended that the Coast Guard

consider the following when reviewing

post-OPA 90 data: oil released from

accidents, instead of oil released from

operational discharges; and, accident

data involving groundings or structural

failures. In contrast, other comments

stated that the Coast Guard should

specifically exclude the following data

from the economic assessment for

structural measures: spill data in

international waters; lightering zone

data; and barge and tanker spill data

unrelated to groundings, collisions, and

structural failures.

The Coast Guard has extensively

reassessed the anticipated benefits for

structural measures in this final rule.

This reassessment was done because the

Coast Guard recognized the substantial

decrease in oil spill volume from the

tank vessel industry since 1990. The

Cost Guard agrees that oil spill amounts

attributed to operational discharges

should not be included as a benefit for

structural measures. The Coast Guard

deems this final rule benefit assessment

a reasonable estimate of oil outflow

reduction amounts achieved through the

implementation of structural measures.

Final Rule Benefit Assessment

Oil spill amounts attributed to singlehull tankships and tank barges during

the 5-year period of 1990 through 1994

were taken from the regulatory

assessment for the operational measures

final rule if the spills were caused by

groundings, collisions, or structural

failures. Based on this accident data, an

average annual oil spill amount from

single-hull tankships was estimated at

11.52 barrels per vessel. The average

annual oil spill amount from single-hull

tank barges over 5,000 GT was estimated

to be 72.4 barrels per barge. Using a

combination of the phase-out schedule

and the build dates of the affected vessel

population, as calculated in the SNPRM

assessment, an estimated present value

of oil spilled due to groundings,

collisions, or structural failures was

calculated to be 52,369 barrels for

single-hull tankships and 21,487 barrels

for barges. Based on anticipated oil spill

prevention resulting from the

implementation of operational

measures, this present value oil spill

amount was reduced appropriately and

estimated to be between 16,768 and

32,520 barrels spilled between 1997 and

2015 for tankships and between 18,055

and 19,865 barrels spilled for tank

barges. The average of this present value

oil spill amount was then proportioned

out between the four tankship categories

based on vessel population as follows:

(1) International pre-MARPOL (11,735
1632 Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations

barrels); (2) U.S. pre-MARPOL (558

barrels); (3) International MARPOL 73/

78 (11,742 barrels); and (4) U.S.

MARPOL 73/78 (608 barrels). For U.S.

and international tank barges, the

average present value of 18,960 barrels

spilled was used in this analysis. As

done in the SNPRM, the U.S. fleet

consists of vessels that only operate in

U.S. coastwise trade. If a U.S. flagged

vessel also trades between international

ports, it was accounted for in the

international population.

To estimate benefits in terms of oil

unspilled, each structural measure’s

ability to reduce oil outflow in a

grounding, collision, or structural

failure accident was calculated and

translated into an effectiveness ratio

similar to those developed for the

SNPRM assessment. This effectiveness

ratio was then multiplied by the

anticipated annual oil spill amount for

each of the three accident types to

calculate the anticipated benefits of the

implementation of structural measures.

Because comments received on the

SNPRM stated that the cost to benefit

ratio was disproportionate for smaller

tankship operations, anticipated oil spill

benefits were further broken down by

deadweight tonnage. Benefits were also

calculated for pre-MARPOL fleets where

HBL was instituted to meet the

requirements of Regulation 13G. The

Coast Guard recognizes that PL/Spaces

must be ballasted down in order to

provide oil outflow benefits, despite the

fact that Regulation 13G does not

articulate this requirements.

Consequently, for this final rule

assessment, benefits for the measure

combining PL/Spaces and HBL were

calculated based on the assumption that

the spaces were ballasted down. The

benefits estimated for this final rule are

significantly less than those estimates

used in the SNPRM, because the

recalculation of benefits did not include

consideration of operational discharge

benefits for pre-MARPOL vessels, and

because the spill history used for all

tankships reflects post-OPA 90 accident

data. Table 2 is a summary of the

present-value benefits estimated for this

final rule with respect to vessel type and

deadweight tonnage based on an

implementation date of 1997.

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Cost-Benefit

Cost-benefit calculations were

completed using the revised cost and

benefit estimates calculated for each

structural measure. Based on the costbenefit analysis performed for this final

rule, structural measures, in particular,

pose the greatest economic challenge to

the U.S. coastal fleets. Post OPA–90

benefits combined with the high cost to

U.S. coastal vessels to refit PL/Spaces or

to implement HBL requirements that

meet Regulation 13G requirements make

the cost-effectiveness of implementing

structural measures on these vessels

questionable. In addition, given the

disproportionate cost impact of

structural measures on that portion of

the fleet operating as small product

tankers crucial to certain ports,

economically feasible structural

measures for these vessels cannot be

attained.

Cost-Benefit Comments on the SNPRM

Regulatory Assessment

The Coast Guard received six

comments on the cost-effectiveness of

implementing structural measures. One

comment estimated that a refinement of

the SNPM regulatory assessment using

post-OPA 90 data, excluding operational

discharges in whole or in part (since

such discharges occur far from U.S.

waters in amounts substantially less

than assumed in the SNPRM regulatory

assessment), and including the cost of

fitting PL/Spaces to pre-MARPOL

tankers (since many vessels can satisfy

the requirements of Regulation 13G

using light-loading only), would result

in costs in excess of $50,000 per barrel

of oil not spilled, as opposed to actual

spill costs of $2,000 to $10,000 per

barrel spilled. Another company

evaluated the true cost-benefit of

implementing structural measures to

their corporation in light of the

company’s historical non-spill

performance. Based upon their

calculations, a 3-year phase-in period

would result in cargo shutout and

onetime modification costs totaling

$17.7 million for their fleet of product

and crude-carrying vessels, while the

net present value cost per barrel of

spilled oil avoided would be $1 million

per barrel. Consequently, this comment

estimated the potential cost to this

particular corporation as being 28 to 84

times greater than that indicated in the

SNPM regulatory assessment. Another

comment provided extensive

documention and analysis on the costeffectiveness of the proposed measures

by using oil spill data from 1991

through 1994, estimating the operational

discharge benefits based on actual

vessel discharge records, and including

an estimate of clean-up and retribution

costs. Using National Oceanic and

Atmospheric Administration (NOAA)

damage assessment and restoration

settlement data and oil spill data from

spills recorded within U.S. waters in the

Oil Spill Intelligence Report, this

comment estimated that the average

damage amount per barrel should be

$18,580, and explained that in order for

a requirement to be cost-effective, its

cost-benefit should be less than this

amount. According to this comments

analysis, no structural requirement is

cost-effective.

The Coast Guard agrees with the

comments and has calculated the

benefits for this final rule using postOPA 90 accident data and excluding the

benefits gained from eliminating

operational discharges. The recalculated

benefits for this final rule do not include

estimates in terms of the amount of

money saved by eliminating oil spill

clean-up costs. To remain consistent

with all other OPA 90 assessments, the

Coast Guard has considered benefits in

terms of oil unspilled. Because the costbenefit ratios presented in this final rule

are much higher than $2,000 or $18,580

per barrel as referenced in the

comments, the Coast Guard deems that

even if clean-up cost savings were

included in this cost-benefit analysis,

the cost-benefit ratios would not fall

below these thresholds.

Three more comments specifically

discouraged the Coast Guard from

implementing the least costly structural

measure. Two of these comments noted

that the Coast Guard proposed PL/

Spaces in light of its low cost, despite

findings that another alternative

requiring HBL would prevent the

spillage of significantly more oil.

Specifically, the comment estimated

that the HBL alternative would present

spillage of 164,000 barrels of oil which

is nearly 8 times the 21,000 barrels of

spillage prevented by PL/Spaces. One of

the comments also conceded that the

HBL alternative would cost

approximately $3 billion to implement

from 1998 to 2015, which amounts to

nearly 5 times the estimated cost of

implementing PL/Spaces, $579 million,

but explained that as compared to the

cost of cleanup under California law,

$18,900 per barrel, the feasibility of HBL

in terms of avoided costs is

economically favorable.

The Coast Guard has reassessed the

cost to benefit ratio for various

structural measures. The costs for this

final assessment closely correlate the

costs used in the SNPRM assessment;

however, the benefits have been

significantly reduced, and no longer

correlate. If the cost to benefit ratio of

$18,900 per barrel of unspilled oil is

compared to this final rule assessment,

none of the measures can be deemed

cost-effective. However, the Coast Guard

determination of economic infeasibility

is not based solely on the dollar per

barrel unspilled ratio. While the

numbers certainly support a

determination of economic infeasibility,

the impact on small entities and

geographic areas dependent on a single

oil source also weighted in favor of this

decision.

Final Rule Cost-Benefits

The Coast Guard has extensively

researched both the cost and the

resultant benefits of implementing

structural measures on single-hull tank

vessels. In accordance with current

Office of Management and Budget

guidance, program costs and benefits are

discounted at 7 percent back to 1990. A

summary of the cost-benefit ratios,

which were computed by dividing the

cost of each structural measure by its

associated benefit, it presented in Table

3, and reflects a 1997 implementation

date. These ratios are categorized by

international and U.S. coastal fleets.

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An analysis of the cost to benefit ratio

for requiring implementation of

Regulation 13G on pre-MARPOL

tankships on the same timeline as

required by Regulation 13G (25 years

after the vessel’s build date) was also

completed for this final rule regulatory

assessment. Because those pre-MARPOL

vessels on international routes were

assumed to comply with this

requirement, no cost or benefit was

assigned to these vessels for

implementing this requirement. The

cost for implementing Regulation 13G

on pre-MARPOL tankships was

estimated to be $13.5 million and would

be placed solely on those tankships

operating on U.S. coastal routes until

2015. The benefit from this requirement

was not specifically calculated. The

Coast Guard estimated a benefit lower

than the attained by the HBL

requirement on U.S. coastal preMARPOL tankships because the

implementation date would be later

than 1997 (the date assumed for the

HBL calculations). Therefore, the costbenefit to the U.S. coastal fleet would be

higher than $240,642 per barrel of

unspilled oil. Because the financial

burden of this measure reduces the

ability of U.S. ships to compete with

foreign shipping interests and the costbenefit ratio is extremely high, the Coast

Guard deems this measure to be

economically infeasible.

Similar cost-benefit calculations were

also conducted for varying

implementation years ranging from 1998

to 2001. These calculations show that

the cost-benefit ratio becomes higher

with each implementation year

proposed due to the short benefit timeframe resulting from the aggressive

vessel phase-out schedule created by

OPA 90. The inability to recoup

financial losses, as well as the

effectiveness of operational measures for

existing tank vessels for reducing oil

spills, supports a determination that the

costs of structural measures outweigh

the benefits.

The total present value cost of

structural measures over the 18-year

period of this final rule would range

from $896 million to $1.1 billion. Total

present value of the benefits for

structural measures over the 18-year

period of this final rule would range

from 5,718 to 10,386 barrels of unspilled

oil. As a benchmark for this analysis,

the Coast Guard used cost-benefit of

$24,000 per barrel of unspilled oil,

which was the estimated cost-benefit of

the double hull requirements mandated

by OPA 90 in Section 4115(a) to which

these interim requirements are linked.

Because the cost-benefit estimates for

the measures are well over $24,000 per

barrel of unspilled oil, and the measures

would impose substantial costs to the

industry over the estimated 18-year

period, no measures are required. Some

regulatory text is contained in this final

rule to clearly indicate that the Coast

Guard considers the operational

measures and lightering equipment

requirements to be the only feasible

interim requirements for existing tank

vessels without double hulls, and that

these requirements, as promulgated,

satisfy section 4115(b) of OPA 90.

Small Entities

Under the Regulatory Flexibility Act

(5 U.S.C. 601, et seq.), the Coast Guard

must consider whether this rule will

have a significant economic impact on

a substantial number of small entities.

‘‘Small entities’’ may include: (1) Small

businesses and not-for-profit

organizations that are independently

owned and operated and are not

dominant in their fields; and (2)

governmental jurisdictions with

populations of less than 50,000. The

Coast Guard has determined that this

rule will not have a significant

economic impact on a substantial

number of small entities because no

structural measures are being imposed

in this rule. Therefore, the Coast Guard

certifies under section 605(b) of the

Regulatory Flexibility Act (5 U.S.C. 601,

et seq.) that this rule will not have a

significant economic impact on a

substantial number of small entities.

Unfunded Mandate

Under the Unfunded Mandates

Reform Act (Pub. L. 104–4), the Coast

Guard must consider whether this rule

will result in an annual expenditure by

State, local, and tribal governments, in

the aggregate, or by the private sector, of

$100 million (adjusted annually for

inflation). The Act also requires (in

Section 205) that the Coast Guard

identify and consider a reasonable

number of regulatory alternatives and,

from those alternatives, select the least

costly, most cost-effective, or least

burdensome alternative that achieves

the objective of the rule.

After extensive review of several

alternatives, all with varying cost and

effectiveness ratings, the Coast Guard

has determined that no structural

measures are cost-effective, and is

therefore not requiring any in this rule.

Consequently, this rule will not result in

estimated costs of $100 million or more

to either State, local, or tribal

governments in the aggregate, or to the

private sector.

Collection of Information

This rule contains no collection-ofinformation requirements under the

Paperwork Reduction Act (44 U.S.C.

3501, et seq.).

Federalism

The Coast Guard has analyzed this

rule under the principles and criteria

contained in Executive Order 12612

(October 26, 1987) and, because of the

long-standing and judicially recognized

need for uniform rules regulating the

design and construction of vessels

engaged in interstate and international

commerce, has determined that this rule

does not have sufficient federalism

implications to warrant the preparation

of a Federalism Assessment.

Environment

The Coast Guard considered the

environmental impact of this final rule

and concluded that preparation of an

Environmental Impact Statement was

not necessary. As discussed in the

Environmental Assessment, the final

rule’s Regulatory Assessment, and the

Operational Measures final rule

Regulatory Assessment provide

sufficient evidence and analysis for

determining that structural measures are

not economically feasible; and therefore,

should not be promulgated under

Section 4115(b) of OPA 90. Because no

structural measures are required, an

Environmental Impact Statement is not

required under the National

Environmental Policy Act. An

Environmental Assessment and a

Finding of No Significant Impact are

available in the docket for inspection or

copying where indicated under

ADDRESSES.

List of Subjects in 33 CFR Part 157

Cargo vessels, Oil pollution,

Reporting and recordkeeping

requirements.

For the reason set out in the preamble,

the Coast Guard amends 33 CFR part

157 as follows:

PART 157—RULES FOR THE

PROTECTION OF THE MARINE

ENVIRONMENT RELATING TO TANK

VESSELS CARRYING OIL IN BULK

1. The authority citation for part 157

continues to read as follows:

Authority: 33 U.S.C. 1903; 46 U.S.C. 3703,

3703a (note); 49 CFR 1.46. Subparts G, H, and

I are also issued under section 4115(b), Pub.

L. 101–380, 104 Stat. 520; Pub. L. 104–55,

109 Stat. 546.

2. The subpart heading of subpart G

is revised to read as follows:
Federal Register / Vol. 62, No. 7 / Friday, January 10, 1997 / Rules and Regulations 1637

Subpart G—Interim Measures For

Certain Tank Vessels Without Double

Hulls Carrying Petroleum Oils

3. The subpart heading of subpart H

is revised to read as follows:

Subpart H—Interim Measures For

Certain Tank Vessels Without Double

Hulls Carrying Animal Fat or Vegetable

Oil

4. The subpart heading of subpart I is

revised to read as follows:

Subpart I—Interim Measures For

Certain Tank Vessels Without Double

Hulls Carrying Other Non-Petroleum

Oil

Dated: January 3, 1997.

Robert E. Kramek,

Admiral, U.S. Coast Guard Commandant.

[FR Doc. 97–471 Filed 1–9–97; 8:45 am]

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