# Standards for Living Organisms in Ships' Ballast Water Discharged in U.S. Waters

36 CFR Part 151 and 46 CFR Part 162 Docket No. USCG-2001-10486 RIN 1625-AA32

Final Rule
Regulatory Analysis and Final Regulatory Flexibility Analysis

March 2012

Prepared by:

United States Coast Guard (USCG) Office of Standards Eval uation and Development Standards Evaluation an d Analysis Division USCG Headquarters Washington, DC

Additional contributions by:

AMSEC, LLC Virginia Beach, VA

Herbert Engineering Corp. (HEC) Alameda, CA

# Contents

Executive Summary ............................................................................................................. ... 10 1 Introduction .................................................................................................................. .. 23 1.1 Statement of Need ......................................................................................................... .... 23 1.2 Overview .................................................................................................................. ......... 23 1.2.a Comparison Between the NPRM RA and the FR RA ................................................... 25 1.3 Alternative Ballast Wate r Discharge Standards ................................................................ 27 1.4 Implementation Schedule .................................................................................................. 28 1.5 Regulatory Analysis ....................................................................................................... ... 28 2 Population Affected ....................................................................................................... 30 2.1 Overview of Data and Sources ......................................................................................... 30 2.2 Description of the Maritim e Transportation Industry ....................................................... 32 2.3 Vessel Types and Ownership ............................................................................................ 33 2.4 Fleet Growth and Makeup .............................................................................................. 37 3 Ballast Water Management Costs .................................................................................. 39 3.1 Descriptions of the BWMS and Assessm ent of Meeting the IMO Standard .................... 42 3.2 Applicability of BWMS to Vessel Types ......................................................................... 45 3.3 Acquisition and Installation Costs .................................................................................... 45 3.5 Discussion ................................................................................................................ ......... 51 4 Ballast Water Management Systems Cost ..................................................................... 57 4.1 Calculation Approach for Costs of Ballast Water Discharge Standards........................... 57 4.2 Installation Costs of Ballast Water Management Systems ............................................... 61 4.3 Operating Costs of Ballast Water Management System ................................................... 62 4.4 Total Costs of Ballast Water Management Systems ......................................................... 64 4.5 Additional Sources of Uncertainties on the Costs Estimates ............................................ 65 4.6 Uncertainties Related to More Stringent Standards .......................................................... 66 5 Benefits from Reducing Invasions of Non-indigenous Species .................................... 69 5.1 Resources at Risk ......................................................................................................... ..... 69 5.2 Economic Impacts of Past NIS ......................................................................................... 72 5.3 Benefits of Ballast Wate r Discharge Standards ................................................................ 74 5.4 Functional Benefits of the Ballast Water Standards ......................................................... 75 5.5 Annual Number of Invasions Due to Ballast Water Discharge ........................................ 76 5.6 Costs of Ballast Water Invasions ...................................................................................... 81 5.7 Benefits (Averted Costs) of Ba llast Water Discharge Standards ...................................... 83 5.8 Potential Benefits Transfer ............................................................................................... 86 5.9 Sources of Uncertainties a nd Alternative Use of Risk-B ased Decision-Making in Addressing Benefits ........................................................................................................... ..... 87 6 Comparison of Costs and Benefits ................................................................................. 89 6.1 Comparison of Alternative Phase-In Schedules ............................................................... 91 6.1.a. FR Phase-In Schedule for Costs and Benefits............................................................... 91 6.2 Comparison of NPRM Alternatives .................................................................................. 94 7 Final Regulatory Flexibili ty Act Analysis ..................................................................... 95 7.1 Summary of the NPRM IRFA .......................................................................................... 95 7.3 Final Regulatory Flexibility Analysis ............................................................................... 96 8 References .................................................................................................................... 106

ii

### Appendix A Ballast Water Tank Capaciti es and Fleet Makeup ........................................ 118 Appendix B Ballast Water Exchange (BWE) Cost ........................................................... 130 Appendix C Cost of Ballast Water Manageme nt Systems in Terms of Vessel Value and Daily Charter Rates ........................................................................................................... .... 135 Appendix D Ballast Water Management System Costs for the Foreign Vessels ............. 138 Appendix E Information Provided by Public Comments ................................................ 138 Appendix F Aquatic NIS Invasion Process................................................... 149 Appendix G Alternative Analyses of Benefits (Economic Costs Avoided) ...................... 156 Appendix H Derivation of Estimates of Costs and Damages Due to Aquatic NIS ........... 161 Appendix I Collection of Information fo r Compliance Extension Request .............. 172

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# Tables

Table ES-1 Comparison of Regulatory Im pacts between the NPRM and FR ...................................................... 11

Table ES-2 Allowable concentration of or ganisms in BWD, by size, for BWDS ................................................ 12

Table ES-3 Potential vessels affected by BWD Standards ........................................................................ ........... 14 Table ES-4 Costs to the U.S. vessels to comply with IMO Convention BW D Standard ($Mil) .......................... 15

Table ES-5 Estimated Annu al Costs of Aquatic Intr oduced Species ($ 2007)

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

Table ES-6 Estimated Number of Initial Ballast Water Invasions that Cause Severe Economic and Financial Harm .......................................................................................................................... ........................................... 18 Table ES-7: Range of Annual Costs Associated with Selected NIS Intr oductions ($ 2007) ................................ 18 Table ES-8 Potential Cost ($Mil)/Damage of BW Invasion over a 10-year Period ............................................. 19

Table ES-9: Potential Annual Benefits (Averted Cost), in Millions, of BW Invasion over a 10-year Period ...... 20 Table 1.1 Comparison of Regulatory Impacts between the NPRM and FR ......................................................... 26
Table 1.2 Allowable concentration of organism s in BWD, by size, for Alternatives ........................................... 27
Table 1.3 Implementation Schedule fo r the Ballast Disc harge Standards ......................................................... ... 28 Table 2.1 Vessel Ty pe Definitions ............................................................................................. .......................... 34

Table 2.2 Potential vessels af fected by BWD Standards ......................................................................... ............. 36

Table 2.3 U.S. Fleet Gr owth and Rem oval Rates ................................................................................ ................ 38

Table 3.1 Ballast Water Treatment Processes ................................................................................... ................... 41 Table 3.2 Suitability of BWMS to Ve ssel Type .................................................................................. ................. 45 Table 3.6 Estimated Average Operational Cost per Cubi c Meter of Ballast Treated by Vessel Category and Treatment Process ($/m 3 ) ............................................................................................................................. ........ 51

Table 4.3 Costs for U.S. In stalled BWDS-2 ($Mil) .............................................................................. ................ 61

Table 4.4 Estimated Ballast Water Di scharge for U.S. Vessels in 2007 .......................................................... .... 62 Table 4.5 Annual Operating Co sts for BWM U. S. ($Mil) .......................................................................... .......... 63

Table 4.6 Total Cost of the Rule making to US Vessels ($ Mil) .................................................................. ......... 65 Table 5.1 Estimated Cumulative Losses to the United States from Selected, Harmful, Nonindigenous Species, 1906-1991 (OTA 1993) .......................................................................................................... .............................. 72 Table 5.3 Distribution of NIS by Plants, Invertebrates and Fish for Three Regions (Cohen and Carlton, 1995) . 77

Table 5.4 Forecasted Number of Initia l Shipping Invasi ons Per Year ............................................................ ..... 78 Table 5.5 Number of Nonnative Coastal Marine Species by Shipping Vector (Fofonoff, et al. 2003) ................ 79

Table 5.6 Estimated Number of Ballast Water In itial Invasions ................................................................. ......... 80

Table 5.7 Estimated Number of Ballast Water Initial Invasions That Cause Severe Economic or Financial Harm

.............................................................................................................................. ................................................ 81 Table 5.8 Range of Annual Costs Associated w ith Selected NIS Introd uctions ($ 2007) .................................... 81 Table 5.9a Summary of Potential Cost ($ Mil)/Damage of BW Invasion ov er a 10-year Period ......................... 82 Table 5.9b Potential Cost ($ Mil)/Damage of BW Invasion over a 10-year Period – 7 Percent Discount Rate .. 82 Table 5.9c Potential Cost ($ Mil)/Damage of BW Invasion over a 10-year Period – 3 Percent Discount Rate .. 83



### ivTable 5.10 Reductions in the Mean Rate of Successful IN S Introductions (Multiple Species Model) ............... 85

Table 5.11 Harmful Ballast Water Initial I nvasions Avoided – Ph ased-In Schedule ........................................... 85
Table 5.12 Potential Annual Benefits (Avoided Costs) of Ballast Water Initial Invasions over a 10-year Period ($ M il)* ...................................................................................................................... .......................................... 86

Table 5.13 Uncertainties and Possible Ef fects on Estimatio n of Benefits ....................................................... ..... 88 Table 7.1 . Comparison of the NPRM and FR Number of Small Entities ........................................................... 96 Table 7.2 . Comparison of the NPRM and FR Installation Impact on Small Entities ......................................... 96

Table A-1a Ballast Water Capacities (m 3 ) for U.S. Vessels ............................................................................... 119
Table A-1b Ballast Water Capac ities (m3) for Fo reign Vessels .................................................................. ....... 120

Table A.2 World Fleet Grow th and Rem oval Rates ................................................................................ ........... 122

Table A.3 Number of Active U. S. Vessels and Percenta ge Change (2 002-2007) ............................................. 123 Table A.4 TRB Summary of Major Fo recasts of Wate rborne Cargo ................................................................. 123

Table A.5 U.S. Waterborne Im ports, Arrivals by Type ........................................................................... ........... 124

Table A.6 U.S. Waterborne Trade ............................................................................................... ....................... 124 Table A.7 World Fleet Development (The Platou Report) (Mil DWT) ............................................................. 1 25 Table A.8 World Fleet Development with Derived Re moval Rates (The Platou Report) (Mil DWT) .............. 126
Table B-1 Additional Maintenance Costs per m 3 of Ballast Pumped for BWE ................................................. 132
Table B-2 Additional Crew Costs per m 3 of Ballast Water Pu mped for BWE ................................................... 133
Table B-3 Total Cost per m 3 for Ballast Pump ed for BWE ................................................................................ 133

Table B-4 BWE Co sts for 2007 .................................................................................................. ........................ 135 Table C-1 Average Daily Time Charter Ra tes, 1980-2000 (Kite -Powell 2001) ................................................. 136 Table D-1 Estimated Average Installed Cost ($000) fo r the Foreign Fleet by Vessel Category and BWMS .... 140 Table D-2 Installed Ballast Water Management Syst em Costs ($000) for the Foreign Vessels ......................... 141
Table D-3 Number of Foreign Ve ssels Undergoing BWMS Insta llation by Year an d Type ............................. 142

Table D-4 Installation Costs for the BWMS for Foreign Vessels ($Mil) .......................................................... . 143

Table D-5 Estimated ballast water discharg e in 2007 ........................................................................... ............. 144 Table D-6 Annual Operatin g Costs for BW M ($M il) ............................................................................... ......... 145

Table D-7 Total Cost of the Rulema king to Foreign Ve ssels ($Mil) .............................................................. .... 146 Table D-8 Total Cost of the Rulemaking to U.S. and Foreign Vessels ($Mil) ................................................... 1 47

Table E-1 Cost Information on BWMS Provided by Pub lic Comments ............................................................ 149
Table G-1 Benefits by Year Under Deferred Assumption – 7% ($Mil) ............................................................. 157 Table G-2 Benefits by Year Under Deferred Assumption – 3% ($Mil) ............................................................. 157 Table G-3 Benefits by Year Under Deferred Assumption, 20-Year Period of Analysis– 7% ($Mil) ................ 158 Table G-4 Benefits by Year Under Deferred Assumption, 20-Year Period of Analysis– 3% ($Mil) ................ 159
Figure G-1 Cumulative Benefits and Costs Under Deferre d Assumption, 20-Year Period of Analysis– 7% .... 160
Table G-5 Benefits by Year Under Ph ased-In Assumption – 7% ($Mil) ........................................................... 1 60 Table G-6 Benefits by Year Under Ph ased-In Assumption – 3% ($Mil) ........................................................... 1 61



### vTable H-1 Range of Annual Costs Associated with Selected NIS Introduc tions ($ 200 7) ................................. 163
Table H-2 Summary of Cost Estimate s for Invertebrate s from Literature.......................................................... 164



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# Figures

Figure ES: Comparison of Cumu lative Costs an d Benefits ........................................................................ .......... 21 (7% Discount Rate, $2007, Mid- Point Invasion Estimate) ........................................................................ ........... 21 Figure 6.1 Range of Quantified Benefits an d Annual Costs (7% Di scount Rate, $2007) .................................... 89 Figure 6.2 Comparison of Cumulative Costs and Benefits (7% Discount Rate, $2007, Mid-Point Benefit per Invasion Es timate) ............................................................................................................ .................................... 90 Figure A-1 Imports (M etric Tons) on Contai nerships, 1998-200 3 ................................................................. .... 124 Figure A-2 Imports (TEUs) on Containershi ps, 1998- 2003 ........................................................................ ....... 125 Figure A-3 LNG Fleet Growth (from AB S GASTECH paper) Based Upon 138K m 3 Capacity ....................... 127
Figure A-4 LNG Growth Projected ............................................................................................... ..................... 127 FigureA-5 Bulk Carrier BW Capacity vs. Deadweight ............................................................................. ......... 128 Figure A-6 Containership BW Capacity vs. TEU .................................................................................. ............ 129 Figure A-7 Tanker BW Capacity vs. Cargo Capacity (fr om HEC data) ............................................................ 1 29



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## Acronyms

BWD ballast water discharge BWE ballast water exchange BWM ballast water management CFR Code of Federal Regulations DWT Deadweight Ton EEZ Exclusive Economic Zone ER empty / refill FR Federal Register FRFA Final Regulator y Flexibility Analysis FT flow-through GAO United States Government Accountability Office HEC Herbert Engineering Corp. HFO heavy fuel oil FR Final Rule IMO International Maritime Organization IRFA Initial Regulatory Flexibility Analysis LNG liquefied natural gas MARAD U.S. Maritime Administration MDO marine diesel oil MEPC Marine Environmental Protection Committee MISLE Marine Information Safety and Law Enforcement System NAICS North American Indus trial Classification System NANPCA Nonindigenous Aquatic Nuisan ce Prevention and Control Act of 1990 NBIC National Ballast Water Information Clearinghouse NIS nonindigenous species NISA National Invasive Species Act NOBOB No Ballast On Board NPRM Notice of Proposed Rulemaking OMB Office of Management and Budget PEIS Programmatic Environmental Impact Study PV present value RORO Roll-on, Roll-off (Vessel) RA Regulatory Analysis RFA Regulatory Flexibility Act SERC Smithsonian Environmental Research Center TEU Twenty-foot Equivalent Unit ULCC ultra large crude carrier VLCC very large crude carrier

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# Executive Summary

Under Executive Order 12866, the United States Coast Guard (USCG) is required to assess the costs and benefits of its regulatory actio ns. This Regulatory An alysis (RA) provides supporting documentation on the costs and benefits for the Final Rule (FR) for Standards for Living Organisms in Ships’ Ballast Water Di scharged in U.S. Waters [USCG-2001-10486]. This rule is an economically significant re gulatory action under Ex ecutive Order 12866 and has been reviewed by the Office of Management and Budget (OMB). We did not attempt to exactly replicate the regula tory language of the Final Rule or any other supporting documentation in this report; the regulatory text in the Final Rule, not the text of this report, is legally binding.

The unintentional introduction of nonindigenous species (NIS) in to the waters of the United States via the discharge of vesse ls’ ballast water continues to pose a serious risk to coastal facilities and global biodiversit y. Current U.S. regulations require ballast water management (BWM) to prevent introductions of NIS through ballast water discharge (BWD). Currently, the primary management method for controlling balla st water discharged in U.S. waters is a mid-ocean exchange of ballast water obtaine d from waters outside the U.S. Exclusive Economic Zone (EEZ). Concern remains that this approach to ballast water management is not sufficiently effective in preventing the introdu ction of NIS nor can many vessels conduct ballast water exchange because of safety issues and or voyage constraints.

The U.S. is proposing this rule to establish a ballast water discharge standard (BWDS) for the allowable concentrations of liv ing organisms discharged via ba llast water into U.S. waters. While BWDS has been adopted by the International Maritime Organization (IMO), it has not been ratified by enough countries to bring it into force as an international requirement. The Coast Guard expects this to eventually be ratified.

On August 28, 2009, we published a Notice of Proposed Rulemaking (NPRM) entitled Standards for Living Organisms in Ships’ Ballas t Water Discharged in U.S. Waters in the Federal Register (74 FR 44632). We received 662 letters in the docket, which contained approximately 2,216 individual comments on the proposed rule. We summarized these comments and corresponding changes in the FR section V. Discussion of Comments and Changes

. As a result of public comments, we have revised the NPRM RA to reflect the following changes in the FR:

(a) Exemption of coastwise 1 

### vessels operating in more th an one COTP Zone and that do not operate outside of the EEZ, and are:

1 The term used in the Final Rule is “s eagoing” vessels. For the purposes of c onsistency with the NP RM RA, instead of “seagoing” we use the terms “c oastwise” and “oceangoing” vessels. Seagoing ve ssels that do not operate beyond the U.S. EEZ are considered coastwise. Seagoing vessels that operate beyond the U.S. EEZ are considered oceangoing. We used the coastwise and oceangoing terms throughout the NPRM RA. The definition of seagoing vessel is a vessel in commercial



### 10

### (i) less than or equal to 1 600 Gross Register Tons; or (ii) less than or equal to 3000 Gr oss Tons (Intern ational Tonnage Convention); and (b) Exemption of inland 2 

### vessel and vessels that take on and discharge ballast water exclusively in one COTP Zone.

Given the changes in the applicability and exem ptions of this rule, we have revised our affected population estimates resulting in change s in the overall cost estimates. The revision on the affected population estimates resulted in changes in the overall cost estimates. The FR costs have decreased due to the reduction in the affected population. The benefits have decreased due to the longer phase-in period. We have also revised the original Initial Regulatory Flexibility Analysis (I RFA) and as a result, our estimates showed that there was a reduction in the number of small entities affected by this rule. Table ES-1 presents a summary of the changes in this FR RA comparing to the NPRM RA:

Table ES-1 Comparison of Regulatory Impacts between the NPRM and FR

NPRM FR Applicability All vessels discharging ballast water into U.S. waters. Oceangoing vessels and some coastwise vessels (> 1,600 GT) discharging ballast water in U.S.
waters. Compliance Start Date Beginning 2012 Revised, beginning December 2013 Number of BWMS Installations on Vessels (10- year period of analysis) 4,758 3,046

Costs ($ millions,7% discount rate) $167 (annualized) $1,176 (10-year) $92 (annualized) $649 (10-year) Benefits ($ millions,7% discount rate) $165-$282 (annualized) $1,161-$1,977 (10-year) $141-$240 (annualized) $989-$1,684 (10-year)



### This RA provides an evaluation of the economic impacts associated with the implementation of a standard limiting the quanti ties of living organisms in vesse ls’ ballast water discharged in U.S. waters as summarized in Table ES-2.

service that operates beyond the Boundary Line established by 46 CFR part 7. It does not include a vessel that navigates exclusively on inland waters.

2 The term used in the Final Rule is “non- seagoing” vessels. We have used the terms inland in this RA in order to keep consistency with the term s used in the NPRM RA.



### 11Table ES-2 Allowable concentration of organisms in BWD, by size, for BWDS

Large Organisms > 50 microns in size Small Organisms >10 and ≤ 50 microns in size Bacteria

Toxigenic Vibrio cholerae (O1 and O139) E. coli Intestinal Enterococci

FR BWDS (IMO Standard) <10 per m 3 <10 per ml <1 cfu per 100 ml <250 cfu per 100 ml <100 cfu per 100 ml



### For the NPRM, we considered five alternatives:

• Alternative 1: No Action

• Alternative 2: IMO Standard

• Alternative 3: 10 times more st rict than the IMO Standard

• Alternative 4: 100 times more st rict than the IMO Standard

• Alternative 5: Sterilization

We also considered a Phase 2 Standard that would be 1,000 times st ricter than the IMO Standard.

Based on comments received in the NPRM and as discussed in the FR notice, Coast Guard chose to implement the preferred alternative (the IMO Standard) in this Final Rule, with the consideration of more strict standards based upon future practicability. For further discussion of the alternatives considered, plea se refer to the Regulatory Analysis for the NPRM, the FR preamble and the Final Progra mmatic Environmental Impact Assessment. Population Affected This FR will affect vessels, U.S. and foreign, operating in U.S waters 3 

### equipped with ballast tanks. These vessels are require d to install and operate a USCG approved ballast water management system (BWMS) before discharging ballast water into U.S. waters. This would include vessels bound for offshore ports or pla ces. The following vessels are exempt from complying with this rule:

(a) Department of Defense or Coast Guard vessels subject to the requirements of the Nonindigenous Aquatic Nuisance Prevention an d Control Act (NANPCA ) or any vessel of the Armed Forces, as defined in the Federal Wate r Pollution Control Act th at is subject to the “Uniform National Discharge Standards for Vessels of the Armed Forces”; (b) Any warship, naval auxiliary, or other vess el owned or operated by a foreign state, and used, for the time being, only on government non-commercial service.

3 Waters of the United States means waters subject to th e jurisdiction of the United States as defined in 33 CFR 2.3, including the navigable waters of the United States. For 33 CFR Part 151, subpart C and D, the navigable waters include the territorial sea as extended to 12 na utical miles from the baseline, pursuant to Presidential Proclamation No. 5928 of December 27, 1988.



### 12

### (c) Crude oil tankers engage d in coastwise trade; (d) Vessels that operate exclusively within one Captain of the Port (COTP) Zone; (e) Coastwise (or Seagoing) vessels that ope rate in more than one COTP Zone, do not operate outside of the EEZ, and are (i) less than or equal to 1 600 Gross Register Tons; or (ii) less than or equal to 3000 Gross Tons (International Tonnage Convention); (f) Inland (Non-seagoing) vessels; (g) Vessels that take on and discharge ballast water exclusively in one COTP Zone; (h) Vessels in innocent passage; and (i) Vessels that use only water from a public water supply, meeting the requirements of the Safe Drinking Water Ac t as ballast water.

The primary source of data used in this analys is is the Marine Information for Safety and Law Enforcement (MISLE) system and Ballast Water Reporting Forms submitted to the National Ballast Information Cl earinghouse (NBIC). MISLE is the USCG database system for information on vessel characteristics, arri vals, casualties, and inspections. The NBIC database is maintained by the Smithsonian a nd provides information on the amount of ballast water discharged in U.S. ports for the range of vessel types calling on U.S. waters. Since October 2004, all vessels, U.S. and foreign, opera ting in U.S. waters and bound for U.S. ports or places must submit reports of their BW M practices to the NBIC database. 33 CFR 151.2041.

We identified approximately 6,418 vessels as th e current vessel population that would be required to meet the BWDS. Of these, 1,459 are U.S.-flagged vessels. We assumed that vessels would be in full compliance with th e FR by 2018. The BWMS equipment installation requirements are phased-in for existing vessels over the 2014 through 2016 period. Table ES3 presents the number of potential vessels operating in U.S. wate rs that are projected to be covered under the BWDS.

13Table ES-3 Potential vessels affected by BWD Standards

Type of Vessel Classification Criteria a Vessels Operating in U.S. Waters (2007)

U.S. Vessels Foreign Vessels Total Number of

Vessels

Bulk carriers
Handy <50,000 DWT 11 1,050 1,061

Panamax 50,000-80,000 DWT 6 509 515
Capesize >80,000 DWT 0 46 46
Tank Ships
Handy <35,000 DWT 10 116 126
Handymax-Aframax 35,000-120,000 DWT 17 709 726

Suezmax 120,000-160,000 DWT 7 100 107

VLCC 160,000-320,000 DWT 4 154 158

ULCC > 320,000 DWT 0 16 16
Container ships

Feeder <500 TEU 23 39 62

Feedermax 500-1000 TEU 1 51 52
Handy 1000-2000 TEU 26 126 152
Subpanamax 2000-3000 TEU 52 172 224

Panamax >3000 TEU b 21 174 195
Postpanamax >3000 TEU c 30 272 302

Other vessels
Passenger ship All sizes 138 129 267

Gas carrier All sizes 6 118 124

Chemical carrier All sizes 23 513 536

RORO All sizes 66 321 387

Combination vessel All sizes 131 22 153
General cargo All sizes 47 258 305
Fishing Vessels All sizes 83 16 99

Other Offshore and Coastal Vessels All sizes 757 48 805

Total 1,459 4,959 6,418

a. Vessel classifications source: USGC (2004) b. Vessel length and beam within Panama Canal limits. c. Vessel length or beam exceed Panama Canal limits.

.



### 14

### For the purposes of this RA, we consider the bottom-line costs of this rulemaking to involve U.S. vessels only. Nevertheless, we anticip ate that the development of management technology will involve the world fleet, not the U. S. fleet alone. In addition, for the purpose of this rulemaking, we do consider all vessels operating in U.S. waters when developing the average per vessel installation and operating unit co sts since the U.S. fleet is relatively small and not representative of all vessel types.

Costs of the Ballast Water Discharge Standard

The IMO BWM Convention has spurred deve lopment of alternat ive ballast water management systems (BWMS) that will enable vessels to meet the IMO discharge standard (Alternative 2). Various tec hnologies are being evaluated. Shipboard trials are being conducted for some of these technologies, wh ile other systems are undergoing land-based laboratory testing. Not all systems are appropriate for all vessel types. The BWMS is an emerging technology in its formative stage. The BWMS on ships is a new process for which there is minimal operating practical experience. Any disc ussion of the management technologies, effectiveness, costs, and operating issues is pr ovisional. The primary cost driver of this rulemaking is installation costs for all exis ting vessels. After this period, we estimate operating costs to be substantially less. The operating cost is a function of the number of vessels treating ballast water and the estimat ed average volume treated each year. We calculated the annual vo lume treated by using the average annual volume of ballast water discharged by different types of vessels. We expect highest annual costs in the period between years 3 and 5, as all of the existing fl eet must meet the standards according to the phase-in schedule (Table ES-4).

Table ES-4 Costs to the U.S. ve ssels to comply with IMO Conv ention BWD Standard ($Mil)

Year Installation Costs Treated Ballast Water (m 3 ) Annual Operation Costs Total Cost

3% Discount 7% Discount 3% Discount 7% Discount 3% Discount 7% Discount

1 $51.88 $49.94 280,029 $0.05 $0.05 $51.92 $49.98
2 $51.71 $47.92 478,831 $0.09 $0.08 $51.80 $48.00
3 $191.14 $170.50 2,993,916 $0.46 $0.41 $191.61 $170.91
4 $178.68 $153.43 5,348,917 $0.80 $0.69 $179.49 $154.12

5 $105.08 $86.86 6,565,633 $0.96 $0.79 $106.04 $87.65
6 $35.68 $28.39 6,720,480 $0.96 $0.76 $36.64 $29.15

7 $36.08 $27.63 6,957,572 $0.97 $0.74 $37.05 $28.37
8 $36.49 $26.90 7,200,434 $0.97 $0.72 $37.46 $27.62
9 $36.91 $26.19 7,449,212 $0.98 $0.69 $37.88 $26.89
10 $37.33 $25.51 7,704,056 $0.98 $0.67 $38.31 $26.17
Total $760.98 $643.25 $7.21 $5.61 $768.20 $648.86

Annualized $89.21 $91.58 $0.85 $0.80 $90.06 $92.38
Note: Totals may not add due to rounding.



### 15

### We estimate the first-year total (initial) cost of this rulemaking to be $49.98 million based on a 7 percent discount rate and $51.92 million based on a 3 percent discount rate. Over the 10- year period of analysis, the tota l cost of the FR BWDS for the U.S. vessels is approximately $648.86 million using the 7 percent discount rate and $768.20 million using the 3 percent discount rate. Our cost assessment includes existing and new vessels.

Economic Costs of Invasions of Non-indigenous Species

NIS introductions contribute to the loss of marine biodiversity and have associated with it significant social, economic, a nd biological impacts. NIS intr oductions in U.S. waters are occurring at increasingly rapi d rates. Avoided costs associat ed with future NIS invasions represent one of the benefits of BWM. Economic costs from invasions of NIS range in the billions of dollars annually. Evaluation of these impacts was difficult because of limited knowledge of the patterns and basic processes th at influence marine biodiversity. The most extensive review to date on the economic costs of intr oduced species in the U.S. includes estimates for many types of NIS, and is reflected in Table ES-5.

Table ES-5 Estimated Annual Costs of Aquatic Introduced Species ($ 2007)

Species Costs

Fish $5.7 billion Zebra and Quagga mussels $1.06 billion Asiatic clam $1.06 billion Aquatic weeds $117 million Green Crab $47 million Note: See Chapter 5 "Economic Cost of Invasions of Non-indigenous Species" for additional details and source information.



### Though a particular invasion may have small direct economic impacts, the accumulation of these events may cost in the billions of dollars every year. Only a few invasions to date have led to costs in the billions of dollars per year.

Ballast water discharge is one of the two main vectors by which NIS are introduced into the marine environment associated with shipping- - hull-fouling being the other. The BWDS will not address hull fouling. The re lative impact of ballast water and hull fouling vectors has not been fully understood (Ruiz 2002).

Benefits of Ballast Water Discharge Standards

The benefits of BWDS are diffi cult to quantify because of the complexity of the ecosystem and a lack of understanding about the probabilities of invasions based on prescribed levels of organisms in ballast water. However, evaluation of costs associated with previous invasions (described above) allows a comparison of the cost of discharge standards versus the potential costs avoided. Because the amount of shipping traffic and the number of incidents of

16

### invasions per year are both in creasing, historical da ta provide a lower bound for the basis of benefit evaluation.

We assessed the functional benefits prior to comparing monetary benefit measures. The primary functional benef its of a BWDS are:

• A reduction in the concentration of all orga nisms leading to lower numbers of these organisms being introduced per discharge; and

• The elimination of the exemptions in the BWM regulations leading to the discharge of unmanaged ballast water (e.g., safety con cerns during exchange, deviation/delay of voyage required to travel to accepta ble mid-ocean exchange location).

This overall strategy should reduce the number of new invasions because the likelihood of establishment decreases with reduced number s of organisms introduced per discharge or inoculation.

We use the same benefits model for the FR as we did for the NPRM. This model quantifies benefits resulting from the reduction in “initia l invasions” from vessels engaged in oceangoing traffic. We have not found complete data or identified appropria te models to quantify the possible benefits associated with reducing the sec ondary spread of inva sions. Therefore, we do not expect the exemption of inland vessels to reduce the estimate of quantified benefits given data and modeling limitations.

We calculate potential benefits of the BWDS by estimating the number of initial invasions reduced and the range of economic damage a voided. We use information on the initial invasion rate of invertebrates from shipping reported by Ruiz et al. (2000) to project the number of future shipping invasions per year. We then estimate the number of fish and aquatic plant invasions based on historical re lationships of fish and plant invasions to invertebrate invasions. We then adjust the projected invasions to account for the fraction of invasions that are attributable to ballast water and the fraction of invasi ons that cause severe economic damage. 4 

### The resulting projection of the number of initial ballast water invasions that will cause harm is displayed in Table ES-6.

4 We recognize that invasive species can cause envir onmental harm without causing economic harm, but cannot monetize these benefits. Environmental harm from invasive species is discussed more fully in the FPEIS.



### 17Table ES-6 Estimated Number of Initial Ballast Wa ter Invasions that Cause Severe Economic and Financial Harm

Year Invertebrate Fish Aquatic Plant

1 0.39 0.08 0.16 2 0.40 0.08 0.16 3 0.41 0.08 0.16 4 0.42 0.08 0.17 5 0.43 0.09 0.17 6 0.44 0.09 0.18 7 0.45 0.09 0.18 8 0.46 0.09 0.18 9 0.47 0.09 0.19 10 0.48 0.10 0.19 Total 4.35 0.87 1.74
Note: Totals may not add due to rounding.



### To estimate the potential economic harm that may be caused by these invasions, we assign a cost per invasion based on the available data on the range of costs and damages incurred by past invasions. As no comprehensive estimate is available on the costs from past invasions, we do not try to develop a composite cost estim ate for all invasions, but instead select a low and high estimate for fish, aquatic plants, and in vertebrates based on representative species. We then calculate a mid-point for the range and calculate costs for futu re invasions using all three values. The resulting ranges of costs per invasions are summarized in Table ES-7.

Table ES-7: Range of Annual Costs Associated with Selected NIS Introductions ($ 2007)

Low-Range Mid-Range High Range

Fish $ 15,805,000 [1] $ 160,547,000 $ 305,289,000 [2] Invertebrates $ 19,538,000 [3] $ 539,769,000 $ 1,060,000,000 [4] Aquatic Plants $ 4,507,000 [5] $ 214,585,500 $ 424,664,000 [6] [1] From Jenkins 2001, economic impact of sea lamprey on Great Lakes, updated from 2001$ [2] From Leigh 1998, commercial and recreational fishing benefits lost due to ruffe invasion of Great Lakes, updated from 1998$ [3] From Connelly et al. 2007, cost of Zebra Mussel c ontrol at WTP and electric generation facilities, updated from 2004$ [4] From Piementel et al. 2005, cost of Zebra Mussel or Asian Clam, updated from 2005$ [5] From Rockwell 2003, cost to control Water Hyacinth in Louisiana, updated from 2003$ [6] From Pimentel 2005, cost to control Eurasion watermilfoil, updated from 2005$



### We assume that once an invasion is establishe d, it will continue to generate costs and/or damages for each year subsequent to the invasion . Thus, an invasion that occurs in the first year of our analysis will incur costs/damages in each of the next 10 years. Also, these estimates of costs include the im pact of secondary spread of an invasion to areas other than the site of the initial invasion.

18

### Based on the cumulative impacts of invasions, we have calculated a mid-range estimate of annual costs for all harmful ballast water-intr oduced invasions over the 10-year period (we present results of benefits estimation for a l onger period of analysis in Appendix D) at $1.453 billion at a 7 percent discount (Table ES-8). These estimates assume no ballast water management.

Table ES-8 Potential Cost ($Mil)/Damage of BW Invasion over a 10-year Period

Range of NIS Costs Total Cost for (3% disc. rate) Total Cost for (7% disc. rate) Low Range $ 56 $ 54 Mid Range $ 1,491 $ 1,453 High Range $ 2,926 $ 2,852



### The Final Programmatic Environmental Impact Statement (USCG 2010) has estimated the reduction in the mean rate of successful introduc tions of various altern ative standards. In comparison with the existing practice of ballast water exchange, the FR BWDS is between 37 percent and 63 percent effective in preventing invasions when fully implemented. We use these estimates of the reduction in the rate of invasions to es timate the economic cost/damage avoided as a result of the BWDS.

As discussed earlier, the implementation of the FR BWDS will be phased-in over several years. During the phase-in period of, there is uncertainty as to how effective the measures will be in preventing invasions if only a subs et of ships have implemented ballast water management. For the purposes of estimating quantitative benefits, we assume that no invasions will be avoided before the end of this period because a subset of ships will have implemented ballast water management. This approach may lead to an underestimate of potential benefits.

The resulting damages avoided for the FR BW DS range from a minimum of $5 million and the maximum is $470 million with a mid-range estimate of $141-$240 million per year at a 7 percent discount rate 5 

### (Table ES-9). Over a 10-year period of analysis, we estimate the total discounted present value benefits of the phase-o ne BWDS to be as high as $3 billion with a mid-range estimate of $0.99 billion to $1.68 billion 6 

### . Thus, quantified benefits exceed the estimated costs for the mid-point benefits es timate of Low Effectiven ess. The high range annual cost estimate of $192 million 7 

### is less than the high range benefits estimate of Low Effectiveness.

5 The large range in the estimates of be nefits from preventing invasive species is due to the natural variability in the amount of damage caused by any individual species (i.e., different species can cause a wide range of damages from very little in a small area to large, widespread damages).
6 The mid-range benefit estimate varies based on the assumed effectiveness factor s of preventing invasions (37% and 63%). The average of the mid-range benefit es timate for the 10-year period of analysis is $1.34 billion (range: $0.99 billion to $1.68 billion).

7 See OMB A-4 Account Statement for high cost estimates information.



### 19Table ES-9: Potential Annual Benefits (Averted Cost), in Millions , of BW Invasion over a 10-year Period

Reductions in Mean Rate of Invasion Low Range Mid Range High Range

3% discount rate 7% discount

rate 3% discount

rate 7% discount

rate 3% discount

rate 7% discount

rate Low Effectiveness - 37% $ 6 $ 5 $ 155 $ 141 $ 304 $ 276 High Effectiveness - 63% $ 10 $ 9 $ 264 $ 240 $ 518 $ 470

Figure ES-1: Range of Quantified Benefits and Annual Costs (7% Discount Rate, $2007)

$5

Low $141

Mid $276

High

$9

Low $240

Mid $470

High

$- $100 $200 $300 $400 $500 ($ Millions) Annual Benefits Low Effectiveness

Annual Benefits High Effectiveness Average Annualized Costs



### The cumulative economic damages avoided would e qual cumulative costs incurred in year 7 assuming a higher reduction rate of 63 percen t and in year 9 assuming a low reduction by invasion rate of 37 percent. Figure ES-2 illu strates the cumulative costs of the BWD in relationship to the damages avoided.

20

### 21 Figure ES-2: Comparison of Cumulative Costs and Benefits

(7% Discount Rate, $2007, Mid-Point Invasion Estimate)



### Regulatory Flexibility Analysis

In accordance with the Regulatory Flexibilit y Act (RFA), we have prepared a Final Regulatory Flexibility Analysis (FRFA) that examines the impacts of the FR on small entities (5 USC 601 et seq.). Based on available data, we estimated that approximately 29 percent of the businesses affected would be small by the Small Business Administration size standards. After installation, however, most small busin esses would not incur a significant economic impact from the estimated annual recurring operati ng costs. We have determined that this rule would have a significant economic imp act on a substantial num ber of small entities under section 605(b) of the Regulatory Flexibility Act.

Reporting and Recordkeeping

As a result of public comments, we have in cluded a provision in the FR to allow vessel owners and operators to request an extensi on of their compliance date if they cannot practicably comply with the compliance date othe rwise applicable to their vessel. This is a voluntary provision and will result reporting a nd recordkeeping burden to the vessel owner and operator applying for the extensions. Therefore, the Coast Guard is amending the existing (OMB CONTROL NUMBER: 1625-0069) to add these requests for extension (see Appendix I for more information).

### OMB A-4 ACCOUNTING STATEMENT

The USCG has determined that this is an “economi cally significant” rulemaking within the definition of Executive Order (EO) 12866, because estimated annua l costs or benefits exceed $100 million in any year. As required by OMB Circular A-4 (avail able at http://www.whitehouse.gov), the USCG has prepared an accounting statement sh owing the classification of expend itures associated with the FR. Agency/Program Office: USCG Rule Title : Standards for Living Organisms in Ship’s Ballast Water Discharged in U.S. Waters RIN#: 1625-AA32 Date: March 2012

Category Primary Estimate Minimum Estimate High Estimate Source

Benefits Annualized monetized benefits ($ Mil) $141-$240 7% $5 7% $470 7% RA $155-$264 3% $6 3% $518 3% RA Annualized quantified, but unmonetized, benefits Unspecified Unspecified Unspecified RA

Unquantifiable Benefits Avoidance of damages due to certai n species such as viruses and the secondary spread of invasions Avoidance of environmental damages that cannot be monetized RA

Costs Annualized monetized costs ($ Mil) $92 7% $92 7% $178 7% RA $90 3% $90 3% $173 3% RA Annualized quantified, but unmonetized, costs None None None
Qualitative (unquantified) RA
Transfers Annualized monetized transfers: “on budget” Not calculated Not calculated Not calculated RA

From whom to whom? RA Annualized monetized transfers: “off-budget” None None None

From whom to whom? None None None Miscellaneous Analyses/Category Effects on State, local, and/or tribal governments None None None

Effects on small businesses We expect the rulemaking to have a significant economic impact on a substantial number of small entities. RA
Effects on wages None None None Effects on growth No dete rmination No determination No determination
Discount rate appears to the right of estimates. Note 1: We based primary estimates for annualized costs on low cost technology alternatives (see Chapters 3 and 4 for more details and descriptions). The primary cost es timates are the same as the minimum estimate. High cost estimates are based on high cost technologies. Note 2: Primary estimates for annualized benefits are based on the mid-point cost per species estimate for low and high effectiveness (See Chapter 5 for more details). The minimal estimate is from the low range cost per species and low effectiveness. The high estimate is for the hi gh range cost per species and high effectiveness.



### 22

# 1 Introduction

1.1 Statement of Need

Vessels that release untreated ballast water increase risks to aquatic life and possibly human health and cause other environmental and economic harm without accounting for the consequences of these actions on other parties (sometimes referred to as third parties) who do not directly participate in the business transactions of the business entities. These costs are not borne by the res ponsible entities and are therefore external to the business decisions of the responsible entity. Th e goal of environmental legislation and implementing regulations, including the BW DS, is to correct these environmental externalities by requiring vessels to treat their ballast water releases in order to reduce the environmental harm that results from the introduction of some non- indigenous invasive species.

The invasion of NIS in the US waters is a co mplex negative external ity that requires the establishment of a unified ballast water disc harge standard. Individu al initiatives from some States do not fully address the NI S invasion problem since waterways are interlinked making the withholding of an invasi ve species a difficult task. Because States regulations are not standardized, the cost a nd equipment requirements might represent an undo burden on vessels traveling from port – to – port. A Federal regulation that standardizes operational and e quipment requirements on all ve ssels, with the capability of operating ballast tanks, is the most effect alte rnative to correct this market failure. In a published statement by the American Great Lakes Ports Association, they support the Coast Guard’s initiative to develop a Fede ral regulation that would standardize the criteria for the management of ballast water in U.S. waters 8 

### . In addition, a Federal regulation on ballast water discharge will have the added benefit of a regulation that complies with international treaties.



## 1.2 Overview

As discussed above, the introduction of non-i ndigenous species (NIS) into the waters of the United States via the discharge of vessels ’ ballast water continues to pose a serious risk to coastal facilities and global biodivers ity. Ruiz et al. (2000a) analyzed the likely sources and pathways for North American ma rine invasions and concluded that most invasive species are associated with vessels. The authors estimated that of all invasive species introduced into U.S. waters -60 percent, 48 percent, and 64 percent on the Atlantic, Pacific, and Gulf coas ts, respectively- could be attri buted to some aspect of the shipping industry. Vectors associated with ve ssels include hull fou ling and ballast water discharge (BWD).

8 Source: http://www.greatla kesports.org/aquatic.html



### 23

### The shipping industry uses ballast to optimize the configuration of th e vessel so that it operates in a safe and efficient manner. Vesse ls use ballast to meet orientation (trim, heel, and draft), stability, a nd strength (bending moments, shear forces, and slamming loads) requirements both in port and at sea. Ballast water taken into the vessel via onboard pumps is the most common form of ballast. Ballast quantities range from a few hundred cubic meters (m 3 

### ) to more than 200,000 m 3 

### for the largest ta nkers. Analysis of the National Ballast Information Clearinghous e (NBIC) database shows that vessels discharge more than 40 million m 3 

### of ballast water from outside the U.S. into U.S. waters each year.

Current ballast water regulations require vess els that operate outside the U.S. Exclusive Economic Zone (EEZ) to use one of the fo llowing ballast water management (BWM) practices:

(a) Conduct mid-ocean ballast water exchange (BWE) at least 200 nautical miles from any shore (some vessels may not be able to conduct BWE depending on vessel design, age, load, sea c onditions, and safety concerns); (b) Retain ballast water onboard; or (c) Use a United States Coast Guard (USCG) approved alternative method. Because there are currently no approved alternative methods, BWE and retention of ballast wa ter are the only available methods of BWM.

Under the legislative mandate in the Nationa l Invasive Species Act (NISA), the USCG must approve any alternative methods of BWM used in lieu of BWE. 16 U.S.C. 4711(c)(2)(D)(iii). NISA further stipulates that such alternative methods must be at least as effective as BWE in preventing or reducing the introduction of NIS into U.S. waters. 16 U.S.C. 4711(c)(2)(D)(iii). Determining whet her an alternative method is as effective as BWE is not an easy task. The effectiv eness of BWE is highly variable, largely depending on the specific vessel and voyage . These variables make comparing the effectiveness of an alternative BWM method to BWE extremely difficult. In addition, a majority of vessels are constrained by desi gn or route from practicing BWE effectively. Ballast water exchange that show a proporti onal reduction in abundan ce of organisms, so every vessel then has a different allowable c oncentration of organisms in its discharge, support these results. Thus, vessels with very large starting concentr ations of organisms in their ballast tanks might still have large concentrations of orga nisms after BWE.

For these reasons, BWE is not well suited as the basis for a protective programmatic regimen, even though it has been a useful “i nterim” management practice. We have concluded that, as an alternative to using BWE as the benchmark, establishing a standard for the concentration of living organisms that can be discharged in ballast water would advance the protective in tent of NISA and simplify the process for USCG approval of a ballast water management system (BWMS). Additionally, setting a discharge standard would promote the development of innovative BWM technologies to be used for enforcement of the BWM regulations and assi st in evaluating the effectiveness of the BWM program.

24

## 1.2.a Comparison Between the NPRM RA and the FR RA

The goal of the USCG Final Rule (FR) is to establish a ballast water discharge standard (BWDS) for the allowable concentrations of living organisms disc harged via ballast water into U.S. waters. On August 28, 2009, we published a Notice of Proposed Rulemaking (NPRM) entitled Standards for Li ving Organisms in Ships’ Ballast Water Discharged in U.S. Waters in the Federal Register (74 FR 44632). We summarized these comments in the FR section V. Discussion of Comments and Changes . The great majority of the comments on the NPRM RA were from the inland, Great Lakes and coastwise industries. The commenters raised many different issues related to the ballast water operations, such as the use of munici pal/potable water, technology costs, size limitations and underestimation of the aff ected population (for not including inland vessels and vessels under 100 feet due to the general applicability of the NPRM). Additionally, commenters expressed concern th at the cost estimates for the proposed Phase 2 standard was not included in any of the supporting documentation or analysis. Remaining comments were on cost to foreign vessels, benefits and small entities analysis.

Given the issues raised by commenters on the affected population (mainly from inland, Great Lakes and coastwise indus tries as stated in the para graph above), the Coast Guard has revised the applicability of the BWDS rule. The FR requires compliance with IMO BWDS only to the following vesse ls, intending to discharge ballast water into water of the United States: vessels entering waters of the United States from outside the exclusive economic zone (EEZ); and coastwise vessels that operate in more than one Captain of the Port (COTP) Zone, and are greater than 1600 Gross Register Tons (or 3000 International Gross Tons). The Coast Guard fully intends to expand the BWDS rule to all vessels at some point, as noted in the NPRM, but has determined that additional research and analysis is necessary to support this e xpansion. Additionally, the Coast Guard has decided to move forward with the NPRM Ph ase one standard that will not include a standard that is more stri ngent than the IMO standard.

In order to address the app licability changes in the FR, we have revised the NPRM RA affected population to incorporate the following :

(a) Exemption of coastwise 9 

### vessels that do not operate outside of the EEZ, and

are: (i) less than or equal to 1 600 Gross Register Tons; or (ii) less than or equal to 3000 Gr oss Tons (Intern ational Tonnage Convention); and (b) Exemption of inland 10 

### vessels.

9 The term used in the Final Rule is “s eagoing” vessels. For the purposes of th is RA, instead of “seagoing” we use the terms “coastwise” and “oceangoing” vessels. Seagoing vessels that do not operate beyond the U.S. EEZ are considered coastwise. Seagoing vessels that operate beyond the U.S. EEZ are considered oceangoing. We used the coastwise and oceangoing terms in this RA in order to keep consistency with the terms used in the NPRM RA. The definition of seagoing vessel is a vessel in commercial service that operate s beyond the Boundary Line established by 46 CFR part 7. It does not include a vessel that navigates exclusively on inland waters.



### 25

### The revision of the affected population estimates and the revised compliance start date resulted in changes in the overall cost estima tes. The FR costs have decreased due to the reduction in the affected population. The quantif ied benefits have decreased due to the longer phase-in period. 11 

### We have also revised the quant itative findings from the Initial Regulatory Flexibility Analysis (IRFA) and as a result, our estimates showed that there was a reduction in the number of small entities affected by th is rule. Table 1.1 presents a summary of the changes in this FR RA compared to the NPRM RA:

Table 1.1 Comparison of Regulatory Impacts between the NPRM and FR

NPRM FR Applicability All vessels discharging ballast water into U.S. waters. Oceangoing vessels and some coastwise vessels (> 1,600 GT) discharging ballast water in U.S.
waters. Compliance Start Date Beginning 2012 Revised, beginning December 2013 Number of BWMS Installations on Vessels (10- year period of analysis) 4,758 3,046

Costs ($ millions,7% discount rate) $167 (annualized) $1,176 (10-year) $92 (annualized) $649(10-year) Benefits ($ millions,7% discount rate) $165-$282 (annualized) $1,161-$1,977 (10-year) $141-$240 (annualized) $989-$1,684 (10-year)



### In addition to the changes described above, we have included a provision in the FR to allow vessel owners and operators to request an extension of their compliance date if they cannot practicably comply with the compliance date otherwise applicable to their vessel. This is a voluntary provision and will re sult reporting and recor dkeeping burden to the vessel owner and operator applying for the ex tensions. Therefore, the Coast Guard is amending the existing (OMB CONTROL NU MBER: 1625-0069) to add these requests for extension (see Appendix I for more information).

This RA provides a revised evaluation of the economic impacts associated with FR requirements and is presented as follows:

The remainder of Chapter 1 discusses th e alternative discha rge standards under consideration and impl ementation schedule.

10 The term used in the Final Rule is “ non-seagoing” vessels. We have used the terms inland in this RA in order to keep consistency with the te rms used in the NPRM RA.
11 We use the same benefits model for the FR as we did for the NPRM. This model quantifies benefits resulting from the reduction in “initial invasions” from vessels engaged in ocean-going traffic. Inland vessels have been increasingly associated with the secondary spread of invasions, but we have not found complete data or identified appropriate models to qua ntify the possible benefits associated with reducing the secondary spread of invasions. Therefore, we do not expect the exemption of inland vessels to reduce the estimate of quantified benefits given data and mode ling limitations. See the Be nefits chapter of this report for more discussion on the data and modeling framework used for this rulemaking.



### 26

### Chapter 2 presents a description of the affected vessel population, data sources, and estimated fleet growth.

Chapter 3 presents the discussion on the inst allation and operational costs of the BWMS.

Chapter 4 presents estimates of the costs associated with inst alling and operating a BWMS required to meet the Alternative 2 standards.

Chapter 5 discusses the economic costs of NIS invasions and the benefits of the application of a BWDS.

We analyze some factors contributing to th e evaluation of benef its of a BWDS and discuss costs that we may potentially incur or avoid. We also present limitations of the various standards in reduci ng the invasion of NIS.

Chapter 6 presents a comparison discussi on on cost and benefits, BWDS, BWE and a sensitivity analysis in the total cost for U.S. vessels based in the potential in percentages of vessels owners complying with the phase-in schedule.

Chapter 7 contains the Final Regulator y Flexibility Act (FRFA) analysis.



## 1.3 Alternative Ballast Wa ter Discharge Standards

As part of the rulemaking process, Coast Gu ard considered severa l alternative BWDS. As described in the NPRM RA, these alternatives included:

• maintaining the current BWE requirement (Alternative 1 – “No Action”) ;

• three alternatives that would establish di fferent and increasingly stringent levels of maximum concentrations for living or ganisms in discharged ballast water (Alternatives 2, 3, and 4 as summarized in Table 1.2) ; and

• an alternative that essentially requires sterilization of ballast water (Alternative 5)

.

Coast Guard also considered a Phase 2 standard that required more stringent levels of maximum concentrations for living organi sms in discharged ballast water than Alternative 4. See the NPRM RA for additional detail on the alternatives considered in the NPRM. Table 1.2 Allowable concentration of organis ms in BWD, by size, for Alternatives

Large Organisms > 50 microns in size Small Organisms

>10 and

≤ 50 microns in siz e Bacteria

Toxigenic Vibrio cholerae (O1 and O139) E. coli Intestinal Enterococci

Alternative 2 <10 per m 3 <10 per ml <1 cfu per 100 ml <250 cfu per 100 ml <100 cfu per 100 ml

Alternative 3 <1 per m 3 <1 per ml <1 cfu per 100 ml <126 cfu per 100 ml <33 cfu per 100 ml



### 27Alternative 4 <0.1 per m 3 <0.1 per ml <1 cfu per 100 ml <126 cfu per 100 ml <33 cfu per 100 ml

Phase 2 <0.01 per m 3 <0.01 per ml <1 cfu per 100 ml <126 cfu per 100 ml <33 cfu per 100 ml



### Alternative 2 is the BWDS in the International Maritime Organization (IMO) Ballast Water Convention 12 

### . Alternative 2 was the preferred al ternative in the NPRM RA and is the standard in the FR. Under the FR BW DS the allowable concentration of living organisms (per volume) in ships’ ballast water (by size class) is:

• For organisms larger than 50 microns in minimum dimension: discharge less than 10 living organisms per cubic meter (m 3 

### ) of ballast water.

• For organisms equal to or smaller than 50 microns and larger than 10 microns: discharge less than 10 living individuals per milliliter (ml) of ballast water.

• For bacteria and viruses, discharg e of indicator microbes such that:

o Toxigenic Vibrio cholera (Serotypes O1 and O139) occur at a concentration less than 1 colony forming unit (cfu) per 100 ml.

o E. coli occur at a concentration less than 250 cfu per 100 ml.

o Intestinal Enterococci oc cur at a concentration less than 100 cfu per 100 ml.



## 1.4 Implementation Schedule

Table 1.3 shows the implementation sche dule for meeting the BWDS. This implementation schedule provides vessel owners and operators time to install equipment needed to comply with th e discharge standard.

Table 1.3 Implementation Schedule fo r the Ballast Discharge Standards

Vessel’s Ballast Water Capacity (cubic meters, m 3 ) Vessel’s Construction Date Vessel’s Compliance Date

New vessels All On or after December 1, 2013 On Delivery

Existing vessels Less than 1500 Before December 1, 2013 First schedule d drydocking after January 1, 2016

1500-5000 Before Decem ber 1, 2013 First sche duled drydocking after January 1, 2014

Greater than 5000 Before December 1, 2013 First sc heduled drydocking after January 1, 2016

12 The IMO is an organization of 160 member countries with observers from governmental, industry, environmental, public interest, and labor organizations that is concerned with the safety of ship ping and cleaner oceans. To achieve its objectives, the IMO has promoted the adoption of some 30 c onventions and protocols, and has adopted well over 700 codes and recommendations concerning maritime safety, the prevention of pollution, and related measures.



### 28

## 1.5 Regulatory Analysis

This rule is economically signi ficant under Executive Order 12866.

This report presents an analysis of costs and benefits from this rule. These cost estimates would likely differ from future costs due to changes in technology, installation, and implementation efficiencies that may take place in industry. We expressed costs in constant 2007 dollars, which is the same as the NPRM RA. This analysis covers a 10- year period covering the phase-in time for th e change from ballast management through exchange to management via a performance standard.

29

# 2 Population Affected

This chapter presents the description of th e population affected by the FR, data sources, and the estimation of the fleet growth over the period of this analysis.

As described in the previous chapter, this FR will affect vessels, U.S. and foreign, that operate in the U.S waters, 13 

### are bound for ports or places in the U.S., and are equipped with ballast tanks. These vessels are require d to install and operate a USCG approved BWMS before discharging ballast water into U.S. waters. The FR includes the following vessel exemptions (pleas e see the FR, sections 151.2015 and 151.2020, for more information on exemptions): (1) Department of Defense or Coast Guar d vessels subject to the requirements of section 1103 of the Nonindigenous Aquatic Nuisance Prevention and Control Act as amended by the National Invasive Species Act, or any vessel of the Armed Forces, as defined in the Federal Water Pollution Contro l Act (33 U.S.C. 1322(a)) that is subject to the “Uniform National Discharge Standards fo r Vessels of the Armed Forces” (33 U.S.C. 1322(n)); (2) Warship, naval auxiliary, or other ve ssel owned or operated by a foreign state, and used, for the time being, only on governme nt non-commercial service. However, each such foreign state shall ensure that such vessels act in a manner consistent, so far as is reasonable and practicab le, with this subpart; (3) Crude oil tankers engaged in coastwise trade; (4) Vessels that operate exclusively within one Captain of the Port (COTP) Zone. (5) Seagoing self-propelled vessels that operate in more than one COTP Zone, do not operate outside of the EEZ, and are (i) less than or equal to 1600 Gross Register Tons; or (ii) less than or equal to 3000 Gross Tons (Inte rnational Tonnage Convention); (6) Inland (Non-seagoing) vessels; (7) Vessels that take on and discharge ballast water exclusively in one COTP Zone; (8) Vessels in innocent passage; and (9) Vessels that use only water fr om a public water supply, meeting the requirements of the Safe Drinki ng Water Act as ballast water.



## 2.1 Overview of Data and Sources

The primary source of data used in this analys is is the Marine Information for Safety and Law Enforcement system (MISLE) and Ba llast Water Reporting Forms (for 2007) submitted to the National Ballast Information Clearinghouse (NBIC). MISLE is the USCG database for information on vessels characteristics, arrivals, casualties, and inspections. This database presents data from 2002 to present and utilizes the SQL Sequel Software interface for the database searches. The Smithsonian Environmental

13 U.S. waters means waters subject to the jurisdiction of the United States as defined in 33 CFR 2.3, including the navigable waters of the United States. For 33 CFR Part 151, subpart C and D, the navigable waters include the territorial sea as extended to 12 na utical miles from the baseline, pursuant to Presidential Proclamation No. 5928 of December 27, 1988.



### 30

### Research Center (SERC) administers the NBIC. We present a descriptio n of the data used and their sources in th e following discussion.

Number of U.S. vessels affected by the rule

We estimated the U.S. population affected by this rule, based on the number of vessels in the MISLE database for the year 2007. The U.S. population includes only active vessels.

Annual arrivals

We used this data to determine the vessel’ s origin and the distinct routes the vessel typically transit

. We used the routes to differentia te between coastwise and non-coastwise (oceangoing) 14 

### vessels. Both MISLE and the NBIC data base provide the last port of call (and country). However, the last port of call is not necessarily the source of ballast water. Vessels that travel between two U.S. ports ma y discharge ballast that originated outside the EEZ and within 200 nautical miles off shor e. The NBIC database provides the source for ballast water. Vessels on U.S. voyages that obtained ballast prior to their first U.S. arrival were entered into the database and included in the estimates of BWM and BWD standards costs.

Average total ballast capacity

We used this data to determine the average volumes (in m 3 

### ) of ballast water that a vessel needs to exchange and the equipmen t necessary to perform the exchange

. We obtained data from Ballast Water Reporting Forms submitted in 2007 to the NBIC. We then compared these average volumes of ballast water for each vessel type (Appendix A) to the data in the BWM RA (USCG, 2004). From these data it was determined that mean ballast water capacity ranges from 1,700 m 3 

### (fishing vessels) to approximately 215,000

m 3 

### (large tankers).

Vessel service and capacity or size

We used this data to determine the excha nge amount (empty-refill or flow-through) and equipment cost to complete the BWE information in Appendix B. The NBIC database provides the IMO number (a unique vessel id entifier) for each vessel. The IMO number was cross-referenced with data from the MISLE (which used the Lloyd’s Register of Shipping 2002 ) and database to determine vessel service. We identified distinct types of cargo or passenger services that could feasib ly conduct ballast exch ange. These services were further delineated by 20-foot equiva lent units (TEU) for containerships or deadweight tons (DWT) for all other services , yielding 22 distinct vessel types and sizes of vessels that would be subj ect to this rulemaking. The type of exchange utilized by the

14 Vessels are deemed to be “coastwise” when they operate exclusively with in the U.S. Exclusive Economic Zone (EEZ), which is shipping within 200 nautical miles of U.S. coastal waters. “NonCoastwise” vessels are those that tr avel outside the EEZ, with normal operations is to and from foreign ports.



### 31

### various vessel types was determined from the NBIC data. Although there are trends associated with vessel type, some types and even some specific vessels use both the empty-refill and the flow-through methods.

Vessel ballast pump capacity

We used this data to determine the ballast wa ter system maintenance cost as a function of total capital cost for a ballast water system

. Herbert Engineering Corporation (HEC) developed information based on personal comm unications with members of the marine industry (e.g. equipment manufact urers) and vessel specifica tions. Ballast water system’s pump capacities range from 250 m 3 

### /hour for small containerships to 6,500 m 3 

### /hour for large liquefied natural gas (LNG) carriers and tankers.



## 2.2 Description of the Mari time Transportation Industry

A diverse group of businesses comprises the ocean transportation industry. Containerships, general cargo vessels, tanke rs, and dry-bulk carriers dominate the deepsea cargo carrying fleet. Added to this lis t are specialized vessels carrying commodities ranging from flammable gases to vehicles to passengers. Vessels pump ballast water, distribute it throughout the vessel, and discha rge it from vessels to achieve acceptable conditions of stability, list, trim, and longitu dinal strength. Cargo operations may change the required quantity of ballast water.

The U.S. shipping industry is a net importe r. In 2004, imports totaled more than 957 million tons while exports were 350 million t ons (MARAD 2005). Over the 5-year period from 2000 to 2004, import tonnage increased 18 percent while exports remained flat. This means that the majority of vessels arrivi ng at U.S. ports arrive laden, and thus do not need to discharge large amount s of ballast. Containerships are also much more heavily laden inbound to the U.S. than outbound. On e exception to this general trend are shipments of grain in bulk carriers to Asia.

Ocean shipping operations fall into two broa d categories: tramp shipping and liner service. Tramp shipping provides convenient, timely, and economical transportation of a broad variety of raw materials and finished goods necessary to a global economy. Tramp vessels contract for particul ar cargoes on routes that vary from voyage to voyage. These vessels provide excess capacity along establis hed trade routes and lo w-cost transportation for agricultural goods and many natural (crude oil, timber, ores, mineral products) and manufactured (petroleum, cement, steel, fertili zers) raw materials. In this sector, it is common for all of the cargo on board to belong to a single owner and to be loaded and off-loaded at individual ports. Tankers and dry bulk carriers are vessel types that typically operate on the spot market. 15 

### In contrast, liner-service ve ssels operate on set routes and on fixed schedules. They commonly carry a vari ety of cargoes, the majority of which are

15 A spot market is one in which commodities, such as grain, gold, crude oil, or computer chips, are bought and sold for cash and delivered immediately. For example, the ownership of crude oil onboard a tanker may change several times during a single voyage.



### 32

### finished goods and cargoes belonging to ma ny different cargo owners. In this sector, timely service is critical to a successful operation, and the ship ping company typically has a large traffic department responsible for generating the cargo business to fill the company vessels. General cargo and containerships are typical vessel types in this sector.

Vessels in tramp service, moving shipload lots of cargo from one port to another, travel with a minimum of ballast and a maximum of cargo in order to maximize revenue generated by the voyage. After off-loading it s cargo, the vessel typically takes on ballast and travels to a different port to load new cargo bound for yet a different port. Thus, these vessels routinely discharge all of their onboard ballast at the port in which they load cargo. Liner-service vessels, by contrast, travel between por ts with a combination of cargo and ballast, therefore pumping small volumes of ballast in response to changes in cargo distribution.

Prior to BWM requirements, it was unlikely that all ballast water in a particular tank on a liner-service vessel would have originated in a single port, let alone all the ballast water aboard the vessel. Current operations and requi rements make the contents of a particular tank much more likely to come from the same source.



## 2.3 Vessel Types and Ownership

We grouped vessels by service and size using a similar procedure as in the BWM RA (USCG 2004). Data developed by the USCG prov ided the baseline for the vessel types. We identified each vessel in Lloyd’s Register of Ships through the seven-digit IMO number and recorded the vessel type reported by Lloyd’s Register of Ships for each vessel (Table 2.1). We further divided bul k cargo vessels and tank vessels into subcategories by dead weight tonnage (DWT ) according to commonly used industry size ranges (Hunt and Butman 1994). We also pl aced the largest of these vessels into subgroups according to their ability to navigate the Panama and Suez Canals. We grouped container vessels into six subgroups based on 20-foot equivalent unit (TEU) capacity and their ability to transit the Panama Canal. 16

16 Panama Canal operations are such that vessels longer than 294 meters or wider than 32.2 meters are unable to pass through the locks.



### 33Table 2.1 Vessel Type Definitions

Vessel Type (this analysis) Ship Type (Lloyd’s Register)

Bulk carriers— Handy Panamax Capesize Ore/Bulk/Oil Carriers Bulk Carriers Cement Carriers Great Laker Heavy Load Carrier Limestone Carrier Ore/Oil Carrier Sand Carrier Wood Chip Carrier Tank ships— Handy Handymax-Aframax Suezmax VLCC a ULCC b Fruit Juice Tanker Oil Tanker Products Tanker Shuttle Tanker Tanker Vegetable Oil/Wine/Beer Tanker Chemical carriers Chemical Tanker Gas carriers Liquefied Gas Carrier Liquid Petroleum Gas (LPG) Tanker Liquid Natural Gas Tanker Feeder Feedermax Handy Subpanamax Panamax Postpanamax Containerships

Passenger ships Passenger Ferry Passenger Ship General cargo vessel General Cargo Deck Cargo Ship Refrigerated Cargo Pallets Carrier Other Specialized Cargo RORO RORO Cargo Ferry c RORO Cargo with Lo/Lo Access d RORO Cargo/Vehicle Carrier Passenger RORO Car Ferry Combination vessel Bulk Carrier + Vehicle Decks Passenger/General Cargo General Cargo with RORO Facility Containership with RORO Facility Mobile Offshore Drilling Units (MODUs) Integrated Tug Barges (ITBs) Fishing Vessels Fishin g Catching Vessels Processing Vessels Charter Fishing Vessels Fishing Support Vessels Offshore Drilling Vessels (OSVs)
a. Very Large Crude Carrier b. Ultra Large Crude Carrier c. RORO is a vessel with roll-on, roll-off access



### 34d. Lo/Lo is a vessel with lift-on, lift-off access


### As shown in Table 2.2, we grouped vessels by size and service into one of 22 vessel types based on data from Lloyd’ s Register of Ships and MISLE database. We categorized vessels according to these classifications developed in the BWM RA (USCG 2004) to more accurately estimate costs based on pump capacities, which vary by vessel type and size. 17 

### (See Appendix A)

We have not included the following vessels in the affected population due to the FR exemptions: (1) Coastwise (Non-Seagoing) vessels that are less th an or equal to 1600 Gross Register Tons; or less than or equal to 3000 Gross Tons (International Tonnage Convention); (2) Inland and Great Lake s (Lakers) vessels; and (3) Crude Oil Tankers engage d in coastwise trade.

17 Two tanker categories are renamed to agree with current industry practice. “Handymax” is changed to “Handymax – Aframax,” since this group reflects tankers from Handymax to Panamax to Aframax size, and the group previously described as “Panamax” is renamed “Suezmax.”



### 35Table 2.2 Potential vessels affected by BWD Standards

Type of Vessel Classification Criteria a Vessels Operating in U.S. Waters (2007)

U.S. Vessels Foreign Vessels Total Number of

Vessels

Bulk carriers
Handy <50,000 DWT 11 1,050 1,061

Panamax 50,000-80,000 DWT 6 509 515
Capesize >80,000 DWT 0 46 46
Tank Ships
Handy b <35,000 DWT 10 116 126
Handymax-Aframax 35,000-120,000 DWT 17 709 726

Suezmax 120,000-160,000 DWT 7 100 107

VLCC 160,000-320,000 DWT 4 154 158

ULCC > 320,000 DWT 0 16 16
Container ships

Feeder <500 TEU 23 39 62

Feedermax 500-1000 TEU 1 51 52
Handy 1000-2000 TEU 26 126 152
Subpanamax 2000-3000 TEU 52 172 224

Panamax >3000 TEU b 21 174 195
Postpanamax >3000 TEU c 30 272 302

Other vessels
Passenger ship All sizes 138 129 267

Gas carrier All sizes 6 118 124

Chemical carrier All sizes 23 513 536

RORO All sizes 66 321 387

Combination vessel All sizes 131 22 153
General cargo All sizes 47 258 305
Fishing Vessels All sizes 83 16 99

Other Offshore and Coastal Vessels All sizes 757 48 805

Total 1,459 4,959 6,418

a. Vessel classificati ons source: USGC (2007) b. Vessel length and beam within Panama Canal limits. c. Vessel length or beam exceed Panama Canal limits.



### 36

### This rulemaking is consistent with the IMO BWDS under the International Convention for the Control and Management of Ship’s Ballast Water and Sediments (also known as BWM Convention) of February 2004. For th e purposes of this RA, we consider the bottom-line costs of this rulemaking for U.S. vessels 18



### . In order to estimate the cost associated with BWMTS on the U.S. fleet, we needed to develop the range of technologi es that may be available and the unit costs of these technologies. We assume that there will be a broad market for the new BWMS that includes both U.S. and foreign vessels, t hus improving the range of technologies available and the cost effi ciencies of production.



## 2.4 Fleet Growth and Makeup

We estimated the U.S. fleet growth rates fo r the various vessel t ypes using the following data sources: U.S. Department of Trans portation (MARAD), Clarkson Research Service and the U.S. Coast Guard MISLE System Database. Additional details of the U.S. and world fleet growth and removal rate calc ulations are presented in Appendix A.

We extracted the number of affected vessels from the MISLE database to provide a baseline fleet size for year 2007. In projecti ng fleet growth, we assu med that there would be no optimization of the fleet for U.S. traffi c. That is, we assumed that all vessels involved in international tr ade will be built to both U.S. and international BWDS requirements.

Table 2.3 shows the assumed gr owth and removal rates form ing the baseline case. We estimated the number of new bu ilds each year by adding the number of vessels removed to the number of vessels needed to achieve the net growth rate.

18 See appendix D for cost estimates of foreign vessels projected to call in U.S. waters during the 10-year period of analysis.



### 37Table 2.3 U.S. Fleet Growth and Removal Rates

Type of Vessel Net Growth Rate Removal Rate 19

Bulk carriers Handy -1.24% 2.0% Panamax -1.24% 2.0% Capesize -1.24% 2.0% Tank ships Handy 2.58% 1.0% Handymax-Aframax 2.58% 1.0% Suezmax 2.58% 1.0% VLCC 2.58% 1.0% ULCC 2.58% 1.0% Container ships
Feeder 1.99% 2.0% Feedermax 1.99% 2.0% Handy 1.99% 2.0% Subpanamax 1.99% 2.0% Panamax 1.99% 2.0% Postpanamax 1.99% 2.0%
Other vessels Passenger ship 3.36% 2.2% Gas carrier 20 2.58% 2.0% Chemical carrier 21 1.99% 2.2% RORO 2.59% 2.2% Combination vessel 2.65% 2.0% General cargo 22 1.99% 2.2% Fishing Vessels 3.54% 2.2% Other Offshore and Coastal Vessels 4.87% 3.7%

19 Removal rates for U.S. fleet is the same as the estim ated removal rate for the world fleet, due to the fact that removal rates are related to vessel age and market conditions.
20 Same as tank ships
21 Same as container ships
22 Same as container ships



### 38

# 3 Ballast Water Management Costs

Onboard ballast water management systems (B WMS), which are intended to eliminate or greatly reduce the transmittance of live NIS, are an emerging technology. Manufacturers have derived some systems from existing sh ore-side water treatment processes, while others involve innovative tech niques and technologies. We ha ve analyzed the technology, costs, and effectiveness of a va riety of systems. Much of th e present analysis stems from previous work and information in papers submitted to MEPC 53. Many of the manufacturers developing alternative BWMS have provided direct feedback on costs, capabilities, and testing for their systems. Based on analysis of this information, it appears that the technology s hould be available for installation onboard vessels to meet the Alternative 2 (BWD-2) standard, the IMO re gulation D-2, by the 2013 initial implementation date.

In this RA, we describe alternative BWMS as generic treatment processes, avoiding discussion of specific manufacturers and systems. This approach accommodates situations in which multiple vendors may aris e or have arisen for a specific treatment process. The object of this analysis was to survey the marketplace and describe systems currently under development, including the co sts and capabilities of those systems. Many of the individual systems are patented or ha ve patents pending. We have evaluated the following six different treatment (management) processes in detail: Chlorine Generate, Chemical Apply, Filter & Radiat e, Deoxygenate, Ozone Generate, and Heat Treatment

. See Table 3.1 for a description of these proces ses, including some of their characteristics and capabilities. We have selected these processes because some vendors are actively developing and testing systems that operate based on the indi cated treatment process.

The sources of information regarding the treatment processes are as follows:

1. MEPC 53/2/14 by The United States, dated 15 April 2005; 2. MEPC 53/2/16 by Norway, dated 15 April 2005; 3. MEPC 53/2/6 by Sweden, dated 15 April 2005; 4. USCG supplied system information; 5. Herbert Engineering Corporation (HEC ) updated the information for the BWMS technologies and added additional information including updated assessments of capabilities of the system, ab ility to meet stricter standards, testing carried out and planned, cost estimates for installa tion and operation, and effect on tank corrosion. This update included research on current BWMS and manufacturers. Some information on current BWMS t echnology and system capability was more complete and of greater use than others; and
6. Technical information, brochures, tec hnical papers, discussions, and other information provided by manufacturers. Table 3.1 describes the generic BWMS proces ses analyzed in this RA. For each, we determined when treatment is applied in the ballast cycle, the time required for treatment to achieve the desired lethality, and the eff ect on corrosion in ballast tanks. The effect on

39

### corrosion is included because it is a significant concern for ve ssel owners, and this impact on a BWMS might influence their choice.

40Table 3.1 Ballast Water Treatment Processes

Treatment

Process Method of Treatment When Applied Time for Lethality (2) Effect on Corrosion

Chlorine Generate Use electrolytic cell to generate chlorine and bromine that act as biocides. Next, sodium sulfate neutralizes the ballast water prior to discharge. As long as free chlorine exists in the tank, biocide will be active so dosage can be adjusted to keep biocide always active. At uptake and neutralize at discharge Hours High dosage levels promote steel corrosion

Chemical Apply Mix proprietary chemicals with the ballast water in metered dosage rates at intake to kill living organisms. Chemicals degrade over time so ballast will be safe to discharge. At uptake via eductor 24 hrs High dosage levels promote steel corrosion

Filter & Radiate Filtration of the incoming water, usually with self-cleaning 50 micron filters, in parallel with discharge of filtrate to the waters where intake takes place. Ballast water exposed to a form of radiation, such as UV energy or other (AOT to generate hydroxyl radicals), to kill smaller organisms and bacteria. At uptake for filter & UV and at discharge for UV At treatment No effect

Deoxygenate Mix inert gas generated onboard with the ballast water, either by a venturi eductor or by bubbling from pipes in the tanks. This removes oxygen from the water and lowers pH, therefore killing the living organisms. This process requires the atmosphere in the ballast tank be maintained in an inert condition. At uptake for some systems and in tanks for others 4 to 6 days Relatively less corrosive

Ozone Generate Ozone is generated onboard and acts as a biocide. It is applied during the ballast pumping process by eductor either at uptake or discharge. It can be combined with filtration or other methods of
treatment. At uptake for some systems and at discharge for others Up to 15 hrs Limited effect as ozone has short life. If treated at discharge, no effect

Heat Treatment 23 Heat ballast water to a predetermined temperature (such as over 42 deg C) for a period of time to kill living organisms. Source of heat is main engine or oil-fired boiler or water heater. During voyage and in port for vessels with large boilers. Hours to several days Heat promotes corrosion

23 We did not consider the Heat Treatment process in the analyses of costs due to the uncertainties related to process effectiveness and potentia l system design and operation (see detailed discussion in Section 3.1)



### 41

## 3.1 Descriptions of the BWMS a nd Assessment of Meeting the IMO Standard 24



### All analyzed treatment processes have, at some point, been tested—many on full-size prototypes on vessels. All of the systems have had biological testing of effectiveness to varying degrees, and all of the processes ha ve a proven ability to kill living marine organisms. We consider all of these processe s to be systems that can be made effective for some flow rates and levels of trea tment based upon industry information, publicly available test results, and Herbert Engineer ing Corporation (HEC) industry experience with marine equipment. Many of the systems need further optimization to determine the size of the components, the power requirement s (such as for UV), or the lethal dosage and the flow rate that can be sust ained for a given equipment size.

Killing small aquatic life with chemical biocides based on chlorine or bromine is a proven technology used extensivel y in shore-side water trea tment. We can adjust the degree of lethality by changing the dosage ra te. However, the main concern with these systems is making the water suitable for disc harge in order to minimize harm to the receiving waters. This can be accomplished by retaining the ballast onboard for a few days and allowing the treatment chemical to degrade ( Chemical Apply Treatment, as claimed by manufacturer) or by ad ding a neutralizing substance ( Chlorine Generate ). These systems reach effectiveness in hours. The processes that kill the organisms consume the chemical biocide. The dosage rate is set at a level that will leave a small residual in the tank, which can be effective in killing any remaining organisms. Further dosing can be accomplished if the residual is consumed. Setting the correct dosage rate is an important consideration in the eff ectiveness of these types of systems.

Treatment processes that deoxygenate the ballast water have a similar level of effectiveness. We base this rating on r ecent published reports on the effectiveness of testing a full-size un it on a bulk carrier. 25 

### The deoxygenation process occurs either at uptake by mixing inert gas with the water by an eductor or by bubbling the gas into the

24 New information about additional Ballast Water Management Systems was available after the completion of the NPRM RA. We have not incorporated these new findings in our analysis due to the complexities of the calculations used in estimating costs per system type, which would require an extensive re-estimation of all costs associated with this RA. The new systems available are Hydroyclone – Electrochlorination and Menadione or Vitamin K.

The Hydroyclone – Electrochlorination system utilizes two methods to optimize the reduction of living organism in ballast water. The system’s initial operatio n (Hydoyclone) is intended to filter the in-coming ballast water by forcing the water into a high velocity rotational centrifugal motion resulting in the separation between particles (organisms) and water. Then the Electrochlorination process is introduced to either the particles and or the water to maximi ze the neutralization of any living organisms.

Menadione or Vitamin K (proprietary name Seakleen), is a natural product that is used as a disinfectant for the neutralization of living organisms in ballast water. Method of use is as a chemical compound (powder or liquid) that is poured into the ballast tank.

25 These systems require an inert gas generator and may require installation of a closed vent piping system for the ballast tanks, plus additional piping if the gas is distributed by a bubbler system.



### 42

### ballast tanks by a dispersed array of bubbler pipes. The hypoxic inert gas will drive the oxygen out of the water. The presence of carbon dioxide in the inert gas stream will also significantly lower the pH of the water. Th e combination of low oxygen levels and low pH is toxic to most marine organisms. Ho wever, the process takes several days to complete and the ballast water needs an inert atmosphere fo r the entire period. Thus, the ballast tanks need to connect to a central in ert gas system with a closed venting system similar to cargo tanks on tankers. This requi res modification of the tanks in addition to the installation of a system to apply the iner t gas to the ballast water. According to the research findings, when the ballast water is discharged, the hypoxic and low pH ballast water quickly returns to normal levels upon mixing with the receiving waters. According to research, the time required to achieve the de sired kill rates is a bout 3 to 6 days, which may pose a problem for vessels on short routes . Additionally, some organisms, such as spores, are more resistant to this treatment method, particularly if the oxygen levels and pH levels are not as low as intended.

Treatment processes based upon Filtration and Radiation are considered capable of meeting the BWD-2 standard, but testing done to date shows it may not be as effective as some of the other processes.

For many of these systems, the filtration design can remove organisms above 50 microns in size, and filtration takes place at uptake w ith the filtrate returned to the source waters. One vendor proposes a portable system for balla st discharge. For this design, the filtrate needs to be disposed of ashore or retained onboard for disposal in the deep ocean. Some of the problems linked to filtration systems are that excessive sediment can overload them and some organisms can slip through filters because of th eir shape. Smaller organisms require a secondary treatment, such as ultra violet (UV) radiation or processes that use photocatalytic effects to create hydr oxyl radicals. Both UV and hydroxyl radicals damage cells so that life is no longer sustaina ble. These technologies are well established; for example, UV is widely used in wa ter purification. However, UV and other electromagnetic radiation-base d treatments are sensitive to the transmittance capacity of the water and can be less e ffective in cloudy water and wh en insufficient wattage is applied. These systems require no residence time in the tank for the treatment to be effective.

A fifth treatment process is the generati on of ozone onboard. The systems for this treatment are less established compared to the other treatment processes considered. Application of the correct dosage depends on the condition of the incoming water and, therefore, these systems require complex cont rols and an ozone generator. Additionally, because ozone is a hazardous gas, the pro cess becomes more complicated. Residuals, such as bromine-based compounds, may persist in the discharged water. Ballast residence time is not a concern with these types of syst ems because some of the procedures work at discharge only and others require onl y hours of residence time in the tank.

While the use of heat as a mean to steri lize water is well documented and utilized extensively onshore, there is uncertainty about whether su fficient heat is available

43

### onboard to meet the required temperature and ma intain it for the requisite period of time. These uncertainties include:

(1) The degree to which additional heat generators are needed to achieve the required heat; (2) Whether sufficient residence time is available at the required temperature; (3) The very large differences in allo wable ballast flow rate depending on the temperature of the incoming water; (4) The significant impact of ambient conditions; and (5) Whether heat is only available at sea when the main engine is under full power.

The Heat Treatment system may require operation while underway if there is insufficient heat available in port 26 

### to achieve the required temperat ures to kill the necessary number of organisms during ballast water loading. Th is system may not be practical except in circumstances in which recirculation of balla st water between the heating elements and the individual tanks is feasible a nd desirable. We did not consider Heat Treatment in the analyses of costs and performance described be low because of the uncertainties identified above. Of particular concern is the large range in capital and operating costs, depending on the heat sources onboard the vessel and wh ether additional heat sources are necessary to achieve a fully functional heat treatment system on a variety of vessels. This process did not appear to offer lower costs or mo re effectiveness than competing treatment processes; therefore, we will not discuss this option further.

We evaluated the following treatment proce sses and found that they have well-defined systems under development with the poten tial to meet the IMO standard: Chlorine Generate, Chemical Apply, Fi lter & Radiate, Deoxygenate and Ozone Generation. These processes are included in the analysis of their suitability for the various categories of vessels and the costs to acquire , install, and operate them.

26 The source of heat will normally be the main propulsion system. This system may not be active in port or not operating at a level sufficient to provide heat to the ballast water treatment system.



### 44

## 3.2 Applicability of BWMS to Vessel Types

In Table 3.2, we evaluated twenty-two differe nt categories of vesse ls for this project.

Table 3.2 Suitability of BWMS to Vessel Type

Vessel Category Vessel Size Range Chlorine Generate Chemical Apply Filter & Radiate Deoxygenate Ozone Generate

Bulk carriers Handy < 50,000 DWT Yes Yes Yes Yes Yes Panamax 50,000–80,000 DWT Yes Yes Yes Yes Yes Capesize > 80,000 DWT Except la rge Yes Except large Yes Yes Tank ships Handy < 35,000 DWT Yes Yes Some systems Yes Some systemsHandymaxAframax 35,000–120,000 DWT Yes Yes Some systems Yes Some systems Suezmax 120,000–160,000 DWT Yes Yes Some systems Some systems Some systems VLCC 160,000–320,000 DWT No, too large Yes No, too large Some systems Some systems ULCC > 320,000 DWT No, too large Yes No, too large Some systems Some systems Containerships
Feeder < 500 TEU Yes Yes Yes Yes Yes Feedermax 500–1000 TEU Yes Yes Yes Yes Yes Handy 1000–2000 TEU Yes Yes Yes Yes Yes Subpanamax 2000–3000 TEU Yes Yes Yes Yes Yes Panamax > 3000 TEU Yes Yes Yes Yes Yes Postpanamax > 3000 TEU Yes Yes Yes Yes Yes
Other vessels Passenger ship All sizes Yes Yes Yes Yes Yes Gas carrier All sizes Except large Yes Except large Some systems Some systems Chemical carrier All sizes Except large Yes Except large Some systems Some systems RORO All sizes Yes Yes Yes Yes Yes Combination vessel All sizes Yes Yes Yes Yes Yes General cargo All sizes Yes Yes Yes Yes Yes Fishing Vessels All sizes Yes Yes Yes Yes Yes Other Offshore and Coastal Vessels All sizes Yes Yes Yes Yes Yes

Note: For tankers, chemical carriers, and gas carriers, some systems are not suita ble, either because they are not designed to be installed in a hazardous atmosphere such as a tank er pump room or because they are not produced at the high capacity required for large tankers.


## 3.3 Acquisition and Installation Costs

45

### Manufacturers have supplied estimates of th e acquisition and installation costs for the alternative BWMS. Acquisition costs include the following: costs for designing the system, license fees, regulatory approvals, cost to purchase equipment, and costs for developing a specification suitable for installa tion of the unit on the desired vessel. We also included in the cost estimate the necessa ry changes to existing piping, equipment, arrangement, and structure. For new vesse l construction, the information would be provided to the shipyard de sign staff so that they c ould properly incorporate the alternative BWMS into the ballast system a nd machinery space. Inst allation costs include transporting the system to the installati on location, providing service technicians, surveying by regulatory agencies, carrying out required modifications to the vessel, installing the system onboard, and testing. So me of the less intrusive systems can be installed with the vessel in service, but ma ny systems require the vessel to be out of service for several days to make the necessary modifications. The Chlorine Generate, Chemical Apply, Ozone Generate at discharge (if c ontainer mounted) and Filter and Radiate are easy to install on smaller vessels. The Deoxygenate systems would require a modification to the ballast tank venting system and the vessel to be out of service for several days or weeks. Based on information from system developers and manufactures, these systems do not require the vessel to be drydocked for installation.

Costs associated with out-of-service time are not included in the installation cost estimates because we assumed the work would be completed either with the vessel on its normal drydocking schedule or during other regu larly scheduled maintenance or repair out-of-service period. Installa tion costs would vary dependi ng on the geographic location of the modification.

In general, the cost of incorporating an al ternative BWMS into a new vessel would be lower than an existing vessel because the re quired space and interface connections for the ballast and electric power systems can be de signed in the most efficient manner without having to modify the vessel. However, the new construction designs and building cycle takes several years. Problems may arise if industry is not provided adequate implementation time to incorporate the systems into the initial design of some new vessels; therefore, a retrofit w ould be the only feasible option.

Because this type of specialized equipment is difficult to independently price, the cost analysis relies largely on manufacturer provided data. Ma nufacturers supplied costs for equipment and installation. We estimated installation costs if unavailable from the manufacturers. Table 3.3 shows the high and low ranges of costs to acquire and install systems based on four nomina l capacities of systems.

46Table 3.3 Installed Costs ($000) per Vessel for Typical BWMS System Size (m3/hr) Costs for each
process Chlorine Generate Chemical Apply Filter & Radiate Deoxygenate Ozone Generate

250 Acquire 250 200 175-250 100-400 200-250 Install, High 100 100 100-110 100-150 100-125 Install, Low 50 50 50-60 65-100 50-65

750 Acquire 350 225 390-450 300-400 375-400 Install, High 150 150 150-175 150-250 150-200 Install, Low 75 75 75-100 100-150 75-125

2,000 Acquire 500 275 650-700 400-625 650-750 Install, High 200 200 325 220-450 250-400 Install, Low 100 100 200 120-250 125-250

5,000 Acquire NA 400 NA 512-900 1,150-1,825 Install, High NA 250 NA 255-750 375-700 Install, Low NA 125 NA 150-425 200-400 Source: Herbert Engineering Corporation. Note: We indicate a range of costs for a process when several manufacturers for that process were part of this an alysis. We provide a sing le cost where a single manufacturer supplied data for that system. NA m eans the system is not available in that size.



### We applied the above costs to the 22 categorie s of vessels evaluated in this analysis. Because this work occurs at a wide variety of ports, we considered it suitable to use an average installed cost (average cost of acquisition a nd installation).

Tables 3.4 provides the average ballast pum ping capacities for each category of vessel and state the costs for the systems of the in dicated capacities (using th e data in Table 3.3) for the U.S fleet. Installed costs vary, depe nding on the technology utilized and the cost of the equipment to implement that process. Ho wever, variations in cost are also related to a process’s development stage.

47Table 3.4 Estimated Average Installed Cost ($000) for the U.S. Fleet by Vessel Category and BWMS

Vessel Category Est. Ballast Pumping Capacity (m3/hr) Chlorine Generate Chemical Apply Filter & Radiate Deoxygenate Ozone Generate

Bulk carriers Handy 1,300 764 419 801 837 842 Panamax 1,800 668 459 961 1007 1062 Capesize 3,000 867 533 641 1267 1,608 Tank ships Handy 1,100 556 403 737 769 754 Handymax/ Aframax 2,500 725 504 750 1061 1,292 Suezmax 3,125 894 541 641 1167 1,563 VLCC 5,000 NA 650 NA 1650 2,525 ULCC 5,500 NA 615 NA 1488 2,375 Containerships
Feeder 250 350 300 360 550 375 Feedermax 400 395 323 440 580 443 Handy 400 395 323 440 580 443 Subpanamax 500 425 338 462 563 488 Panamax 500 425 338 462 563 488

Postpanamax 750 500 375 625 650 600
Other vessels Passenger ship 250 350 300 360 550 375 Gas carrier 4,800 NA 638 NA 1612 2,433 Chemical carrier 600 455 353 546 620 533 RORO 400 395 323 440 580 443 Combination vessel 400 395 323 440 580 443 General cargo 400 395 323 440 580 443 Fishing Vessels 250 350 300 360 550 375 Other Offshore and Coastal Vessels 325 319 258 346 508 347 Source: Herbert Engineering Corporation. Note: The costs are derived from HEC information in Table 3.3. Data in the table reflect the costs of both installation and operation for the US fleet only.



### 48

## 3.4 Operation Costs

The operational costs of a BWMS have se veral components. They are as follows:

1. Energy, usually electrical, to power the system. 2. Consumables utilized in operating the syst em. For some treatments, chemicals are consumed in the process. Others utilize lamps or filters that must be replaced periodically. The manufacturers for each process identified these. 3. Crew labor to operate the system. 4. Periodic maintenance and servicing of the system. 5. Replacing components as they wear out or become defective. 6. Other logistics, including trai ning and technical information.

The manufacturers supplied us with estimat es for the energy needs. Based on these estimates, we developed a nominal cost per cubic meter of pumped ballast. Manufacturers also advised us on the normal consumables expended in the operation of the system. For example, using this informa tion, we estimated the costs associated with chemical biocides on a cubic meter proce ssed basis. Some consumables (such as UV lamps) are required after a cer tain quantity of hours of operation. We converted these costs into per cubic meter costs utilizing th e pumping rate of the system. The cost of required crew labor was not a significant co st to manufacturers because most systems featured automatic controls in varying form s. We added all the di rect operational costs together into an order of magnitude cost pe r cubic meter treated. We evaluated the costs for four nominal system sizes. Table 3.5 incl udes the estimated direct operational costs per cubic meter treated, covering costs fo r energy, consumables, and labor.

Although not a direct cost of operation, the co sts for service technicians, maintenance, repair, and replacement of components can be the largest cost component of a BWMS. The BWMS generally contain many expensiv e components, as evidenced by the high acquisition costs, and many of these co mponents require servicing and periodic maintenance. Additionally, many components will require replacement over a vessel’s lifetime. As an estimating guide based on HEC in put, we assumed that half the initial cost of a system was associated with mechanic al and electrical co mponents that need maintenance, repair, and replacement over ti me. The other half focuses on design fees, license fees, structural elements, etc. Base d upon marine industry maintenance and repair experience, we have taken the annualized maintenance and replacement costs at 10 percent of the purchase cost for machinery per year.

To determine the maintenance costs per year for each management system, HEC averaged the different vessel category’s acqui sition costs in Tables 3.4, divided it by two to account for machinery and electrical equipment costs, and multiplied that figure by 10 percent to yield a net annualized maintenance cost of 5 percent of the initial cost per year. We then divided the estimated annual costs for the four nominal system sizes by the estimated annual ballast flow for each system equal to about 100 times the system flow rate to get the estimated annual maintenance cost per cubic meter of treated ballast. As can be seen, the maintenance and replacement co sts are larger than the direct operating

49

### costs. As expected from economies of scale, the maintenance and replacement costs per cubic meter treated get smaller as the system size increases because large systems cost less to buy and maintain pe r cubic meter treated.

Table 3.5 Operation Costs per Cubic Meter Treated by Management Process ($/m 3 ) System Size (m3/hr) Cost Component Chlorine Generate Chemical Apply Filter & Radiate Deoxygenate Ozone Generate

250 Direct Operation $0.02 $0.08 $0.05 $0.05 $0.05 Maintenance & Replacement $0.42 $0.33 $0.36 $0.17 $0.38

Total $0.44 $0.41 $0.41 $0.22 $0.43

750 Direct Operation $0.02 $0.08 $0.05 $0.05 $0.05 Maintenance & Replacement $0.23 $0.15 $0.28 $0.20 $0.26

Total $0.25 $0.23 $0.33 $0.25 $0.31

2,000 Direct Operation $0.02 $0.08 $0.05 $0.05 $0.05 Maintenance & Replacement $0.13 $0.07 $0.17 $0.13 $0.18

Total $0.15 $0.15 $0.22 $0.18 $0.23

5,000 Direct Operation NA $0.08 NA $0.05 $0.05 Maintenance & Replacement NA $0.03 NA $0.08 $0.12

Total NA $0.11 NA $0.13 $0.17 Source: Herbert Engineering Corporation. Note: NA means the system is not available in that size.



### Table 3.6 shows the total estimated operating costs per year for each category of vessels analyzed in this RA. We obtained these va lues by interpolating the data for total operational costs based on nominal systems sizes as given in Table 3.5, assuming the average pumping capacity for each vessel category as given in Tables 3.4.

50Table 3.6 Estimated Average Operational Cost per Cubic Meter of Ballast Treated by Vessel Category and Treatment Process ($/m 3 )

Vessel Category Chlorine Generate Chemical Apply Filter & Radiate Deoxygenate Ozone Generate
Bulk carriers Handy $0.21 $0.19 $0.28 $0.22 $0.27 Panamax $0.17 $0.16 $0.24 $0.19 $0.24 Capesize $0.13 $0.14 $0.18 $0.16 $0.21 Tank ships Handy $0.22 $0.21 $0.30 $0.23 $0.29 Handymax/Aframax $0.11 $0.12 $0.17 $0.15 $0.20 Suezmax $0.13 $0.14 $0.17 $0.16 $0.21 VLCC NA $0.11 NA $0.13 $0.17 ULCC NA $0.11 NA $0.13 $0.17 Containership Feeder $0.44 $0.41 $0.41 $0.22 $0.43 Feedermax $0.38 $0. 36 $0.39 $0.23 $0.39 Handy $0.38 $0.36 $0.39 $0.23 $0.39 Subpanamax $0.35 $0.32 $0.37 $0.24 $0.37 Panamax $0.35 $0.32 $0.37 $0.24 $0.37 Postpanamax $0.25 $0.23 $0.33 $0.25 $0.31 Other vessels Passenger ship $0.44 $0 .41 $0.41 $0.22 $0.43 Gas carrier NA $0.21 NA $0.13 $0.17 Chemical carrier $0.31 $0.29 $0.36 $0.24 $0.35 RORO $0.38 $0.36 $0.39 $0.23 $0.39 Combination vessel $0.38 $0.36 $0.39 $0.23 $0.39 General cargo $0.38 $0.36 $0.39 $0.23 $0.39 Fishing Vessels $0.44 $0.41 $0.41 $0.22 $0.43 Other Offshore and Coastal Vessels $0.43 $0.38 $0.40 $0.22 $0.42
Source: Herbert Engineering Corporation. Note: NA means the system is not available in that size.



## 3.5 Discussion

Cost Uncertainty

Several issues regarding the certainty of the estimations made for this RA merit discussion. Although significant progress has been made in the development of the systems able to meet the BWDS, these tec hnologies are in con tinual development and refinement.

We base all costs on manufacturer estimates fo r the prices they hope to receive for their equipment. The rigors of the competitive marketplace have not refined prices due to production efficiencies and competitive pressure s. Additionally, the ease of installation onboard vessels depends on the vessel ar rangement and its piping and machinery systems. Vessels within the same basic cate gory can have significant differences that would affect the ease of inst allation. The costs for individua l ships could vary widely

51

### from what is estimated for that category of ve ssel. Therefore, it is possible that estimated installation costs could vary with location or due to competition in the market place. Similar variance is possibl e for operating costs.

Approval Technology Testing

The technologies discussed in this RA will be subjected to the USCG BWMS approval process before being available in the market place. The USCG is es tablishing an approval program, including requirements for designing, installing, operating, and testing BWMS to ensure these systems meet required safe ty and performance standards. Currently, manufacturers are submitting BWMS designed to meet the BWDS. All indications are that there will soon be technologi es available on the market to allow vessels to meet this standard (see FR for detailed information on BWDS receiving appr oval). Nevertheless, testing is still an ongoing process as tec hnologies are adapted to the different vessel design, operations and envi ronmental conditions.

Time Frame for Implementation

There may be a shortage of equipment to implement BWMS on a large scale around the world in a short time frame. Because this is a new product, the specific components needed for this equipment are most likely not being manufactured today on the scale needed. Certainty about the requirements, te sting, and approvals is needed before companies will invest in the facilities for large-scale production. There may be a time lag of several years from the time there is significant certainty to justify investment until equipment is produced and delivered on a wide scale. Additionally, the time lag between technical development of the regulatory requi rements and enforcement of the regulation should be taken into consideration. Once the re gulatory regime is articulated and actual production and installation have begun, we consid er it relatively easy to install a system. The equipment for installation is often sim ilar to commercially available equipment and production can be increased to meet demand. However, any specia lized components may not be immediately available. The normal ve ssel repair industry can do the installation if it does not require special training or tools.

Safety Issues

The purpose of BWMS is to kill living or ganisms. The processes utilize chemicals, radiation, and equipment that create conditi ons that may be hazardous to human health. There is an existing regulatory environmen t onboard vessels and in industry regarding safety precautions and handling techniques fo r hazardous chemicals. We assume that any necessary modifications or speci al handling procedures will be resolved by individual vessels during the choice and installation of equipment. Manufacturers who use chemicals in the system ha ve proposed transporting and restocking chemicals onboard using only their trained service agents, not the vessel’s crew. Manuf acturers would also like to set up procedures for disposal of unus ed chemicals in the ev ent that the system on a vessel needs to be disabled or dismantled. Mo st of the BWMS are sealed processes, in which case the vessel’s crew would not handl e or apply the chemicals by hand. Sealed

52

### pipes transfer chemicals from the storage ta nks to the processing equipment. To prevent discharge of large amounts of hazardous chem icals during a vessel casualty, requirements are needed to ensure that the quantities onboard should be limited and that they should be stored in sturdy containers in a protected location.

Systems that employ radiation, such as UV-ba sed systems, require safeguards in place to ensure against human exposure to the UV a nd that users are aware of any special precautions needed for disposing of the UV la mps. Vessel operators should already be aware of these precautions as UV equipment is currently used onboard vessels for potable water sterilization. Chlorine generation syst ems have already been used onboard vessels on a small scale for eliminating fouling in ve ssel seawater cooling sy stems. With regard to the Deoxygenate process, in which the ballast tanks need to be inerted, tanks must be well-vented prior to personnel entering them . Tankers currently ha ve experience with inerted cargo tanks, but most dry cargo vessel cr ews have no such experience. If there are cracks in the ballast tank bulkhead, inert ga s may flow into adjacent spaces, including cargo holds or void spaces, posing a hazard to anyone entering those spaces. Good tank entry practice is to test the atmosphere in any enclosed space, such as a tank, for oxygen prior to entry. These procedures need to be rigorously applied onboard a vessel that employs a process utilizing inert gas. Overall, we believe the safety issues with regard to the operation of BWMS onboard vessels can be managed.

Environmental Concerns

BWMS that employ chemicals or generate ch emicals onboard need to be designed in a manner that ensures that no active biocides are discharged overboard. For many of the systems, the biocide has a s hort life and would degrade by th e time the vessel discharges ballast. Other manufacturers have determined that the discharged ballast water would have residual biocide and they have incorporated features in to their systems to neutralize the residual chemicals. This typically involves ad ding a neutralizing agent, which makes it safe to discharge ballast over board. Manufacturers that employ the Deoxygenate process have tested the effect of the hypoxi c and low pH water on the receiving waters and have determined that it dissipates with in a few meters of discharge. There are pending guidelines from IMO about the tes ting requirements for systems that employ active substances, and these requirements cover verification of the effects on the environment of discharging ballast water treated by these systems.

Effect on Corrosion in Tanks

BWMS processes have varying effects on the corrosion of steel in ballast tanks. Several systems have no effect, such as the ones that filter and irradiate the water. The systems that deoxygenate the water ac tually reduce corrosion in tanks because there is less oxidation of the steel at reduced oxygen leve ls (Tamburri and Ruiz, 2005). Furthermore, manufacturers indicate that because thes e processes do not fully remove all oxygen, anaerobic conditions do not exis t in the tanks; therefore, growth of anaerobic bacteria

53

### would not be promoted. Possible establishm ent of anaerobic conditions would be of concern because anaerobic bacteria are able to accelerate corrosion.

BWMS that apply chemicals such as chlori nes and ozone generall y create oxidants that can promote corrosion. If a tank is well-coated with a hard epoxy, there should be limited deleterious effects at the concentrations of chemicals required for ballast treatment. However, if tank coatings have deteriorate d, then we expect accelerated corrosion. In addition, if we increase dosage rates to meet stricter standards, corrosion will increase. The heat treatment process also promotes corro sion in ballast tanks. This is an effect well known to the marine industry because ballast tanks adjacent to heated oil tanks suffer from accelerated coating brea kdown and steel corrosion. Quality of coatings is an important consideration in adopting this system.

It is difficult to quantify the impact of these processes on corrosion before implementation of the systems or collection of actual corrosion data. We do not anticipate that corrosion will be a significant cost driver except, perhaps, in the case of the heat treatment system, and, therefor e, the effect of corrosion is not included in the cost analysis.

Zero Discharge as a Means of Meeting Alternative 5 Ballast Water Discharge Standard

The most effective way to stop the spread of NIS through BWD is by eliminating the discharge of ballast water c ontaining live organisms into U. S. waters. This solution is difficult to apply to all vessels because of the wide variety of vessels, cargoes, and the need of some vessels to discharge ballast in U.S. waters for safety reasons. Nevertheless, the primary strategy for eliminating the disc harge of live organisms is to discharge no ballast and, if the vessel has to discharge ballast , to take measures to ensure sterilization of the ballast. We have outlined some possible approaches in the following discussion.

Sterilized Ballast

There are several approaches to sterilizing ballast water for discharge in ports; however, none is without significant co st and many require some cha nge in vessel operations or investment in facilities and means of transp ort. Approaches to achieve sterile ballast include:

• Use fresh water for ballast : Clean fresh water taken from shore is one approach to ensure sterilization of ballast water. The principal difficult ies in using fresh water for vessels that normally load and discharge ballast are its cost and availability.

• Shore-based Treatment : Seawater ballast could be tr eated in a shore-based facility rather than onboard the vessel. A vessel co uld take on treated balla st or ballast taken on elsewhere could be discharged to a facili ty for treatment and disposal. Investment in widespread facilities for ballast treatment would cost millions of dollars, even at a regional level (URS/Dames & Moore 2000), and would most likely be paid for by

54

### fees to process the ballast . Considering the high cost of implementation, shoreside sterilization also appears to be a niche solution.

No Discharge of Ballast

Besides the sterilization of ballast water, the other alternative to obt ain zero discharge of live organisms is for vessels to avoid discharg ing ballast in ports or coastal waters. As discussed in this RA, many vessels have already adopted this policy for many of their U.S. ports calls, particularly the ports with the most stringent regulation of ballast discharge.

One approach is to change vessel designs to make vessels more multi-purpose so they can carry a larger variety of car goes. This would improve the possibility for backhaul cargoes. A zero discharge solution would en courage a new round of innovative solutions, but would no doubt also significan tly increase overall costs.

In evaluating the possibility of eliminating disc harge of ballast, we divide vessels into two primary groups: 1. Vessels that carry ballast and cargo: Vesse ls that normally carry a mix of ballast and cargo are the ones for which this approach is most practical. These vessels would normally not discharge or take on much ba llast in any port and might achieve zero discharge.

Vessels that normally carry a mi x of cargo and ballast are:

• Containerships

• RORO ships

• General cargo ships

• Combination ships

• Passenger ships

2. Vessels that carry ballast or cargo: So me vessel types carry full loads of cargo from port to port and sail from di scharge ports back to the load ing port in a ba llast condition. These vessels generally carry bulk cargoes, ei ther dry or liquid. Such vessels would suffer the most from a no discharge of balla st operating mode. The weight of ballast onboard when entering the loading port woul d reduce by the same weight the amount of cargo that can be loaded, since these vessels normally take on fu ll loads of cargo. This lost revenue represents th e cost of implementing a zero-discharge standard.

The vessels that carry eith er ballast or cargo are:

• Tankers

• Bulk carriers

• LNG ships

• Chemical carriers

55

### For these vessels, the quantity of ballast onboard for a normal sea passage is roughly 35 percent of the full load cargo weight. In good weather, it may be possible for these vessels to deballast as they approach the loading port to a state where the ballast weighs only 10 to 20 percent of the full load of cargo weight. In addition, vessels such as oil tankers and LNG carriers generally arrive at U.S. ports fully laden with cargo. Such vessels will normally not discharge ballast, but will take on ballast for the return leg, and thus could meet the zero-discharge standards for U.S. arrivals.

56

# 4 Ballast Water Management Systems Cost

In this chapter, the system costs developed in the previous chapter are applied to the affected population. The analysis covers a 10-year period, when the requirements for BWM first stipulate mee ting BWD performance.

We have estimated the number of vessels that will have to install or retrofit ballast water systems each year for each vessel type ba sed on the phase-in schedule (presented on Table 1.3. We apply these data together with the one-time capital and installation costs to develop overall implementation costs for U.S. vessels. Capital installation costs are based on the type of systems presented in Table 3.1.

This rulemaking is consistent with a multi-lateral agreement at the IMO. For the purposes of this RA, we consider the bottom-lin e costs of this rulemaking to involve U.S. vessels. Nevertheless, we anticipate that the development of treatment technology will involve the world fleet, not the U.S. fleet alone.

In order to estimate the cost associated w ith BWMS on the U.S. fleet, we needed to develop the range of technologi es that may be available and the unit costs of these technologies. We assume that there will be a broad market for the new BWMS that includes both U.S. and foreign vessels, t hus improving the range of technologies available and the cost efficiencies of production.



## 4.1 Calculation Approach for Cost s of Ballast Water Discharge Standards

In this section, we describe the costs to install and operate BWMS . We have developed low and high estimates for installed costs for systems that would be applicable to the various vessel types. The BWMS industry is in its formative stage, and we expect scale-ba sed efficiencies to evolve. As noted in the previous chapter, the costs should decrease over time, but the extent is unknown.

Under the current rulemaking, implementation of BWMS would be re quired starting in December 2013 for new vessels and phased in, starting in 2014, for existing vessels. We use the growth assumption (including remova l rates) as outlined in Chapter 2 to determine the size of the fleet and the nu mber of new vessels each year. Projecting growth trends out 10 years is an uncertain pr ocess. Vessels affected in this FR will be required to meet the discharge standards by 2018 (based on the phase-in and drydocking schedules). In our cost model, for th e period beyond 2018, we account only for the new vessels.

Tables 4.1 presents the installation costs for the U.S. fleet. The installation costs were calculated based on the average costs for each available ballast water system. The low

57

### costs presented on the tables below are related to the cheapest system available and the high costs are related to the most expensive system available.

Table 4.1 Installed Ballast Water Syst em Costs ($000) for the U.S. Vessels

Vessel Type Installed Costs in 2007

Low High
Bulk carriers Handy 419 842 Panamax 459 1,062 Capesize 533 1,608 Tank ships Handy 403 769 Handyman-Aframax 504 1,292 Suezmax 541 1,563 VLCC 650 2,525 ULCC 615 2,375 Container ships Feeder 300 550 Feedermax 323 580 Handy 323 580 Subpanamax 338 563 Panamax 338 563 Postpanamax 375 650 Other vessels Passenger ships 300 550 Gas carriers 638 2,433 Chemical carriers 353 620 RORO 323 580 Combination vessels 323 580 General Cargo 323 580 Fishing Vessels 300 550 Other Offshore and Coastal Vessels 258 508
Source: Herbert Engineering Corporation (reference Table 3.4)



### 58

### In practice, many vessels do not discharge in U.S. waters and many could adjust their operations to avoid discharge. For example, many container vessels already set up their ballast before arriving in the EEZ based upon advance information about the next departure load condition. We anticipate that this will become the practice for many of these vessels independent of the imposed stan dard. In theory, these vessels could avoid the capital costs entirely. However, vessel owne rs will not consider the U.S. approach in isolation. For example, tankers that discharge no balla st in the U.S. may discharge ballast in other ports and so would install a BWMS if required to do so by any of the loading ports along their expected trading routes. In general, the likely approach would be to acquire the least expensive and easiest system to install and manage the ballast so that all the ballast onboard could be disc harged at any time if needed.

Vessels built before December 1, 2013 with ballast capacities between 1,500 and 5,000 cubic meters will be required to meet the discharge standards on first scheduled drydocking after January 1, 2014 (Table 1.2). Oceangoing vessels are required to drydock twice every 5 years 27 

### ; therefore, we assume that vessel owners will phase-in the installation over a period of 2.5 years after the compliance date. We assume that 40 percent will install BWMS each year in the firs t two years and 20 percent in the last year of the compliance FR requirement.

In 2016, the remainder of the fleet built before December 1, 2013 and certain new vessels will be required to meet the BWDS. In this ca se, we have assumed that 40 percent of the population will install the system each year in the first two years and 20 percent in the last year of the compliance requirement. Gi ven these assumptions and the projected fleet growth as defined in Chapter 2 (Table 2.3), the number of vessels undergoing BWMS installations is as shown in Table 4.2. In order to account for the impact of these assumptions we have performed a sensitivity analysis on the effect of compliance percentage per year and the total cost of th e rulemaking for U.S. vessels (section 6.1).

27 Drydocking requirements are specified in the following CFRs: 46 CFR 71.50-3 (passenger vessels); 46 CFR 176.600 (small passenger vessels); 46 CFR 12 6.140(a) (offshore supply vessels); 46 CFR 31.10- 21(tank vessels), and 46 CFR 91.40-3 (freight vessels)



### 59

### 60 Table 4.2 Projected number of U.S. Vessels unde rgoing BWMS Installation by Year and Type *

Vessel type Year

Total 1 2 3 4 5 6 7* 8* 9* 10*

Bulk carriers Handy 0.1 0.1 3.8 3.8 1.9 0.1 0.1 0.1 0.1 0.1 9.9 Panamax 0.0 0.0 2.1 2.1 1.0 0.0 0.0 0.0 0.0 0.0 5.4 Capesize 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Tank ships Handy 0.4 0.4 4.9 4.9 2.7 0.5 0.5 0.5 0.5 0.5 15.7HandyAframax 0.7 0.7 8.3 8.3 4.5 0.8 0.8 0.8 0.9 0.9 26.7 Suezmax 0.3 0.3 3.4 3.4 1.9 0.3 0.3 0.3 0.4 0.4 11.0 VLCC 0.2 0.2 1.9 1.9 1.1 0.2 0.2 0.2 0.2 0.2 6.3 Containerships Feeder 2.9 2.9 9.4 8.5 4.8 1.1 1.2 1.2 1.2 1.2 34.5 Feedermax 0.0 0.0 0.5 0.5 0.3 0.0 0.1 0.1 0.1 0.1 1.5 Handy 1.2 1.2 11.7 11.7 6.5 1.3 1.3 1.3 1.4 1.4 39.0 Subpanamax 4.6 4.6 22.3 21.2 11.9 2.6 2.6 2.7 2.7 2.8 78.0 Panamax 2.0 2.0 8.9 8.4 4.7 1.0 1.1 1.1 1.1 1.1 31.5 Postpanamax 1.3 1.4 13.5 13.5 7.5 1.5 1.5 1.5 1.6 1.6 45.0 Other vessels Passenger ships 17.8 18.2 65.1 61.2 36.1 11.0 11.4 11.8 12.2 12.6 257.5 Gas carriers 0.3 0.3 2.7 2.7 1.5 0.3 0.3 0.3 0.3 0.3 9.2 Chemical carriers 1.2 1.2 10.8 10.8 6.1 1.4 1.4 1.5 1.5 1.5 37.3 RORO 9.9 10.0 28.0 25.0 14.6 4.2 4.3 4.4 4.5 4.6 109.5 Combination vessels 7.1 7.3 62.3 62.5 35.3 8.1 8.3 8.6 8.8 9.0 217.5 General Cargo 4.7 4.8 19.8 18.6 10.5 2.4 2.5 2.5 2.6 2.6 71.1 Fishing 10.0 10.2 40.3 38.4 22.7 7.0 7.2 7.5 7.8 8.0 159.2 Other Offshore and Coastal Vessels 126.4 130.6 395.5 380.1 244.7 109.5 114.8 120.4 126.2 132.4 1,880.4 Total 191 196 715 688 420 153 160 167 174 181 3,046.4

Note: Totals may not add due to rounding. * We estimated the number of new vessels that will undergo installation after the phase-in period. We applied fleet growth rates (Table 2.3) to estimate the number of new vessels in the U.S. fleet per year. Some types of vessels have values representing a fraction of a vessel coming into service yearly. The fraction means that the rate of installation would be less than one per year.

## 4.2 Installation Costs of Balla st Water Management Systems

The assumptions and calculations described above form the basis for the baseline cost (based on the low installation costs presented on Table 4.1) of the FR discharge standard. Table 4.3 shows the breakdown by year, vessel type, a nd the overall share for each vessel type.

Table 4.3 Costs for U.S. Installed BWDS-2 ($Mil)

Vessel Type Year Total 1 2 3 4 5 6 7 8* 9* 10*
Bulk Carriers Handy Bulk 0.03 0.03 1.58 1.58 0.80 0.03 0.03 0.03 0.03 0.03 4.17 Panamax Bulk 0.02 0.02 0.94 0.94 0.48 0.02 0.02 0.02 0.02 0.02 2.49 Capesize 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Tank Ships Handy 0.17 0.17 1.96 1.96 1.08 0.19 0.20 0.20 0.21 0.21 6.34HandymaxAframax 0.36 0.37 4.16 4.17 2.29 0.41 0.42 0.43 0.44 0.45 13.48 Suezmax 0.16 0.16 1.84 1.84 1.01 0.18 0.18 0.19 0.19 0.20 5.96 VLCC 0.11 0.11 1.26 1.27 0.69 0.12 0.13 0.13 0.13 0.14 4.09 Containerships Feeder 0.87 0.87 2.83 2.56 1.45 0.34 0.35 0.36 0.36 0.37 10.35 Feedermax 0.01 0.01 0.15 0.15 0.08 0.02 0.02 0.02 0.02 0.02 0.48 Handy 0.38 0.38 3.78 3.79 2.10 0.42 0.42 0.43 0.44 0.45 12.60 Subpanamax 1.55 1.56 7.53 7.17 4.02 0.87 0.89 0.91 0.92 0.94 26.36 Panamax 0.68 0.68 3.02 2.84 1.60 0.35 0.36 0.37 0.37 0.38 10.65 Postpanamax 0.51 0.52 5.06 5.07 2.82 0.56 0.57 0.58 0.59 0.60 16.87 Other vessels Passenger ships 5.35 5.45 19.54 18.37 10.84 3.31 3.42 3.54 3.66 3.78 77.25 Gas carriers 0.18 0.19 1.73 1.74 0.97 0.20 0.21 0.21 0.21 0.22 5.86 Chemical carriers 0.43 0.44 3.80 3.81 2.15 0.49 0.50 0.51 0.53 0.54 13.18 RORO 3.19 3.22 9.04 8.08 4.71 1.35 1.39 1.42 1.46 1.50 35.37 Combination vessels 2.30 2.36 20.14 20.20 11.41 2.62 2.69 2.76 2.84 2.91 70.25 General Cargo 1.53 1.55 6.39 6.00 3.39 0.79 0.81 0.82 0.84 0.85 22.97 Fishing 3.01 3.07 12.09 11.53 6.81 2.10 2.17 2.25 2.33 2.41 47.75 Other Offshore and Coastal Vessels 32.60 33.69 102.04 98.06 63.12 28.24 29.61 31.06 32.57 34.16 485.16 Total 53.43 54.86 208.87 201.11 121.82 42.60 44.37 46.22 48.16 50.17 871.62 Total PV 3% 51.88 51.71 191.14 178.68 105.08 35.68 36.08 36.49 36.91 37.33 760.98 Total PV 7% 49.94 47.92 170.50 153.43 86.86 28.39 27.63 26.90 26.19 25.51 643.25
Note: Totals may not add due to rounding * The estimated cost on Table 4.3 was obtained using data fro m Table 4.2 (project number of vessels undergoing BWTS installation), and multiplying it with the Lower range cost of Table 4.1 (installed BW system cost). We divide the results by 1,000 and present those results in Table 4.3.



### 61

## 4.3 Operating Costs of Balla st Water Management System

BWMS operational costs are in addition to the cap ital costs for installati on. In order to obtain a cost of operation for U.S, we first calculated the amount of ballast discharge per vessel type (Table 4.4).

Table 4.4 Estimated Ballast Water Discharge for U.S. Vessels in 2007

Vessel Type # of Arrival Total Ballast Water Discharged Average Ballast Water Discharged per Arrival

Bulk carriers Handy 1,135 10,572,584 9,315 Panamax 214 8,362,151 39,075 Capesize 578 12,719,493 22,006 Tank ships Handy - - - Handymax-Aframax 34 2,931,103 86,209 Suezmax 2 655,633 327,817 VLCC 1 70,706 70,706 Container ships Feeder a
- - - Feedermax 52 18,868 363 Handy 280 1,246,886 4,453 Subpanamax 110 1,030,473 9,368 Panamax 290 547,131 1,887 Postpanamax 410 4,254,689 10,377 Other vessels Passenger ships 1 13 13 Gas carriers - - - Chemical carriers 160 224,040 1,400 RORO 357 21,508 60 Combination vessels 29,718 15,673,816 527 General Cargo 12,046 204,819 17 Fishing Vessel 120 2,237 19 Other Offshore and Coastal Vessels 114 1,415 12
Note: Totals may not add due to rounding a. Information for Feeder vessel is assumed to the same as for Feedermax.



### The average amount of ballast wa ter discharged per vessel type is calculated by using data collected by NBIC for year 2007. The amounts of discharge from vessels, represented in the above table, are of those vessels that reported actual discharge of ballast in year 2007. This data was then cross-referenced to population data gathered from USCG MISLE database in order to match vessel activity with th eir corresponding categ ory by vessel type.

Once the ballast water discharge by vessel type was determined, we multiplied these estimates by the number of vessels undergoing installation in Table 4.2 Then multiply this

62

### product by the cost presented in Table 3.6 using th e lowest cost per cubic meter of water for each particular vessel type. The calculated va lue is then used to formulate a cumulative annual operating cost for BWM (Table 4.5) per vessel type.

Table 4.5 displays the operating costs for all a ffected vessels in the population. The total operating costs covering the period of analys is is $7.2 million and $5.6 million at 3 and 7 percent discount rate s, respectively. Table 4.5 Annual Operating Costs for BWM U.S. ($Mil)

Vessel Type Year Total 1 2 3 4 5 6 7 8 9 10 Bulk Carriers Handy Bulk 0.000 0.000 0.007 0.014 0.017 0.017 0.017 0.017 0.017 0.018 0.125 Panamax Bulk 0.000 0.001 0.013 0.026 0.033 0.033 0.033 0.033 0.034 0.034 0.240 Capesize 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Tank Ships Handy 0.001 0.001 0.007 0.013 0.016 0.017 0.017 0.018 0.019 0.019 0.128HandymaxAframax 0.007 0.015 0.099 0.184 0.231 0.239 0.248 0.256 0.265 0.274 1.820 Suezmax 0.012 0.025 0.167 0.309 0.388 0.402 0.416 0.430 0.445 0.461 3.055 VLCC 0.005 0.002 0.018 0.018 0.010 0.002 0.002 0.002 0.002 0.002 0.063 Containerships Feeder 0.000 0.000 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 0.005 Feedermax 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.001 Handy 0.002 0.004 0.023 0.041 0.052 0.054 0.056 0.058 0.060 0.063 0.412 Subpanamax 0.014 0.028 0.094 0.158 0.194 0.201 0.209 0.217 0.226 0.234 1.575 Panamax 0.001 0.002 0.008 0.013 0.016 0.016 0.017 0.018 0.018 0.019 0.129 Postpanamax 0.003 0.006 0.039 0.071 0.089 0.092 0.096 0.100 0.104 0.107 0.708 Other vessels Passenger ships 0.000 0.000 0.000 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.008 Gas carriers 0.000 0.001 0.006 0.010 0.013 0.014 0.014 0.015 0.015 0.016 0.105 Chemical carriers 0.000 0.001 0.005 0.010 0.012 0.013 0.013 0.014 0.015 0.015 0.098 RORO 0.000 0.000 0.001 0.002 0.002 0.002 0.002 0.002 0.002 0.002 0.016 Combination vessels 0.001 0.003 0.015 0.026 0.033 0.035 0.036 0.038 0.040 0.041 0.268 General Cargo 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.003 Fishing 0.000 0.000 0.000 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.008 Other Offshore and Coastal Vessels 0.001 0.001 0.003 0.005 0.006 0.007 0.007 0.008 0.008 0.009 0.054 Total 0.050 0.090 0.508 0.904 1.114 1.146 1.187 1.230 1.273 1.318 8.820 Total PV 3% 0.048 0.085 0.465 0.803 0.961 0.960 0.965 0.971 0.976 0.980 7.215 Total PV 7% 0.046 0.079 0.414 0.690 0.794 0.763 0.739 0.716 0.693 0.670 5.605 Note: Totals may not add due to rounding.



### 63

## 4.4 Total Costs of Ballast Water Management Systems

For the purposes of estimating the total cost of BWMS, we multiply the operating costs by the estimated volume of treate d ballast water each year. We calculated the annual volume of ballast water treated by using th e average annual volume of ba llast water discharged by the different types of vessels. Once a vessel begins exchange of ballast water through ballast management technology, their operational cost continues to be car ried-over into the following periods. Therefore, total cost will increase substantially due to the commutative nature of operating BWM. This section illustrates the total costs (installation and operational) for U.S. vessels over the period of analysis. Ap pendix D (table D-8) presents the total cost for U.S. and foreign vessels.

We estimate the first-year total (initial) cost of this rulemaking to be $49.98 million based on a 7 percent discount rate and $51.92 million based on a 3 percent discount rate (Table 4.6). Over the 10-year period of analys is, the total cost of Alterna tive 2 for the U.S. vessels is approximately $649 million using the 7 percen t discount rate and $768 million using the 3 percent discount rate. Our cost assessment in cludes existing and new vessels. The annualized cost over the 10-year period is $92 million at 7 percent and $90 million at 3 percent 28 

### . Our cost assessment includes existing and new vessels . In Appendix D (table D-7) we show the foreign cost to illustrate the potential impact to vessel owners and operators that will be operating in U.S. waters.

In addition, owners and operators performi ng BWE will no longer be required to perform BWE. See Appendix B for more detail on BWE cost s. We have not considered the potential cost savings due to the termination of th e BWE operations in the BWDS total costs estimation.

In Appendix C, we also present a discussion on the cost of BWMS in terms of vessel value and daily charter rates. We presented this discussion in the NPRM RA (Section 4.5). We found information to suggest that capital costs, such as the in stallation of BWMS, will have little or no effect on charter rates. We also found additional information suggesting the same finding in terms of the magnitude of global trade and the effe cts of costs being passed to

consumers. 29

28 At the high end of costs, assuming vessel owners will install the highest cost system (Table 4.1), the annual costs over the 10-year period are $178 million at 7 percent and $173 million at 3 percent.
29 King, Dennis. 2011. MEPC 62 special: The world can afford sustainable shipping. Sustainable Shipping, July 8 2011 ( http://www.maritime-enviro.org/news/King_Sustainable_Shipping_070811.pdf ). King suggests that if the cost of ballast water regulations was passed along to global businesses and consumers, the price increase of imported goods will be minimal and st atistically indistinguishable from no change.



### 64Table 4.6 Total Cost of the Rule making to US Vessels ($ Mil)

Year Installation Costs Treated Ballast Water (m 3 ) Annual Operating Costs Total Cost

3% Discount 7% Discount 3% Discount 7% Discount 3% Discount 7% Discount

1 $51.88 $49.94 280,029 $0.05 $0.05 $51.92 $49.98
2 $51.71 $47.92 478,831 $0.09 $0.08 $51.80 $48.00
3 $191.14 $170.50 2,993,916 $0.46 $0.41 $191.61 $170.91
4 $178.68 $153.43 5,348,917 $0.80 $0.69 $179.49 $154.12

5 $105.08 $86.86 6,565,633 $0.96 $0.79 $106.04 $87.65
6 $35.68 $28.39 6,720,480 $0.96 $0.76 $36.64 $29.15

7 $36.08 $27.63 6,957,572 $0.97 $0.74 $37.05 $28.37
8 $36.49 $26.90 7,200,434 $0.97 $0.72 $37.46 $27.62
9 $36.91 $26.19 7,449,212 $0.98 $0.69 $37.88 $26.89
10 $37.33 $25.51 7,704,056 $0.98 $0.67 $38.31 $26.17
Total $760.98 $643.25 $7.21 $5.61 $768.20 $648.86

Annualized $89.21 $91.58 $0.85 $0.80 $90.06 $92.38

Note: Totals may not add due to rounding. 

### As a result of public comments, we have in cluded a provision in the FR to allow vessel owners and operators to request an extensi on of their compliance date if they cannot practicably comply with the compliance date othe rwise applicable to their vessel. This is a voluntary provision and will result reporting a nd recordkeeping burden to the vessel owner and operator applying for the exte nsions. This extension provisi on will give flexibility to vessel owners and operators to comply with this rule. We estimated the average cost per vessel to be $484 (see Appendix I for more informa tion on). The total cost of the rule is not impacted by this paperwork provision.



## 4.5 Discussion on More Stringent Standards

While the IMO BWDS is practicable to achieve in the near term and will considerably advance environmental protection over the current exchange-based regime, we also recognize that it is not the ultimate endpoint for protection of U.S. waters. The purpose of NISA, as already noted, is to ensure, to the maximum extent practicable, that NIS are not introduced and spread into U.S. waters. In the NPRM published on August 28, 2009, we proposed a phase two standard that is poten tially 1,000 times more stringent than the standard analyzed in this FR RA. Due to the lack of information on the phase two standard and issues raised by th e public comments, the Coast Guard has decided to move forward with phase one standard while we assess the following issues:

• practicability of implemen ting a phase-two standard,

• obtain additional data on t echnology available to meet th e phase-two standard for various vessel types, and

65

### • develop a subsequent rule w ith the economic and environmen tal analysis necessary to support the phase-two standard, since the Co ast Guard fully intends to issue a rule that will establish a more stringen t phase-two discha rge standard.

In the NPRM, we have solicited information fr om the public on the phase two standard with respect to the following issues:

1. Acquisition, installation, operation/main tenance and replacement costs of technological systems that are able to meet more stringent standards, 2. Technology scalability to m eet multiple stringency standards,3. Additional costs for vessels compliant with the phase-one standard to go to the phasetwo standard, 4. Technology alternatives and cost s for smaller coastwise vessel types, 5. Additional avoided environmental and so cial damages and economic benefits of ballast water discharge standards at mo re stringent standards, and 6. Potential for the rule to ensure to th e maximum extent practicable that aquatic nuisance species are not discharged into waters of th e United States from vessels, as required by NISA.

We have not received any information from the public that would contribute to the development of the economic analysis for the phase two standard. Some commenters pointed out that this technology is sti ll not available and therefore, they could not provide data on potential technology costs. We have receiv ed some data on costs for phase one only (Appendix E). Other commenters noted that the lack of the ability to test for compliance with stricter standards poses difficulties in determining whet her an existing technology has the capacity to meet a higher standard.

In addition to requesting information from th e public, the Coast Guard has been conducting further research on BWMSs. Since the NPRM publication, the Coast Guard has conducted additional research on available BWMs technolo gies. The research has focused on systems’ cost and capacity of achieving more strict standards. Selected vendors of different BWMs technologies were interviewed in order to obta in information on the current systems status, costs and scalability potential for meeting standards that are more stringent.

We have researched and contacted vendors of the following types of BWMS technologies: (1) Filtration + Chlorine, (2) Filtration+ Radiation (UV), and (3) Cavitation + Sterilization + Filtration.

Only the vendor of one system (Filtration + Chlo rine) said that they could currently meet standards that are more stringent then the IMO, such as the California standard 30 

### . The other

30 California Interim Performance Standards for Ballast Water Di scharges (Section 2293). Subject to the Implementation Schedule in Section 2294, before discharging ballast water in waters subject to the jurisdiction of California, the master , owner, operator, or person in char ge of a vessel to which this section applies shall conduct ballast water treatment so that ballast water discharged will contain:



### 66

### vendors were not certain if their systems could meet the more stringent standards because the current testing protocols are based on the IMO standard. Speculations on potential changes to a system to meet a higher standard included: installing UV bulbs in series (instead of parallel), increasing biocide concentr ation, and using finer filter meshes.

In relation to the increase in acquisition, insta llation and operation costs for systems to meet a higher standard, vendors did not provide any information. According to one vendor, system development is still in the conceptual stage, thus predicting costs is not feasible without more certain information on the characteris tics of the technology, the costs of R&D to develop the technology (which would need to be factored into the ultimate cost of the system) and the manufacturing costs.

We have also been following Lloyd’s Register publications on ballast water technologies. According to the Lloyd’s Register (2007 and 2008) estimates that the costs for BWMSs will range between $135K to $2.3 million for capacities of 200 m 3 

### /hr to 2,000 m 3 

### /hr respectively for systems meeting IMO standards. The Coast Guard cost estimates for BWMS are within the range described in the Ll oyd’s report. The current Lloyd’s Register (February 2010) has the mean cost of BWMS ranging from $281K to $863K for capacities of 200 m 3 

### /hr to 2,000

m 3 

### /hr respectively for systems meeting IMO standards, which is still within range of Coast Guard’s estimates. The 2010 Lloyd’s Register re port shows technologies that have undergone preliminary pilot trails. According to the report , data from these trials has shown the systems to be generally effective with reference to the IMO standard. At presen t, there is no available information on any manufactures that are developing and designing a system that will meet standards more stringent than the IMO standard. These finding are in concurrence with other organizations and the Coast Guard’s conclusi ons about management systems that go beyond the IMO standard.

In our research, we have also found that some vessels owners have requested the States (such as New York) postpone the implementation of phase two standard (1,000 times the IMO standard) due to the lack of technology available. According to the industry memo sent to the New York State Department of Environmental Conservation (DEC), there is currently no ballast water treatment technology, and there is no realistic ex pectation that such technology will be available in the near future 31



### .

(a) No detectable living organism s that are greater than 50 micr ometers in minimum dimension; (b) Less than 0.01 living organisms per milliliter that are less than 50 micrometers in minimum dimension and more than 10 micrometers in minimum dimension; (c) For living organisms that are less than 10 micrometers in minimum dimension: (1) less than 1,000 bacteria per 100 milliliter; (2) less than 10,000 viruses per 100 milliliter; (3) concentrations of microbes that are less than: (A) 126 colony forming units per 100 milliliters of Escherichia coli ; (B) 33 colony forming units per 100 milliliters of Intestinal enterococci; and (C) 1 colony forming unit per 100 milliliters or 1 colony forming unit per gram of wet weight of zoological samples of Toxicogenic Vibrio cholerae (serotypes O1 and O139)

31 http://www.infomarine. gr/attachments/article/857/New%20 York%20Extension%20Request.doc or http://www.gard.no/webdocs/GardAlert25062010.doc



### 67

### For these reasons, at this time we cannot estimate the costs of meeting stricter ballast water discharge standards based on the level of uncer tainty of system conf iguration, performance and cost.

After the publication of the NPRM, the EPA requested its Science Advisory Board (SAB) provide review and advice regarding whether existing shipboard treatme nt technologies can reach specified concentrations of organisms in vessel ballast water, how these technologies might be improved in the future, and how to ove rcome limitations in existing data (EPA SAB 2011) 32 

### . The Panel used industry information as the source material for its assessment of ballast water treatment performance and, as requested by the EPA, used proposed ballast water discharge standards as th e performance benchmarks.

Based on its evaluation of the available data , the SAB concluded that the performance standards for discharge quality proposed by IMO and the USCG are currently measurable, based on data from land-based and shipboard testing. However, current methods (and associated detection limits) prevent testing of BWMS to any standard more stringent than BWDS-2 Phase I (i.e., IMO D-2) and make it im practicable for verifyi ng a standard 100 or 1000 times more stringent. New or improved met hods will be required to increase detection limits sufficiently to statistically evaluate a standard 10x more stringent than BWDS-2 Phase I; such methods may be available in the near future. The SAB concluded that establishment of a ballast water discharge limit at the pr oposed BWDS-2 Phase I di scharge standard will result in a substantial reduction in the concentr ation of living organisms in the vast majority of ballast water discharges, compared to discharges of ballast water managed by mid-ocean exchange or discharges of unexchanged ballas t water. The numeric limitations in today’s rule represent the most stringent standards th at ballast water management systems currently safely, effectively, credibly, and reliably meet (US EPA SAB, 2011).

32 US EPA Science Advisory Board (SBA ). 2011. Efficacy of Ballast Water Treatment Systems: a Report by the EPA Science Advisory Board. Washington, D.C.



### 68

# 5 Benefits from Reducing Invasio ns of Non-indigenous Species

Bioinvasions of aquatic ecosyst ems can result in a dverse economic impacts on industries that are dependent on those ecosystems. The purpose of this section is to discuss the economic costs associated with bioinvasions of aquatic ecosystems, and specifically to discuss the overall economic harm 33 

### attributable to bioinvasions resu lting from the introduction of NIS through ballast water. Subsequent sections discuss the costs (economic harm) associated with the primary economic activities impacted by aquatic bioinvasions : (1) water-dependent infrastructure, (2) subsistence, (3) tourism and recreation, (4) wate r-related subsistence activities, (5) commercial fish ing, and (6) recreational (sport) fishing. Quantification of some of the economic impacts, as well as a re liable assessment of public health risks (and costs) related to bioinvasions of aquatic ecosystems remain problematic.

In the second part of this chapter, we attempt to quantify and monetize avoided costs associated with future NIS invasions that re present the benefits of BWM. These avoided costs provide the same benefits whether the reduction in inva sions is achieved through BWM via exchange (USCG 2004) or the use of a BWDS. Economic costs from invasions of NIS are in the billions of dollars annually.

We use the same benefits model for the FR as we did for the NPRM. This model quantifies benefits resulting from the reduction in “initia l invasions” from vessels engaged in oceangoing traffic. We have not found complete data or identified appropria te models to quantify the possible benefits associated with reducing the sec ondary spread of inva sions. Therefore, we do not expect the exemption of inland vessels to reduce the estimate of quantified benefits given data and modeling limitations.



## 5.1 Resources at Risk

Loss of biodiversity

Invasions of U.S. waters by NIS are occurring at increasingly rapid rates (Carlton et al. 1995, Ruiz et al. 2000a). The U.S. Commission on Oc ean Policy notes that invasive species are considered one of the greatest threats to coastal environments and can contribute substantially to altering the abundance, dive rsity, and distribution of many native species (USCOP 2004). While introduction of a NIS doe s not necessarily lead to invasion, the sudden availability of a new habitat and absen ce of natural predators can lead to runaway growth that pushes out other species. Unlik e oil and other forms of pollution, where the deleterious effects can degrade over time, invasive species can persist, reproduce, and spread. The discharge of ballast water is considered a primary pathway for the introduction of NIS (USCOP 2004). The social and eco nomic implications of accelera ting the loss of biodiversity bear directly on several ecol ogical interrelationships, includ ing the following (NRC, 1995):

33 This section focuses on quantifying and monetizing the economic harm caused by aquatic NIS. The Programmatic Environmental Impact Statement provides a discussion of the environmental harm caused by NIS.



### 69• 

### the ocean’s capacity to sustain ec onomically significant fisheries,

• 

### the quality of bays and estuaries as nurseries for important stocks,

• 

### the loss of species with significant potential for biomedical products,

• 

### the recreational value of ocean margins, and

• 

### the aesthetic value of marine environments that remain close to their aboriginal state.

Water-dependent infrastructure

Water-dependent infrastructure includes water in take pipes, storm sewer drains, docks, piers, canals, dams, navigation locks, and facilities such as electric powe r plants, drinking water treatment plants, water storage facilities, and water distribution systems (USCG 2006). Water-dependent infrastructure must deal w ith the impacts of une xpected interruptions caused by disruption or contamination (USEPA 2001).

Invasive invertebrates, such as the zebra musse l and the Asian clam, have adversely affected water-dependent infrastructure by fouling intake pipes and screens, causing equipment malfunction and overheating, and jamming valves and other mechanisms. Affected systems include electric power genera tion stations, drinking water treatment plants, industrial facilities, and navigation lock and dam structures. Additionally, invasive aquatic plants have caused problems on rivers and canals. Costs a ssociated with the zebra mussel approach $1 billion annually and were about the same in the 1980s for the Asian clam (Pimentel et al. 2005).

Subsistence living primarily involving Native American, Alaskan, and Hawaiian tribes

Subsistence living in the U.S. involves Nativ e American, Alaskan, and Hawaiian tribes, as well as the inhabitants of the U.S. territories that include Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam, and the Commonwealth of Northern Mariana Islands. The Indigenous Environmental Netw ork (see http://www.ienearth.or g/) notes that indigenous peoples depend on the fish, aquatic plants, and wi ldlife to a greater exte nt and in different ways than the general population. Many indige nous peoples are reliant on a subsistencebased lifestyle. Consumption and use of aqua tic resources not only meets basic nutritional and economic needs, but also provides resour ces for cultural, traditional, and religious purposes (Maybee 2001). Fish stocks and wate r quality are linked to the health of an ecosystem and to the activities that occur in the watershed. NIS can im pact both fish species and water quality, causing disruptions to loca l food webs. These disruptions can impact subsistence fishing and, in turn, the livelihoods of people who rely on it.

Impacts to Commercial Fishing, Recreation al Fishing, and Water-Dependent Tourism

Invasions of NIS are capable of disrupti ng commercial and recrea tional fisheries and adversely affecting local and regional economie s. NIS can degrade water-dependent tourism and recreational activities associated with fishing, boating, swimming, and scuba diving.

70

### The domestic commercial fish and shellfish industry, which obtains its catch from many fresh and saltwater sources, including the Columb ia River, the Great Lakes, the Atlantic and Pacific Oceans, and the Gulf of Mexico, contributes $45 billion to the U.S. economy annually (ERS 2004). This contribution reflects not only direct economic effects—the value of the fish and shellfish harvested—but also i ndirect effects, which include processing fish and shellfish for market, servicing the comm ercial fishing fleet, and repairing and maintaining commercial fishing gear.

An example of costs to the local economy asso ciated with NIS concerns Ohio’s $600 million Lake Erie sport fishery, which lost 50 to 65 percent of its value between 1985 and 1995. Possible reasons include an above-capacity walleye population in early 1982, a rapidly growing white perch population from 1985 to 1993, and the zebra mussel (Hushak 1997).

Impacts to Public Health

While the introduction of bacteria and viruse s through ballast water is a growing concern, potential public health impacts remain virtually unexplored by sc ientists (Ruiz et al. 2000b). Concentrations of bacteria and viruses in balla st water have been f ound at very high levels— up to six to eight times higher than those for other taxonomic groups in ballast water— suggesting that invasions may be relatively common (Carlton and Geller 1993; Drake et al. 2001; Drake et al. 2002; Ruiz et al. 2000b). For example, hum an pathogen microorganisms are common in coastal waters and have been f ound in the ballast water of vessels (Ruiz et al. 2000b).

During the 1997 and 1998 shipping seasons, samples were taken from the ballast tanks of 28 transoceanic vessels (Knight et al. 1999; Reynolds et al. 1999; Zo et al. 1999). The sampling revealed the presence of a host of microor ganisms, many of which are human pathogens, including fecal coliform, fecal stre ptococci, clostridium, salmonella, E. coli
, Vibrio cholerae
, cryptosporidium, giardia, and enteroviruses. The presence of these organisms demonstrated the survival of human pathogens during transocean ic transport of ballast water. It has been shown that certain microbial organisms can survive and become su ccessfully established following BWD, thereby becoming vectors for human exposure.

The global increase in HAB via BWD poses an in creased risk to human health. Some algal species contain powerful toxins, which can adve rsely affect fish, birds, and humans through the consumption of contaminated fish and shel lfish. Paralytic shellf ish poisoning, diarrheic shellfish poisoning, amnesic sh ellfish poisoning, neurotox ic shellfish poisoning, and ciguatera fish poisoning are a ssociated with natural toxi ns produced by HAB-forming diatoms and dinoflagellates.

71

## 5.2 Economic Impacts of Past NIS

Reporting on the costs in NIS invasions is almost an industry in itself. Despite the difficulty of obtaining economic estimates of the costs of aquatic introductions (Randall and Gollamudi 2001), such figures are widely published. The im portance of these estimates is that they establish the scale of the costs in comparison with the costs of meeting a BWDS. Ultimately, the quantified and monetized bene fits of more stringent standa rds lie in the reduction of the costs of invasions such as those described herein.

The U.S. EPA (Lovell and Stone 2005) has publis hed a literature review on NIS and has noted the weaknesses of the currently available estimates: “Current empirical estimates are not comprehensive enough to determine the natio nal or regional economic impacts of aquatic invasives. Additionally, the re alm of impact categories differs across the scale of analysis and methods of estimation. By and large, ther e are few estimates of the non-market impacts using known methods.” (Lovell et al 2006).

In the absence of a national comprehensive estim ate of the economic impacts due to invasive aquatic species, we review the literature on the existing estimates and develop a range of costs/impacts on a per species basis to charac terize potential economic impacts of preventing future NIS invasions. The following discussion summarizes some of the available estimates of costs and damages related to past invasions , with more detailed information presented in Appendix H.

A landmark assessment of the losses from select ed NIS (Table 5.1) was made in 1993 by the U.S. Congress Office of T echnology Assessment (OTA 1993).

Table 5.1 Estimated Cumulative Losses to the Unit ed States from Selected , Harmful, Nonindigenous Species, 1906-1991 (OTA 1993)

Category Species analyzed (number) Cumulative loss estimates (millions of dollars, 1991) Species not analyzed a (number)

Plants 15 603 - Terrestrial vertebrates 6 225 >39 Insects 43 92,658 >330 Fish 3 467 >30 Aquatic invertebrates 3 1,207 >35 Plant pathogens 5 867 >44 Other 4 917 - Total 79 96,944 >478 Source: U.S. Congress Office of Technology Assessment (OTA 1993), “Harmful Non-Indigenous Species in the United States.”



### In the above table, the cumulative losses due to selected fish and aqua tic invertebrates total nearly $1.7 billion. Other cost s are not easily assigned to marine sources; however, the marine contribution is significant. In particular, the costs asso ciated with non-native aquatic plants are notable. O’Neill (2000) has estimated the damage s costs of the Zebra Mussel

72

### ( Dreissena spp .) introduction in the U.S and obt ained amounts between $750 million and $1 billion for the period 1989–2000.

In the most extensive review to date on the eco nomic costs of introduced species in the U.S., Pimentel et al. (2005) co vers estimates for many types of NI S. As part of an overall estimate that includes both direct and i ndirect cost of $120 billion annu ally, they include $7.8 billion associated with damages and costs of controlli ng aquatic invaders. Aqua tic contributions are broken down as follows.

Table 5.2 Estimated Annual Costs of Aquatic Introduced Species (based on Pimentel et al. 2005) ($ 2007)

Species Costs 34

Fish $5.7 billion Zebra and quagga mussels $1.06 billion Asiatic clam $1.06 billion Aquatic weeds $117 million Green Crab $47 million



### The potential negative economic impact caused by aquatic invasive fish species has not been studied to the extent such that direct and indirect costs resulting from invasions can be quantified, nor is there very much data to s upport prevailing assumpti ons about the costs of invasions. In one study, an estimate of $5.7 billion is given for annual fish related costs (Pimentel 2005). This study defines cost in term s of losses to commercial and sports fishing in the Great Lakes and other U.S. inland waters. Two invasive species in particular are nearly always cited on this subject – the Ruffe (Gymnocephalus cernuus) and the Sea lamprey (Petromyzon marinus) . The Ruffe came from Europe via ballast water in the 1980’s and the Sea lamprey migrated naturally. Both species prey on other fish and compete for habitat. In two studies on these species, losses were quantified in terms of future angler days lost due to decreases in fishing population (Leigh 1998 and L upi et al 2003). While these two studies (which do not quantify costs in terms of actual expenditures) by themselves cannot be used to support the above figure of $5.7 billion, they underline one of the primary economic concerns to environmentalists regarding aqua tic invasions, which is that they have the potential to cause significan t harm to native fish populati ons and aquatic ecosystems.

The economic costs associated with mollusk infestation to U.S. waters has been estimated as high as $1 billion per year in direct cost for Zebra Mussels (Dreissena polymorpha) (O’Neill 1997), and $1 billion per year for Asian Clams (Corbicula fluminea) (Pimentel et al. 2005). The origin of Zebra Mussel is the Caspian Sea. Scientists believe that the introduction of Zebra Mussels occurred through ba llast water discharged into the Great Lakes during the early part of the 1980’s. Their high rate of reproduction has enabled Zebra Mussels’ colonies to spread quickly throughout U.S. waters, including recent spread into the waters of western States.

34 All economic costs/damages in benefits analysis have been updated to 2007 dollars (using the Consumer Price Index).



### 73

### The Asiatic Clam like the Zebra Mussel is believed to have entered U.S. coastal waters through ballast water discharge. The first reported infestation of Asiatic Clams was discovered in San Francisco Bay during the earl y 1980’s. Like the Zebra Mussels, the Asiatic Clam colonization around the openings of drai nage pipes and siphoning pipes have caused damages to industrial facilities.

Aquatic weeds, in partic ular the Hydrilla weed (Hydrilla verticillata) which is “native to warmer areas of Asia, was first discovered in the U.S. in 1960....in Fl orida” (Langeland K.A. 1996). Most damages caused by this weed are the blocking of irrigation, drainage canals, and the entanglement of propeller blades.

Shipworms (Teredo navalis) are not worms, but elongated clams that feed on and live inside wooden structures. The destruc tion of wooden structures by Shipworm begins during the larval stage (Chesapeake Bay Program 2008) which ma kes detection of the infestation impossible until the damage is already done. Da mage is usually done to wooden boats and piers that are untreated.

The first European Green Crab (Carcinus maenas) was reported in North America in 1817 along the Atlantic Coast. (Prince William Sound Regional Citizen’s Advisory Council 2004). The crab was then introduced to the west coast during the 1980’s through ballast water. Damage from the Green Crabs is seen in the di sappearance of native species, due in part to the aggressive nature of these crabs.



## 5.3 Benefits of Ballast Water Discharge Standards

This section describes the benefits likely to occur from the establis hment of a BWDS. The standard’s main goal is the pr evention of future NIS invasions. Prevention of future NIS invasions will also prevent the negative im pacts of such invasions, including loss of biodiversity, damage to water-dependent infr astructure, and impacts on commercial fishing, recreational fishing, water-depe ndent tourism, public healt h, and subsistence populations. We use estimates of costs associated with past NIS invasions to estimate benefits of preventing future invasions. The estimates of co sts resulting from past invasions are derived from a selection of studies that vary in wh ich types of costs are covered by the study and often vary on the time period and the geogr aphic region covered by the study. Most often these studies include costs to control invasive species, with damages to infrastructure and impacts on fishing and tourism occasionally in cluded. We are unable to quantify potential benefits associated with ecological damages su ch as loss of biodivers ity, impacts to public health and impacts on subs istence populations.

Further, the majority of the studies analyzed ar e not specific on the enti ties directly affected by the NIS damages, making the identification of the portion of benefits that are transfer payments difficult.

We start the discussion of potential benefits of a BWDS by presenting information on the functional benefits of the standa rd. We then project the number of expected future invasions and the portion of invasions prevented by the stan dard. We present an analysis of the range

74

### of potential cost per species and the estimated to tal damages of future species, as well as the potential benefits of the standa rd and potential transfers.



## 5.4 Functional Benefits of the Ballast Water Standards

Although it is difficult to determine monetary measures of the benefits of controlling NIS, we can assess the functional bene fits. The primary functional be nefits of the IMO standard (Alternative 2) are:

• A reduction in the concentration of organisms greater than 50 microns in size, leading to lower numbers of these organism s being introduced per discharge.

• A reduction in the concentration of or ganisms in the 10–50 micron size range for ballast water that was initially rich in organisms.

• A general reduction in concentrations fr om BWM values due to the practical requirements of meeting an upper bound standard.

• A consistent upper bound on number of orga nisms (of all sizes) introduced for a given discharge size.

• The potential to reduce the survivability of organisms that have been present in sediments in NOBOB vessels that subseque ntly take on ballast. This applies to systems that maintain a toxic environmen t in the ballast ta nk during the voyage.

• Elimination of the exemptions in the BW M regulations leading to discharge of unmanaged ballast water (e.g., safety con cerns during exchange , delay of voyage required to travel to acceptable mid-ocean exchange location). The elimination of these exemptions is significant, because th ey often lead to discharge of large amounts of untreated ballast water. Large inoculations (i.e., large number of organisms in a discharge) are linked positively to the risk of invasions (Minton et al. 2005, Ruiz et al. 2000a, and others). In 2005, 7.7 million cubic meters of ballast was discharged from vessels from outside the EEZ th at did not travel further th an 200 miles from shore and thus were unable to perform mid-ocean exchange. This represents about 19 percent of the ballast discharged from vessels whos e ballast originated outside the EEZ.

This overall strategy should reduce the number of new invasions because the likelihood of establishment increases with the number of organisms introduced per discharge or inoculation (Ruiz et al. 2 000a, Minton et al. 2005).

More stringent discharge standards further stre ngthen these benefits. Inoculation sizes will decrease in proportion to the reduction in concentrations. This reduces the chance of invasion, but the effects are extremely uncerta in. There is evidence that probability of invasion reduces asymptotically with re duction in concentration (Tamburri 2005).

Zero discharge standards, if achievable, w ould effectively elimin ate the introduction of invasive species into ballast water.

75

## 5.5 Annual Number of Invasions Due to Ballast Water Discharge

Rate of Future Invertebrate Invasions

To assist in assessing the benefit of BWDS, we first es timate the number of invasions introduced by BWD from shipping. The approa ch is based on the invasion rate of invertebrates from shipping reported by Ruiz et al. (2000) to estimate an approximated number of initial invasions per year. The aut hors compiled data on past marine invasions of invertebrates and algae in North Amer ica from 1790 to 2000. The authors found 298 invertebrate and algae NIS in the coastal wate rs of North America, with an additional 76 instances in which a species has spread to more than one coast (designated as repeat invaders). We focus our primary analysis on the number of initial invasions, with a discussion of the impact of reducing “repeat invaders” in a later section of this document.

The authors note that these estimates likely unders tate the number of act ual invertebrate and algae invasions: “Our data pr ovide only minimum estimates for established invasions of marine invertebrates and algae. We have ex cluded consideration of boundary residents and cryptogenic 35 

### species from our estimates, and th e latter group may include hundreds of NIS that have gone unrecognized as such. Furt hermore, many sites and taxa within North America have received little scrutiny” (Ruiz et al. 2000). 36



### Ruiz et al characterized the mechanism for in troduction of initial i nvasions and found that 62 percent of the invasions over the most recent 30-year period studied (1970 – 2000) were due to shipping. An additional 15 percent of invasions had shipping as one of the potential mechanisms, often with fishing as the other potential mechanism.

The authors also calculated the rate of initia l invasions due solely to shipping based on historical invasion data (i.e., the number of invasions by time period back to 1790). The authors derive a “best fit mathematical model” to characterize the historical trend in invasions. The best fit model is an expone ntial function which is represented by the equation: , where x is time in 30-year intervals since 1790. )024.0( 

### 127.1 x 

### ey

⋅= 37



### We assume that this historical trend in initia l invasions will continue in the future. We use this equation to project the number of invasi ons per year due to shipping for our 10-year evaluation period (see Table 5.4). Since this equation does not include the 15 percent of

35 Cryptogenic – not clearly native or introduced

36 According to the NAS 2011 report, studies on invasions in North America waters have involved mining occurrence records from the literature and diverse resear ch programs, rather than an organized field-based monitoring program designed explicitly to detect i nvasions. Therefore, today’s knowledge of invasions represent an underestimate of the total numbe r of NIS species that have colonized.

37 The model shape (the exponential function) means that as time progresses, the rate of invasions increases greater than a simple linear relationship. In this equation, the values of 1.127 and 0.024 are constants that define the shape of the trend line (similar to the slope in a linea r equation). The variable of x is a measure of time, specifically time in 30-year intervals since 1790.



### 76

### invasions in which shipping was one of several potential mechanisms, this approach is likely to underestimate the actual number of invasions that are the result of shipping activities.

Rate of Future Fish and Aquatic Plant Invasions

The Ruiz et al analysis incl udes only invasions of inverteb rate and algae species: “Although our analysis is restricted to invertebrates and algae, it is noteworthy that at least 100 species of non-indigenous fish and 200 species of non-in digenous vascular plants are known to be established within this coasta l area” (Ruiz et al 2000). To account for the additional number of fish and plant invasions that are expected to occur, we use the results of the Ruiz et al 2000 model to estimate the number of fish and plant invasions per year, based on historical data on the relationship of inva sions for different specie group s. Table 5.3 summarizes the results of previous studies that characteri zed invasions for specific bodies of water.

Table 5.3 Distribution of NIS by Pl ants, Invertebrates and Fish for Three Regions (Cohen and Carlton, 1995)

Miller et al. 1993 Great Lakes Mills et al. 1995 Hudson River Cohen and Carlton 1995 San Francisco Estuary

Plants 60% 63% 23%

Invertebrates 20% 18% 61%

Fish 18% 19% 13%
Source: Cohen and Carlton, 1995, page 283.



### In two of the studies, the percen t of invasive fish species was roughly equal to the number of invertebrates and the number of plant species was roughly 3 times the number of invertebrates. The third study employed more stri ct criteria for inclusion of plant species and found that the number of plant sp ecies was 40 percent of the numb er of invertebrates and fish species were roughly 20 percent of the number of invertebrates. We use these two sets of relationships to project the annua l number of invasive fish and plant species as displayed in Table 5.4. For the purposes of estimating economic impacts of invasions, we use the number of fish and aquatic plant invasions that result from Relationship 2 (i.e., aquatic plants are 40 percent of invertebrate s and fish are 20 percent).

77Table 5.4 Forecasted Number of Init ial Shipping Invasions Per Year

Year Invertebrate Invasions a Relationship 1 b Relationship 2 c

Fish Aquatic Plant Fish Aquatic Plant

1 8.12 8.12 24.36 1.62 3.25
2 8.32 8.32 24.95 1.66 3.33
3 8.52 8.52 25.56 1.70 3.41
4 8.73 8.73 26.18 1.75 3.49
5 8.94 8.94 26.82 1.79 3.58
6 9.16 9.16 27.47 1.83 3.66
7 9.38 9.38 28.13 1.88 3.75
8 9.61 9.61 28.82 1.92 3.84
9 9.84 9.84 29.52 1.97 3.94
10 10.08 10.08 30.23 2.02 4.03

a. Derived from Ruiz et al. 2000 equation b. Derived from Great Lake & Hudson River data; fish equal to invertebrates, aquatic plants equals 3 times invertebrates c. Derived from San Francisco Estuary data; fish eq ual to 20 percent of invertebrates, aquatic plants equal to 40 percent of invertebrates



### Fraction of Shipping Invas ions Due to Ballast Water

Ballast water discharge is one of the two main vectors associated w ith shipping—hull fouling being the other. The discharge standard in this rule will not address risks associated with hull fouling, so the fraction of invasions associated with hull fouling needs to be removed from our estimates of future invasions. Appendix F presents a summary from the FEIS on the science and benefits of preventing inva sions, including discus sion on hull fouling.

There are competing factors with regard to the influence of hu ll fouling versus BWD. On the one hand, reductions in the impact of hull foulin g are expected as fuel costs continue to increase in overall importance and more attentio n is paid to maintaining non-fouled bottoms. Further, the trend to larger ships results in more volume for a given hull surface area, thus increasing the relative importance of ballast discharge as a vector.

Reduced toxicity of bottom paint, improved wate r quality, creation of new harbor facilities, vessel activities (e.g., vessels that remain in place for long periods ), biological triggers, and other factors (Minchin 2002) s uggest that hull fouling may beco me a more significant vector. One contributing factor to this scenario is that NIS have a higher surv ivability rate on hulls than in ballast tanks.

Past analyses of ballast water and hull fouling indicate that the rate of shipping invasions due to ballast water could be as high as 63 percent (Mills, et al. 1993) and as low as 10 percent. The relative impact of ballast water and hull fouling vectors has not been fully understood (Ruiz 2002).

In a recent analysis of histori cal invertebrate invasions, Fof onoff, et al. (2003) classified nonnative species (invertebrates, algae and fish) associated with shipping to assess the

78

### likelihood of invasion by the subvectors based on traits such as life hi story, etc. Table 5.5 summarized the results of the Fo fonoff et al. (2003) analysis:

Table 5.5 Number of Nonnative Coastal Marine Species by Shipping Vector (Fofonoff, et al. 2003)

Shipping Vector Number of Species Percent of Species

Ballast Water 20 20% Ballast/Hull Fouling 34 34% Hull Fouling 36 36% Ballast Water/Dry Ballast 1 1% Hull Fouling/Dry Ballast 1 1% Hull Fouling/Dry Ballast/Ballast Water 1 1% Dry Ballast 1 1% Ballast Water/Cargo or Packing material 3 3% Dry Ballast/Cargo or Packing material 1 1% Cargo or Packing material 1 1% Total 99 100% Only Ballast Water 20% Ballast Water + Ballast/Hull Fouling 54% Ballast Water + Proportion of Ballast Water/Hull Fouling 32%

Source: Fofonoff et al. "In Ships or On Ships? Mechanisms of Transf er and Invasion for Nonnative Species to the Coast of North America," Invasive Species: Vectors and Management Strategies, Island Press, Washington DC, 2003, page 170.



### Based on this analysis and using species as a pr oxy for invasions, 20 percent of invasions are solely attributed to ballast water, while anothe r 34 percent of invasions could be attributable to either ballast water or hull f ouling. If we assume none of the “Either Ballast Water or Hull Fouling” invasions was due to ballast water, th en 20 percent of shippi ng invasions are due to ballast water. Similarly, if we assume that a ll of the “Either Ballast Water or Hull Fouling” are due to ballast water, the resulting fraction of ballast water invasions is 54 percent. If we assume that the “Either Ballast Water or Hull Fouling” invasions are distributed proportionally, then ballast water accounts for 32 percent of invasions. Table 5.6 presents the potential number of invasions per year assuming 32 percent of shipping invasions are attributable to ballast water. For the purpos es of our main analysis, we assume that 32 percent of shipping invasions are attributable to ballast water.

79Table 5.6 Estimated Number of Ballast Water Initial Invasions

Year Number of Shipping Invasions Number of Ballast Water Invasions (32% of Shipping Invasions)

Invertebrate Fish Aquatic Plant Invertebrate Fish Aquatic Plant
1 8.12 1.62 3.25 2.60 0.52 1.04
2 8.32 1.66 3.33 2.66 0.53 1.06
3 8.52 1.70 3.41 2.73 0.55 1.09
4 8.73 1.75 3.49 2.79 0.56 1.12
5 8.94 1.79 3.58 2.86 0.57 1.14
6 9.16 1.83 3.66 2.93 0.59 1.17
7 9.38 1.88 3.75 3.00 0.60 1.20 8 9.61 1.92 3.84 3.07 0.61 1.23
9 9.84 1.97 3.94 3.15 0.63 1.26
10 10.08 2.02 4.03 3.22 0.64 1.29 Total 90.68 18.14 36.27 29.02 5.80 11.61
Note: Totals may not add due to rounding.



### Fofonoff et al. 2003 also evalua ted temporal changes in the shipping vectors and found that ballast water invasions appear to be growing at a faster rate over the past 30 years in comparison to hull fouling inva sions, although there is consider able uncertainty due to the relatively large number of invasions that could not be definitively classified.

Fraction of Invasions Th at Cause Economic Harm

Further, not all invasions will cause econom ic harm. According to Windle 1997: “On average, 15 percent of foreign species trigger severe economic or financial damage and about 40 percent cause some harm.” For the purposes of this analysis, we assume that 15 percent of the invasions will cause economic damage, a figur e that is also in line with the findings of the OTA 1993 assessment. We note that we ma y be underestimating the number of harmful species by not including all or some fraction of the 40 percent of species that may cause some economic harm. We are also not incl uding the impacts of invasions that cause environmental damage that does not result in economic harm. As seen in Table 5.7, during the 10-year period, 4.35 invertebra te invasions, 0.87 fish inva sions, and 1.74 aquatic plant invasions due to ballast water are expected to cause severe economic or financial damage.

80Table 5.7 Estimated Number of Ballast Water Initial Invasions That Cause Severe Economic or Financial Harm

Year Invertebrate Fish Aquatic Plant

1 0.39 0.08 0.16
2 0.40 0.08 0.16 3 0.41 0.08 0.16
4 0.42 0.08 0.17
5 0.43 0.09 0.17
6 0.44 0.09 0.18
7 0.45 0.09 0.18
8 0.46 0.09 0.18 9 0.47 0.09 0.19
10 0.48 0.10 0.19 Total 4.35 0.87 1.74
Note: Totals may not add due to rounding.



## 5.6 Costs of Ballast Water Invasions

As discussed earlier, no comprehensive estimate is available on the costs from past invasions. Most studies focus on one species and often only consider certain types of costs or costs in certain regions, resulting in a wide variability of estimates. For this reason, we do not try to develop a composite cost estimate for all invasi ons, but instead select a low and high estimate for fish, aquatic plants and invertebrates based on representative species. We then calculate a mid-point for the range and calculate costs fo r future invasions using all three values.

Appendix H contains a summary of available cost estimates for invasions and a discussion documenting the choice of the low and high rang e cost estimates per species. Table 5.8 displays the range of values us ed in subsequent calculations.

Table 5.8 Range of Annual Costs Associated with Selected NIS Introductions ($ 2007)

Low Range Mid Range High Range

Fish $ 15,805,000 [1] $ 160,547,000 $ 305,289,000 [2] Invertebrates $ 19,538,000 [3] $ 539,769,000 $ 1,060,000,000 [4] Aquatic Plants $ 4,507,000 [5] $ 214,585,500 $ 424,664,000 [6] [1] From Jenkins 2001, economic impact of sea lamprey on Great Lakes, updated from 2001$ [2] From Leigh 1998, commercial and recreational fishing benefits lost due to ruffe invasion of Great Lakes, updated from 1998$ [3] From Connelly et al. 2007, cost of Zebra Mussel c ontrol at WTP and electric generation facilities, updated from 2004$ [4] From Piementel et al. 2005, cost of Zebra Mussel or Asian Clam, updated from 2005$ [5] From Rockwell 2003, cost to control Water Hyacinth in Louisiana, updated from 2003$ [6] From Pimentel 2005, cost to control Eurasian watermilfoil, updated from 2005$



### 81

### We assume that once an invasion is establishe d, it will continue to generate costs and/or damages for each year subsequent to the invasion . Thus, an invasion that occurs in the first year of our analysis will incur costs/damages in each of the next 10 years. Also, these estimates of costs include the im pact of secondary spread of an invasion to areas other than the site of the initial invasion.

Based on the cumulative impacts of invasions, we have calculated a mid-range estimate of annual costs for all harmful BW-introduced invasions over the 10 year period at $1.453 billion (7 percent) assuming that ballast water invasions represent 32 percent of shipping invasions. The annual cost of ballast water in vasion for the 10-year period varies from approximately $54 million to $2.852 billion based on the range of estimated costs per invasions as shown on Table 5.9 at 7 percent discount rate.

Table 5.9a Summary of Potential Cost ($ Mil) /Damage of BW Invasion over a 10-year Period

Range of NIS Costs Total Cost for (3% disc. rate) Total Cost for (7% disc. rate) Low Range $ 56 $ 54 Mid Range $ 1,491 $ 1,453 High Range $ 2,926 $ 2,852

Table 5.9b Potential Cost ($ Mil)/Damage of BW Invasion over a 10-year Period – 7 Percent Discount Rate

7% Discount Rate
Year Low Mid High

1 $10 $256 $503
2 $18 $485 $952
3 $26 $688 $1,351
4 $32 $868 $1,704

5 $38 $1,027 $2,015
6 $43 $1,165 $2,288

7 $48 $1,287 $2,525
8 $52 $1,391 $2,731
9 $55 $1,481 $2,907
10 $58 $1,557 $3,056
Total $380 $10,205 $20,031
Annualized $54 $1,453 $2,852



### 82Table 5.9c Potential Cost ($ Mil)/Damage of BW Invasion over a 10-year Period – 3 Percent Discount Rate

3% Discount Rate
Year Low Mid High

1 $10 $256 $503
2 $19 $504 $989
3 $28 $743 $1,458
4 $36 $973 $1,910

5 $45 $1,196 $2,347
6 $53 $1,410 $2,768

7 $60 $1,617 $3,174
8 $68 $1,816 $3,565
9 $75 $2,009 $3,943
10 $82 $2,194 $4,306
Total $474 $12,718 $24,962
Annualized $56 $1,491 $2,926



## 5.7 Benefits (Averted Costs) of Ballast Water Disc harge Standards

This section describes the main benefits likely to occur from the establishment of BWDS. The standards main goal is the prevention of fu ture NIS invasions. The value of the benefits for each alternative considered varies based on a particular alternative’s effectiveness in preventing future invasions. The Final Progr ammatic Environmental Impact Statement (FPEIS) 38 

### has estimated the reduction in the mean ra te of successful introductions of various alternative standards. As described in detail in Appendix A of the DPEIS, a mathematical model was developed based on the premise that a decrease in the number of living organisms initially introduced thro ugh ballast water discharges into a waterway reduces the probability that a population becomes successfully established 39 

### . The researchers fi rst develop a model of the simplest case in which a single species is discharged during a ballast water discharge event (referred to as a single species model). Th e researchers then used this simple model to develop a more complex model representing a situation where multiple species are discharged from a vessel (referred to as the multi-species model). The multiple species

38 Source: USCG. 2010. Final Programmatic Environmental Impact Statement for Standards for Living Organisms in Ship’s Ballast Water Discharged in U.S. Waters. DOT Document Number: USCG-2001-10486..

39 As identified in the NAS 2011 report, there are major data gaps ("a profound lack of data and information") and therefore no available information on multiple di scharges (at the time of this rule publication). As recommended by NAS, models need to be developed to assess these risks and to link to new information as they become available. USCG will consider models that may be available during a practicability review performed under NISA. This may provide additional information to address the risk associated with multiple ballast discharges.



### 83

### model is the appropriate model to use for th e calculation of benefits as it is the more ecologically realistic scenario. 40



### The goal of the multi-species model is to estimate the probability that a single ballast water discharge containing multiple invasive species in different concentrations will result in at least one successful in troduction of an invasive species. The BWDS is intended to decrease the probability of NIS establishment by reducing the number of individual organisms that are introduced via BWD. The multi-species model is used to estimate the probability of a successful invasive species introduction. The probability of introductions is compared against the baseline probability of introduction to calculate the reduction in the probability of introduction.

The FPEIS developed two different baselines based on different assumptions about current ballast water management practic es. One baseline assumes that no ballast water management is being practiced and the other assumes that ba llast water exchange takes place. To estimate benefits, we use the ballast water exchange baseline as most ocean-going vessels are currently required to co nduct ballast water exchange. Howe ver, not all ocean-going vessels can conduct exchange for all voyages, thus so me fraction of voyages may occur under the no ballast water management baseline. For the purpo ses of this analysis of benefits, we are unable to separate out the invasion risk associ ated with conditions under which exchange is not conductedand therefore use the conservative assumption that all ocean-going vessels are conducting ballast water exchange for all voyages.

Table 5.10 presents the reduction in the mean ra te of invasions that would result from the BWDS. In comparison with th e existing practice of ballast water exchange, the BWDS is between 37 percent to 63 percent effective in preventing invasions when fully implemented.
41 

### Please refer to the FPEIS for further info rmation on the derivation of these estimates.

40 Source: FPEIS.
41 The range in effectiveness is the re sult of different assumptions as to the threshold below which a population is considered extinct for the purposes of invasive species . For example, a Ne=1 in Table 5.10 assumes that all organisms of a particular species have to be eradicated for species to be unable to colonize the new environment (i.e., the new waterway). For many species, however, a certain popula tion size is necessary for successful colonization. Thus, the analysis in the FPEIS also uses a threshold of 100, meaning that 100 organisms of a species would need to survive for the invasion to be successful (Ne=100). Please refer to Appendix A of the FPEIS for further explanation.



### 84Table 5.10 Reductions in the Mean Rate of Successful INS Introductions (Multiple Species Model)

Extinction Threshold Assumption [1] BW Exchange


### 1 = e 

### N 37%



### 100 = e 

### N 63%
Source: FPEIS, Page 4-13, Table 4-2.
[1] The extinction threshold refers to the number of organisms below which a population is considered extinct.



### As discussed in Chapter 4, the implementation of the FR BWDS will be phased-in over several years. For the purposes of estimati ng quantitative benefits, we assume that no invasions will be avoided before the end of th is period, because only a subset of ships will have implemented ballast water management. This approach may lead to an underestimate of potential benefits. 42 

### The resulting schedule of invasions avoided for the Ballast Water Discharge Standard is displayed in Table 5.11.

Table 5.11 Harmful Ballast Water Initial Invasions Avoided – Phased-In Schedule

Year Number of Harmful Ballast Water Invasions Avoided –Low Effectiveness Number of Harmful Ballast Water Invasions Avoided –High Effectiveness

Invertebrate Fish Aquatic Plant Invertebrate Fish Aquatic Plant
1 0.000 0.000 0.000 0.000 0.000 0.000
2 0.000 0.000 0.000 0.000 0.000 0.000
3 0.000 0.000 0.000 0.000 0.000 0.000
4 0.000 0.000 0.000 0.000 0.000 0.000
5 0.000 0.000 0.000 0.000 0.000 0.000
6 0.163 0.033 0.065 0.277 0.055 0.111
7 0.167 0.033 0.067 0.284 0.057 0.113 8 0.171 0.034 0.068 0.290 0.058 0.116
9 0.175 0.035 0.070 0.298 0.060 0.119
10 0.179 0.036 0.072 0.305 0.061 0.122 Total 0.85 0.17 0.34 1.45 0.29 0.58
Note: Totals may not add due to rounding.



### Benefits are presented in Table 5.12 and assume no benefits during the phase-in period. Tables G-1 and G-2 in A ppendix G present the estimate of benefits by year.

The minimum avoided costs is $5 million and the maximum is $470 million with a midrange estimate of $141-$240 million per year at a 7 percent discount rate.

42 We estimate benefits using an alternative assump tion that the fraction of invasions avoided will be proportional to the fraction of the vessels installing management systems in Appendix F.



### 85Table 5.12 Potential Annual Benefits (Avoided Costs) of Ballast Water Initial Invasions over a 10-year Period ($ Mil)*

Low Range Costs Per Species Mid Range Costs Per Species High Range Costs Per Species

Reductions in Mean Rate of Invasion 3% discount rate 7% discount

rate 3% discount

rate 7% discount

rate 3% discount

rate 7% discount

rate Low Effectiveness - 37% $ 6 $ 5 $ 155 $ 141 $ 304 $ 276 High Effectiveness - 63% $ 10 $ 9 $ 264 $ 240 $ 518 $ 470 

### * We estimated the costs in Table 5.12 usi ng values in Table 5.8 and Table 5.11. Tables G-1 and G-2 in Appendix G present the estimate of benefits by year.



### Over a 10-year period of analysis, we estimate the total discounted pres ent value benefits of the phase-one BWDS to be as high as $3 billi on with a mid-range estimate of $0.99 billion to $1.68 billion 43 

### (see Appendix G for details on 10 and 20-year estimates)

.

The estimates of benefits resulting from the ballast water discharge standard are based on preventing initial invasions only. The range of costs per invasion presented in Table 5.6 includes the impact of secondary spread of invasions, but only in the context of preventing an initial invasion (i.e., if an init ial invasion is prevented, the sec ondary spread of that invasion is also prevented). We have not found complete data or identified appropriate models to quantify the possible benefits associated with reducing the secondary spread of invasions. Therefore, we do not expect the exemption of inland vessels to reduce the estimate of quantified benefits given da ta and modeling limitations.



## 5.8 Potential Benefits Transfer

The estimates of costs avoided by preventing NIS invasions encompass many categories of losses, some of which may represent a potential transfer of benefits. Some of the categories of losses that are included in the avoided costs include:

• Costs to control non-indigenous species

• Damage to infrastructure and resulting losses

• Loss of both commercial and re creational fishery resources

• Loss of recreation a nd tourism opportunities

Losses of natural or capital reso urces are generally not consider ed transfers. Thus, control costs, damage to infrastructure, and loss of fi shery resources are not lik ely to be transfers, although lost business resulting from damaged in frastructure may be a transfer. Loss of recreation and tourism opportunitie s may be a transfer if the recreational user substituted

43 The mid-range benefit estimate varies based on the assumed effectiveness factor s of preventing invasions (37% and 63%). The average of the mid-range benefit es timate for the 10-year period of analysis is $1.34 billion (range: $0.99 billion to $1.68 billion).



### 86

### another form of recreation or participated in the same activity at a di fferent location. Under the presumption that the original recreational ex perience was the first c hoice of the user, the alternative recreational opportunities would not have the same value as the primary choice of activity with the difference representing a net economic loss.

It is difficult to comprehensively ascertain th e portion of the calcula ted benefits in each category in order to break out pot ential transfers. Many of the estimates of costs per species simply do not provide sufficient detail to divide costs into th e categories. In addition, the distribution of costs by category differ from invasive specie to specie. A few studies have provided specie-specific information of costs or damages by category. For example, O’Neill 1997 surveyed infrastructure owners on their expe nditures on zebra-mussel related activities. Only about 1.1 percent of the zebra mussel e xpenditures were related to recreation or tourism. The majority of the expenditures were related to water treatment plants and electric power generation facilities. Pimentel 2005 estimated that about 16 percent of economic impacts (damages and control costs) from mu ssels in the New York State Canal and Hudson River system were related to tourism or recreation. On the other hand, Pimentel 2005 estimates that 50 percent of the impacts from inva sive fish species in this region are related to tourism or recreational activities such as sport fishing. Based on this limited information, some portion of the estimated benefits from preventing future invasions may represent transfers, but the amount will vary widely depend ing on the nature of the specie and extent of the invasions.



## 5.9 Sources of Uncertainties and Alt ernative Use of Risk-Based DecisionMaking in Addressing Benefits

The benefit analysis is based on assumptions re garding a number of inputs, which introduces uncertainty into the resulting estimates. Ta ble 5.13 summarizes some of the assumptions underlying the analyses and assesses the likely impact of the assumptions on the estimates of damages and benefits.

87Table 5.13 Uncertainties an d Possible Effects on Estimation of Benefits

Uncertainty Effect on Benefits Estimate

Under-Estimate Over-Estimate Unknown Impact

Rate of future invertebrate invasions (uses Ruiz el al 2000 model to project) X

Exclusion of invasions that have shipping as one of the potential vectors X

Relationship of the number of fish and aquatic plant invasions to the number of invertebrate invasions X

Fraction of shipping invasions due to ballast water X

Fraction of invasions that cause harm X

Costs per invasion Quantified in the primary analysis (addresses range of potential underestimate or overestimate)

Mean rate of invasions/invasions reduced Quantified in the primary analysis (addresses range of potential underestimate or overestimate)

Invasions avoided during phase-in period X

Potential transfers X

Risk-based approach to evaluate NIS invasions from ballast water X

Impact of reducing secondary spread of invasions through coastwise and inland traffic X

Potential impacts on biodiversity, public health, and subsistence populations are not quantified in the analysis X



### 88

# 6 Comparison of Costs and Benefits

The annualized cost for domestic vessels over the 10-year period for the phase one standard is estimated at $92 million 44 

### at a 7 percent discount rate. The estimate of quantified benefits for the phase one standard ranges from $5 million to $470 million per year (see Figure 6.1), with a mid-point of $141-$240 million per year at a 7 percent discount rate. Thus, quantified benefits exceed the estimated cost s for mid-point benefits estimate of Low Effectiveness. The high range annual cost estimate of $178 milli on is considerably less than the high range benefits estimate of Low Effectiveness. Additional benefits to the areas of ecological damages such as loss of biodiversity, impact s to public health and impacts on subsistence populations are expected to accrue as a result of the BWDS , but cannot be quantified at this time.

Figure 6.1 Range of Quantified Benefits a nd Annual Costs (7% Discount Rate, $2007)

$5

Low $141

Mid $276

High

$9

Low $240

Mid $470

High

$- $100 $200 $300 $400 $500 ($ Millions) Annual Benefits Low Effectiveness

Annual Benefits High Effectiveness Average Annualized Costs



### Comparison of Discounted Cumulative Benefits and Costs

Based on our projected invasions avoided, th e breakeven point (discounted cumulative benefits equal or outweigh discounted cumulative costs) would be reached in year 7 for the Alternative 2 assuming a 63 percent reduction in the invasion rate and by year 9 for Alternative 2 assuming a low reduction in invasion rate of 37 percent. Figure 6.2 illustrates the cumulative costs of the BWD in relationship to the damages avoided.

44 Total discounted cost of $1.191 billion amortized over 10 years using the Capital Recovery Factor equation at 7% discount rate because of the large capital installation costs require d by the rulemaking.



### 89Figure 6.2 Comparison of Cumulative Costs and Benefits (7% Discount Rate, $2007, Mid-Point Benefit per Invasion Estimate)



### Based on comments received on the NPRM, co mmenters noted that the BWDS would continue to accrue benefits after the 10-period of our analysis. For illustrative purposes, we present cumulative benefits and costs over a 20-year period of analysis in Appendix G.

90

## 6.1 Comparison of Alternat ive Phase-In Schedules

6.1.a. FR Phase-In Sche dule for Costs and Benefits

The schedule for vessels installing ballast wate r management systems and producing benefits from the reduction in the introduction of i nvasive species can vary based on the assumed timing of implementation.

Based on the FR text, different groups of ve ssels have different compliance requirements:

Table 6.1 FR Phase-In implementation Schedule

Vessel’s Ballast Water Capacity Vessel’s Construction Date Vessel’s Compliance Date

New vessels All On or after December 1, 2013 On delivery

Existing vessels Less than 1500 m 3 Before December 1, 2013 First scheduled drydocking after January 1, 2016

1500-5000 m 3 Before December 1, 2013 First scheduled drydocking after January 1, 2014

Greater than 5000 m 3 Before December 1, 2013 First scheduled drydocking after January 1, 2016



### All new vessels constructed on or after Decem ber 1, 2013 must comply with the standard. For existing vessels, the vessels that have th e early conversion deadline are those with a ballast water capacity of great er than 5,000 and less than 1,500 cubic meters. These will be referred to below as Type 2 vessels. The remain ing existing vessels will be referred to as Type 1 vessels. Based on these assumpti ons we have calculated different compliance scenarios in order to determine potential variation in cost a nd benefit estimates due to the compliance schedule.



## 6.1.b. Compliance Comparison Between NPRM RA and FR RA

NPRM Primary Cost Scenario

Our analysis for the NPRM assumed that all vessels will comply with the standard by 2016, which follows the IMO Convention implementati on schedule. We also assumed that some vessels will be required to convert by the e nd of 2014. Table 6.2 disp lays the fraction of vessels in each group scheduled to install mana gement technology in each year as assumed in the NPRM analysis.

91Table 6.2 NPRM Analysis Compliance Phase-In Assumption

Year New Vessels Type 1 Vessels Type 2 Vessels
1 100% 20% 30% 2 100% 20% 30% 3 100% 20% 40% 4 100% 20% N/A 5 100% 20% N/A 6 100% N/A N/A 7 100% N/A N/A 8 100% N/A N/A 9 100% N/A N/A 10 100% N/A N/A



### FR Primary Cost Scenario

For existing vessels, the FR ties the installation of ballast water management systems to the drydocking schedule of a vessel. For vessels in Type 1, the comp liance date for a vessel is at the first scheduled drydocking after January 1, 2016. For vess els in Type 2, the compliance date for a vessel is at the first schedu led drydocking after January 1, 2014. Based on information from the Navigation and Vessels Inspection Circular (NVIC) 1-89 

### on the vessel drydocking requirements, we assume that a vessel is on a once pe r 2.5-year drydocking schedule for saltwater vessels. In the absence of information a the specific business model for vessel owners and operators, we assume that for Type 1 vessels, 40 percent will install during 2016, 40 percent during 2017 and 20 percent during the half year in 2018. Type 2 vessels will follow a similar pattern, only begi nning in 2014. Table 6.3 presents the resulting schedule for compliance.

Table 6.3 FR Primary Scenar io Compliance Assumption

Year New Vessels Type 1 Vessels Type 2 Vessels
1 100% 0% 40% 2 100% 0% 40% 3 100% 40% 20% 4 100% 40% N/A 5 100% 20% N/A 6 100% N/A N/A 7 100% N/A N/A 8 100% N/A N/A 9 100% N/A N/A 10 100% N/A N/A



## 6.1.c. Alternative Complianc e Scenarios for the FR RA

We looked into alternative compliance scenarios in order to access the sensitivity of the cost estimates to the percentage of vessels installing the BWMS in different years.

92

### Scenario 1: In this scenario, we assume a more even (compared to Scenario 1) distribution of vessels complying with the FR requirements. Th is scenario might better represent vessel owners using their scheduled drydocking to insta ll the BWMSs. In this case, for the Type 1 vessels, 30 percent will install during year 3, 30 percent during year 4 and 40 percent during the half year in year 5. Type 2 vessels will follow a similar pattern, only beginning in year 1. Table 6.4 presents the resu lting schedule for compliance.

Table 6,4 FR Primary Scenar io Compliance Assumption

Year New Vessels Type 1 Vessels Type 2 Vessels
1 100% 0% 30% 2 100% 0% 30% 3 100% 30% 40% 4 100% 30% N/A 5 100% 40% N/A 6 100% N/A N/A 7 100% N/A N/A 8 100% N/A N/A 9 100% N/A N/A 10 100% N/A N/A



### Scenario 2: In this scenario, we assume that the ma jority of the vessel owners will postpone the system installation until the last year. This would be expected industry behavior in order to minimize risks and costs. In this scenario, the Type 1 vessels, 20 pe rcent will install during year 3, 20 percent during year 4 an d 60 percent during the half year in year 5. Type 2 vessels will follow a similar pattern, only beginning in year 1. Table 6.5 presents the resulting schedule for compliance.

Table 6.5 FR Primary Scenar io Compliance Assumption

Year New Vessels Type 1 Vessels Type 2 Vessels
1 100% 0% 20% 2 100% 0% 20% 3 100% 20% 60% 4 100% 20% N/A 5 100% 60% N/A 6 100% N/A N/A 7 100% N/A N/A 8 100% N/A N/A 9 100% N/A N/A 10 100% N/A N/A



## 6.1.d. Comparison Betwe en Different Cost Scenar ios in the FR RA

The primary cost estimate represents the highe r compliance costs since the majority of the vessels will have their systems installed in th e first two years of th e rule implementation.

93

### While industry practice is to delay additional co sts as long as possible, we assumed that the fleet will undergo system installations during routine drydocking for other regularly scheduled maintenance. As we postpone BWMS installations, the costs of the FR decrease (as shown in scenarios 1 and 2). The varia tion between the total a nd annual primary cost estimates and scenarios above are around only 1 percent.

Table 6. 6 Cost Comparison Between Different FR RA Scenarios ($ Mil, 7 Percent discount rate)



### Primary Scenario 1 Scenario 2 Total Cost $649 $642 $634 Annual Cost $92 $91 $90



## 6.2 Comparison of NPRM Alternatives

As discussed earlier, in the Re gulatory Analysis for the NPRM, Coast Guard considered five regulatory Alternatives, plus a Phase 2 Alternative. The FPEIS contains effectiveness information that allows us to calculate an esti mate of benefits for Alternatives 3, 4 and 5. The FPEIS does not have a similar estimate of effectiveness for the Phase 2 Alternative; therefore we cannot calculate benefits for Phas e 2 based on existing information. In addition, as discussed in Section 4.6, we cannot estimate the costs of meeting BW DS more strict than the IMO standard based on the level of uncerta inty of system confi guration, performance, and cost. Table 6.7 summarizes the comparison of the Alternatives considered in NPRM based on available cost and benefits data.

Table 6.7 Comparison of NPRM Alternatives ($ Mil., 7 Percent discount rate)

Alternative Standard Annual Benefits (Low Effectiveness) Annual Costs ($Millions) Effectiveness ($ Millions) 1 No Action 0% $0 $0 2 IMO Standard 37% $141 $92 3 10X IMO Standard 64% $244 Data not available 4 100X IMO Standard 85% $323 Data not available 5 Sterilization* 100% $380 Data not available Phase 2 1,000X IMO Standard (CA) Data not available Data not available Data not available Note: Benefits for alternatives 1-4 are based on lo w effectiveness estimates fr om the FPEIS. The FPEIS presents Alternative 5, Sterilization, as 100% effec tive. See FPEIS pages 4-13 (Table 4-2) and 4-16.



### 94

# 7 Final Regulatory Flexibility Act Analysis

7.1 Summary of the NPRM IRFA

The U.S. Coast Guard (USCG) performed an initial regulatory flexibility analysis (IRFA) of the impacts on small businesses and other en tities from the 2008 NPRM for Standards for Living Organisms in Ship’s Ballast Water Discha rged in U.S. Waters. We have performed this assessment using the cost information disc ussed in chapter 4. We have determined that the rule will result in a si gnificant economic impact on a substantial number of small entities under section 605(b) of the Regulatory Flexibility Act. Belo w is a summary of our IRFA findings:

• There were an estimated 850 U.S. entities that would be affected by the rulemaking, these businesses operated 2,616 ve ssels affected by the NPRM;

• We estimated that of these 850 U.S. entities, 57 percent were considered small;

• These firms will be required to purchase and install a ballast water management system for each affected vessel th ey own, costing between $258,000 and $419,000 per vessel, depending on the vessel type;

• We have assumed that firms will finance the purchase of this equipment and therefore we have used the annual payment to se rvice the loan as the annual cost for installation;

• Annual recurring operational cost s of the NPRM resulted in less than 1% impact on revenue for 100 percent of the firms;

• For a 10-year finance scenario, we estimate d 72 percent of small firms would incur an annual cost impact greater than 1 percent of annual revenue; and,

• For a 20-year finance scenario, we estimate d 59 percent of small firms would incur an annual cost impact greater than 1 percent of annual revenue.



## 7.2 Changes from the NPRM IRFA

Tables 7.1 and 7.2 present the comparison between the NPRM findings and revised FR findings. In the IRFA for the NPRM, we assumed 10-year and 20-year cost finance scenarios. The resulting analysis in the IRFA showed that 72 percen t and 59 percent of the small entities (10-year finance and 20-year finan ce, respectively) would have an annual cost impact greater than 1 percent of annual revenue . For these estimates, we assumed that vessel owners would opt for the least expensive systems available.

Given the changes in the applicability (from th e NPRM to the FR), there was a reduction in the number of vessels and enti ties affected by the rule. Fo r this reason, we updated the revenue impacts from the IRFA and found that 69 percent and 56 percent of the small entities (10-year finance and 20-year finance, respectivel y) would have an annual cost impact greater than 1 percent of annual revenue. There wa s a reduction in economic impacts on small entities as a result.

95Table 7.1 . Comparison of the NPRM and FR Number of Small Entities

Impact Range NRPM FR

10-yr Finance 20-yr Finance 10-yr Finance 20-yr Finance

≤ 1% 20 29 11 16
> 1 to ≤ 3% 16 12 11 7 > 3 to ≤ 5% 8 8 2 3
> 5 to ≤ 10% 8 11 2 3 > 10% 19 11 10 7
Total 71 71 36 36 Note: Totals may not add due to rounding.

Table 7.2 . Comparison of the NPRM and FR Installation Impact on Small Entities

Impact Range NRPM FR

10-yr Finance 20-yr Finance 10-yr Finance 20-yr Finance

≤ 1% 28% 41% 31% 44%
> 1 to ≤ 3% 23% 17% 31% 19%
> 3 to ≤ 5% 11% 11% 6% 8%
> 5 to ≤ 10% 11% 15% 6% 8% > 10% 27% 15% 28% 19%
Total 100% 100% 100% 100% Note: Totals may not add due to rounding.



## 7.3 Final Regulatory Flexibility Analysis

The Regulatory Flexibility Act of 1980 (Public Law 96-354) establishes “as a principle of regulatory issuance that agencies shall endeavor , consistent with the objectives of the rule and of applicable statutes, to fit regulatory a nd informational requirements to the scale of the businesses, organizations, and gove rnmental jurisdictions subject to regulation. To achieve this principle, agencies are re quired to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such propos als are given serious consideration.”

When an agency promulgates a final rule unde r section 553 of the Regulatory Flexibility Act (RFA), after being required by that section or any other law to publish a gene ral notice of proposed rulemaking, or promulgates a final inte rpretative rule involving the internal revenue laws of the United States as described in se ction 603(a), the agency must prepare a final

96

### regulatory flexibility analysis (FRFA) or have the head of the agency certify pursuant to RFA section 605(b) that the rule wi ll not, if promulgated, have a significant economic impact on a substantial number of small entities. The RFA prescribes the content of the FRFA in section 604(a), which we discuss below.

(1) a statement of the need fo r, and objectives of, the rule;

The unintentional introduction of non-indigenous species (NIS) in to the waters of the United States via the discharge of ships’ ballast water continues to contribute to the loss of marine biodiversity and to lead to si gnificant social, economic, and biological impacts. Current U.S. regulations require ballast water management (BWM) to prevent introductions of NIS through ballast water discharge (BWD). Curre ntly, the primary management method for controlling ballast water di scharged in U.S. waters is a mid-ocean exchange of ballast water obtained from waters outside the U.S. Excl usive Economic Zone (EEZ). Concern remains that this approach to ballast water management is not sufficiently effective in preventing the introduction of NIS nor can many vessels conduct ballast water exchange because of safety issues and or voyage constraints. The U.S. is proposing a rule to es tablish a ballast water discharge standard for the allowable concentrations of living organisms discharged via ballast water into U.S. waters. The objectiv e is to reduce the probability of unintentional introduction of NIS into the waters of the United States via the discharge of ships’ ballast water. Reducing the probability will reduce th e harmful biological a nd economic effects of NIS with the goal of reducing the number of NIS invasions and resu lting biological impacts and economic losses.

(2) a statement of the significant issues rais ed by the public comments in response to the initial regulatory flexibility analysis, a statemen t of the assessment of the agency of such issues, and a statement of any changes made in the proposed rule as a result of such comments;

On August 28, 2009, we published a Notice of Proposed Rulemaking (NPRM) entitled Standards for Living Organisms in Ships’ Ballas t Water Discharged in U.S. Waters in the Federal Register (74 FR 44632). We summarize d these comments in the Final Rule section V. Discussion of Comments and Changes . The great majority of the comments on the NPRM RA were from the inland, Great Lakes and coastwise industries. The commenters raised many different issues related to the balla st water operations, such as the use of municipal/potable water, technology costs, size limitations and underestimation of the affected population (for not in cluding inland vessels and vessels under 100 feet due to the general applicability of the NPRM). Additi onally, commenters expressed concern that the cost estimates for the proposed Phase 2 standa rd was not included in any of the supporting documentation or analysis. Remaining comments were on cost to foreign vessels, benefits, small entities analysis and uncertainties. The significant issues raised by the public comments on the IRFA were the following:

A) Cumulative Impact of Regulations on Sma ll Businesses - One commenter noted that the Coast Guard did not take into account the cumu lative impact of other Coast Guard regulations on small businesses. The co mmenter argued that the BWDS rule will

97

### impose more costs on top of the other re gulations for affected passenger vessel operations.

For the proposed rule, the Coast Guard co mpleted an Initial Regulatory Flexibility Analysis (IRFA). The specific statutory re quirements of an IRFA can be found at 5 U.S.C. 603(b). Under these statutory re quirements, we did not consider the cumulative impact of other Coast Guard regu lations on small businesses or affected passenger vessel operations. The Coast Gu ard acknowledges that other Coast Guard regulations have imposed additional costs on vessel owners and operators subject to this rule, which contains re vised applicability that excl udes most vessels operating solely in coastwise trade as previously discussed.

Many of these published regulations are due to international agreements such as the International Convention for the Preventi on of Pollution from Ships (MARPOL) and the International Convention for the Safety of Life at Sea (SOLAS). This rule also aligns with the Internatio nal Convention for the Control and Management of Ships Ballast Water and Sediments (IMO BWM Convention). The U.S. responsibility as a party to these international agreements is to ensure the fulfillment of the requirements by promulgating regulations that are consistent with these agreements. If the Coast Guard does not fulfill its obligations under th ese international agreements, then it risks the consequences of noncompliance (e.g., reduced commerce and trade as a result of U.S. flag vessels on foreign voyage not compliant with international agreements).

Additionally, for this rule, th e Coast Guard is acting under the legislative mandates in NANPCA, as amended by NISA, to authori ze the use of any alternative methods of BWM that are used in lieu of mid-ocean BWE. As previously discussed, these mandates require the Secretary of Homela nd Security to ensure to the maximum extent practicable that aquatic nuisance spec ies are not discharged into waters of the United States from vessels. 16 U.S.C. 4711( c)(2)(A). In addition, NISA requires the Secretary to assess and revise the Departme nt’s BWM regulations not less than every 3 years based on the best scientific informa tion available to her at the time of that review, and potentially to the exclusion of some of the BWM methods listed at 16 U.S.C. 4711(c)(2)(D). 16 U.S.C. 4711(e). The Coast Guard is publishing this FR based on these mandates.

B) Number of Employees - Two commenters ar gued that, as a part of the financial burden, it is important for vessel companies to note the amount of employees/mariners they have.

The Coast Guard agrees with the commenter s and would like to note that the number of employees is taken into consideration in the IRFA. The IRFA is in chapter 7 of the NPRM RA available on the docket. The IRFA ’s goal is to assess the proposed rule’s impact on small entities. Company revenue and number of employees (as well as number of vessels) are variab les used in the estimation of potential economic impacts to small businesses.

98

### The Coast Guard has assessed the public comments received on the NPRM RA and has determined the more research is necessa ry to assess the pract icability and impacts of phase two standard; and to better understand ballast water operations and technology available for the following vesse ls: small coastwise, Great Lakes and inland. As a result, the Coast Guard has made changes to the app licability and other requirements of the rule. Detailed explanation of these changes follows.

The FR contains a number of changes from the rule proposed by the NPRM (74 FR 44632). Below we discuss change in the FR that was related to the public comments on the NPRM IRFA. For a full discussion of comments and Coast Guard responses is found in the FR section V.B. Discussion of Comments.

(a) Changes in the Rule Applicability

In order to reduce the burden of this regulation over small coastwise and inland vessels and to allow more time to research these vessels’ ballast water operations, the Coast Guard has made changes in the rule applicability. In the NPRM, the Coast Guard proposed requiring all vessels discha rging ballast water into waters of the United States to comply with the BWDS. This included vessels operating solely in coastwise trade and on the inte rnal waters of the United States. These vessels are not required to conduct a BWE under the existing Coast Guard regulations, and, as such, the proposal was correctly seen as an expa nsion of those regulations. Commenters raised a number of issues re garding the applicability of the NPRM. These issues included uncertainty as to whether any of the currently available BWMS could be successfully installed on non- seagoing vessels, the cost of installation of BWMS on these industries, and the bene fit of requiring these vessels to install a BWMS. As a result of these comments, the Coast Guar d removed some vessels which previously were not required to conduct BWE from the FR applicability. These vessels are seagoing vessels that do not operate beyond the U.S. Exclusive Economic Zone (EEZ), and are greater than 1,600 gross regi ster tons (GRT) (3,000 gross tons (GT) (International Tonnage Conven tion (ITC)). Therefore, in land, Great Lakes vessels and small coastwise vessels (equal or sm aller than 1,600 GRT) are not required to comply with the FR.

In addition, we revised 33 CFR §§ 151.1510 and 151.2025 to 1) clarify that discharge of ballast water into waters of the U.S. is a threshold requiremen t, and 2) include an additional BWM option for use of water fr om a public water supply, meeting certain EPA water quality standards. This adds flexibility to vessel owners and operators on installing a BWMS or other sources of balla st water (as long as this water meets EPA water quality standards).

The Coast Guard has determined that additiona l research and analysis is necessary to support the expansion of th e rule applicability.

99

### (b) Removal of Phase Two Standard

The Coast Guard has decided to move forward with the phase-one (IMO) standard while assessing the practicability of im plementing a phase-two standard, gathers additional data on technology available to meet the phase-two standard for various vessel types, and develops a subsequent rule with the economic and environmental analysis necessary to suppor t the phase-two standard. The decision to remove the more stringent standard from the FR should not be interpreted as a sign that the Coast Guard is reconsidering its intent to incr ease the protectiveness of the BWDS. To provide the public with as much informati on as possible on which to base comments, the Coast Guard will develop additional an alyses regarding the potential costs, benefits, and environmental impacts of the proposed phase-two standard. When these analyses are completed, the Coast Guard will make them available for public comment, either via a notice of availabil ity or in conjunction with a subsequent rulemaking published in the Federal Register.

Since the FR only includes the phase-one standard, the Coast Guard has omitted the grandfather provision and applicability re views proposed in the NPRM. The Coast Guard expects to reconsider these provi sions when we re-propose the phase-two standard in a notice or a subsequent rulemaking.

(c) Delay of Compliance Date for New Vessels

Even with the provision for acceptance of foreign type approvals, a process that is expected to be quicker than completing th e full schedule of land-based and shipboard tests, the Coast Guard anticipates there wi ll not be an adequate number of approved BWMS to allow vessel owners to meet the NPRM’s proposed compliance date for new vessels. For this reason, the Coast Guard have pushed back the compliance date for new vessels to install Coast Guard- approved BWMS from January 1, 2012, to December 1, 2013. Additionally, the Decembe r 1st date will align the compliance date with the proposed e ffective date for the 2013 EPA VGP. The Coast Guard estimates that this deferral could dela y the compliance date for up to 600 newly constructed vessels.

The Coast Guard has also added a provision to both 33 CFR part 151 subparts C and D that will allow individual vessel owners to extend their compliance date if, despite the owner’s efforts, he or she cannot m eet the published compliance dates. This change is in response to commenters w ho argued that the compliance timelines included in the NPRM were too aggressive.

(3) the response of the agency to any comme nts filed by the Chief Counsel for Advocacy of the Small Business Administration in response to the proposed rule, a nd a detailed statement of any change made to the proposed rule in the final rule as a re sults of the comments. 45

45 This section of 604(a) has been added by the Small Business Jobs Act of 2010.



### 100

### The Coast Guard received comments from th e SBA, Office of Advocacy, regarding the impact that the proposed rule will have on small entities. The comments provided by the SBA focused on small businesses within the tugb oat, tow boat, and supply barge industries. According to the SBA letter, these small busin esses are concerned that the Coast Guard’s economic analysis does not account for a significant number of vessels operated by small businesses. These businesses also contend th at installing the required BWMS will not be economically feasible for the large number of vessels that discharge relatively small amounts of ballast water. The SBA also expressed concern about the cumulative effect of the proposed regulations should the phase-two st andards be implemented without a longer grandfathering period than the five year period proposed. Th e SBA has made the following suggestions to improve the Coas t Guard small entities analysis:

a. Expand the scope of regulatory flexibili ty analysis to include more vessels (vessels less than 100 feet in lengt h, tugboat, towing and supply vessels). b. Consider additional regulatory alterna tives to increase flexibility for small business (such as exemption for vessel s with relatively low-volume ballast tanks).

c. Include a grandfathering provisi on with the phase-two standards

The Coast Guard acknowledges the SBA con cerns related to th e vessels mentioned previously and is studying th e BWM options for small vessels and vessels less than 1,600 gross tons that operate solely in coastwise tr ade and inland waters of the United States. The Coast Guard has received numerous comments from these industries and has revised the applicability of the rule. As noted earlier in this RA, the BWDS in this FR applies only to vessels entering waters of the United States from outside the EEZ, to coastwise vessels that are more than 1,600 gross tons, and to certain other seagoing vessels meeting specific size thresholds (see V.A. Summary of Changes from the NPRM).

Detailed statement of changes in the final rule as a result of the SBA, Office of Advocacy, comments as well as public comments ar e presented above in paragraph (2).

(4) a description of and an estimate of the num ber of small entities to which the rule will apply or an explanation of why no such estimate is available;

Based on current data provided by the Coast Guar d’s Marine Information for Safety and Law Enforcement (MISLE) database, we estimate th at there are approximately 533 U.S. entities operating 1,459 vessels affected by this rule.

We used available operator name and address in formation to research public and proprietary databases for entity type (subsidiary or pare nt company), primary line of business, employee size, revenue, and other information. 46 

### We matched this information to the Small Business Administration’s (SBA) “Table of Small Business Size Standards” to determine if an entity is

46 We used information and data from Manta ( http://Manta.com ) and ReferenceUSA ( http://www.referenceusa.com ).



### 101

### small in its primary line of business as cl assified in the North American Industry Classification System (NAICS)

. 47



### We used the employee size and revenue data to identify the number and type of entities affected by the rulemaking based on the NRPM random sample of 150 vessel owners.. Due to the changes in the applicability (from the NPRM to the FR), there was a reduction in the number of entities affected by this rule. We found 36 small entities and 7 entities with no available data. We estimate the number of small entities affected by this rulemaking is 43 (36 small and 7 with no data available). This corr esponds to approximately 29 percent of small entities from the original NPRM sample. We found small entities affected by this rule to have multiple business lines. Some have a primary bus iness line that is not unique to the maritime industry. Please, see Tables 7.1 and 7.2 for info rmation on installation cost impact on small entities.

(5) a description of the projected repo rting, recordkeeping and other compliance requirements of the rule, including an estimate of the classes of small entities which will be subject to the requirement and th e type of professiona l skills necessary for preparation of the report or record; and

As a result of public comments, we have in cluded a provision in the FR to allow vessel owners and operators to request an extensi on of their compliance date if they cannot practicably comply with the compliance date othe rwise applicable to their vessel. This is a voluntary provision and will result reporting a nd recordkeeping burden to the vessel owner and operator applying for the extensions. Therefore, the Coast Guard is amending the existing (OMB CONTROL NUMBER: 1625-0069) to add these requests for extension (see Appendix I for more information).

(6) a description of the step s the agency has taken to mi nimize the significant economic impact on small entities consistent with the stat ed objectives of applicable statutes, including a statement of the factual, pol icy, and legal reasons for select ing the alternative adopted in the final rule and why each one of the other signi ficant alternatives to the rule considered by the agency which affect the imp act on small entities was rejected.

As described in section 7.4, the Coast Guard ha s made a number of changes from the rule proposed by the NPRM (74 FR 44632) after co nsideration of public comments. For a full discussion of comments and Coast Guard re sponses is found in the FR section V.B. Discussion of Comments. The fo llowing steps were taken by the Coast Guard to minimize the economic impact on small entities: changes in the rule applicabil ity to exclude inland, Great Lakes vessels and small coastwise vesse ls (equal or smaller than 1,600 GRT), removal of Phase Two standard and delay compliance for new vessels providing additional time for small entities to plan for BWMS.

47 The SBA lists small business size standards for industries described in the North American Industry Classification System (NAICS). See http://www.small businessnotes.com/fedgovernment/sba/13cfr121/201- 4849.html (as of April 7, 2008).



### 102

### The Coast Guard has considered six alternat ives. The Coast Guard took into account each one carefully before choosing the preferred a lternative, based on the input provided through the scoping process, as well as the informa tion developed through workshops, international discussions, and public comments . The alternatives include: maintaining the current BWE requirement or “No Action”; four alternatives that w ould establish different and increasingly stringent levels of maximum concentrations fo r living organisms in discharged ballast water (IMO standard, 10, 100 and 1,000 more strict th an the IMO standard); and a one that essentially requires steri lization of ballast water

. The IMO standard is the preferred alternative.

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### A. No Action

This alternative would not establish a BWDS. Instead, the mandatory BWM program established in accordance with the directives in the NISA would conti nue for vessels entering U.S. waters. Currently, the mandatory BWM progra m directs vessels to utilize at least one of the following BWM practices: conduct mid-o cean ballast water exchange, retain ballast water onboard, or use an environmentally sound treatment method approved by the Coast Guard. Some vessels cannot conduct mid-ocean ba llast water exchange due to safety and voyage constraints. In addition, the Coast Gu ard has not yet approved any environmentally sound treatment methods. Thus, “No Action” means that the primary BWM practice for vessels would be to conduct mid-ocean exchange (BWE) when it is safe to do so and when the voyage permits. The Coast Guard would n eed to develop an approval program for alternative methods in lieu of a BWDS. Such a program must verify that the alternative methods are as effective as mid-ocean ballast water exchange.

The Nonindigenous Aquatic Nuisance Preventi on and Control Act of 1990 (NANPCA), as amended by the National Invasive Species Act of 1996 (NISA), authorizes the Coast Guard to determine alternative methods of ballast water management for use in lieu of mid-ocean ballast water exchange (BWE). 16 U.S.C. 4711(c )(2)(D)(iii). NISA furt her stipulates that Coast Guard approved alternative BWM methods mu st be at least as effective as BWE in preventing or reducing the introduction of noni ndigenous species (NIS) into waters of the United States. 16 U.S.C. 4711(c)(2)(D)(iii).

NISA also requires the Coast Guard to assess and revise its BWM regul ations not less than every 3 years based on the best scientific inform ation available to the Coast Guard at the time of that review, and potentially to the exclus ion of some of the BWM methods listed at 16 U.S.C. 4711(c)(2)(D). 16 U.S.C. 4711(e). De termining whether an alternative method of BWM is as effective as BWE is not an easy task. The effectiveness of BWE is highly variable, largely depending on the specific vessel and voyage. These variables make comparing the effectiveness of an alterna tive BWM method to BWE extremely difficult. Results from several studies have shown the eff ectiveness of BWE varies considerably and is dependent on vessel type (design), exchange method, ballasting system configuration, exchange location, and method of study. Some st udies suggest that the efficacy of BWE is 80 to 99 percent per event (Dickman and Zhang 1999; Hines and Ruiz 2000; Rigby and Hallegraeff 1993; Smith et al. 1996; Taylor and Bruce 2000; Zhang and Dickman 1999). Other studies demonstrate that the volumetric efficiency of BWE ranges from 50 to 90 percent (Battelle 2003; USCG 2001; Zhang and Dickman 1999). Thus, vessels with very large starting concentrations of organisms in their ballast tanks might still have large concentrations of organisms after BWE. In addition, vessels are constrained by design or route from conducting BWE in compliance with ex isting regulations prior to the majority of arrivals into waters of the United States.

For these reasons, BWE is not well-suited as the basis for a protective programmatic regimen, even though it has been a useful interi m management practice. We have concluded that, as an alternative to using BWE as th e benchmark, establishing a standard for the concentration of living organisms that can be discharged in ballast water would advance the protective intent of NISA and si mplify the process for Coast Guard approval of ballast water

104

### management systems (BWMS). Additionally, setting a ballast water discharge standard (BWDS) would promote the development of innovative BWM technologies, facilitate enforcement of the BWM regulations, and assist in evaluating the effectiveness of the BWM
program.

Therefore, in the FR, the Coast Guard amend 33 CFR part 151 by establishing a BWDS and 46 CFR part 162 by adding an approval proce ss for BWMS intended for use onboard vessels to meet the BWDS.

B. Phase One – IMO Standard- Preferred Alternative

The preferred BWDS proposed is the same st andard adopted by the Internationa l Maritime Organization (IMO) in 2004, “International Convention for the Control and Management of Ships’ Ballast Water and Sediments” (BWM Convention). The Coast Guard leads the U.S. government delegation to the IMO, the organization responsible for improving maritime safety and preventing pollution from vesse ls. The Coast Guard coordinated U.S. participation in this effort with the Envir onmental Protection Agency, the National Oceanic and Atmospheric Administration, the U.S. Depa rtment of Defense, the U.S. Maritime Administration, the U.S. Department of Justi ce, and the U.S. Department of State.

This requirement is intended to meet the directives under NISA that re quires the Coast Guard to ensure to the maximum extent practicab le that nonindigenous species (NIS) are not introduced and spread into U.S. waters and th at they apply to all vessels equipped with ballast tanks that operate in U.S. waters. 16 U.S.C. 4711(c)(1), (c)(2)A , (e) and (f). A full discussion of the legislative and regulatory hist ory of the Coast Guard’s actions to implement both NANPCA and NISA may be found in the NP RM for this rule, published on August 28, 2009. 74 FR 44632, 44633.

C. Standards More Stringent than the IMO Standard

The Coast Guard has decided to move forward with the phase-one (IMO) standard while assessing the practicability of implementing a phase-two standard, gathers additional data on technology available to meet the phase-two standard for various vessel types, and develops a subsequent rule with the economic and envi ronmental analysis n ecessary to support the phase-two standard. The decision to remove th is more stringent standard from this FR should not be interpreted as a sign that the Coas t Guard is reconsidering its intent to increase the protectiveness of the BWDS.

Due to unavailability of data, the cost, benef it, and environmental impact analyses included in the NPRM did not specifically assess impact s related to the phase -two standard (although the analyses did include an eval uation of standards that are more stringent than the phase-one standard). Many commenters addr essed this issue, noting that the lack of analyses made it impossible for them to comment on the phase-two standard in any meaningful manner.

To provide the public with as much informati on as possible on which to base comments, the Coast Guard will develop additional analyses re garding the potential costs, benefits, and environmental impacts of the proposed phase-t wo standard. When these analyses are

105

### completed, the Coast Guard will make them avai lable for public comment, either via a notice of availability or in conjunction with a subsequent rulemaking published in the Federal Register

. The Coast Guard fully intends to issue a subseque nt rule that will establish a more stringent phase-two discharge standard. To demonstrate our commitment, we are issuing this rule as an FR rather than as a final rule to show that the Coast Guard does not view publication of the phase-one standard as completing the agency ’s work in controlling the introduction and spread of NIS from ships’ ballast water. In the FR, we are also re serving the regulatory provisions where the phase-tw o standard would be found.

D. Sterilization

This alternative essentially requires sterilizat ion of ballast water. It would require the removal or inactivation of all membrane- bound organisms (including bacteria) and most viruses. Vessels meeting this standard woul d have approved BWMS onboard that discharge virtually no living organisms in U. S. waters. This alternative was considered as not viable at this time. Additional research is needed to obtain information on technology and potential environmental impacts.

106

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118

# Appendix A Ballast Water Tank Capacities and Fleet Makeup

Table A-1a Ballast Water Capacities (m 3 ) for U.S. Vessels

U.S. Vessel Category MISLE/NBIC 2007 Ballast Water Volume Breakdown
Sample

Size Average Capacity <1,500 1,500 -5,000 >5,000

Bulk Carriers
Handy 7 14,329 100.00%

Panamax 7 36,258 100.00%
Capesize 5 59,065 100.00% Tank ships
Handy 21 17,038 4.76% 95.24%
Handymax - Aframax 2 9,379 50.00% 50.00%

Suezmax 2 61,558 100.00%

VLCC 1 214,863 100.00%

ULCC N/A N/A 100.00% Container ships

Feeder 5 6,927 60.00% 20.00% 20.00%

Feedermax 1 4,195 100.00%
Handy 2 17,891 100.00%
Subpanamax 28 9,469 10.71% 10.71% 78.57%

Panamax 16 11,729 6.25% 12.50% 81.25%
Postpanamax 12 21,359 100.00% Other vessels
Passenger ships 7 6,416 42.86% 14.29% 42.86%

Gas carriers 2 30,841 100.00%

Chemical carriers 11 17,266 100.00%

RORO 22 5,896 18.18% 22.73% 59.09%

Combination vessels 28 15,764 100.00%
General Cargo 29 5,571 37.83% 13.49% 48.68%
Fishing Vessels 26 1,666 80.77% 11.54% 7.69%
Other Offshore and Coastal Vessels 16 7,605 31.25% 12.50% 56.25%



### 119Table A-1b Ballast Water Capaci ties (m3) for Foreign Vessels
Foreign Vessel Category MISLE/NBIC 2007 Ballast Water Volume Breakdown

Sample Size Average Capacity <1,500 1,500 -5,000 >5,000

Bulk Carriers
Handy 549 13,753 2.37% 9.47% 88.16%

Panamax 215 27,849 0.93% 99.07%
Capesize 7 46,153 100.00% Tank ships

Handy 43 14,952 11.63% 37.21% 51.16% Handymax - Aframax 398 28,411 0.50% 99.50%

Suezmax 67 55,560 100.00%

VLCC 95 98,983 100.00%

ULCC 10 82,045 100.00% Container ships

Feeder 21 4,928 28.57% 52.38% 19.05%

Feedermax 24 5,093 4.17% 79.17% 16.67%
Handy 61 5,543 13.11% 24.59% 62.30%
Subpanamax 85 11,631 100.00%

Panamax 76 12,691 100.00%
Postpanamax 180 18,502 0.00% 100.00% Other vessels

Passenger ships 78 3,176 15.38% 75.64% 8.97%

Gas carriers 78 15,469 3.85% 30.77% 65.38%

Chemical carriers 324 14,378 0.31% 9.88% 89.81%

RORO 121 7,951 9.92% 15.70% 74.38% Combination vessels 14 5,128 57.14% 21.43% 21.43%
General Cargo 190 7,226 29.47% 31.05% 39.47%
Fishing Vessels N/A N/A 80.77% 11.54% 7.69%

Other Offshore and Coastal Vessels 11 3,209 54.55% 36.36% 9.09%



### 120

### World 

## Fleet Growth and Makeup

Based on information provided by HEC, a BWDS would be phased in under the proposed U.S. and international regulations. During this period, the populat ion of vessels will potentially change— some vessels would be removed and others will be constructed. We obtained estimates of growth and removal rates for the various vessel t ypes from a number of sources. Primary sources are the Transportati on Research Board (TRB) and the Maritime Administration (MARAD). We also consulted pr ivate sector information sources: Clarkson Register, RS Platou for generalized fleet fo recasts; PIERS, Mercator Transportation Management, Herbert Engineering Corp, a nd MDS Transmodal for container traffic forecasts; and the American Bureau of Shi pping and ConocoPhillips for LNG forecasts. Appendix A contains additional details on Fleet Makeup.

We extracted the number of affected vessels fr om the MISLE database to provide a baseline fleet size for year 2007. In projecting fleet gr owth, we assumed that there would be no optimization of the fleet for U.S. traffic. That is, we assumed that a ll vessels involved in international trade will be built to both U. S. and international BWDS requirements.

In addition to growth in number of vessels, the size composition of the fleet is changing, especially in the LNG and container fleets. Th e relationship between ballast water capacity and vessel size (deadweight) is approximat ely linear (see Figures A-5, A-6 and A-7). Although the increased cargo may be carried on a fleet that is growing more slowly in numbers than in tonnage or TEU capacity, the as sumption is made that the amount of ballast water discharged will grow with tonnage or TEU capacity.

Table A.2 shows the assumed growth and removal rates forming the baseline case. We estimated the number of new bu ilds each year by adding the number of vessels removed to the number of vessels needed to achieve the net growth rate.

121Table A.2 World Fleet Gr owth and Removal Rates

Type of Vessel Net Growth Rate Removal Rate

Bulk carriers Handy -0.5% 2.0% Panamax -0.5% 2.0% Capesize -0.5% 2.0% Tank ships Handy 2.0% 1.0% Handymax-Aframax 2.0% 1.0% Suezmax 2.0% 1.0% VLCC 2.0% 1.0% ULCC 2.0% 1.0% Container ships
Feeder 4.4% 2.0% Feedermax 4.4% 2.0% Handy 4.4% 2.0% Subpanamax 4.4% 2.0% Panamax 4.4% 2.0% Postpanamax 4.4% 2.0%
Other vessels Passenger ship 2.8% 2.2% Gas carrier 6.0% 2.0% Chemical carrier 2.8% 2.2% RORO 2.8% 2.2% Combination vessel 0.0% 2.0% General cargo 2.8% 2.2% Fishing Vessels 2.8% 2.2% Other Offshore and Coastal Vessels 3.6% 3.7%



## Data Source for Fleet Growth Calculations

U.S. Fleet Growth Rates

We estimated the U.S. fleet growth rates usi ng different data sources : U.S Department of Transportation (MARAD), Clarkson Resear ch Service and U.S.C.G. MISLE System database.

122Table A.3 Number of Active U. S. Vessels and Perce ntage Change (2002-2007)

Type of Vessel Year Increase % Average Change % 2002 2003 2004 2005 2006 2007

Bulk Carriers 48 65 64 64 61 60 61 -6.15 -1.24 Tanks 49 7,229 7,381 7,419 7,661 7,901 8,209 13.56 2.58 Containers 50 41,391 43,806 42,766 43,300 44,186 45,596 10.16 1.99 Passenger Ships 19,413 20,402 20, 889 21,431 22,027 22,898 17.95 3.36 RoRo 51 57 63 63 73 69 66 12.12 2.59 Combination Vessels 52 9,901 10,423 10,392 10,633 10,913 11,275 13.88 2.65 Fishing Vessels 53 61,989 66,059 66,300 67,930 72,154 73,661 18.83 3.54 Offshore Supply Vessel 1,465 1,530 1,522 1,583 1,624 1,849 26.21 4.87



### World Fleet Growth and Removal Rates

We estimated the world growth and remova l rates using the following data sources:

Transportation Research Board

The Transportation Research Board has publishe d forecasts for U.S. International Marine Trade 54 

### , as summarized in the following tables.

Table A.4 TRB Summary of Major Forecasts of Waterborne Cargo

Sector Units Traffic Compound Annual Growth Rate (%) Percent Change Source 2000 2020 International Million tons 1,143.4 1,674.5 1.9 46 Global Insight Container TEUs (thousands_ 120,350 48,401 4.4 138 Global Insight

Petroleum Million tons 669.7 1,056.3 2.3 58 EIA Dry bulk Million tons 355.9 444.0 1.1 25 Global Insight Total inland river Million tons 66137 836.0 1.3 26 USACE



### MARAD Statistics

Vessel statistics compiled by MARAD are shown below

48 Based on Clarkson Research Service (Source: U.S. Department of Transportation, Maritime Administration, Water Transportation Statis tical Snapshot, May 2008)
49 Based on MISLE database, includes tank barges and tank ships.
50 Based on MISLE database, includes freight barges and freight ships.
51 Based original data from Clarkson Research Servi ce available at U.S. Depart ment of Transportation, Maritime Administration, Water Transportation Statistical Snapshot (May 2008)
52 Based on MISLE database, includes mobile offshore dr illing units, oil recovery vessels and towing vessels.
53 Based on MISLE database, includes commercial fishing vessels and fish processing vessels. 54 The marine transportation system and the federal role: measuring performance, targeting improvement / Committee for a Study of the Federal Role in the Marine Transportation System. Transportation Research Board Special Report, 279



### 123Table A.5 U.S. Waterborne Imports, Arrivals by Type

Vessel Calls Year
Increase % Growth Rate %/year Vessel Type 1999 2000 2001 2002 2003 2004

Tanker 17,279 18,535 18,387 17 ,320 18,503 19,316 12% 2.3%

• Product 10,875 11,868 11,780 10,949 10,998 11,572 6% 1.3%

• Crude 6,404 6,667 6,607 6,317 7,505 7,744 21% 3.9% Container 16,625 17,410 17,076 17,138 17,287 18,279 10% 1.9% Dry Bulk 11,946 12,013 11,628 11,112 10,271 11,631 -3% 0.5% RORO 5,.73 5,542 5,712 5,632 5,191 5,317 5% 0.9% Vehicle 3,072 3,646 3,646 3,605 3,113 3,065 0% 0.0% Gas Carrier 683 708 739 739 926 916 34% 6.0% Combination 767 856 770 761 666 459 -40% 9.8% General Cargo 4,354 4,318 4,076 3,894 3m915 3m967 -9% -1.8%

All Types 56,727 59,382 58,388 56,596 56,759 59,885 6% 1.1%

Table A.6 U.S. Waterborne Trade

Year (1000 Metric Tons)
Increase Growth Rate Direction 2000 2001 2002 2003 2004

Imports 809,928 829,959 813,571 881,414 957,210 18% 4.3% Exports 347,906 331,423 323,640 324,760 349,628 0% 0.1%
Source: U.S. Maritime Administration, Waterborne Databank

Figure A-1 Imports (Metric Tons) on Containerships, 1998-2003

Containership Imports (Metric Tons)

y = 6E-34e 0.0476x

R 2 = 0.9603

0.00E+00 2.00E+07 4.00E+07 6.00E+07 8.00E+07 1.00E+08 1.20E+08 1.40E+08 1.60E+08 1.80E+08

1997 1998 1999 2000 2001 2002 2003 2004

YearImports (MT) Source: Port Import/Export Reporting Services



### 124Figure A-2 Imports (TEUs) on Containerships, 1998-2003

Containership Imports (TEUs)

y = 1E-45e 0.0601x

R 2 = 0.9775

0.0E+00 5.0E+06 1.0E+07 1.5E+07 2.0E+07 2.5E+07

1997 1998 1999 2000 2001 2002 2003 2004

YearImports (TEUs) Source: Port Import/Export Reporting Services



### The Platou Report

R.S. Platou Economic Research provides and presents analyses of all major shipping markets, as well as markets representing the external conditions for worldwide shipping.

Table A.7 World Fleet Development (The Platou Report) (Mil DWT)

Year Tankers Bulk Carriers Comb. Carriers Others Total

1995 270.9 22.9 25.9 134.8 661.5 1996 270.5 241.3 20.7 140.9 673.4 1997 275.2 250.0 17.3 149.1 691.5 1998 279.5 260.7 16.9 155.3 712.4 1999 285.2 260.4 16.1 160.9 722.6 2000 289.5 264.8 15.2 166.7 736.2 2001 296.4 274.0 14.6 169.3 754.3 2002 290.0 287.4 13.8 174.7 765.9 2003 294.2 295.0 12.6 181.2 783.0 2004 305.2 303.3 12.2 189.6 810.3 2005 322.1 320.8 11.7 200.5 855.0 Increase % 19% 40% -55% 49% 29% Growth Rate %/year 1.7% 3.4% -7.6% 4.1% 2.6%

Source: The Platou Report ( www.platou.com )



### 125Table A.8 World Fleet Developmen t with Derived Removal Rates (The Platou Report) (Mil DWT)

Year Tankers Removed R Rate Bulk Carriers Removed R Rate Other Removed R Rate

1995 270.9 10.9 229.9 2.6 160.7 2.2 1996 270.5 6.8 0.025 241.3 8.5 0.037 161.6 2.6 0.016 1997 275.2 3.7 0.014 250.0 7.9 0.033 166.3 4.8 0.030 1998 279.5 7 0.025 260.7 11.8 0.047 172.2 4.3 0.026 1999 285.2 16.4 0.059 260.4 .1 0.035 177.0 4.8 0.028 2000 289.5 14.1 0.049 264.8 4.4 0.017 181.9 3.6 0.020 2001 296.4 19.7 0.068 274.0 7.2 0.027 183.9 4.8 0.026 2002 290.0 19.3 0.065 287.4 6 0.022 188.5 5.1 0.028 2003 294.2 18.9 0.065 295.0 3.5 0.012 193.8 3.5 0.019 2004 305.2 10.3 0.035 303.3 0.8 0.003 201.8 1.5 0.008 2005 322.1 320.8 212.1 Increase % 19% 0.045 40% 0.026 32% 0.022

Growth Rate %/year 1.7% 3.4% 2.8%



### LNG Fleet Growth Projections

Bloomberg Report: LNG Fleet Needs to Expand 66 percent

The global fleet of tankers carrying liquefied natural gas needs to expand by 66 percent by 2010 to meet current and future demand from exporters including Qatar, Australia and Nigeria, according to LNG Shipping So lutions, as reported by Bloomberg.

About 205 carriers need to be ordered, adding to the 182 vess els in service and 127 units already contracted to be built, to meet de mand for existing and future LNG projects. In addition, as many as 105 vessels need to be or dered to meet demand for future projects and 100 vessels for current contracts.

Source: http://www.marinelink.com/MembersNe w/ViewStoryNR.asp?StoryID=200525 accessed Oct 13, 2005.

ABS Numerous LNG vessels are under order in antic ipation of rising demand for LNG shipments. We estimated an additional 220 vessels.

126Figure A-3 LNG Fleet Growth (from ABS GASTECH paper) Based Upon 138K m 3 Capacity

LNG Carriers

0 50 100 150 200 250 300 350 400 450

2004 2006 2008 2010 2012 2014 2016No. of 135 K ships ABS GASTECH paper A verage 7.2% per year



### Conoco Phillips Marine, USA

Figure A-4 below shows the trend of LNG shipping (Noble, P. 2004).

Figure A-4 LNG Growth Projected

0 50 100 150 200 250 300

1964 1974 1984 1994 2004 2014LNG Trade (billion cubic meters) 

### LNG Trade 6.5% Trend Line



### 127

### Ballast Water Capacity as a Vessel Car go Capacity for Various Vessel Types

A key assumption in the assumed growth rates is that modeling growth in cargo carrying capacity (DWT, TEU or volume) correlates to gr owth in ballast water capacity and thus, discharge potential. The following figures demo nstrate that this assumption is well-founded.

FigureA-5 Bulk Carrier BW Capacity vs. Deadweight



### Bulk Carrier BW Capacity vs DWT

y = 0.4776x - 1997.4
R 2 

### = 0.7656

0 10000 20000 30000 40000 50000 60000 70000 80000 90000

0 50000 100000 150000 200000 DWT (M T)BW Capacity (m3)



### 128Figure A-6 Containership BW Capacity vs. TEU



### Containership BW Capacity vs TEU
y = 3.6774x + 887.54
R 2 

### = 0.9034

0 5000 10000 15000 20000 25000 30000 35000 40000 45000

0 2000 4000 6000 8000 10000 12000

TEUBW Capacity (m3)

Figure A-7 Tanker BW Capacity vs. Cargo Capacity (from HEC data)

Tanker BW Capacity vs. Cargo Capacity

- 20,000 40,000 60,000 80,000 100,000 120,000

0 100,000 200,000 300,000 400,000 

### Cargo Volume (m3)SWB Tanks (m3)



### 129

## Number of Vessels Undergoing BWMS Installation over the Phase-in Period

Table A-8 presents the break-down between number of existing and new vessels undergoing installation over the phase-in period (complete informati on on vessels undergoing BWMS installation over the period of the analysis is presen ted on chapter 4, table 4.2)

Table A-8 Vessel undergoing installa tion during the phase-in period

Vessel Type Year 1 Year 2 Year 3 Year 4 Year 5

Existing New New Existing New Existing New Existing New Existing
Bulk Ships Handy Bulk 0 0 0 0 3.7 0 3.7 0 1.8 0 Panamax Bulk 0 0 0 0 2.0 0 2.0 0 1.0 0 Ca pesize 0 0 0 0 0. 0 0 0.0 0 0.0 0 Tanker Ships Handy 0 0 0 0 4.4 0 4.4 0 2.2 0HandymaxAframax 0 1 0 1 7.5 1 7.5 1 3.8 1

Suezmax 0 0 0 0 3.1 0 3.1 0 1.5 0

VLCC 0 0 0 0 1.8 0 1.8 0 0.9 0 Container Ship Feeder 2 1 2 1 8.3 1 7.4 1 3.7 1 Feedermax 0 0 0 0 0.4 0 0.4 0 0.2 0

Handy 0 1 0 1 10.5 1 10.5 1 5.2 1 Subpanamax 2 2 2 2 19.9 2 18.7 2 9.4 3

Panamax 1 1 1 1 7.9 1 7.4 1 3.7 1 Postpanamax 0 1 0 1 12.1 1 12.1 1 6.1 1 Other Vessels Passenger ships 8 9 8 10 55.1 10 50.9 10 25.5 11

Gas carriers 0 0 0 0 2.4 0 2.4 0 1.2 0

Chemical

carriers 0 1 0 1 9.5 1 9.5 1 4.7 1

RORO 6 4 6 4 24.1 4 21.0 4 10.5 4 Combination vessels 0 7 0 7 54.8 8 54.8 8 27.4 8
General Cargo 3 2 3 2 17.5 2 16.2 2 8.1 2 Fishing 4 6 4 6 34.0 6 31.9 7 16.0 7 Other Offshore

and Coastal

Vessels 

### 40 86 40 90 300.6 95 280.6 100 140.3 104

Total 67 125 67 130 580 135 546 141 273 147

Note: Totals may not add due to rounding.



### 130

# Appendix B Ballast Wate r Exchange (BWE) Cost 55



### This appendix presents the cal culation of the ballast water exchange (BWE) cost, baseline cost, based on the 2007 vessel information pr ovided by the National Ballast Information Clearinghouse (NBIC) database. Th e baseline cost is equivalent to the Alternative 1 (No Action) described in this RA. We then comp ared to the BWE costs the proposed BWDS, alternative 2 (see Chapter 6 for discussion).

The direct costs of the current ballast wate r management practices (BWE) onboard vessels include the cost incurred by pump ing additional ballast water and the cost of additional crew labor required to carry out the mid-ocean ex changes. Herbert Engineering Corp (HEC) estimated the pumping costs based on the cost of generating the electric ity to run the ballast pump and the additional maintenance costs for the ballast pump and piping resulting from pumping more ballast. HEC assu med that no new equipment is required to comply with the rule. In determining the amount of ballast wate r involved in the excha nge, three volumes of ballast tank capacity represents a complete flow-through (FT) exchange, while two volumes of the ballast tank capacity represents an empty/refill (ER) exchange.

To determine pumping costs, HEC estimated the cost for pumping one cubic meter of ballast water. HEC used fluid mechanic equations to calculate the kilowatts (kW) of power required to pump one cubic meter of water against a typi cal ballast system pressure head of 25 m. Taking into account the efficiencies of the pumps, motors, and generators, HEC calculated that it takes 0.11 kW of generated powe r to pump one cubic meter per hour (m 3 

### /h) of ballast is pumped. Because most vessels have diesel generators, HEC based the cost estimate on generating power in this manner. Considering the fuel rates of t ypical diesel generators and a fuel cost of $620 per ton for marine diesel oil (MDO), and $300 per ton for heavy fuel oil (HFO), plus lube oil costs, the calculated cost per m 3 

### /h based on MDO fuel is $0.13 and based on HFO fuel is $0.07. As a rough order esti mate, HEC assumed that half the vessels use MDO for generators and ha lf use HFO; consequently, HEC estimated the average cost for powering the pumps to be $0.10 per m 3 

### /hr pumped.

Another component in the calculation of cost of BWE is the additional maintenance cost incurred by the use of the ballast pumps and pi ping systems to carry out BWE. A reasonable estimate based on industry experience is that the average annual maintenance costs are approximately 10 percent of the ballast pump’s capital cost. 56 

### In order to adequately account for the extra maintenance burden, a uniform annu al maintenance cost of 10 percent of the capital cost of one ballast pump is added for each vessel conducting exchanges. HEC divided this cost by the estimated annual quantity of ballast pumped per year. HEC estimated the annual quantity of ballast pumped without BWE with the assumption that the pumps operate

55 Methodology and sources provided by Herbert Engineering Corporation, information updated to 2007.
56 This number was also used in the BWM RA (USCG 2004). Here it is refined to account only for those costs that truly depend upon the increased ballast pumped required by BWE.



### 131

### at rated capacity for 100 to 125 hours per year, 57 

### increased by a factor of 2.5 on average by BWE (average factor of 2 for empty/refill a nd 3 for flow-through). HEC also assumed this maintenance cost covers replacement parts for pumps such as impellers, as well as maintenance of piping system components, such as pipes and valves. Approximately half of this maintenance cost is considered to be a ffected by increased flow through the system and half based on time of exposure to salt water by the system, which is unaffected by BWE. The maintenance cost affected by flow through the system is increased by 250 percent to account for BWE, and the total is divi ded by the estimated annual flow in the system to obtain the additional maintenance cost per cubic meter of ballast pumped for BWE. See Table B-1 for details on the maintenance cost calculations.

Table B-1 Additional Maintenance Costs per m 3 of Ballast Pumped for BWE

System Size

(m 3 /hr) Annual Maint Cost (no

BWE) Variable Maint Cost (1/2 affected by flow) BallastPumped/YrNo BWE Additional Ballast by

BWE (250%) BWE Additional Maint./ Yr BWE Add Maint / m 3

pumped

250 $1,500 $750 25,000 62,500 $1,875 $0.030
750 $2,500 $1,250 75,000 187,500 $3,125 $0.017
2000 $5,000 $2,500 200,000 500,000 $6,250 $0.013
5000 $10,000 $5,000 500,000 1,250,000 $12,500 $0.010



### Because carrying out BWE doubles or triples th e amount of time needed to empty and refill or flow-through ballast tanks and could re quire many hours of operation at sea, it is reasonable to add additional crew labor costs to this number. 58 

### This factor recognizes that the crew could be doing other work during this time . The charges would be primarily for officers to oversee the ballasting and possibly for unli censed crew if the vessel has manually-operated valves. The labor charges vary from very low cost 59 

### to over $50 60 

### per hour for U.S. or European officers. 61 

### Table B-2 shows an estimated average labor cost for BWE and includes the cost for BWE labor per m 3 

### of water. HEC assumed that no additional personnel would be added to the vessel to conduct BWE. For sma ller vessels, it is assumed that less time is required for ballasting and less s upervision is required compared to a large tanker or bulk carrier, where ballasting is a major operation.

57 This estimate is based upon a review of typical num bers of voyages and amounts discharged across all vessel types.
58 Based upon recent industry experi ence, it is assumed that vessels can maintain course and speed while performing BWE.
59 Costs are loaded.
60 U.S. wage rate source comes from BLS data for year 2007 using NAIC 483100 and SOC Code # 53-5021. This is the mean wage rate, times the load rate of 40 %, gave us approximately $50 as a loaded wage rate for U.S.
61 For small incremental increases in labor use on a ship, it is appropriate in assessing real costs to use direct labor charges.



### 132Table B-2 Additional Crew Costs per m 3 of Ballast Water Pumped for BWE

System Size

(m 3 /hr) Voyage /Year Add Labor Cost/Voyage BWE Add Labor Cost/Yr BWE Additional Ballast by BWE (250%) BWE Labor Cost/m 3

250 15 $90 $1,350 62,500 $0.022
750 15 $120 $1,800 187,500 $0.010
2000 10 $150 $1,500 500,000 $0.003
5000 6 $180 $1,080 1,250,000 $0.001



### Table B.3 summarizes the components of the co st for BWE described above and provides a total cost per cubic meter pumped for BWE.

Table B-3 Total Cost per m 3 for Ballast Pumped for BWE

System Size

(m 3 /hr) Elect Power Cost Maintenance Cost Labor Cost Total Cost

250 $0.010 $0.030 $0.022 $0.062
750 $0.010 $0.017 $0.010 $0.037
2000 $0.010 $0.013 $0.003 $0.026
5000 $0.010 $0.010 $0.001 $0.021 Note: All costs are per m 3 of ballast pumped



### Based on the above estimated cost per cubic meter of ballast pumped, HEC estimated the annual cost of BWE. While this estimate carries uncertainty, it provides a reasonable estimate of the magnitude of costs industr y can expect to incur because of BWE.

Ballast Water Exchange Practices

The costs of BWE influence shipping operations . The NBIC data indica te how much ballast is managed through exchange; whether ER, FT, or alternative methods are used. Alternative methods as reported in the NBIC data can include treatment, mid-ocean filling, or undetermined methods. However, they repres ent only a small portion (<0.5 percent) of managed ballast water.

Vessels that carry goods into th e U.S. typically discharge littl e ballast. Imports and foreign goods dominate U.S. maritime trade. In particular, large VLCC and ULCC tankers, which have the largest ballast capacities, discharge virt ually no ballast in U.S. waters; this is not surprising, since the U.S. imports primarily crude oil.

Containerships vary significantly in the likelihood that they wi ll discharge ballast, with the smallest size being the most likel y to discharge. Nationally, larg e containerships discharge at a rate of about two-thirds of their port arrivals. HEC expects th is rate to decrease over time. Generally, we expect all operators to minimize the costs of BWE. Balla st discharge data for regions such as the Great Lakes and Californi a, where mandatory BWM programs have been in effect for a number of years, demonstrate this trend.

133

### In an assessment of the role of no ballast onboard (NOBOB) vessels in the introduction of NIS into the Great Lakes (Johenge n, et al. 2005), it was concluded that over 90 percent of the vessels entering the Great Lakes have NOBOB. 62 

### HEC also used data from California, where BWM has been mandatory since 2000, to corroborate the behavior observed in the NBIC data. This data shows that implem entation of the mandatory BWM program for vessels 63 

### arriving at California ports (CSLC 2005) reduces the amount of ballast water discharged. Additionally, note that for containerships the no-d ischarge ratio has increased from about two-thirds to over 80 percent. Panamax and Post-Panamax vessels dominate containership traffi c in California.

HEC’s experience in developing BWE excha nge plans for industry and their personal communications with vessel operators supported these behavior patterns.

These data support the findings of this RA that the actual amount of ballast discharged, and thus requiring management, is significantly lower than the as sumptions used in the upper bound evaluation made in the previous BWM RA (USCG 2004).

The NBIC data also provide information on how the ballast water is managed. Table B-4 presents the ratio of ballast water managed us ing ER and FT, as well as using alternative methods (discussed above). ER is the dominant process for most vessel types. Bulk carriers and passenger ships ex tensively use FT.

62 The cited reference confirmed earlier analyses that NOBOBs dominate Great Lakes saltwater vessel entries despite significant discrepancies in the details reported by Colautti et al (2003) and the U.S. USCG. In most cases the disagreement involved a Colautti et al. design ation of NOBOB vs. a USCG designation of ballast on board . St. Lawrence Seaway data fo r the 2000 season indicate that 89 percent of the vessels entered as NOBOBs. The cited reference included further analysis of th e Seaway data that revealed that only ~7 percent of the vessels entering that year would have legally been subject to the deep-water ballast exchange and salinity verification requirements in effect at that time, the remainder having entered the system as NOBOBs, but ballasted at freshwater ports between Quebec City and Montreal, and were thus counted as in a ballasted condition by the Seaway. Such vessels would have been counted as being in a ballasted condition, but compliant with entry regulations, by the U.S. USCG. Thes e numbers lead the authors to conclude that the best estimate is that over 90 percent of the vesse ls entering the Great Lakes do so as NOBOBs.
63 Vessel types are as categorized by California.



### 134

### Annual Ballast Water Exchange Costs

The BWE exchange costs were calculated ba sed on the percentage ballast water managed through ER or FT 64 

### and by the current discharged amount of non-coastwise vessels operating in the U.S. waters in 2007. In order to calcu late the amount of mana ged ballast water, HEC assumed that all ballast water will be exchange d on every voyage to a U.S. port from outside the U.S. EEZ. Most operators will likely exch ange only the tanks they need before entering port depending on the cargo opera tions they intend to perform once in the United States. They also assigned a uniform annual maintenance cost to every vessel that made at least one transit outside the EEZ; for many vessels that only make one port call in the United States from outside the EEZ, this would overstate th e annual cost to this vessel. HEC believed, however, that even though they could be overestim ating the annual cost of the final rule, their costs certainly represents the ma gnitude of the expenditure they would expect to see. HEC estimated a total annual cost for BWE to be $5 million for year 2007.

Table B-4 BWE Costs for 2007

Vessel Type %ER %FT 2007 Cost/m 3 Total Discharge BWE Costs

Bulk Carriers Handy 0.35 0.37 $0.036 19,205,314 $17,657 Panamax 0.23 0.65 $0.028 13,643,470 $13,019 Capesize 0.50 0.26 $0.025 13,058,853 $8,135 Tank ships Handy 0.12 0.17 $0.037 700,461 $20,035 Handymax - Aframax 0.21 0.17 $0.022 165,111,289 $3,367,364 Suezmax 0.07 0.00 $0.025 101,459,503 $344,409 VLCC 0.45 0.00 $0.022 1,939,980 $37,906 ULCC 1.00 0.00 $0.021 9,900 $418 Container ships Feeder 0.03 0.09 $0.067 20,068 $45 Feedermax 1.00 0.00 $0.059 20,068 $239 Handy 0.45 0.10 $0.056 1,275,040 $8,635 Subpanamax 0.72 0.05 $0.050 1,216,466 $9,800 Panamax 0.70 0.02 $0.050 654,601 $4,817 Postpanamax 0.74 0.00 $0.037 4,468,678 $25,197 Other vessels Passenger ships 0.06 0.00 $0.064 809,286 $6,289 Gas carriers 0.23 0.05 $0.022 189,918 $2,552 Chemical carriers 0.37 0.18 $0.045 7,946,202 $455,901 RORO 0.39 0.02 $0.056 365,683 $17,475 Combination vessels 0.99 0.00 $0.056 15,673,816 $657,801 General Cargo 0.47 0.23 $0.056 257,428 $6,310.96 Total 348,026,022 $5,004,003

64 Percentages provided by Herbert Engineering Corporation



### 135

# Appendix C Cost of Ballast Water Management Systems in Terms of Vessel Value and Daily Charter Rates

Shipowners face three cost elem ents: capital, operating, and voyage. Capital costs are fixed costs, whereas operating and voya ge costs are variable. Becaus e the fixed costs are always present, shipowners will offer their vessels fo r charter if at least the variable costs are covered. These costs represent the lower bound of charter rates. Installation of BWMS for new buildings represents part of the capital cost. We can compare the cost impact to the vessel value at various ages and their amortized cost to the increase in the charter rate necessary to recover this investment. Operatio nal costs associated with BWMS would form part of the lower bound charter rate. However, as shown below for bulk carriers, these operational costs are small in co mparison to charter rates.

Long-term (i.e., 12-month) charter rates re flect supply and demand. Table C-1 shows a twenty-year average (1980-2000) of the daily ti me charter rates for several vessel types. However, current rates are significa ntly higher for most vessel types.

Table C-1 Average Daily Time Charter Rates, 1980-2000 (Kite-Powell 2001)

Vessel Type $/day

Bulk Carriers
Handy 8,000

Panamax 9,500
Capesize 14,000
Tank Ships

Product 12,000

Aframax 13,000

Suezmax 16,500

VLCC 22,500
Containerships
400 TEU (Feeder) 5,000
100 TEU (Feedermax) 9,000

1500 TEU (Handy) 13,500
2000 TEU (Subpanamax) 18,000

Source: Hebert Engineering Corp., and AMSEC, LLC



### Bulk carriers represent 14 percent of the overall installation costs for BWD-2. Estimated installation costs in 2021 for Handy size bu lk carriers range from $419,000 to $842,000 per vessel (see Table 3.4). Estimated values of bulk carriers at the top of the Handy size range (~50,000 DWT) vary, depending on trade demands. At the end of 2005, the estimated value of this size bulk carrier ranged from $29 million for a new vessel to $10 million for a 20- year-old vessel (Compass 2006).

136

### The Baltic Exchange, formerly known as the Ba ltic Freight Index (BFI), tracks bulk carrier potential revenues through the Baltic Dry Inde x (BDI). From 1996 to 2003, this index varied in the range from approximately 1000 to approx imately 1500 (Findata 2006). In the next two years, this index soared to over 5500 on two occasions, with a minimum below 2000, exhibiting a recent trend toward increasing vol atility (Findata 2006). At the end of 2005, the BDI was about 2400. Recent projections based upon increased demand by China and other Asian countries suggest that the BDI, and thus charter rates, will tend to increase over the long term (Fearnley 2006).

The assumption that current rates represent an estimate of future returns allows for the approximation of an upper bound of the amortized cost of BWMS rela tive to potential

revenues.

At the end of 2005, the average 12-month time ch arter rate for the top of the Handy size range was $17,000 per day (Compass 2006). According to HEC, amortizing the BWMS installation costs of $419,000 to $842,000 over an assumed 15-year service life, the additional cost of BWM is approximately 0.4 to 0.8 percent of the daily charter rate. Even if the charter rates were to temporarily return to the 20-year average of $8,000 per day, the amortized cost would rise to only about 1.7 percent of the daily charter rate. HEC has estimated operating costs in 2006 to be less th an 0.05 percent of the daily charter rate.

For a Capesize bulk carrier, the 10-year-old vessel estimated value is $38 million and the current average 12-month time charter is $34,500 per day (Compass 2006). Upper bound installation costs are about 3.8 pe rcent of the value of a 10-y ear-old vessel. Amortizing the cost over 15 years indicates a daily cost of approximately 0.8 percent of the daily charter rate.

Tanker long-term charter rates also reflect supp ly and demand. Over the past four years, charter rates for Aframax tankers have steadily increased from $17,000 per day at the end of 2002 to $37,500 per day at the end of 2005 (Com pass 2006). Demand for oil continues to increase as population and energy use per capita increase, thus requiring an increase in oil shipment. Tanker orders declined in 2005 compar ed with the previous two years (Marsoft 2006). The existing fleet of single hull tanke rs has largely been replaced and new construction is tapering off.

Assuming that the average 12-month time char ter is $35,000 per day for an Aframax tanker, amortizing the installation cost over 15 years indi cates a cost of approximately 0.6 percent of the daily charter rate. Assuming a 20-year average of $13,000 per day, the cost of the BWMS, installation increases to about 1.6 percen t of the daily charter rate. Other vessel types exhibit comparable trends.

Industry experts were consulted by HEC to assess other factors affecting costs and economies of scale are possible for BWMS. Th e consensus was that prices provided by manufacturers represent current costs with current technologie s and construction facilities. Offshore manufacturing (e.g., in China, Korea) a nd larger manufacturing facilities will drive down future costs.

137

### Charter rates and the overall co st of shipping goods are market driven. The operating costs represent the lower bound of charter rates. Ship owners will pull vessel s off the market when rates fall much below this level. Therefore, in the short term, modest capital costs, such as the installation of BWMS, w ill have little or no effect on charter rates. Over the longer run, the cost of shipping goods will reflect the costs of BWMS because ship owners must ultimately recapture their investment in order to remain commercially viable. We also found additional information suggesting similar findings in terms of the magnitude of global trade and the low impact of costs being passed on to consumers. 65

65 King, Dennis. 2011. MEPC 62 special: The world can afford sustainable shipping. Sustainable Shipping, July 8 2011 ( http://www.maritime-enviro.org/news/King_Sustainable_Shipping_070811.pdf ). King suggests that if the cost of ballast water regulations was passed along to global businesses and consumers, the price increase of imported goods will be minimal and st atistically indistinguishable from no change.



### 138

# Appendix D Ballast Water Man agement System Costs for the Foreign Vessels

This appendix presents the information on the ballast water management costs for the foreign vessels that operate in U.S. waters. The data sources for the information below are described on chapters 2 and 3 of the main document.



## Installation Costs of Ballast Water Management Systems

In order to calculate the installation costs fo r the foreign vessel, HEC assumed that these vessels will have a wide range of options of BWMS vendors and therefore, the installation costs will be potentially lower than the co sts incurred by the U.S. vessels. Tables D-1 provides the average ballast pumping capacities fo r each category of vessel and the costs for the systems of the indicated capacities for the foreign fleet. Installed costs vary, depending on the technology utilized and the cost of the e quipment to implement that process. However, variations in cost are also related to a pro cess’s development stage

139Table D-1 Estimated Average Installed Cost ($000) for the Foreign Fl eet by Vessel Category and BWMS

Vessel Category Est. Ballast Pumping Capacity (m3/hr) Chlorine Generate Chemical Apply Filter & Radiate Deoxygenate Ozone Generate

Bulk carriers Handy 1,300 544 333 634 453 593 Panamax 1,800 572 363 788 501 723 Capesize 3,000 400 425 567 567 967 Tank ships Handy 1,100 474 321 573 434 541 Handymax/ Aframax 2,500 500 400 708 544 871 Suezmax 3,125 375 431 531 573 991 VLCC 5,000 NA 525 NA 662 1,350 ULCC 5,500 NA 525 NA 662 1350 Containerships
Feeder 250 300 250 225 165 252 Feedermax 400 338 265 297 236 311 Handy 400 338 265 297 236 311 Subpanamax 500 363 275 345 283 351 Panamax 500 363 275 345 283 351 Postpanamax 750 425 300 465 400 450

Other vessels Passenger ship 250 300 250 225 165 252 Gas carrier 4,800 NA 515 NA 653 1,312 Chemical carrier 600 388 285 393 330 391 RORO 400 338 265 297 236 311 Combination vessel 400 338 265 297 236 311

General cargo 400 338 265 297 236 311 Fishing Vessels 66 250 300 250 225 165 252

Other Offshore and Coastal Vessels 67 325 340 258 325 200 282
Source: Herbert Engineering Corporation. Note: The co sts are for the processes considered the most costeffective for the categor y of vessel, considering both installed cost and operating cost.



### Table D-2 presents the installation costs for the foreign vessels by vessel type. The installation costs were calculat ed based on the average costs for each available ballast water

66 Information obtained through consultation with the U.S. Coast Guard Commercial Fishing Vessels Division.
67 Information obtained through consultation with the U.S. Coast Guard Offshore Vessels Division.



### 140

### management system presented on Table D-1. Th e low costs presented on the table below are related to the cheapest management system av ailable and the high costs are related to the most expensive management system available.

Table D-2 Installed Ballast Wa ter Management System Costs ($ 000) for the Foreign Vessels

Vessel Type Installed Costs in 2007

Low High

Bulk carriers Handy 333 634 Panamax 363 788 Capesize 400 967 Tank ships Handy 321 573 Handyman-Aframax 400 871 Suezmax 375 991 VLCC 525 1,350 ULCC 525 1,350 Container ships
Feeder 165 300 Feedermax 236 338 Handy 236 338 Subpanamax 275 363 Panamax 275 363 Postpanamax 300 465
Other vessels Passenger ships 165 300 Gas carriers 515 1,312 Chemical carriers 285 393 RORO 236 338 Combination vessels 236 338 General Cargo 236 338 Fishing Vessels 165 300 Other Offshore and Coastal Vessels 200 340

Source: Herbert Engineering Corporation



### The primary cost estimate for the foreign fleet as sumes that these vessels will be subjected to the same phase-in schedule as the U.S. fleet (Table 1.2). For the existing vessels that will comply with this rulemaking af ter January 2014, we have assumed that 40 percent will install BWMS each year, in the first two years and 20 percent in the last year of the compliance requirement. In 2016, the remainder of the fleet built before December 1, 2013 will be required to meet the BWDS. In this case, we have assumed that 40 percent of the population will install the system in the first two years and 20 percent in the last year of the compliance requirement. Given these assumptions and the pr ojected fleet growth as defined in Chapter 2 (Table 2.3), the number of foreign vessels und ergoing BWMS installations is as shown in Table D-3.

141

### 142 Table D-3 Number of Foreign Vessels Undergoing BWMS Installation by Year and Type

Vessel type Year Total 1 2 3 4 5 6 7 8 9 10
Bulk carriers Handy 40.7 40.6 342.3 325.5 166.2 7.0 6.9 6.8 6.7 6.6 949.3 Panamax 5.2 5.1 173.2 172.4 87.9 3.4 3.3 3.3 3.2 3.2 460.2 Capesize 0.3 0.3 15.7 15.7 8.0 0.3 0.3 0.3 0.3 0.3 41.6 Tank ships Handy 23.9 24.0 46.8 37.4 21.4 5.5 5.6 5.8 5.9 6.1 182.4HandyAframax 29.6 30.3 344.2 345.0 189.3 33.6 34.5 35.3 36.3 37.2 1115.1 Suezmax 4.2 4.3 48.5 48.7 26.7 4.7 4.9 5.0 5.1 5.2 157.3 VLCC 6.4 6.6 74.8 74.9 41.1 7.3 7.5 7.7 7.9 8.1 242.2 ULCC 0.7 0.7 7.8 7.8 4.3 0.8 0.8 0.8 0.8 0.8 25.2 Containerships
Feeder 10.0 10.0 13.4 9.3 5.6 1.9 2.0 2.0 2.1 2.1 88.0 Feedermax 18.6 18.6 14.8 6.7 4.6 2.5 2.6 2.6 2.7 2.7 115.0 Handy 18.2 18.3 50.5 44.3 25.3 6.2 6.4 6.5 6.6 6.8 284.2 Subpanamax 7.7 7.9 77.4 77.6 43.0 8.5 8.7 8.9 9.0 9.2 387.9 Panamax 7.8 8.0 78.3 78.5 43.5 8.6 8.8 9.0 9.1 9.3 392.4 Postpanamax 12.2 12.5 122.4 122.7 68.1 13.5 13.7 14.0 14.3 14.6 613.5

Other vessels Passenger ships 50.7 51.0 43.9 23.2 16.7 10.3 10.7 11.0 11.4 11.8 240.7 Gas carriers 20.3 20.4 46.1 38.9 22.6 6.2 6.3 6.5 6.6 6.7 180.6 Chemical carriers 47.9 48.6 229.5 219.8 125.3 30.7 31.5 32.3 33.2 34.0 832.9 RORO 38.7 39.2 140.8 130.9 75.6 20.4 20.9 21.4 22.0 22.6 532.5 Combination vessels 3.2 3.2 9.5 8.5 4.9 1.4 1.4 1.4 1.5 1.5 36.5 General Cargo 44.1 44.3 99.5 83.8 48.6 13.4 13.7 14.0 14.2 14.5 390.3 Fishing 1.9 2.0 7.8 7.4 4.4 1.3 1.4 1.4 1.5 1.5 30.7 Other Offshore and Coastal Vessels 12.9 13.1 22.7 19.2 13.1 6.9 7.3 7.6 8.0 8.4 119.2 Total 405 409 2010 1898 1046 195 199 204 208 213 6787.7

Note: Totals may not add due to rounding

### Table D-4 shows the breakdown by year, vessel t ype, and the overall share for each vessel type.

Table D-4 Installation Costs for th e BWMS for Foreign Vessels ($Mil)

Vessel Type Year Total 1 2 3 4 5 6 7 8 9 10

Bulk Carriers Handy Bulk 13.56 13.53 113.97 108.39 55.36 2.32 2.29 2.26 2.23 2.20 316.11 Panamax Bulk 1.88 1.86 62.87 62.57 31.89 1.22 1.21 1.19 1.18 1.16 167.04 Capesize 0.13 0.13 6.29 6.29 3.20 0.12 0.12 0.12 0.12 0.12 16.63 Tank Ships Handy 7.67 7.71 15.02 12.00 6.88 1.76 1.81 1.86 1.90 1.95 58.57HandymaxAframax 11.83 12.13 137.66 137.98 75.71 13. 44 13.78 14.14 14.50 14.88 446.05 Suezmax 1.56 1.60 18.20 18.25 10.01 1.78 1.82 1.87 1.92 1.97 58.98 VLCC 3.37 3.46 39.25 39.34 21.58 3.83 3.93 4.03 4.13 4.24 127.16 ULCC 0.35 0.36 4.08 4.09 2.24 0.40 0.41 0.42 0.43 0.44 13.21 Containerships
Feeder 1.65 1.65 2.22 1.54 0.93 0.32 0.33 0.33 0.34 0.35 9.65 Feedermax 4.38 4.39 3.50 1.58 1.09 0.60 0.61 0.62 0.63 0.65 18.05 Handy 4.28 4.31 11.91 10.46 5.97 1.47 1.50 1.53 1.56 1.59 44.60 Subpanamax 2.12 2.17 21.29 21.33 11.84 2.34 2.39 2.44 2.49 2.54 70.94 Panamax 2.15 2.19 21.54 21.58 11.98 2.37 2.42 2.47 2.52 2.57 71.77 Postpanamax 3.66 3.74 36.73 36.80 20.42 4.04 4.12 4.21 4.29 4.38 122.39

Other vessels Passenger ships 8.37 8.42 7.24 3.82 2.76 1.70 1.76 1.82 1.88 1.94 39.72 Gas carriers 10.44 10.50 23.75 20.04 11.62 3.20 3.26 3.33 3.39 3.46 93.00 Chemical carriers 13.66 13.86 65.40 62.64 35.70 8.76 8.99 9.22 9.46 9.70 237.39 RORO 9.14 9.24 33.23 30.90 17.85 4.81 4.93 5.06 5.19 5.33 125.68 Combination vessels 0.75 0.76 2.24 2.01 1.17 0.32 0.33 0.34 0.35 0.36 8.62 General Cargo 10.41 10.47 23.49 19.78 11.48 3.17 3.23 3.30 3.36 3.43 92.11 Fishing 0.32 0.33 1.28 1.22 0.72 0.22 0.23 0.24 0.25 0.26 5.06 Other Offshore and Coastal Vessels 2.57 2.63 4.53 3.85 2.62 1.39 1.46 1.53 1.60 1.68 23.85 Total 114.27 115.44 655.67 626.47 343.01 59.59 60.93 62.31 63.72 65.18 2,166.59 Total PV 3% 110.94 108.82 600.04 556.61 295.89 49.90 49.54 49.19 48.84 48.50 1,918.25 Total PV 7% 106.79 100.83 535.23 477.93 244.56 39.70 37.94 36.26 34.66 33.13 1,647.05



### 143

## Operating Costs of Ballast Water Management System
BWMS operational costs are in addition to the capita l costs for installation . In order to obtain a cost of operation for the foreign vessel, we first had to calculate the amou nt of ballast discharge per vessel type (Table D-5).
Table D-5 Estimated ballast water discharge in 2007

Vessel Type # of Arrivasl Total Ballast Water Discharged Average Ballast Water Discharged per Vessel type
Bulk carriers Handy 1,137 8,632,730 7,593 Panamax 300 5,281,319 17,604 Capesize 42 339,360 8,080 Tank ships Handy 120 700,461 5,837 Handymax-Aframax 7,303 162,180,186 22,207 Suezmax 4,040 100,803,870 24,951 VLCC 285 1,869,274 6,559 ULCC 11 9,900 900 Container ships
Feeder 68 N/A N/A N/A Feedermax 6 1,200 200 Handy 22 28,154 1,280 Subpanamax 68 185,992 2,735 Panamax 56 107,470 1,919 Postpanamax 92 213,989 2,326

Other vessels Passenger ships 1,003 809,272.3 807 Gas carriers 23 189,917.56 8,257 Chemical carriers 1,211 7,722,161.79 6,377 RORO 533 344,174.99 646 Combination vessels N/A N/A N/A General Cargo 55 52,609.2 957 Fishing Vessel N/A N/A N/A Other Offshore and Coastal Vessels 6 24,022 4,004
Note: Totals may not add due to rounding. 

### The average amount of ballast wa ter discharged per vessel type is calculated by using data collected by NBIC for year 2007. The amounts of discharge from vessels, represented in the above table, are of those vessels that reported actual discharge of ballast in year 2007. This data was then cross-referenced to population data gath ered from USCG MISLE database in order to match vessel activity with their co rresponding category by vessel type.

Once the average yearly amount of ballast di scharge was determined, we multiplied these estimates by the number of vessels undergoing installation in Table D-3. Then multiply this

68 Information for Feeder vessel is assumed to the same as for Feedermax



### 144

### product by the cost presented in Table D -2 using the lowest cost per cubic meter of water for each particular vessel type. The calculated value is then used to formulate an annual operating cost for BWM (Table D-5) per vessel type.

Table D-6 displays the operating costs for all affected vessels in the population. The total operating costs covering the period of analysis is approximately $61 million and $47 million at 3 and 7 percent discount ra tes, respectively.

Table D-6 Annual Operatin g Costs for BWM ($Mil)

Vessel Type Year Vessel Type SubTotal 1 2 3 4 5 6 7 8 9 10

Bulk Carriers Handy Bulk 0.072 0.144 0.750 1.326 1.620 1.632 1.644 1.656 1.668 1.680 12.191 Panamax Bulk 0.032 0.064 1.147 2.224 2.773 2.795 2.815 2.836 2.856 2.876 20.420 Capesize 0.001 0.002 0.050 0.099 0.123 0.124 0.125 0.126 0.127 0.128 0.907 Tank Ships Handy 0.029 0.059 0.116 0.162 0.188 0.195 0.202 0.209 0.216 0.224 1.600 Handymax- Aframax
0.304 0.615 4.148 7.689 9.632 9.976 10.330 10.693 11.065 11.447 75.899 Suezmax 0.175 0.354 2.385 4.421 5.538 5.736 5.939 6.148 6.362 6.581 43.638 VLCC 0.211 0.062 0.701 0.703 0.385 0.068 0.070 0.072 0.074 0.076 2.422 ULCC 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.001 Containerships
Feeder 0.001 0.001 0.002 0.001 0.001 0.000 0.000 0.000 0.000 0.000 0.009 Feedermax 0.002 0.005 0.007 0.008 0.008 0.009 0.009 0.009 0.010 0.010 0.076 Handy 0.029 0.058 0.139 0.211 0.251 0.261 0.271 0.282 0.292 0.303 2.098 Subpanamax 0.023 0.047 0.279 0.512 0.641 0.666 0.692 0.719 0.746 0.774 5.098 Panamax 0.005 0.010 0.057 0.104 0.130 0.136 0.141 0.146 0.152 0.158 1.038 Postpanamax 0.029 0.059 0.351 0.644 0.806 0.838 0.871 0.905 0.939 0.974 6.416
Other vessels Passenger ships 0.000 0.000 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.008 Gas carriers 0.035 0.070 0.150 0.218 0.257 0.268 0.279 0.290 0.301 0.313 2.183 Chemical carriers
0.019 0.039 0.132 0.221 0.272 0.285 0.297 0.310 0.324 0.338 2.238 RORO 0.001 0.002 0.005 0.008 0.009 0.010 0.010 0.011 0.011 0.012 0.077 Combination vessels
0.001 0.001 0.003 0.005 0.006 0.006 0.006 0.006 0.007 0.007 0.047 General Cargo 0.000 0.001 0.001 0.002 0.002 0.002 0.002 0.002 0.002 0.002 0.017 Fishing 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.002 Other Offshore and Coastal Vessels 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.001 0.001 0.004 Total 0.971 1.593 10.424 18.556 22.645 23.009 23.708 24.423 25.155 25.904 176.388 Total PV 3% 0.943 1.502 9.540 16.487 19.534 19.269 19.277 19.280 19.279 19.275 144.385 Total PV 7% 0.908 1.392 8.509 14.156 16.145 15.332 14.764 14.214 13.683 13.168 112.271
Note: Total may not add due to rounding.



### 145

## Total Costs of Ballast Water Man agement Systems for Foreign Vessels

In Table D-7, we estimate the total cost over the period of analysis for the foreign vessels. The total estimated cost was approximately $2.0 bi llion with a 3 percen t discount rate and $1.6 billion with a 7 percent discount rate.

Table D-7 Total Cost of the Rulema king to Foreign Vessels ($Mil)

Year Installation Costs Treated Ballast Discharged (m 3 ) Annual Operating Costs Total Cost

3% Discount 7% Discount 3% Discount 7% Discount 3% Discount 7% Discount

1 $110.94 $106.79 6,975,800 $0.94 $0.91 $111.88 $107.70
2 $108.82 $100.83 10,759,556 $1.50 $1.39 $110.32 $102.22
3 $600.04 $535.23 74,183,840 $9.54 $8.51 $609.57 $543.73
4 $556.61 $477.93 131,568,095 $16.49 $14.16 $573.10 $492.09
5 $295.89 $244.56 159,811,057 $19.53 $16.15 $315.42 $260.71
6 $49.90 $39.70 161,813,571 $19.27 $15.33 $69.17 $55.04
7 $49.54 $37.94 166,832,339 $19.28 $14.76 $68.82 $52.71
8 $49.19 $36.26 171,971,026 $19.28 $14.21 $68.47 $50.48
9 $48.84 $34.66 177,232,781 $19.28 $13.68 $68.12 $48.34
10 $48.50 $33.13 182,620,835 $19.28 $13.17 $67.77 $46.30
Total $1,918.25 $1,647.05 $144.38 $112.27 $2,062.64 $1,759.32
Annualized $224.88 $234.50 $16.93 $15.98 $241.80 $250.49



## Comparison of Costs and Benefits of Ballast Water Management Systems Including Foreign Vessels

In Chapter 6 of this RA we compared the benefits of the FR to the estimated costs for the U.S. fleet only. In this chapter, we present the sa me comparison but now include the costs for the foreign fleet. It should be noted that this compar ison does not include a valu ation of benefits that would result from the reduced risk of invasions from foreign-flagged ve ssels on a global basis 69



### . The annualized cost for foreign ve ssels over the 10-year period of for the phase one standard is estimated to be $282 million at a 7 percent discount rate (Table D-7). A dding the annualized cost for foreign vessels to the annualized costs for U.S. ($92 million) we obtain a total annualized cost of approximately $251 million at a 7 percent discount rate (Table D-8). The quantified benefits for the phase one standard ranges from $5 million to $470 million per year, with a mid range of $141-$240 million per year and high range of $276- $470 million per year (at a 7

69 The benefits estimates presented in this RA only consider reductions in NIS invasions to U.S. waters. Installing and using ballast water treatment systems will also result in reductions in NIS invasions to foreign waters, from both U.S. and foreign-flagged vessels. We have not attempted to estimate the benefits that might accrue to waters other than those in the U.S.



### 146

### percent discount rate). Thus, quantified benef its will only exceed the estimated costs for high range benefits estimate of High Effectiveness.

Table D-8 Total Cost of the Rulemaking to U.S. and Foreign Vessels ($Mil)

Year Installation Costs Treated Ballast Discharged (m 3 ) Annual Operating Costs Total Cost

3% Discount 7% Discount 3% Discount 7% Discount 3% Discount 7% Discount

1 $165.76 $159.57 7,258,222.86 $0.99 $0.96 $166.75 $160.52
2 $130.04 $120.50 11,018,776.04 $1.55 $1.44 $131.60 $121.94
3 $793.18 $707.51 76,986,014.36 $9.97 $8.90 $803.16 $716.41
4 $740.25 $635.61 136,789,064.58 $17.27 $14.83 $757.52 $650.44
5 $423.61 $350.14 166,424,588.16 $20.50 $16.95 $444.11 $367.08
6 $85.58 $68.09 168,569,876.26 $20.24 $16.10 $105.82 $84.19
7 $85.62 $65.58 173,825,737.05 $20.25 $15.51 $105.87 $81.09
8 $85.67 $63.17 179,207,285.60 $20.26 $14.93 $105.93 $78.10
9 $85.74 $60.85 184,717,818.82 $20.26 $14.38 $106.01 $75.23
10 $85.83 $58.64 190,360,716.72 $20.26 $13.84 $106.09 $72.48
Total $2,681.30 $2,289.65 $151.55 $117.83 $2,832.86 $2,407.48
Annualized $314.33 $326.00 $17.77 $16.78 $332.10 $342.77



### Comparison of Discounted Cumulative Benefits and Costs

When costs to foreign-flagged vessels are added to the domestic costs, the rule would reach the breakeven point (discounted cumulative benefits equal or outweigh discounted cumulative costs) by year 12 assuming a 63 percen t reduction in the invasion rate and year 15 assuming a 37 percent reduction in the invasion rate. Figure D- 1 illustrates the cumulative costs of the BWD in relationship to the cumulative damages avoided to U.S. waters.

147Figure D-1 Comparison of Cumulative Costs and Benefits (7% Discount Rate, $2007, Mid-Point Benefit per Invasion Estimate)



### $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20$ Millions



### Year Benefits: 37% Reduction in Invasion Rate Benefits: 63% Reduction in Invasion Rate

Domestic Costs Foreign & Domestic Costs



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# Appendix E Information Provid ed by Public Comments

We received several comments from the public providing data on the BWMS costs during the NPRM public comment. We present the information submitted by the public in table E-1. For the standard and applicability of th e FR, equipment and installation costs provided by the public are consistent with the costs in the RA. Therefore, there was no need to modify the range of costs used by Coast Guard due to the pub licly supplied cost data. Some of the cost data provided by the public and presented below is related to vessels that are now excluded from the FR, such as Great Lakes and inland vessels. This data wa s not used on the FR analysis, but will be incorporated into any future applicable analyses.

Table E-1 Cost Information on BWMS Provided by Public Comments

Comment Equipment Costs Installation Costs O & M Costs (per year) System size Retrofitting costs System Shipyard costs (per vessels) 1 $400K - $580K - - - - - -

2 $250K - $580K 10% of equipment
cost - - -

3 $600K - $700K 25% - 75% of equipment
cost - 1200m 3 /h - 1500m 3 /h - -

4 - - - - $20 million - 5 $200K - $250K - - - - UV - 6 $750K - - - - Filter -
7 $640K- 1.67Mil $134K $21K per system - - - -
8 $250K - $2mil $2.5 - $500K - - - - -
9 - - - - - - $50K - 100K 10 >$500K - $85K - $875K - - - -



### 149

# Appendix F Aquatic NIS Invasion Process

This Appendix provides a brief summary of the scientific understandi ng of the aquatic NIS invasion process. It highlights the factors and events related to the introducti on and successful establishment of aquatic NIS transported by a ve ctor (e.g., ballast water). This analysis was prepared to provide the tec hnical foundation for the Programmatic Environmental Impact Statement (PEIS) developed in support of the United States Coast Guard (USCG) Ballast Water Discharge Standard (BWDS) rulemaking. For the purposes of the FPEIS, the analysis focuses on the transport of individual organisms in ba llast water and release into a new location (introduction), and the evaluation of whether thes e individuals provide th e basis for successful population growth and survival (establishment). NIS introduction occurs when a species survives tr ansport by a vector and is released into a new environment. Establishment occurs when the introduced species reproduces and spreads in its new environment. Thus, in simple terms, it is assumed that NIS are introduced when individual organisms are transported in ballast water and re leased into a new, non-native, location, whereas establishment occurs when introduced NIS establ ish a viable population. Impacts occur when an introduced species establishes a population that alters the ecology, food we b, or fisheries, or otherwise disrupts the natural eco system or socioeconomics of an environment or region. Many factors affect the survival, spread, and pro liferation of introduced species, including basic climatic factors and food resources, the nature of the reproductive biology of a species, and the presence or absence of competitors, predators, and parasites (Carlton 1996). The dispersal of introduced NIS occurs through vectors 70 

### – the physical means or agent for transporting a species. In broad terms, the successful establishment of NIS involves seven se quential events, each having an associated probability of occurrence: (1) interface of species w ith transport vector; (2) vector take-up (engaging) of specifi c species; (3) survival of the tr ansport event; (4) release from vector; (5) initial survival upon release; (6) establishment of first repr oducing population; and (7) establishment of long-term reproducing populations. Each of these events is briefly described be low, in a summary largely drawn from Carlton (1985). Some of these events may not be directly relevant to the discus sion of potential impacts of BWDS, but they help in presenting the overall context of the NIS invasion process:

1. Probability of interfacing with transport vector – species in the water column may or may not be immediately adjacent to the vessel at the moment the vessel is in a position to engage the local biota by drawing in ballast water. There is large temporal and spatial variability (determined by currents, tides, temper atures, salinity, stochastic events such as storms, as well as random probability) of the probability of interfacing with the transport vector, which can change within minutes to hours (as well as seas onally and annually). This temporal and spatial variability of th e probability of interface determines which species are or are not in the available species pool for transport to a different location.

70 Vector is the physical means or agent by which a species is transported. Ballast water is the vector of interest in this rulemaking, but many others exist and play an important role in the dispersal of NIS worldwide, including ships’ hulls (fouling organisms), drilling platforms and dry docks, fisheries activities, and the aquarium pet industry.



### 150

### 2

. Probability of transport vector engaging specific species – on ly a subset of the pool of available species immediately next to the vesse l are actually taken into the vessel. That is, being adjacent to the ship and within th e effective zone of a vessel’s ballast water intake at the time of ballasting does not n ecessarily result in uptake. For example, species such as some shrimp and fish activel y detect a water current (like the one created by the uptake of ballast water) a nd swim away from it. In addition, other species may not be engaged in the water flow as readily as others, even when acting as passive particles (e.g., planktonic organisms), due to their size, shape, or relative density.

3

. Probability of surviving the transport event – a substantial number of factors interact to determine the probability of a transported species surviv ing before being released. For example, the uptake process (including injury due to physical contact with the ship and its systems), light, temperature, salin ity, oxygen, food, voyage duration, and other variables during transport all play an important role. Given the fact that there are thousands of species being transported in ball ast water, it is particularly difficult to characterize the probabilities, except in very broad terms (i.e., the large variability in terms of the type of organisms entrained as well as the physical conditions in the ballast water, creates both ‘species specific’ and ‘voyage specific’ probabilities).

4

. Probability of being released – not all spec ies transported are released; for example, organisms in a ballast tank may not leave th e ballast tank, if not all of the water is discharged, or if the organisms in question ar e fouling species that attach themselves to the inside of the tank or imbed in the sedime nt that collects in the ballast tank. Organisms in a ballasted cargo hold are always either fu lly discharged (since the cargo now replaces 100% of the ballast water) or di e in transport (organisms th at have settled on the cargo hold walls die of exposure, desiccation, or sm othering by the cargo) (C arlton 2005). It is important to distinguish betw een these two different ballast systems (ballast tank and ballastable cargo hold) because of the long-term potential of ballast water in ballast tanks to not result in complete re lease after each voyage, which can then lead to colonies of living organisms in ballast tanks that remain there for a considerable period of time. These organisms could essentially re-seed the ship with larvae or other propagules, and pose a risk for future introducti ons even without new ballasting.

5

. Probability of initial survival upon release – regardless of inoculum size (the number of released individuals of any lif e stage), most released species (and perhaps all released species for most discharge events) do not surv ive after release. In addition, the discharge process can also result in injury to transpor ted organisms due to physical contact with the ship systems. The scientific community doe s not have a complete understanding of the reasons for this, although some of the many potential causes in clude post-transport physiological weakness, post-transport starva tion, physiological mismatch with the new environment once released, predation (consumption) at the release site, and competition with the resident biota. Over the decade s, numerous vessels arriving in U.S. coastal waters have discharged millions of orga nisms (e.g., diatoms, copepods, worm larvae), which have appear to result in relatively few invasions. This fact is interpreted by the scientific community as the result of failure of initial survival. However, there is no certainty in this, as many other factors coul d be coming into play, including: many of the

151

### organisms could have survived but not re produced, and therefore failed to establish permanent populations; invasions could simp ly be overlooked for abundant, but poorly studied organisms and as such not recogni zed as invaders (seriously skewing our appreciation of the extent of invasions); or some establishe d species that are considered rare may have population levels so low that they are below our ability to detect them without targeted searches.

6. Probability of establishing the first reproduc ing population – as a general proposition, the probability that a species reproduces and beco mes successfully established is positively related to the number of indi vidual organisms that are in troduced. Thus, the number of organisms of a particular speci es released via ballast wate r is a potentially important determinant of the probabili ty that a population establis hes its first reproducing population. However, it is important to highli ght that the probability that an inoculum may result in an established population may al so be largely dependent on dilution of the inoculum, hydrodynamics of water flow, and local microtopographic features, which affect the distribution of in troduced organisms in the new environment. Those factors affect the ability to reproduce by influenci ng the probability that organisms of the same species interact with each othe r. However, there are a number of life stages and sexual and asexual reproductive modes which may char acterize organisms in BW. For example, the presence of ovigerous females, bacteria , and spore-releasing or ganisms can result in elevated reproductive potential of the species in the receiving waters and is independent of the number of organisms released.

7

. Probability of establishing long-term reproducing populations – the establishment of long-term reproducing populations is depende nt on a wide range of biological and physical variables. In addition, it is important to note that there is no scientific consensus about the meaning of "long-term" reproducing populations. For example, there are many scientists who, observing a new invader with multiple populations in a specific ecosystem and with multiple generations represented, argue that sampling needs to be conducted some time in the future (5 or 10 years) to ve rify whether the species is still present before concluding that long-term es tablishment has occurred.

While each event is important and must be realized for invasion success, the most critical event for prevention of invasions is release. If the numbers released are sufficiently low that establishment does not occur the invasion is prevented.

Predicting Invasion and Po tential Impacts of NIS

Biological and physical interactions in aqua tic ecosystems are highly complex. Aquatic organisms are not static, isolated entities that merely occupy space in the water column or the benthic environment of aquatic ecosystems; th ey interact dynamically with their physical, chemical, and biological environment as components of an ecosystem. In addition, there is very limited information about the biology and ecology of the majority of a quatic species. The BWDS rulemaking is national in nature and thus applicable to widely diverse aquatic ecosystems throughout the U.S., thus increasing the releva nce of the limitations of our knowledge for analyzing the alternatives in the FPEIS. These limitations, together with the variability involved

152

### in the transport of aquatic organisms via ballas t water, makes it extremely difficult to predict which NIS from a potential pool of thousands of speci es are likely to be delivered, which NIS are likely to become successfully established, and wh ich NIS are likely to significantly affect the invaded ecosystems.

The introduction and establishment of species into a new environment is so complex and full of variability and uncertainty, thatit has been called “a game of ecological roulette” (Carlton and Geller 1993). The complexities associated with – and the limited knowledge of – the invasion process make predicting which organisms arrive, their origin, the time of their arrival, and whether they survive, persist, spread, and prolif erate, an exceptionally challenging problem. Invasion rates vary dramatically with region and propagule delivery (vector) history. One of the main factors to be considered in the current context is the large variability in the densities of organisms transported via ballast water. Sampling studies show that organi sm densities in ballast water can range from very low (as little as 1 individual per cubic meter) to very high (thousands per cubic meter) (Carlton 2001, Cohen 1998). Low observed densities are generally associated with sampling schemes targeting multicellular form s or larger protists. In many cases, however, the bacterial and viral compone nts may exist in higher concentrations. Furthermore, the potential number of organisms released by a gi ven vessel could be cons iderable depending on the total amount of BW discharged. In addition, survival varies great ly in transits. However, in general, the longer the voyage, th e more organisms die. Exceptions are species that reproduce in situ in the water column or that reproduce from the ballast benthic communities and shed larvae into the water column, and organisms that go into a resistant or dormant stage such as dinoflagellates cysts that can pers ist in the sediments when stressf ul conditions are intolerable for vegetative or reproductive stages. The extinction threshold (or conversely, the minimum number of organisms necessary for successful establishment) is unknown for most species under most conditions. For many organisms, the initial population sizes required for successful establishment upon release may be much lower than generally predicted. In th eory, even a single or ganism, if monoecious, hermaphroditic, or parthenogenic, could establ ish a successful populati on. Many species that have such cycles have been found to be capable of successful establishment (Sakai et al. 2001) because they only need one individual to inva de a new environment (Davis 2005). Thus, it is very difficult to determine whether a very small initial population size or a very large one led to successful establishment of a particular NIS. Understanding this would require detailed knowledge of the precise life stage of the specific species in question that would be released, in what numbers, into what ecosystem, and with what hydrodynamic 71 

### conditions at the moment of release. Unfortunately, (most of the time, for most species, for most release events, at most places ), only limited information is available, thus limiting the possibility of providing a more defin itive assessment of the probability of invasion (Carlton 2005). It follows from the discussion ab ove (e.g., in theory even a single organism of a

71 In invasive species ecology, the "lagoonal hypothesis" ar gues that a few individuals can find themselves in a retention system that prevents loss due to export, such that a population can become established from a very small initial population size. This can be in terpreted as meaning that most speci es simply do not successfully become established because upon release the indi viduals become so dispersed that the organisms do not locate each other to reproduce (not applicable to asexually reproducing species) even if some of these individuals survive and settle as transient species and establish an in itially successful population. Thus, lo cal (stochastic) events may facilitate invasion from a very small number of released organisms.



### 153

### particular species can lead to successful establishm ent) that it is impossible to accurately predict whether individuals of unknown species in a given vessel on a given voyage will become successfully established when released in a new environment, or go extinct. An additional complicating factor is that a large number of species are not studied to determine their potential invasive capacity in a new environment. Some of the main ecological factors that determine the invasive capacity of organisms in a new environment include niche availability, lack of predation, res ource abundance, and competitive advantage. For example, the shore crab Hemigrapsus sanguineus is of no particular concern in its native Asia, but it became a highly invasive species (with significant ecological impacts) when introduced to the U.S. Atlantic coast in the 1980s. In the 19 years since its discovery at Cape May, NJ in 1988, it has spread and can now be found in large numbers from Maine to the Carolinas. Further, detailed studi es in Japan reveal that this crab is strictly a rocky shore (intertidal) species in its nativ e range. However, on the U.S. Atlantic coast, it has become established in no fewer than five different habi tats (USGS 2006). This was not a predictable outcome; thus, the invasion potential and impact of this species (and potentially many others) was not predictable from knowledge of its biol ogy and ecology in its native environment (Carlton 2005). The context provided above sets the broader stag e of the invasion process, and summarizes the variables that need to be considered to analyze the alternatives and their potential implications. It is important to clarify that, while (in gene ral) the likelihood that a ny given individual of a particular species might go thr ough all the steps previ ously described and become successfully established in the long-term is quite low, the likelihood that a vessel wi ll release live organisms from ballast water is high. Current scientific knowledge make s predicting the fate of even a single population for even well studied organisms a very challenging problem. Indeed, Ludwig (1999) ha s argued that it is essentially impossible. The problem is even mo re challenging in the context of assessing the aggregate effect of the BWDSs (specified under the alternatives) on the rate at which NIS are introduced and become establishe d in waters of the United St ates. This is because the populations of concern are difficult to identify and not well-studie d. Predicting the ecological or economic impacts of NIS that succe ssfully become established is even more challenging because cause and effect relationships would need to be established and well-defined (Carlton 2001) and the current poorly resolved state of scientific kno wledge makes the latter very difficult. It is important to clarify that the difficulty lies in the prediction of which species will become established and the nature and ex tent of their subsequent impact s, even if the likelihood of organisms being released is considerable. Management measures aimed at reducing the numb er of organisms released are implicitly or explicitly aimed at reducing the probability that a population will become established or, equivalently, increasing the probability that the relatively small initial population will become extinct after introduction. Thus, the BWDSs pr escribed under the alternatives differ in the degree to which they reduce the nu mber of organisms that are in troduced via discharged ballast water. The number of individual organisms in troduced will be referred to as the initial population size. Even when transport and release occur, ballast water management efforts that reduce the number of organisms released (such as the alternatives analyzed in the PEIS) can help

154

### to prevent successful establishment. As a general proposition, the proba bility that a population will become extinct is inversely re lated to the initial population size of the species of interest. The PEIS used the Population Viability Analys is (PVA) to analyze th e relationship between population size and extinction proba bility for this rulemaking. PVA refers to the use of quantitative methods to predict the likely future status of a population or collection of populations of conservation (or extinction) concern. PVA is performed by developing a mathematical model of the dynamics of the populati on of interest and using this model to predict the effect of varying the initi al population size (or ot her factors) on extinction probability and other variables of interest in conservation (B oyce 1992). PVA is typical ly used to assess the conservation status of a particul ar population and therefore typical ly involves the development of a model of the dynamics of each population of interest separately. The PEIS presents a detailed discussion on the use of PVA (PEIS, Appendix A) and the model results. As a result of the PVA model used in the PEIS we were able to estimate reductions in the mean rate of successful INS introductions. The reduction in the mean rate was us ed in our benefits esti mates in Chapter 5 of this document.

155

## References:

Boyce, M. 1992. “Population Viability Analysis”. Annual Review of Ecology and Systematics 23: 481-506. Carlton, J.T. 1985. “Transoceanic and Interoceanic Dispersal of Coastal Marine Organisms: The Biology of Ballast Water”. Oceanography and Marine Biology Annual Review 23: 313–371. Carlton, J. T. 2001. Introduced Species in United States Coastal Waters: Environmental Impacts and Management Priorities. Pew Oceans Commission, Arlington, Virginia.
Carlton, J.T. 2005. Personal communication with José G. Mantilla by electronic mail. December 15, 2005.
Carlton, J.T. and Geller, J.B. 1993. “Ecol ogical Roulette: The Global Transport of Nonindigenous Marine Organisms”. Science , 261(5117): 78-82. Cohen, A.N. 1998. Ships’ Ballast Water and the Introduction of Exotic Organisms into the San Francisco Estuary. San Francisco Estuary Institute, Richmond, CA. Davis, C. 2005. Personal communication with José G. Mantilla by electronic mail. December 15, 2005. Ludwig, D. 1999. “Is It Meaningful to Estimate a Probability of Extinction?” Ecology 80(1): 298-310. Sakai A.K., Allendorf, F.W., Holt, J.S., Lodge, D.M., Molofsky, J., With, K.A., Baughman, S., Cabin, R.J., Cohen, J.E., Ellstrand, N.C., McCaul ey, D.E., O' Neil, P., Parker, I.M., Thompson, J.N., and Weller, S.G. 2001. “The Popul ation Biology of Invasive Species”. Annual Review of Ecology and Systematics 32 (1): 305-332. USGS, 2006. “Nonindigenous Species Information Bulletin: Asian Shore Crab, Japanese Shore Crab, Pacific Crab, Hemigrapsus sanguineus (De Haan) (Arthropoda: Grapsidae)” http://cars.er.usgs.gov/Nonindigenous_Species /Asian_shore_crab/asian_shore_crab.html

156

# Appendix G Alternative Analyses of Benefits (Economic Costs Avoided)

Summary of Benefits Assuming Benefits Deferred Until All Vessels Install Management Systems: Table G-1 Benefits by Year Under Deferred Assumption – 7% ($Mil)

7% Discount Rate

Low Effectiveness - 37% High Effectiveness - 63%

Year Low Mid High Low Mid High

1 $0 $0 $0 $0 $0 $0 2 $0 $0 $0 $0 $0 $0 3 $0 $0 $0 $0 $0 $0 4 $0 $0 $0 $0 $0 $0 5 $0 $0 $0 $0 $0 $0 6 $3 $76 $150 $5 $130 $255 7 $5 $144 $283 $9 $246 $482 8 $8 $205 $402 $13 $349 $684 9 $10 $258 $507 $16 $440 $863 10 $11 $305 $599 $19 $520 $1,020 Total $37 $989 $1,941 $63 $1,684 $3,304 Annualized $5 $141 $276 $9 $240 $470

Table G-2 Benefits by Year Under Deferred Assumption – 3% ($Mil)

3% Discount Rate

Low Effectiveness - 37% High Effectiveness - 63%

Year Low Mid High Low Mid High

1 $0 $0 $0 $0 $0 $0 2 $0 $0 $0 $0 $0 $0 3 $0 $0 $0 $0 $0 $0 4 $0 $0 $0 $0 $0 $0 5 $0 $0 $0 $0 $0 $0 6 $3 $92 $181 $6 $157 $308 7 $7 $181 $356 $12 $309 $606 8 $10 $267 $525 $17 $455 $893 9 $13 $350 $687 $22 $596 $1,170 10 $16 $430 $844 $27 $733 $1,438 Total $49 $1,321 $2,593 $84 $2,250 $4,416 Annualized $6 $155 $304 $10 $264 $518



### 157

### Several commenters expressed the view that Coas t Guard did not fully account for all benefits that might result from a ballast wa ter discharge standard in the 10-year period of analysis used in the NPRM RA. In response to these comments, we provide two alternative analyses of benefits – one that extends the comparison of benefits and costs over a longer, 20-year time period and one in which we assume that invasions are av oided before the entire fleet as installed management systems. For this alternative, we assume that the fraction of invasions avoided is proportional to the fraction of vessels (percent of fleet) that has installed management systems.

Summary of Benefits Assuming No Benefits Until Rule All Vessels Install Management Systems, 20-Year Period of Analysis:

Table G-3 Benefits by Year Under Deferred Assu mption, 20-Year Period of Analysis– 7% ($Mil)

7% Discount Rate

Low Effectiveness - 37% High Effectiveness - 63%

Year Low Mid High Low Mid High

1 $0 $0 $0 $0 $0 $0 2 $0 $0 $0 $0 $0 $0 3 $0 $0 $0 $0 $0 $0 4 $0 $0 $0 $0 $0 $0 5 $0 $0 $0 $0 $0 $0 6 $3 $76 $150 $5 $130 $255 7 $5 $144 $283 $9 $246 $482 8 $8 $205 $402 $13 $349 $684 9 $10 $258 $507 $16 $440 $863 10 $11 $305 $599 $19 $520 $1,020
11 $13 $347 $680 $22 $590 $1,159
12 $14 $383 $751 $24 $652 $1,279
13 $15 $414 $812 $26 $705 $1,383
14 $16 $440 $865 $28 $750 $1,472
15 $17 $463 $909 $29 $789 $1,548
16 $18 $482 $946 $31 $821 $1,611
17 $19 $498 $977 $32 $848 $1,664
18 $19 $510 $1,002 $32 $869 $1,706
19 $19 $520 $1,021 $33 $886 $1,738
20 $20 $528 $1,035 $33 $898 $1,763 Total $208 $5,573 $10,939 $354 $9,490 $18,626 Annualized $20 $526 $1,033 $33 $896 $1,758



### 158Table G-4 Benefits by Year Under Deferred Assu mption, 20-Year Period of Analysis– 3% ($Mil)

3% Discount Rate

Low Effectiveness - 37% High Effectiveness - 63%

Year Low Mid High Low Mid High

1 $0 $0 $0 $0 $0 $0 2 $0 $0 $0 $0 $0 $0 3 $0 $0 $0 $0 $0 $0 4 $0 $0 $0 $0 $0 $0 5 $0 $0 $0 $0 $0 $0 6 $3 $92 $181 $6 $157 $308 7 $7 $181 $356 $12 $309 $606 8 $10 $267 $525 $17 $455 $893 9 $13 $350 $687 $22 $596 $1,170 10 $16 $430 $844 $27 $733 $1,438
11 $19 $507 $996 $32 $864 $1,696
12 $22 $582 $1,142 $37 $991 $1,945
13 $24 $654 $1,283 $41 $1,113 $2,184
14 $27 $723 $1,419 $46 $1,231 $2,416
15 $29 $790 $1,550 $50 $1,344 $2,639
16 $32 $854 $1,676 $54 $1,454 $2,853
17 $34 $916 $1,797 $58 $1,559 $3,060
18 $36 $975 $1,914 $62 $1,661 $3,260
19 $38 $1,033 $2,027 $66 $1,758 $3,451
20 $41 $1,088 $2,136 $69 $1,853 $3,636 Total $352 $9,442 $18,533 $599 $16,077 $31,556 Annualized $24 $635 $1,246 $40 $1,081 $2,121



### 159Figure G-1 Cumulative Benefits an d Costs Under Deferred Assumption, 20-Year Period of Analysis– 7%



### $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,0001234567891011121314151617181920$ Millions



### Benefits: 37% Reduction in Invasion Rate Benefits: 63% Reduction in Invasion Rate

Cumulative Domestic Costs



### We also calculated benefits assuming that the re ductions in invasions would be proportional to the fraction of the fleet that ha d installed a management system. Under this assumption, benefits of the BWDS start accru ing in the first year of the anal ysis as vessels begin to install management systems. Under this assumption, the mid-range of annual benefits is $305-$519 million at 7 percent, in comparison to a ra nge of $141-$240 million when we assume that benefits do not accrue until all vessels have installed treatment.
Table G-5 Benefits by Year Under Phased-In Assumption – 7% ($Mil)

7% Discount Rate

Low Effectiveness - 37% High Effectiveness - 63%

Year Low Mid High Low Mid High

1 $0 $3 $6 $0 $6 $11 2 $1 $14 $28 $1 $24 $47 3 $2 $54 $106 $3 $92 $180 4 $4 $117 $230 $7 $199 $391 5 $7 $189 $371 $12 $322 $632 6 $9 $253 $497 $16 $431 $845 7 $12 $309 $607 $20 $527 $1,034 8 $13 $359 $705 $23 $611 $1,200 9 $15 $402 $790 $26 $685 $1,345 10 $16 $440 $864 $28 $749 $1,471 Total $80 $2,141 $4,203 $136 $3,646 $7,157 Annualized $11 $305 $598 $19 $519 $1,019



### 160Table G-6 Benefits by Year Under Phased-In Assumption – 3% ($Mil)

3% Discount Rate

Low Effectiveness - 37% High Effectiveness - 63%

Year Low Mid High Low Mid High

1 $0 $3 $6 $0 $6 $11 2 $1 $15 $29 $1 $25 $49 3 $2 $58 $114 $4 $99 $194 4 $5 $131 $258 $8 $224 $439 5 $8 $220 $432 $14 $375 $736 6 $11 $306 $601 $19 $521 $1,023 7 $14 $389 $763 $25 $662 $1,300 8 $17 $469 $920 $30 $798 $1,567 9 $20 $546 $1,071 $35 $929 $1,824 10 $23 $620 $1,217 $39 $1,056 $2,073 Total $103 $2,757 $5,412 $175 $4,695 $9,215 Annualized $12 $323 $634 $21 $550 $1,080



### 161

# Appendix H Derivation of Estima tes of Costs and Damages Due to Aquatic NIS

Non-indigenous aquatic invasive species can cause considerable economic damages such as costs to control the invasion, damage to infrastructure and other asse ts, loss of fishery resources, and loss of recreation and touris m opportunities. We have revi ewed the literature on economic damages resulting from existing NIS invasions to pr edict damages from futu re invasions. Since each invasive specie is unique, the type and level of cost varies wi dely from specie to specie (i.e., variability). Further, the cost estimates of damage for an indi vidual specie can also vary as different studies focus on particul ar aspects of costs or costs with in a specific geographic range. Because of variability in the amount of damage across species and the uncertainty in estimating damages for an individual species, we have not attempted to derive a comprehensive estimate of costs per non-invasive species. In stead, we establish a range of va lues to use – a low end of the range and upper end estimate w ith a calculated mid-range by sp ecies groups – invertebrates (mollusks), fish, and aquatic plants.

Table H-1 summarizes estimates of costs due to NIS invasions as derived from the existing literature. The following discussion provides an explanation for the de rivation of the low and upper end estimates by species group.

Invertebrates

• At the upper end, Piementel, et al. 2005 estim ates costs resulting from Zebra Mussels of $1 billion per year. The estimate w ould be $1,060,000,000 annually updated to 2007 price level. This value is meant to be a comprehensive estimate covering all damages and control costs in all geographic areas. In addi tion, Pimentel, et al 2005 reports an estimate for the Asian Clam at $1 billion per year in damages and costs, based on the reported cost in the 1993 OTA report. The estimat e would be $1,060,000,000 annually updated to 2007 price level. Based on the damage esti mates for these two species of mollusks (Zebra Mussel and Asian Clam), we establis h the upper end of the range at $1.060 billion per year in potential costs and damages for invertebrates.

• At the lower end, two survey-based studies collected information on the amount that facilities (mainly electric generation and wate r treatment facilities) have spent on zebra mussel control and/or prevention. A 2007 study (C onnelly, et al) provided in estimate of $17.8 million per year spent by electric generatio n and water treatment facilities over the time period of 1989 to 2004 ($19.6 million updated to 2007). O’Neill 1997 provided an estimate of $17.751 million per year for infrastr ucture owners and operators. Both of these studies, while based on survey responses , only account for a subset of impacted parties and only one category of costs, but can be used to establish the lower end of the range of potential costs from invertebrates.

162

### 163 • The calculated mid-range between the upper end ($1.060 billion) and lower end ($19.538 million) is $539.769 million.

Fish

• At the upper end, Leigh 1998 estimates that the annual commercia l and recreational fishing benefits lost due to the ruffe i nvasion in the Great Lakes range from $24 million and $119 million to $240 million (1998 pr ices), $31.4 million, $155.9 million and $305.289 million updated (based on varying assumptions about the loss of yellow perch and walleye populations). We use the uppe r estimate of $305.289 million per year to represent potential damages fo r invasive fish species.

• At the lower end, Jenkins 2001 reports an estimate of the economic impact of sea lamprey at $13.5 million, updated to $15.8 million.

• The calculated mid-range between the upper end ($305.3 million) and lower end ($15.8 million) is $160.547 million.

Aquatic Plants

• At the upper end, Pimentel 2005 estimates that the costs to control Eurasion milfoil is $400 million per year ($424.7 million updated) based on an average cost per hectacre.

• At the lower end, Rockwell 2003 reported estimates of costs to control Water Hyacinth in Louisiana of $4.0 million per year, updated to $4.5 million.

• The calculated mid-range between the upper end ($424.7 million and lower end ($4.5 million) is $214.6 million.

Summary

Table H-1 Range of Annual Co sts Associated with Selected NIS Introductions ($ 2007)

Low-Range Mid-Range High Range

Fish $ 15,805,000 [1] $ 160,547,000 $ 305,289,000 [2] Invertebrates $ 19,538,000 [3] $ 539,769,000 $ 1,060,000,000 [4] Aquatic Plants $ 4,507,000 [5] $ 214,585,500 $ 424,664,000 [6] [1] From Jenkins 2001, economic impact of sea lamprey on Great Lakes, updated from 2001$ [2] From Leigh 1998, commercial and recreational fishing benefits lost due to ruffe invasion of Great Lakes, updated from 1998$ [3] From Connelly et al. 2007, cost of Zebra Mussel c ontrol at WTP and electric generation facilities, updated from 2004$ [4] From Piementel et al. 2005, cost of Zebra Mussel or Asian Clam, updated from 2005$ [5] From Rockwell 2003, cost to control Water Hyacinth in Louisiana, updated from 2003$ [6] From Pimentel 2005, cost to control Eurasian watermilfoil, updated from 2005$Table H-2 Summary of Cost Estimates for Invertebrates from LiteratureZebra MusselReference:Source:What is included inestimate?Annual CostPriceLevelPimentel et al., "Updateon the environmental andeconomic costs associated with alien-invasivespecies in the United States". EcologicalEconomics. 52 (2005) 273-288US Army COE Environmental Laboratory,"http://el.erdc.usace.army.mil/zebra/zmis/zmishelp/economic_impacts_of_zebra_mussel_infestation.htm"Zebra Mussel Information Review, JanuaryFebruary 1994, congressional researchers estimatecosts of $3 billion over 7 years for power industryalone, $5 billion by end of decade.All damages and controlcosts$ 1,000,000,0002005Pimentel, "Aquatic Nuisance Species in the NewYork State Canal and Hudson River Systems andthe Great Lake Basin: An Economic andEnvironmental Assessment," EnvironmentalManagement. 35:5 (2005) 692-701Derived from larger estimate of $1 billion total.Damages to tourism, electricindustry, fishing, boating,other recreation for limitedgeographic area$ 12,500,0002005Ben Grumbles, AA Office of Water, USEPA,Testimony Before WATER RESOURCES ANDENVIRONMENT SUBCOMMITTEE OF THEHOUSE TRANSPORTATION ANDINFRASTRUCTURE COMMITTEE, March 7,2007O’Neill, C. R. 2000. National Aquatic NuisancesSpecies Clearinghouse, New York Sea GrantExtension, Brockport NY, Personal Communication,22 Dec. 2000. As reported in Carlton, IntroductedSpecies in US Coastal Water for the Pew OceansCommissionLosses to natural resourcesand damage to infrastructurein Great Lakes of $750million to $1 billion from1989 to 2000$ 75,000,0002007$ 100,000,0002007EPA estimates, quotes from Dr. David Lodge ofNotre Dame in a variety of mediaCosts for control andtreatment of zebra musselsat industrial and municipalfacilities fo $100 to $200million per year in GreatLakes$ 100,000,0002007$ 200,000,0002007US General Accounting Office, INVASIVESPECIES: Clearer Focusand Greater CommitmentGAO estimatesAnnual costs to theAmerican power industry$ 60,000,000164Needed to Effectively Manage the Problem,October 2002, GAO-03-01.US Fish & Wildlife Service estimate as reported inCataldo, R. "Musseling in on the Ninth DistrictEconomy," Fedgazette, 13(1) 15-17.Impacts on industry,recreation and fisheries of$3.1 billion over next tenyears$ 310,000,0001991US Congress, Office of Technology Assessment,Harmful Non-Indigenous Species in the UnitedStates September 1993, OTA-F-565.Contractor report by Mark J. Cochran, Nonindigenous species in the United States-economicconsequences, 1992.Economic impact over next10 years of $3.1 billion($1991)$ 310,000,0001991Connelly, et al. Economic Impacts of ZebraMussels on Drinking Water Treatment and ElectricPower Generation Facilities, Environ Manage 40(2007) 105–112Survey of a subset of electric generation anddrinking water treatment facilities within zebramussel range in 2004$267 million (BCa 95% CI= $161 million–$467million) in total economiccosts for electric generationand water treatmentfacilities through late 2004,since 1989.$ 17,800,0002004O'Neill, Economic Impact of Zebra Mussels -Results of the 1995 National Zebra MusselInformation Clearinghouse Study, Great LakesResearch Review3:1(April 1997).Survey to infrastructure owners and operators$17751000 annually in 1995for respondents only (noscaling for non-response oruniverse of facilities),average $11,500,000annually for 1989-1995$ 17,751,0001995Hushak, L.J. and Y. Deng, 1997. Costs ofAlternative Zebra Mussel Control Strategies: TheCase of Great Lakes Surface Water Users, OhioSea Grant College Program, Ohio State UniversityEstimate of zebra mussel research expenditures$8.8 million annually for1992, 1992 and 1994$ 8,000,0001994Asian ClamReference:Source:What is included inestimate?Annual CostPriceLevelPimentel et al., "Updateon the environmental andeconomic costs associated with alien-invasivespecies in the United States". EcologicalEconomics. 52 (2005) 273-288OTAAll damages and controlcosts$ 1,000,000,0002005US Congress, Office of Technology Assessment,Harmful Non-Indigenous Species in the UnitedStates September 1993, OTA-F-565.B.G. Isom, Historical Review of Asiatic ClamInvasions and Biofouling of Waters and Industriesin the AmericasAll damages and controlcosts$ 1,000,000,0001991165ShipwormReference:Source:What is included inestimate?Annual CostPriceLevelPimentel et al., "Updateon the environmental andeconomic costs associated with alien-invasivespecies in the United States". EcologicalEconomics. 52 (2005) 273-288Cohen, A.N., Carlton, J.T., 1995. NonindigenousAqautic Species in a United States Estuary: A CaseStudy of the Biological Invasions of the SanFrancisco Bay and Delta. United States Fish andWildlife Service, Washington, DC.Damages$ 205,000,0002005New Zealand Mud SnailReference:Source:What is included inestimate?Annual CostPriceLevelDavis, A. and Moeltner, K.Valuing the Prevention ofan Infestation: The Threat of the New Zealand MudSnail in Northern Nevada. UNR Joint EconomicsWorking Paper SeriesWorking Paper No. 09-001. July 2009.Original analysisWelfare and expenditurelosses to recreationalfishermen for 3 possiblepolicies to control NewZealand mud snail in theTruckee/Carson/Walkerwatershed$ 17,000,000 to$40,000,0002009Green CrabReference:Source:What is included inestimate?Annual CostPriceLevelPimentel et al., "Updateon the environmental andeconomic costs associated with alien-invasivespecies in the United States". EcologicalEconomics. 52 (2005) 273-288Lafferty, K.D., Kuris, A.M., 1996. Biologicalcontrol of marine pests. Ecology 77 (7), 1989–2000.Economic impacts$ 44,000,0002005Lafferty, K.D., Kuris, A.M., 1996. Biologicalcontrol of marine pests. Ecology 77 (7), 1989–2000.Original analysisEconomic value of existingfishery harvest at risk fromintroduction of green crabon west coast$ 46,700,0001991166S. Lovell, S., Besedin, E., and E. Grosholz.Modeling Economic Impacts of the EuropeanGreen Crab. American Agricultural EconomicsAssociation Annual Meeting, Portland, OR, July29-August 1, 2007Original analysisDamage to commercialshellfishery including softshell clams, hard clams,Manilla clams, and musselsfrom green crab predationon the East Coast$22,600,0002006FishReference:Source:What is included inestimate?Annual CostPriceLevelPimentel et al., "Updateon the environmental andeconomic costs associated with alien-invasivespecies in the United States". EcologicalEconomics. 52 (2005) 273-288Unpublished data by authorEconomic losses due to 138alien invasive species thathave negatively affectednative fishes and otheraquatic biota$ 5,400,000,0002005Leigh, "Benefits and Costs of the Ruffe ControlProgram for the Great Lakes Fishery," Journal ofGreat Lakes Research, 24:2 (1998) 351-360.Estimation of annual commercial and recreationalfishing benefits lost due to ruffe invasion using avalue per angler/day approachRecreational, commercialand sport fishing (assumes10%, 35% and 60%reduction in the populationof yellow perch and 1%,12.5% and 25% reduction inthe population of wall-eye)$ 24,000,0001998$ 119,000,0001998$ 240,000,0001998US Congress, Office of Technology Assessment,Harmful Non-Indigenous Species in the UnitedStates September 1993, OTA-F-565.Great Lake Commission estimatesEconomic losses due toruffe$ 90,000,0001991US Congress, Office of Technology Assessment,Harmful Non-Indigenous Species in the UnitedStates September 1993, OTA-F-565.Schnittker, J., ‘ ‘Federal Policy on Non- IndigenousSpecies: An Overview of the U.S. Department ofAgriculture, ” contractor report prepared for theOffice of Technology Assessment, December 1991.Value of lost fishingopportunities and indirectimpacts if sea lamprey is notcontrolled in the GreatLakes$ 500,000,0001991Jenkins, P. 2001. “Economic Impacts of AquaticNuisance Species in the Great Lakes.” Reportprepared by Philip Jenkins and Associates, Ltd.,for Environment Canada, Burlington, Ontario.As reported in Lovell et al 2006Economic impact of sealamprey in Great Lakes (USand Canada)$ 13,500,0002001167Aquatic PlantsReference:Source:What is included inestimate?Annual CostPriceLevelPimentel et al., "Updateon the environmental andeconomic costs associated with alien-invasivespecies in the United States". EcologicalEconomics. 52 (2005) 273-288OTAAmount invested annuallyin alien species aquaticweek control (assume for 5species: hydrilla, Europeanloosestrife, erasion watermilfoil, melaluca, salt cedar)$ 110,000,0002005Pimentel et al., "Updateon the environmental andeconomic costs associated with alien-invasivespecies in the United States". EcologicalEconomics. 52 (2005) 273-288Center et al, 1997Spending by Florida forhydrilla control$ 14,500,0002005Pimentel, "Aquatic Nuisance Species in the NewYork State Canal and Hudson River Systems andGreat Lakes Basin: An Economic andEnvironmental Assessment." EnvironmentalManagement. 35:5 (2005) 692-701Calculated based on reported cost per ha to controlCost to control EurasionWatermilfoil nationally$ 400,000,0002005Pimentel, "Aquatic Nuisance Species in the NewYork State Canal and Hudson River Systems andGreat Lakes Basin: An Economic andEnvironmental Assessment." EnvironmentalManagement. 35:5 (2005) 692-702Data from USGSCost to control purpleloosestrife nationally$ 229,000,0002005Pimentel, "Aquatic Nuisance Species in the NewYork State Canal and Hudson River Systems andGreat Lakes Basin: An Economic andEnvironmental Assessment." EnvironmentalManagement. 35:5 (2005) 692-703Calculated based on reported costs to control inLake Champlain BasinCost to control waterchestnut nationally$ 200,000,0002005US Congress, Office of Technology Assessment,Harmful Non-Indigenous Species in the UnitedStates September 1993, OTA-F-565.Courtenay, W. R., Jr., ‘ ‘Pathways andConsequences of the Introduction of NonIndigenous Fishes in the United States, ” contractorreport prepared for the Office of TechnologyAssessment, August 1991.Amount invested annuallyin alien species aquaticweed control (assume for 5species: hydrilla, Europeanloosestrife, erasion watermilfoil, melaluca, salt cedar)$ 110,000,0001991168Bell , F.W., and M.A. Bonn. 2004. “EconomicSectors at Risk from Invasive Aquatic Weeds atLake Istokpoga, Florida.” The Bureau of InvasivePlant Management, Florida De-partment ofEnvironmental Protection, Tallahassee, Florida.Available athttp://www.aquatics.org/pubs/economics.htmOriginal analysisEconomic value at risk frominvasive aquatic weeds(primarily hydrilla) in a FLlake includes recreation,agriculture support, floodcontrol and property values$ 40,103,0002004Drissoll, P & et al, The Effect of Aquatic Plants onResidential Shoreline Property Values atGunterville Reservoir, Tennessee Valley Authorityand U.S. Army Corps of Engineers, 1994Original analysis using a hedonic model to relatedproperty values to aquatic weed conditions(primarily hydrilla)Complete control of aquaticplantsincreased property values by17% for developed lots and35% for undevelopedpropertiesN/AN/ARockwell 2003, "Summary of a Survey of theLiterature on the Economic Impact of AquaticWeeds", August 2003.USAID, Economic Damage Caused by AquaticWeeds, 1971Spending by Louisianna tocontrol water hyacinth$ 4,000,0002003Rockwell 2003, "Summary of a Survey of theLiterature on the Economic Impact of AquaticWeeds", August 2003.USAID, Economic Damage Caused by AquaticWeeds, 1971Annual losses in Louisiannadue to water hyacinth inagriculture, drainage, fishand wildlife, navigation, andpublic health$ 35,000,0002003Rockwell 2003, "Summary of a Survey of theLiterature on the Economic Impact of AquaticWeeds", August 2003.Schmitz et al 1991Spending by Florida forhydrilla control$ 7,000,0001989Carlton, "Introduced Species in US CoastalWaters", 2001VariousFederal and state spendingon cordgrass control over 2fiscal years$ 1,888,0002001Horsch, E. J. and D. J.Lewis. The Effects ofAquatic Invasive Species on Property Values:Evidence from a Quasi-Random Experiment.University of Wisconsin-MadisonDepartment of Agricultural & Applied Economics.AGRICULTURAL & APPLIED ECONOMICSSTAFF PAPER SERIES. Staff Paper No. 530:November 2008.Original analysisHedonic estimate of thechange in property valuesfor lakeside property afterinfestation with EurasianWatermilfoil (milfoil)13% decrease in landvalues after invasion2008169170Regional Impacts of AISReference:Source:What is included inestimate?Annual CostPriceLevelU.S. Army Corps of Engineers. Lake Tahoe RegionAquatic Invasive Species ManagementPlan, California - Nevada. 2009.Original analysisAverage annual damagesfrom AIS in the Lake Tahoeregion in the categories ofrecreation, tourism, propertyvalues, water supply,boats/piers$ 22,427,0002009

# Appendix I Collection of In formation for Compliance Extension Requests

The final rule calls for new collection of information under the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520). As de fined in 5 CFR 1320.3(c), "collection of information" comprises reporting, recordkeepin g, monitoring, posting, labeling, and other, similar actions. The title and description of the information collections, a description of those who must collect the information, and an estimate of the total annual burden follow. The estimate covers the time for reviewing inst ructions, searching exis ting sources of data, gathering and maintaining the data needed, and completing an d reviewing the collection. This new collection of information is due to the final rule provision that allows vessel owners and operators to request a compliance extension.

The final rule’s new collection of information is a result of public comments received in the NPRM. In the final rule, we have included a paperwork provision to allow vessel owners and operators to request an extension of thei r compliance date if th ey cannot practicably comply with the compliance date otherwise ap plicable to their vessel. This extension provision will give flexibility to vessel owners and operators to comply with the rule. Summary information concerning all extension decisions, including the name of the vessel and vessel owner, the term of the extension, a nd the basis for the extension will be promptly posted on the U.S. Coast Guard Maritime Information Exchange website (CGMIX), currently located at [http://cgmix.uscg.mil/Default.aspx].

The Coast Guard is amending the existing co llection of information (OMB CONTROL NUMBER: 1625-0069) to add the above me ntioned requests for extension.

TITLE: Ballast Water Management for Vessels with Ballast Tanks Entering U.S. Waters

SUMMARY OF THE COLLECTION OF INFORMAT ION: The information is needed to carry out the requirements of 16 U.S.C. 4711 rega rding the management of ballast water, to prevent the introduction and spread of aqua tic nuisance species into U.S. waters. Respondents are owners and operators of certain vessels. The Coast Guard is amending the existing collection of information to include appl ication for extensions as established in the final rule (33 CFR 151.1513 or 151.2036).

NEED FOR INFORMATION: The Coast Gu ard may grant an extension to the implementation schedule only in those cases wh ere the master, owner, operator, agent, or person in charge of a vessel subject to this subpart can document that, despite all efforts, compliance with the requirements of the final ru le is not possible, givi ng flexibility to vessel owners and operators to comply with the final rule.

Extension evaluations will be on a per-vessel basis. Summary information concerning all extension decisions, including th e name of the vessel and vessel owner, the term of the extension, and the basis for the extension will be promptly posted on the Internet. Extensions will be for no longer than the minimum time needed, as determined by the Coast Guard, for

171

### the vessel to comply with the requirements of § 151.2030.

Any extension request must be made no la ter than 12 months before the scheduled implementation date listed in § 151.1512(b) of this subpart and submitted in writing to the Commandant (CG-522), U.S. Coast Guard O ffice of Operating and Environmental Standards, 2100 2nd St. SW., St op 7126, Washington, DC 20593-7126.

PROPOSED USE OF INFORMATION: The Coas t Guard will use the information provided in the extension request to eval uate whether to grant extensi on and for what period of time, and to keep records of vessels not meeting the esta blished compliance date. The compliance extension provides additional time to determin e how BWMS can be safely installed. An extension postpones inst allation costs for affected vessels.

DESCRIPTION OF THE RESPONDENTS: Vessel owners and operators subject to the requirements of this final rule (see section V.A.3. Applicability).

NUMBER OF RESPONDENTS: We do not have information on the potential number of vessel owners and operators that will take advantage of the compliance extension at this time. We estimate that between 10 and 30 percent of ow ners and operators of U.S. vessels affected by the final rule might request the extension based on preliminary information from industry, BWMS vendors and Coast Guard experts. We anticipate that extension requests will be based on issues related to safety and regulator y requirements of electri cal equipment, vessel capacity to accommodate BWMS, vessel age, shipyard availab ility, and other reasons. At this time, we do not have the data to dete rmine the potential number of requests for extension. We expect to obtain this informati on as we process the requests. We will revise this collection of information as we post th e requests on the website or as needed.

We estimate that owners and operators of a pproximately 146 to 438 vessels (estimated total U.S. vessel affected by this rule is 1,459) might request compliance extensions for the reasons listed above. We estimate the total average number of vessels that will submit a request for extension to be 292.

FREQUENCY OF THE RESPONSE: Vessel owners and operators will submit a compliance extension request once.

BURDEN OF RESPONSE: We es timate that there could be an average of 292 existing vessels that could request an extension for installing a BWMS. The 292 is the total number of vessels estimated to request the extension. We estimate that the average time burden to prepare and submit a request is approximat ely 8 hours (6 hours management and 2 hours clerical) 72 

### but burden may vary depending on type of vessel and reason for the extension request. The total average burden hours of vessels requesting an extension is approximately 2,336 hours (292 vessels x 8 hours for completing and submitting the extension documentation). The total burden cost is $141,328, calculated by (a) + (b):

72 This estimate is based on an existing collection of information (OMB Control Number 1625-0095) for requests of exemption and alternatives for Oil a nd Hazardous Materials Pollution and Safety Records Equivalent.



### 172

### 173 (a) Assuming someone at a management le vel (equivalent to GS-12 (out-ofgovernment rate)) prepares the submission to the Coast Guard, the applicable wage rate is $69/hour 73 

### . Therefore, the total management cost for preparing the extension request is $69 x 6 hrs x 292 vessels = $120,888.

(b) Assuming someone at the clerical level (equivalent to GS-5 (out-of-government rate)) files the copies, then the applicable wage rate is $35/hour 74 

### . Therefore, the total management cost for preparing th e extension request is $35 x 2 hrs x 292 vessels= $20,440.

The estimated cost per vessel is $484 ($141,328/292 vessels). The tota l cost of the rule is not impacted by this paperwork provision.

ESTIMATE OF TOTAL ANNUAL BU RDEN: At this time, we do not have information on how many vessel owners and operators will be requesting compliance extension per year. We expect to obtain this information as we process the requests. If we assume that 10 percent of the estimated owners of 292 ve ssels (see “BURDEN OF RESPONSE,” above) will be applying for an extension every year , then the annual burden will be equal to approximately 234 hours (29.2 vessels x 8 hrs or 10 percent of 2,336 hours). The annual cost will be approximately $14,132 (10 percent of $141,328).

As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), we will submit a copy of this rule to the Office of Manageme nt and Budget (OMB) for its review of the collection of information.

We ask for public comment on the proposed collection of information to help us determine how useful the information is; whether it can he lp us perform our func tions better; whether it is readily available elsewhere; how accurate our estimate of the burden of collection is; how valid our methods for determining burden are; how we can improve the quality, usefulness, and clarity of the information; and how we can minimize the burden of collection.

If you submit comments on the collection of information, submit them both to OMB and to the Docket Management Facility where in dicated under ADDRESSES, by the date under DATES.

You need not respond to a coll ection of information unless it displays a currently valid control number from OMB. Before the Co ast Guard could enforce the collection of information requirements in this rule, OMB woul d need to approve the Coast Guard’s request to collect this information.

73 Wage rate obtained from Enclosure (2) to COMDTINST 7310.1M and validated based on the Bureau of Labor Statistics (BLS) subcategory Managers (Occupation Code 11-9199).
74 Wage rate obtained from Enclosure (2) to COMDTINST 7310.1M and validated based on the Bureau of Labor Statistics (BLS) subcategory First-line Superv isor of office and Administrative Support Worker (Occupation Code 43-1011).