COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL ON THE SAFETY OF THE SEABORNE OIL TRADE

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL ON THE SAFETY OF THE SEABORNE OIL TRADE

TABLE OF CONTENTS

INTRODUCTION

I. BACKGROUND

A : SEABORNE OIL TRADE

1 Importance of oil transport

2. Oil tanker fleets

3. Tanker casualties

B : TANKER SAFETY

1. Developments in tanker safety

2. Weaknesses in the present system

II. PROPOSALS FOR ACTION

A : PROPOSALS FOR IMMEDIATE LEGISLATIVE MEASURES

1. Port State control

2. Classification societies

3. Single and double hull oil tankers

B : PROPOSALS FOR FUTURE MEASURES

1. Increased transparency

2. Surveillance of navigation

3. Enlargement of the European Union

4. Towards a European structure for Maritime Safety

5. Liability of the maritime players

C : VOLUNTARY AGREEMENT WITH INDUSTRY

CONCLUSION

ANNEXES

I-A Tanker accidents

I-B Double hull or equivalent design tankers

LEGISLATIVE PROPOSALS

I. Proposal for a Directive of the European Parliament and of the Council amending Directive 95/21/EC on port State control of shipping

II. Proposal for a Directive of the European Parliament and of the Council amending Directive 94/57/EC on classification societies

III. Proposal for a Regulation of the European Parliament and of the Council on the accelerated phasing-in of double hull or equivalent design requirements for single hull oil tankers

INTRODUCTION

1. On 12 December 1999 the 25-year old, Maltese-registered, single hull oil tanker Erika chartered by Total-Fina broke in two some 40 nautical miles off the southern tip of Brittany. More than 10 000 tonnes of the 30 000 tonnes of heavy fuel oil it was carrying were spilt. About 400 kilometres of coastline were polluted by the oil, causing serious damage to fauna, flora, fisheries and tourism, as well as potential public health consequences.

This was not the first accident of its kind in European Union waters. The wreck of the oil tankers Torrey Canyon, Olympic Bravery, Boehlen, Amoco Cadiz, Tanio, Aegean Sea and Braer in particular come to mind.

Some 70% of the European Union's oil imports are transported along the Brittany coast and through the English Channel, hence the fact that the same regions are hit again and again. If such an accident were to occur in the Mediterranean, the effects would be equally disastrous.

As the scale of reaction to the sinking of the Erika shows, public opinion is no longer prepared to tolerate such accidents. There have been calls for rigorous action at Community level, not least from the European Parliament [1] and the Council of Ministers. [2]

[1] European Parliament resolutions of 20 January 2000 and 2 March 2000.

[2] Council meeting on General Affairs, 24 January 2000.

2. It has become clear that the normal framework for international action on maritime safety under the auspices of the International Maritime Organisation (IMO) falls short of what is needed to tackle the causes of such disasters effectively. The IMO suffers from a major handicap: the lack of proper means to verify how its regulations are applied throughout the world. As a result, IMO regulations are not applied everywhere with the same rigour. The evolution of maritime transport over the last few decades and in particular the emergence of "flags of convenience", some of which fail to live up to their obligations under the international conventions, is tending to aggravate this phenomenon.

It was for this reason that the European Council called on the Commission, following the 1978 Amoco Cadiz disaster, to come forward with proposals to control and reduce pollution caused by oil spills. An ambitious programme of proposals was presented which resulted, in the end, simply in a number of formal declarations or resolutions, encouraging Member States to ratify the IMO and ILO Conventions. One directive establishing minimum requirements for certain tankers was, however, adopted.

Once the "momentum" generated by a tanker accident subsided, Member States tended to avoid binding measures at Community level, more particularly since unanimity was required for decision-taking.

3. It was not until the middle of the 1990s and the advent of qualified majority voting that the Council adopted the first building blocks of a common maritime safety policy including:

- organisation at Community level of stricter application of international conventions,

- adoption of specific Community provisions where IMO standards are lacking or inadequate.

The Erika disaster demonstrates, firstly, the risk presented by old ships and, secondly, the need to tighten up the existing Community regulatory framework - which, incidentally, Member States are not applying properly, particularly as regards the number of inspections in ports - beyond the level of the IMO standards. This was also the tendency in the USA, where the regulatory framework was tightened up at federal level following the Exxon Valdez catastrophe.

The Commission therefore proposes a number of measures that could be taken immediately, and longer-term, more complex measures which will be the subject of a second series of proposals towards the end of the year.

4. With regard to the short-term regulatory measures, the Commission is presenting three sets of measures to the Parliament and the Council of Ministers with this communication:

- Firstly, more rigorous inspection of ships using Community ports, which should be reflected in tougher measures against ships that are manifestly sub-standard. It is proposed to ban from all ports of the Union ships older than fifteen years that have been detained more than twice in the course of the two preceding years, on the basis of a "black list" which the Commission will publish every six months. In addition, inspections of all ships will have to be stepped up in line with the age of the vessel and will systematically have to target one of the ballast tanks. Ships will be required to communicate certain information before entering ports to enable inspections to be properly prepared. Member States will have to undertake to inspect vessels more frequently and more thoroughly, notably by increased recruitment and training of inspectors, in order to avoid the creation of "ports of convenience".

- Secondly, there must be stricter monitoring of the classification societies to which Member States delegate power to inspect the quality of ships. The Commission reserves the right to suspend or withdraw the societies' recognition by means of a simplified procedure, and the societies must be held fully liable in the event of negligence. Good safety and pollution prevention performance of the classification societies will become essential in order to obtain and maintain recognition at Community level. In addition, more stringent quality criteria must be met by the recognised organisations, including the obligation to follow certain procedures when a ship changes class, such as the transmission of the complete history file of the ship to the new classification society.

- Finally, it is proposed to generalise the ban on single hull oil tankers according to a timetable similar to that applied by the USA (2005, 2010 and 2015, depending on tonnage).

The three proposals form a coherent whole and the first two apply not only to oil tankers, but to any ships transporting dangerous or pollutant substances. In particular, the information gathered in the course of inspections in each port and of surveys by the classification societies will be widely publicised, notably through the EQUASIS database, so that the condition of a vessel will systematically be known and individual liability will be clearly established in the event of an accident.

5. In a second stage, the Commission plans to make additional proposals in the following areas:

- Systematic exchanges of information between all the actors in the maritime community by further developing the EQUASIS system in particular. It is important in this context to ascertain which professions (shipowners, insurers, classification societies) are willing or otherwise to ensure maximum transparency.

- Improved surveillance of navigation, particularly in those areas where oil tanker traffic is most dense. In addition to the obligation to "report", as already provided for in a Commission proposal of December 1993 not yet adopted by the Council, the arrangements for monitoring the most hazardous ships outside territorial waters must be examined. These are issues on which Member States have always been reserved, on grounds of potential conflicts with the international law of the sea.

- The possible establishment of a European structure for maritime safety , whose prime task would be to monitor the organisation and effectiveness of national inspections in order to ensure greater uniformity.

- Development of the liability of the various players in the seaborne oil trade. The liability regime is currently governed by international conventions. The Commission intends, firstly, to seek to increase compensation available under collective compensation schemes of the IOPCF type and, secondly, to establish the principle of responsibility of the carrier and owner of the cargo.

6. Enhanced safety of maritime transport cannot be decreed. It will be achieved by developing often highly technical rules and reconciling the Union's obligations to protect its environment with its industrial interests - the capacity to renew its fleet - and international considerations. The European Union, the world's leading trading power, cannot discount the consequences of unilateral measures that might conflict with its activities in the rest of the world, given that most of the European fleet trades exclusively between non-Community ports.

Before proposing new Community legislation in the social field in particular (training of seafarers, etc.), the Commission wishes to draw attention in this communication to the fact that several of the existing measures have still not been correctly implemented. Some of the texts already adopted have either not been transposed or are not being properly applied, with the result that infringement proceedings are in progress in several cases.

Furthermore, while deploring the widespread recourse to flags of convenience, the Commission would also point out that most of the vessels controlled by European companies have been flagged out to third countries for tax reasons. Having said that, the Commission considers that it should be a condition of the accession negotiations with Cyprus and Malta that these countries apply the existing Community legislation on maritime safety as soon as possible but not later than by by the date of their to accession.

7. In order to act as speedily as possibly and to avoid further disasters like the Erika, the Commission proposes that the oil companies, without awaiting the adoption of the first package of directives, should undertake by voluntary agreement to refrain in future from chartering tankers older than 15 years (unless appropriate inspections show them to be in a satisfactory condition) and to take any other measures necessary to improve safety. The discussions on this voluntary agreement should also be reflected in improvements to the reform of the oil companies' liability arrangements.

8. The package of measures proposed is designed to improve prevention of accidents of the Erika type and in this way to enhance protection of the marine and coastal environment. The Commission would point out that measures to combat pollution are planned in the common position adopted by the Council on 16 December 1999 concerning the European Parliament and Council Decision setting up a Community framework for cooperation in the field of accidental or intentional marine pollution (2000-2006).

9. In addition to the measures proposed in this communication, the Commission considers that the proliferation of operational pollution by all types of ships and the risk of serious pollution by bunker oil in the event of accidents are also cause for concern. It therefore plans to examine preventive Community initiatives that could be taken in this respect.

I: BACKGROUND

A: SEABORNE OIL TRADE

1. Importance of oil transport

(a) World oil movements

More oil than any other commodity is shipped globally. In 1998 the total crude oil and refined products transported by sea amounted to more than 2 000 million tonnes [3] which in weight terms represented 40% of the total cargoes shipped by sea.

[3] EUROSTAT and OECD/IEA statistics, Journal de la Marine Marchande.

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World Oil Trade

The principal sea routes for crude oil are from the main natural oil sources: Middle East/Gulf to Southeast Asia, Japan/South Korea, Europe and the USA; from North Africa to Europe and from the Caribbean to the USA.

The EU oil trade is the largest in the world, with crude oil imports representing about 27% of the total world trade while US imports amount to 25% of the world total. The oil trade is broadly divided into crude oil and refined products. In tonnage terms, crude oil amounts to around three quarters of the global trade (1 590 million tonnes), with products representing about one quarter (430 million tonnes).

90% of the total oil trade with the European Union (intra- and extra-EU) is seaborne. The remainder is shipped by pipeline, land transport and by inland waterways.

In the coming years a continuing increase in tanker trade can be expected due to an increase in the demand for petroleum products following the expected growth of economic markets.

(b) EU oil movements

The EU seaborne oil trade is particularly important. Oil demand in the EU is around 640 million tonnes, but approximately 800 million tonnes p.a. is transported to, from and between Community ports. This does not include domestic trade within individual States.

Approximately 70% of tanker trade in the EU is concentrated off its Atlantic and northern coasts and the remaining 30% in the Mediterranean. Within these two zones, the split between crude oil and product trades is approximately 2/3 to 1/3.

There is also an additional volume of tanker traffic passing through EU waters but not calling at European ports, for example in the Mediterranean from the Middle East passing through the Strait of Gibraltar.

(c) EU seaborne trade patterns - crude oil

EU imports of crude oil are mainly from the Middle East and North Africa, while exports from the North Sea oil fields are mostly to North America.

Trade patterns are essentially governed by port and refinery locations, as the refineries receive all incoming crude oil and deliver the oil products. The largest EU oil ports are Rotterdam (which handles 100.8 million tonnes of crude oil p.a.), Marseilles (48.3 m tonnes), Le Havre (37.0 m tonnes), Trieste (35.7 m tonnes) and Wilhelmshaven (32.6 m tonnes).

The larger tankers dominate the crude oil trade. Oil to Europe from the Middle East is normally carried on Very Large Crude Carriers [4] (VLCC) with a tonnage of +200 000 tonnes deadweight (tdwt) [5] routed around Africa, or through the Suez Canal using "Suezmax" tankers of between 120-140 000 tdwt.

[4] Or Ultra Large Crude Carrier (ULCC) of +300 000 tdwt.

[5] Deadweight is the tonnes of cargo, fuel and stores carried on a ship.

(d) EU seaborne trade patterns - oil products

The product trade is more complex, comprising EU imports and exports, intra-EU and domestic trades. The total product trade is about 205 million tonnes p.a.

Imports and exports to/from the EU total 135 million tonnes while trade within the EU amounts to 70 million tonnes. The oil product trade in the North Sea region is particularly intense. The type of tankers used are usually of a smaller size range (5-50 000 tdwt handysize product tankers.)

The number of product tankers operating within EU waters at any given time is difficult to quantify because it varies to such a large extent. However, a rough estimate is about 1 500 to 2 000 vessels, the majority being of a smaller size. This sector plays an essential role in the distribution of oil products in the EU.

The product tanker trade is further divided into so-called "black products" (bitumen, heavy fuel oil, etc.) and "white products" (kerosene, petrol, etc.). Many white products are of a highly flammable nature and are carried in modern, state-of-the-art tankers. Black oils pose a far smaller risk of fire and explosion and are regularly carried in older tankers nearing the end of their economic lives.

Although it is true that black oils are intrinsically less hazardous, they can be much more polluting when spilled into the sea than white products or even crude oil, which to a large extent may disperse by evaporation. [6]

[6] Accidental spills can result from ships other than tankers which often carry large quantities of heavy fuel as bunkers. This aspect is not addressed in this Communication; however it is an important risk which has already been flagged up within the IMO.

Erika was a 35 000 tonne product tanker engaged in the carriage of heavy fuel oil (black product cargo).

2. Oil Tanker fleets

The world fleet

Having established the importance of the oil trades both at a global level and within the Community, it is necessary to look more closely at the actual tanker fleet. [7]

[7] Sources of data: Institute of Shipping Economics and Logistics (ISL) Bremen, Yearbook and various issues of FOCUS 1999, ISL Merchant Fleet Data Base (aggregates based on quarterly updates from LMIS); Institute of Shipping Analysis (ISA), Gothenburg; DG TREN Statistics Pocket Book.

The world tanker fleet can be roughly divided into oil tankers (crude and products), chemical tankers and liquid gas tankers. In tonnage terms the oil tanker fleet is by far the greatest. Indeed, this sector is the largest of all shipping sectors and includes the world's largest ships.

The world oil tanker fleet on 1 January 1999 comprised 7 030 ships [8] totalling 289 million tdwt. This represented 38.5% of world merchant tonnage.

[8] Ships of 300 gt and over.

The average age of the world tanker fleet in 1999 was 18 years (compared to 16.7 years in 1995). Of the total 1999 fleet, 41% (2 939 ships) were built before 1979, i.e. are now over 20 years old. In tonnage terms these represent 36% of the total tanker tonnage.

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The world's 15 largest oil tanker fleets, representing 85% of the total tonnage, are shown in the following graph.

The European fleet

The EU registered oil tanker fleet of 855 tankers [9] totalling 43.2 million tonnes dwt represents 14.9% of the world total. However it is estimated that companies established within the EU control [10] about 35% of the world's oil tanker fleet. Flags frequently used by EU interests include Liberia, Panama, Cyprus, Malta and Bahamas.

[9] Denmark includes: DOR, DIS, Faeroes and Greenland. France includes: Kerguelen, New Caledonia, French Polynesia, Martinique, Guadaloupe, St. Pierre et Miquelon, Mayotte, Reunion, Wallis and Fortuna Is, French Guyana. Netherlands includes Netherlands Antilles and Aruba. Portugal includes Madeira (and Macao). Spain includes Canary Is. UK includes Isle of Man, Channel Is., Br.Virgin Is., Montserrat, St.Helena, Turks & Caicos Is., Anguilla and Falkland Is.

[10] Control: the country of domicile of the company owning the controlling interest in the fleet.

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The average age of the EU registered oil tanker fleet was 19.1 years in 1999 (18.9 in 1995), which is above the world average. More than 45% of the EU registered fleet is over 20 years old (in terms of numbers of vessels.)

Many EU flagged and controlled tankers are engaged in "cross-trades", meaning that they trade between countries other than those in which they are registered, for example between the Middle East and Japan, and may seldom or never visit EU ports.

It should also be noted that the world's sixth largest tanker fleet is registered in Norway (18 million tonnes), which means that the EEA-flagged tanker fleet represents over 20% of the world total.

3. Tanker casualties

Between January 1992 and March 1999 a total of 593 merchant ships were lost (about 8 million tdwt). 77 of these losses were tankers which, although accounting for only 13% of the total number, represent 31% in terms of tonnage.

When compared to the share of tankers in the world fleet (18.2% in terms of numbers of ships and 38.5% in tonnage), it would appear that they have a relatively good safety record. Annex 1 contains a summary of major tanker casualties in EU waters. Although the majority of the accidents mentioned occurred off northern and western EU coasts, it must be stressed that tanker accidents in the Mediterranean have the potential to pose an exceptional risk to the environment and commerce. Accidents are often attributed to human error (e.g. faulty navigation or pilotage). Other causes are structural failure, fire and explosion.

There is a general correlation between age and accidents to ships. The following table shows the percentage of all ships lost between 1989 and 1998 according to age group:

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Moreover, figures in Annex 1 show that 60 out of the 77 tanker casualties between 1992 and 1999 were over 20 years of age. However, several of the tankers involved in major pollution incidents in Europe resulting from grounding were comparatively young. [11]

[11] Although this Communication addresses tanker casualties and the resulting pollution, it should be noted that the greatest source of tanker pollution is operational, such as cleaning of tanks and disposing of cargo residues. A number of measures have been taken by the IMO which have resulted in a reduction of this type of pollution, and the provision of adequate reception facilities in all tanker ports will result in further reductions. The proposed Directive on port reception facilities for ship-generated waste and cargo residues addresses this problem in Europe - Common position (EC) No 2/2000.

Structural failure is the other major cause of major pollution accidents over which there is increasing concern.

There have been several instances of serious structural failure, the worst being the Betelgeuse explosion caused by the hull fracturing in Bantry Bay, Ireland, in 1979 which killed 50 people. The Nakhodka suffered a similar fate to Erika off Japan in 1997 when she broke in two while carrying heavy fuel oil, causing extensive pollution.

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In these accidents, serious corrosion in ballast tanks was seen as a contributing factor. In the same month as the Erika disaster the Russian tanker Volgoneft 248, also carrying heavy fuel oil, ran aground in bad weather and broke up off Istanbul causing major pollution.

The measures taken to improve safety and lessen pollution as a result of these accidents has resulted in a significant decrease in both accidents and oil pollution. However, there is no room for complacency. Since the Torrey Canyon disaster the reaction of European citizens has sharply swung from being one of grudging acceptance that pollution is a price we have to pay for economic development, to one of intolerance and outrage. It has to be emphasised that no other type of marine disaster has ever resulted in damaging such huge areas of the marine environment and impacting on the lives and businesses of such a large number of people. Consequently, while welcoming the improving trend in tanker safety, there is clearly more that can and must be done to try and eliminate accidents of this nature.

B - TANKER SAFETY

1. Developments in tanker safety

Following a number of very serious oil spills caused by tanker accidents, various strict measures were taken at international level to improve safety standards. The impact of these measures is reflected in recent casualty statistics.

(a) IMO legislation

Following the Torrey Canyon disaster in 1967 the real environmental threat posed by the rapid growth in tanker traffic and ship size became apparent. It was clear that further measures were needed to prevent oil pollution from tankers and also to improve the system for compensation following such accidents.

The plan of action drawn up at IMO following Torrey Canyon resulted in a series of conventions covering the legal and operational problems exposed by the accident. As well as addressing accidental pollution, the important issue of operational pollution was also covered.

The International Convention for the Prevention of Pollution from Ships (MARPOL) [12] was adopted in 1973. The Convention aims to cover all vessel-sourced pollution, not only oil, but also chemicals, sewage, garbage and other harmful substances. The latest annex to be adopted covers air pollution from ships.

[12] The IMO International Convention for the Prevention of Pollution from Ships, 1973 as amended by the 1978 Protocol (MARPOL 73/78).

Among the measures adopted under MARPOL was Crude Oil Washing, which eliminated the need for washing cargo tanks with sea water. Inert gas systems were introduced on crude oil carriers to prevent ignition within cargo spaces. Another measure was the introduction of Segregated Ballast Tanks (SBTs). The measures were incorporated in the 1978 Protocol to the 1974 Convention for the Safety of Life at Sea (1978 SOLAS Protocol) and the 1978 Protocol to the 1973 MARPOL Convention.

More recently, following the Exxon Valdez accident in 1989, further requirements have been introduced in MARPOL to phase out single hull tankers and replace them by those with double hulls or equivalent design. (For further details see Part II, A.3)

(b) Measures taken within the EU

A number of measures have also been taken at Community level in the fields of safety and pollution as well as the inspection of ships. These to a great extent build on or complement international IMO legislation. The Directive on port State control [13] covers the inspection of all ships and includes specific requirements relating to the inspection of tankers. Directive 94/57/EC establishes common rules and standards for ship inspection and classification societies and for the relevant activities of Administrations. [14]

[13] Council Directive 95/21/EC of 19 June 1995.

[14] Council Directive 94/57/EC of 22 November 1994.

The IMO Resolution relating to tonnage measurement of segregated ballast tanks (SBTs) is implemented in a Regulation [15] which provides for ships with SBTs to receive a reduction in port dues.

[15] Council Regulation (EC) No 2978/94 of 21 November 1994.

Vessels carrying dangerous or polluting goods to and from EU ports are required to report details of their cargoes under Directive 93/75/EEC. [16]

[16] Council Directive 93/75/EEC of 13 September 1993.

The proposed Directive on port reception facilities for ship generated waste and cargo residues [17] aims to ensure compliance with the provision under MARPOL that ports have to provide reception facilities.

[17] Common position (EC) No 2/2000.

(c) Operational measures

A number of important measures have been taken within the IMO framework which help to reduce the chance of vessels grounding or colliding whilst on passage. Traffic Separation Schemes (TSSs) have been adopted in areas of heavy traffic. These schemes provide one-way traffic lanes greatly reducing the chance of ships meeting head-on (e.g. Dover Strait). They also ensure that traffic is kept well away from the coast (e.g. Ushant). The introduction of TSSs has greatly reduced the incidence of collisions in areas where they have been established.

Navigational equipment has become more reliable and accurate. Radars now have the ability automatically to plot other ships and the navigator can assess the collision threat far more easily. Precision navigation using satellite technology (GNSS) provides a continuous accurate plot of the ship's position. This greatly reduces the chance of grounding whilst on passage.

Further improvements in the technical field are being introduced. Accuracy of navigation will be further improved for example through the introduction of Electronic Chart and Information Systems (ECDIS) and the development of the GALILEO global navigation system. The fitting of transponders on ships (AIS) will enable ships to be identified from the shore and will also provide navigators with improved information to determine risk of collision with more precision. The accuracy of meteorological forecasting has improved and weather-routing of ships can result in reduced damage and economic savings.

(d) Training and the human element

In many accidents the "human element" has been a substantial contributory factor. Training and competence of crews was recognised as being an essential part of improving safety at sea and the adoption of the 1978 IMO Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW 78) was adopted. Its limitations though were soon recognised and a rigorous overhaul of the Convention resulted in the revised STCW Convention which came into force in 1997.

Development of technical training aids such as simulators has helped to improve the effectiveness of training schemes for seafarers.

A series of ILO regulations concerning the working and living conditions on board ships has also been adopted. The most recent, covering the regulation of working hours on board, addresses the issue of fatigue, which is seen as an increasingly important contributory factor in marine accidents. The Commission will continue to follow with great interest the proceedings of the International Labour Office with a view to enable the expeditious conclusion of the negotiations on the abandoning, the dead and the harm to seafarers.

Another important instrument, the International Safety Management Code (ISM), became mandatory from 1998. The ISM Code provides for safe practices in ship operations, a safe working environment and requires safeguards against identified risks. It also provides for continuous improvement in management skills of personnel, especially in safety and response to emergencies.

(e) Structural improvements

Close monitoring of ships' structures and the stresses on hulls has led to reductions of losses due to structural failure. Improved stress monitoring equipment and accurate loading computers have helped ensure that stresses are kept within allowable limits. As a further check on the condition of ageing tankers, MARPOL requires (from 1993) an Enhanced Survey Programme (ESP) of inspections to be carried out for crude oil tankers above 20 000 tonnes and product carriers over 30 000 tonnes. This requires a much more rigorous inspection of a tanker's hull than was previously the case. IMO Guidelines specify the detail of such surveys, which become more stringent as the ship's age increases. The scope was later expanded so that from 1996 onwards, the ESP provisions have applied to all tankers over 500 tonnes. ESP has had a significant effect in reducing losses and incidents causing pollution. This is clearly shown in the following graph

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Oil spills - Annual quantities of oil lost as a result of structural failures, fires and explosions

(f) New tanker designs [18]

[18] The Key Action within the Fifth Framework Programme on "Land transport and marine technologies" will target improvements in efficiency, safety and environmental aspects of ships.

Tankers constructed since 1996 are required under MARPOL to be built with double hulls or equivalent designs and single-hulled tankers will be phased out. Double-hulled ships will greatly reduce the chances of pollution in cases of low-impact collisions or grounding in particular. The maintenance of structural integrity, especially in the ballast spaces of these ships, will be essential. The use of modern effective coatings and corrosion protection systems in ballast spaces will help prevent the rapid deterioration which was evident in older tanker designs. It will be essential to monitor the integrity of the coating and systems closely as these new designs of ship age.

>TABLE POSITION>

2. Weaknesses in the present system

(a) Ownership and chartering practices

All the technical improvements achieved cannot hide the fact that there are certain trends in the market which give serious grounds for concern. Oil companies have largely disposed of their tanker fleets. Many small independent tanker owners have entered the market. Oil companies now control only a quarter of the world fleet while independent tanker owners control three quarters.

In addition there is a trend towards "atomisation" amongst independent tanker owners. By splitting their fleet into single-ship companies, often in the form of "brass-plate" companies registered in offshore locations, owners can reduce their financial risk. It is often difficult to determine who are the financial interests concealed by these structures and who are the true decision makers responsible for the safe operation of the ships.

Charterers also show a somewhat similar trend. The major oil production companies are in competition with oil trading companies, which can be subdivided into globally operating big players and niche operators. New oil-trading companies regularly emerge, while others disappear or merge. The oil trading and charter market is highly competitive. Finding the cheapest tanker capacity available on the market is an essential part of the business. The volatile character of the market is also reflected in a shift away from long-term contracts between charterers and carriers towards short-term charters (the so-called "spot market"), as is illustrated in the following table.

>TABLE POSITION>

(Source: INTERTANKO)

Price competition on the spot market is fierce. Market observations show that there is no significant difference between freight rates for young and old tankers, with prices apparently often dictated by the cheapest, oldest tonnage available. In such a market it is therefore difficult to make quality pay, resulting in small, low-cost operators gaining market share at the expense of companies with long-standing reputations. This entails a risk for safety.

(b) Rule enforcement

The economic reality described above calls for strengthened inspection regimes to ensure that safety will not be compromised and used as a means to compete unfairly with operators applying high quality standards.

Primary responsibility for ensuring ships comply with international standards lies with the flag State (with which the ship is registered.) Regrettably, not all flag States are seen to carry out this task to a sufficient level of responsibility. Although flag States are bound by the regulations contained in the international conventions to which they are parties, the IMO does not possess the policing powers to ensure that they abide by them. This enables less scrupulous operators to register their ships under flags which they know will not require full compliance with international rules. It is for this reason that port States have established a line of defence against sub-standard shipping through inspections carried out under port State control regimes (PSC). Under PSC, a proportion of the ships calling at a State's ports are inspected to ensure compliance with international safety, pollution and manning standards. PSC does not specifically focus on structural matters. As PSC is carried out during port calls, normally involving loading or discharging operations, the ability to inspect cargo and ballast spaces is limited, and inspection of the underwater hull structure is practically impossible.

Ship's structures are inspected and monitored by classification societies. These are highly specialised private organisations with extensive experience in the shipping sector, employing hundreds and in some cases thousands of technical staff and supported by powerful research and computer centres. The classification societies assess the condition of a ship against technical standards set by each society in order to issue the certificate of class. In addition, they are often authorised to act on behalf of flag States to verify the ship's compliance with safety and environmental requirements laid down in the international conventions and issue the relevant statutory certificates.

In recent years, the increasingly commercial character of classification societies has led to strong competition by societies in attracting clients. At the same time there has been a worrying trend towards a proliferation of societies of varying standards and an increasing tendency for owners to switch class ("class-hopping").

To ensure the structural integrity of the tanker fleet, it is absolutely essential that classification societies apply the highest possible standards in carrying out their tasks. Although the ten members of the International Association of Classification Societies (IACS) aim to set appropriate standards and ensure that they are maintained, there are still serious doubts as to whether enough is being done throughout the entire class system to achieve the necessary levels of quality. Many in the industry consider that not all IACS members meet the requisite high standards. There seem to be variations both between performance of individual IACS members and also within classification societies, where differing standards are reported depending upon the flag administration and/or the client.

The Commission shares the concerns often expressed in various sectors of the maritime industry that the performance of classification societies does not always meet the standards required.

(c) Industry response

The Community recognises that action is already being taken by industry to address the problems highlighted by the Erika accident. In particular, IACS has perceived the urgent need to improve the detection and monitoring of the structures of ageing ships, particularly regarding degradation of steelwork in ballast tanks.

IACS, at a special meeting of its board in Hamburg on 16 February, examined the specific question of oil tanker safety in depth and announced a number of measures. These include an improvement in class surveys for tankers over 15 years old. Class records, including thickness measurement reports, will be maintained in computerised format and transferred to the society taking over a ship's classification. Specific measures include annual checks on ballast tanks adjacent to heated cargo tanks and an enhanced intermediate survey regime. Transparency will improve through increased sharing of information. The proper implementation of the measures adopted by the IACS members will be closely monitored by the Commission and the Member States in the framework of the inspections of the classification societies recognised on the basis of Council Directive 94/57/EC.

The oil industry has also reacted to the accident. Working in the framework of the Oil Companies International Marine Forum (OCIMF) the industry is discussing how the effectiveness of the private inspection schemes used by members of OCIMF can be enhanced. Most major oil companies have their own in-house inspection schemes. The commercial department will only charter tankers which have been inspected by their technical department. The inspection procedures and reports are harmonised to a certain extent and the data maintained in a common OCIMF database (SIRE), which covers some 4 000 tankers and annually produces some 10 000 tanker inspection reports. As a first step, OCIMF has agreed that the private inspection reports stored in the SIRE database will be made available to PSC inspectors in the framework of the EQUASIS project (see II-B-1), which should help to optimise available PSC resources more efficiently.

The need for action...

Erika was a 25 year old product tanker with segregated ballast tanks carrying heavy fuel oil. Her statutory certification was in order and she had successfully completed a five year survey the year before the accident. An enhanced port State control inspection had been carried out in May and no deficiencies were found. She had undergone the charterer's inspection and had been found suitable for her trade. How, therefore, is it possible that the ship could have broken in two and caused such an environmental catastrophe-

Erika therefore poses a serious challenge to all concerned in the tanker industry. It clearly shows that action is necessary to look beyond the mere verification of certification and the conducting of superficial inspections if we are to prevent a repetition of such tanker accidents. Responsibility for ensuring that tankers meet the required safety and environmental standards lies with the owner and flag State. It is clear, though, that some States and owners are less conscientious than others. There is, moreover, a marked lack of transparency in this complex industry, often resulting in the identity of those persons responsible for an individual tanker being obscured behind the doors of "brass plate" companies in offshore locations. Because of this, there is a clear need for port States and responsible industry bodies to take a stronger line, particularly with respect to older tankers, to ensure that structural defects and sub-standard tonnage are identified well before they pose a threat to the environment. The fact that the average age of the world and EU tanker fleet is relatively high and still increasing is also of great concern. This trend has to be reversed by the introduction of newer, more environmentally friendly, tonnage.

What is needed all-in-all is a package of measures which will bring about a change in culture in the tanker industry. There should be stronger incentives for quality-minded carriers, charterers, classification societies and other key bodies. At the same time, the net should be tightened around those who seek short-term personal economic gain at the expense of safety and the marine environment.

2 : Proposals for action

In drafting its proposals, the Commission adopted an approach designed in particular to:

- make inspection procedures and practices more uniform;

- increase "cross-fertilisation" between Community instruments, in particular the directives on port State control and classification societies;

- increase the sanctions for ships potentially posing a major environment hazard, while rewarding operators of ships of a more environment-friendly quality or design;

- endeavour to eliminate the confusion created by the proliferation of different controls and inspections: each party (shipowner, charterer, flag State, classification society and port State control authority) should respect the limits of its own role and powers;

- engage the liability of all the actors in the industry involved in the operation of sub-standard ships;

- combat the lack of transparency in maritime transport by introducing stricter obligations to publish information relating to inspections and ship detentions and by developing the EQUASIS database on the quality of ships;

- improve the monitoring of correct application of Community legislation by providing the Commission with the necessary resources to accomplish this task.

The Commission proposes two types of measure:

- As a first step, the Commission is presenting regulatory measures. Three proposals for legal acts are annexed to this communication. They concern the amendment of the Port State Control Directive (Directive 95/21/EC), the amendment of the Classification Societies Directive (Directive 94/57/EC) and a Regulation on the accelerated phasing-in of double hull or equivalent design standards (Part A).

- The second part of the communication sets out the broad lines of future action concerning the transparency of information on the quality of ships, the surveillance of navigation, the possibility of setting up a European structure for maritime safety and above all action to ensure the liability of the various players in the shipping community (Part B).

A - Proposals for immediate legislative measures

1. Port State control

Port State control of ships developed as a reaction to the lax or negligent behaviour of some ship operators or flag States that showed little concern for compliance with the IMO safety regulations. It is based on the principle of verification of compliance with these international regulations by inspecting ships calling at ports.

In Europe [19] an administrative agreement, the Paris Memorandum of Understanding (MOU), was concluded in 1982 in order to establish harmonised inspection procedures. In 1995, the Council adopted Directive 95/21/EC which makes the MOU mandatory and significantly strengthens its provisions. This Directive constitutes the main pillar of Community action in its battle against ships that fall short of international safety standards. In parallel with the legislative initiative, training for inspectors is important in order to achieve harmonised implementation of inspection practices in ports. The Commission has financed the development of an advanced training course and plans on this basis to organise courses in 2000 and 2001 for inspectors from the various national maritime administrations of the MOU member countries.

[19] The region covered by the Paris MOU actually extends far beyond the borders of the European Union, as it includes countries such as Canada, Russia and Croatia.

The Port State Control Directive has been amended on several occasions to increase the uniformity and efficiency of procedures. However, the Erika accident revealed certain shortcomings in the way port State control works, particularly as regards the inspection of ships that statistically present greater risks, by virtue either of their age or the pollutant nature of their cargo. It is also clear in the Commission's view that the current lack of transparency of the shipping community and the lack of synergy between the actors (port inspectors, classification societies, etc.) considerably reduce the efficiency of port State control.

The Commission therefore attaches to this Communication a first legislative proposal to amend Directive 95/21/EC on the basis of the following principles:

a) Tougher measures against manifestly sub-standard ships

- Banning of ships over 15 years old that have been detained more than twice in the preceding two years and figure on the "black list" of flags with an above-average number of detentions. This measure has the character of a sanction against "recidivist" shipowners and Flag States that have given proof of persistently neglecting the follow-up of ships flying their flag. The Commission will publish the list of banned ships every six months.

- Systematic inspection in ports of ships whose "target factor" is particularly high. [20]

[20] The "target factor" works on the following principle: a certain number of points is allocated to ships on the basis of various criteria, such as age, flag, previous detentions, etc. Ships with the highest number of points must be inspected as a priority. This tool permits the targeting of vessels posing a high risk and the harmonisation of procedures for selection of the ships to be inspected, thereby reducing the risk of divergent practices depending on the port.

b) Increased inspection of oil tankers and other vessels posing a risk

- The optional provisions in the existing Directive concerning potentially hazardous ships [21] will become mandatory: these ships will henceforth be subject to mandatory expanded inspection every year on entering a Community port. An advance notification obligation prior to entry into ports has been introduced to facilitate the preparation of inspections.

[21] Ships presenting a risk, according to an Annex to the Directive, are oil tankers, gas and chemical tankers and bulk carriers above a certain age, and passenger ships.

- The measures for oil tankers are even tougher: they will be subject to the expanded inspection regime from the age of 15 onwards, rather than 20 and 25 as in the current Directive. In addition, inspectors will have to examine at least one of the ballast tanks in order to detect any corrosion problems.

c) Increased information obligations

- Greater efficiency: inspectors will have more information on the ships to be inspected via mandatory consultation of the EQUASIS database on ship quality. In addition, inspectors will be required to state in their reports the nature of the inspections carried out: this will help to avoid the same inspection being repeated by the inspector in the next port of call.

- "Cross-fertilisation": the flag State and the classification society will be informed of the results of inspections, enabling them to intervene more rapidly in the case of a deterioration in the condition of a ship.

- Greater transparency: additional items have been added to the list of information to be published on inspections and detention, in particular the name of the charterer.

d) Improved monitoring of the application of the Directive

Member States will be required to provide detailed information to the Commission to enable it to evaluate better the effectiveness of the Directive and to verify Member States' compliance with its provisions. This will make it easier to detect cases where the Directive is incorrectly applied and to institute infringement proceedings on the basis of Article 226 of the EC Treaty.

2. Classification societies

Classification societies [22] are key players in the maritime safety field. It would be difficult to imagine a shipping world without the technical expertise provided by these organisations. However, largely due to the commercial pressure exercised on the classification societies, and to the growing number of organisations operating in the field without having sufficient expertise and professionalism, the confidence of the shipping community in these organisations has declined in the recent decades.

[22] See I-B, Paragraph 2 (b).

A first response to these problems was provided at Community level by the adoption, in 1994, of Council Directive 94/57/EC, which introduced a system for Community-wide recognition of classification societies. This Directive addressed the overall issue of the quality of the classification societies to be authorised to work on behalf of the maritime administrations of the Member States. The qualitative criteria of the Annex to the Directive aimed to ensure that only highly reliable and professionally competent bodies be authorised to work on behalf of the EU Member States. The overall provisions of this legal instrument were designed to ensure that the relevant safety requirements were applied in a harmonised and scrupulous manner on board ships. Furthermore, the Directive introduced obligations to control classification societies working on behalf of the Member States, both to ensure that the recognised organisations continued to meet the provisions of the Directive and to assess their quality performance.

This Directive represented one of the first steps on the road to the establishment of a Community policy on maritime safety. Its transposition into the national laws of the Member States constituted a long and complicated process, with twelve infringement procedures launched by the Commission for failure to comply with the transposition time-limit laid down in the Directive and with the last Member State transposing the Directive only in 1998. The Commission also launched a number of infringement procedures - some of which are still pending - for non-compliance, mainly related to the establishment of the working relationships between the maritime administrations and the organisations authorised to work on their behalf.

The Directive suffered, on a number of issues, from some shortcomings that appeared following its implementation. The procedure for the recognition of the classification societies, for example, was completely left to individual Member States without ex ante harmonised and centralised control of the fulfilment of the criteria of the Directive by the organisation wishing to be recognised. The same lack of harmonised and centralised approach applied to the periodic ex post controls of the recognised organisations. The safety and pollution prevention performance record of the organisations - measured in respect of all their classed ships, irrespective of the flag they fly - was not regarded as a conditio sine qua non to recognise the classification societies or to maintain their recognition.

The lessons learned from the practical implementation of the Directive have led to the identification of a number of areas where the provisions of the Directive can be further strengthened. Hence the proposed amendments, which are described in detail in the second legislative proposal attached to this Communication.

The main content of the proposed amendments is the following:

- The granting and the withdrawal of the recognition of the classification societies are decided by the Commission on the basis of the Comitology procedure. The periodic inspections of the recognised organisations are carried out by the Commission together with the Member State proposing the recognition.

- A new sanction for the recognised organisation is introduced: the suspension of recognition for one year, which leads to the withdrawal of the recognition if the shortcomings causing the suspension are not removed.

- A good record of safety and pollution prevention performance of the recognised organisations - measured in respect of all the ships they have in class, irrespective of the flag they fly - becomes a conditio sine qua non to grant and maintain the recognition.

- The conditions of the financial liability of the recognised organisation carrying out statutory tasks on behalf of the Member States are harmonised at Community level. The financial liability is unlimited or can be limited to different levels in accordance with the seriousness of the negligent act of the classification society.

- More stringent qualitative criteria have to be met by the recognised organisations, including the need to respect certain procedures when ships change class and the need to communicate more information about the ships they have in class to the port State control authorities. In order to ensure in particular that the gaining organisation has a full picture of the condition of a ship when it changes class, the complete file on the history of the vessel must be transferred by the losing society to the gaining society.

- The obligations of the Member States as flag States are reinforced in the field of maritime safety.

3 Single and double hull oil tankers

a) Current situation and problem

Most of the oil tankers currently in service are of the "single hull" design. In such ships, the oil is separated from seawater only by the bottom and side plating. If the hull is damaged following a collision or grounding, there is a risk that the cargo tanks will discharge their contents into the sea and cause major pollution. An effective means of avoiding this risk is to surround the cargo tanks with a second inner plate at a sufficient distance from the outer shell. Such a "double hull" design protects the cargo tanks from damage and thus reduces the pollution risk.

Following the 1989 Exxon Valdez accident the USA, dissatisfied with the ineffectiveness of the international standards on the prevention of pollution from ships, in 1990 adopted the Oil Pollution Act (OPA 90).

Under this law, they unilaterally imposed double hull requirements for both new and existing oil tankers in the form of age limits (between 23 and 30 years from 2005) and deadlines (2010 and 2015) for the phasing-out of single hull tankers.

The IMO, faced with this unilateral measure by the USA, was forced to follow suit and in 1992 established double-hull standards in the International Convention on the Prevention of Pollution from Ships (MARPOL). This Convention requires all oil tankers delivered after July 1996 to have a double hull. Hence no single hull oil tankers have been built since that date.

Single hull oil tankers from 20 000 deadweight tonnes, delivered before 6 July 1996, are required by the Convention to comply with the double hull requirements from the age of 25 or 30, depending on whether or not they have segregated ballast tanks. [23]

[23] The objective of segregated ballast tanks is to reduce the risks of operational pollution by ensuring that ballast water never comes into contact with oil. In addition, they are sited in a protective location to minimise the impact of grounding or collision.

Consequently, three categories of single hull oil tankers must be distinguished:

- Category 1: Single hull oil tankers without protective ballast tanks around the cargo tanks. This category will finally be phased out between 2007 and 2012 with the implementation of the double hull requirements.

- Category 2: Single hull oil tankers in which the cargo tank area is partly protected by segregated ballast tanks. Phasing out of this category through the implementation of the double hull requirements will only be completed in 2026 (instead of 2010 and 2015 as in OPA 90).

- Category 3: Single hull oil tankers below the "MARPOL" size limits that are not affected by the double hull requirements.

Given that it is practically impossible to convert a single hull oil tanker to a double hull construction and as the age limits specified are close to the end of a ship's commercial life, both the American system and the MARPOL Convention lead to the phasing out of single hull oil tankers.

However, because of the differences between the American and the international system, single hull tankers banned from American waters because of their age will begin, from 2005 onwards, to operate in other regions of the world, including the European Union, and lead to an increased risk of pollution in those areas.

b) Proposed Community response

The situation described is of concern to the Commission, since the statistics show increasing accident rates for older ships. An appropriate Community response is necessary and must take effect before 2005, a key date from which single hull tankers banned from American waters will begin to operate in European waters.

The Commission therefore proposes speeding up in the Community the replacement of single hull tankers by oil tankers complying with double hull or equivalent safety standards.

This system must be aligned to the age limits and end-dates provided for in OPA 90, in order to prevent oil tankers banned from US waters from shifting their trades to Europe. The proposal will also reverse the ageing trend in the tanker fleet: new, double hull tonnage will replace the old single hull ships, thus ensuring better protection overall against the risk of accidental pollution.

The attached Commission proposal for a regulation provides for the following timetable for the gradual phasing out of single hull oil tankers:

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The proposal for a regulation concerns all single hull oil tankers of 600 tonnes deadweight and above flying the flag of a Member State, and is a condition of entry into Member States' ports, regardless of the flag the ship is flying.

Finally, to encourage the use of double hull tankers, the Commission is proposing a system of financial incentives in the form of a reduction in port and pilotage dues. Conversely, the use of single hull oil tankers will be discouraged by the increase in these dues in line with ship age.

The Commission is aware of the economic and social impact this proposal will have on the industry, and intends to examine it more in depth. Nevertheless, it is important to give an impetus to the ongoing phasing-out of single hull tankers, by proposing to apply in the European Community a phasing-out calendar similar with the American one and by strongly supporting any endeavours aimed at achieving this accelerated calendar at international level as well (IMO).

The Commission is conscious of the fact that the accelerated phasing-out of single hull tankers by new double hull tonnage will have some impact on the price of oil products. An assessment study on the Oil Pollution Act published by the USA National Research Council in 1998, concluded that the impact of OPA90 on the cost of the oil products was estimated to be approximately 10 US cents per barrel or about one tenth of the cost of transportation, which in itself only represents between 5 to 10% of the total product cost. The final impact on the price of the oil products will thus be less than 1%. Compared to the costs for cleaning up the consequences of a major oil spill arising from accidents such as that of the ERIKA, which order of magnitude is estimated to be around 200 million EURO, the Commission esteems that this additional cost does not outweigh the benefits if with the measures proposed the re-occurrence of such accidents in Community waters can be prevented. It considers therefore that this is a reasonable price to be paid to ensure an effective reduction in the risks of pollution.

The Commission further wants that the signal given to the Industry be clear and quick, to avoid uncertainty and unnecessarily delayed decisions to invest in new double hull tonnage. It is recognised between the major shipbuilding associations that for the foreseeable future there is sufficient excess building capacity to cope with the increased demand for new double hull tankers that will emerge from this proposal.

B: Proposals for future measures

Apart from the immediate legislative follow-up measures presented above, a number of other actions will be proposed by the Commission within the foreseeable future. These proposals will cover a variety of matters, including improvements to the existing regime of compensating damage caused by oil spills, measures to achieve increased transparency of safety-related information in shipping, the setting-up of a European structure for maritime safety and improved coastal control of sea traffic in European waters. An outline of the envisaged measures is given below.

1. Increased transparency

The lack of availability of information on matters of relevance to ship safety is a serious concern for the Commission. While a great amount of information on ships is being collected by various bodies, it is scattered in many different places and often difficult to access, even for the maritime industry at large. The Commission considers that all sectors of the maritime industry have a responsibility to exercise care in the safety and quality of ships with which they are dealing. Furthermore, information on the basic details of ships, their safety management and operation, inspections performed, etc. should not be reserved only for those most directly involved. The current lack of transparency in shipping is therefore unacceptable and does not serve the interests of either the industry itself or the wider public.

In order to remedy the transparency problem in shipping, the Commission, in co-operation with the maritime administration of France, has initiated the creation of a new ship safety database, EQUASIS, which will collect information relating to the safety and quality performance of ships and their operators and make it easily accessible on the Internet (www.EQUASIS.org). EQUASIS will be an important tool for anybody with an interest in or responsibility for maritime safety, most notably for charterers determined to select ships of high quality and for port State control inspectors. A first version of the EQUASIS database will become operational in May 2000, but the development and enlargement of the system will no doubt continue after that.

In its first stage, EQUASIS will contain details of the type, flag, age and ownership on all merchant ships of the world. Inspection information from the port State control regions of Europe, Asia-Pacific and the USA will also be available. In addition, it will contain some basic data on the classification and insurance of the ships. Negotiations are underway to widen this data with further information from industry inspection schemes, flag States and more detailed classification data. All data in EQUASIS will be factual in nature and the database will not make any judgement or ranking of ships. Its purpose is to allow each user to form its own opinion on the quality and safety of the ship, based on the information provided.

The Commission and France have been involved in the development of this database since 1998. More recently, the maritime administrations of Japan, Spain, Singapore, the United Kingdom, the United States Coast Guard and the International Maritime Organisation have indicated their preparedness to participate in the supervision of the system. The daily management of EQUASIS will be carried out by a Management Unit to be created by the French Maritime Administration.

A number of important industry bodies, including shipowners, charterers, insurers and classification societies, have already agreed to provide information to the system and to participate in the EQUASIS Editorial Board, which is the advisory body for information providers improving the information provided through EQUASIS. The first orientation meeting of the Editorial Board was held in Brussels on 15 February 2000.

The Commission will make continuous efforts to improve the EQUASIS database. EQUASIS will within the foreseeable future become a comprehensive database, where all sectors of the maritime industry, whether public or private, easily can access a wide range of detailed safety-related information on the world's entire merchant fleet. The quality and extent of information will be such that no charterer, insurer, financier, etc. of a sub-standard ship will be able to claim not to have known about its poor condition. In order to achieve this aim, particular efforts need to be placed on increasing the contribution to EQUASIS by flag and port State control authorities as well as by classification societies.

2. Surveillance of navigation

Following the Erika accident, proposals were made for improving the surveillance of potentially dangerous ships navigating off Europe's coastline. It was stressed in particular that the inspections carried out in the framework of port State control of ships are not always an adequate solution, as particularly dangerous ships may sail along the coast of one or more Member States before the problem is detected in port.

Radical measures have also been proposed, such as inspecting ships outside territorial waters, or even restricting or prohibiting navigation by certain particularly dangerous ships in Member States' exclusive economic zone. However, imposing restrictions or bans on shipping outside territorial waters and a fortiori outside the exclusive economic zone, poses problems not only of compatibility with international law of the EC but also of the practical feasibility of monitoring compliance with these measures.

By contrast, the Commission considers it the perfectly legitimate right of a State, particularly one that is a frequent victim of shipping accidents, to be better informed of and monitor more closely the passage off its coastline of ships transporting pollutant substances, or presenting a major hazard in any other respect. [24] It is also essential to have advance knowledge of the cargo in the event of an accident involving a ship transporting pollutant substances, in order to be able to intervene effectively against a risk of pollution or a pollution incident.

[24] For example, where it can be concluded from the information received, e.g. inspections carried out in ports in other regions of the world, that a ship presents a major hazard to safety and the marine environment before it even enters the port of a Member State. Another example would be a ship authorised to sail to a repair yard after having been detained, where the authority concerned wishes to monitor its behaviour.

There is already a Community legal framework obliging ships transporting pollutant and dangerous substances to report to the competent authorities of the Member States: Directive 93/75/EEC. However, this measure concerns only ships bound for or leaving Community ports. A proposal for a directive, known as Eurorep, [25] was adopted in December 1993 with a view to extending the reporting obligations of Directive 93/75/EEC to ships in transit off the Community coast. Despite having been welcomed by the European Parliament, the Council failed to reach agreement on this proposal.

[25] (COM(93) 647 final)

The Commission intends to produce new proposals on the safety of maritime transport as soon as possible. The following factors will be taken into account in this context:

a) The international legal context has evolved considerably since 1993. In March 1998 the European Community ratified the United Nations Convention on the Law of the Sea. In addition, a new Regulation was introduced in the SOLAS Convention (Regulation V/8-1) giving coastal States the possibility of establishing mandatory reporting systems applicable to all ships, including ships in transit.

b) The IMO has approved several mandatory reporting systems along the European coastline, e.g. in the Strait of Gibraltar, off Cape Finisterre, Ushant and in the Strait of Dover. There is therefore in practice a "potential" chain of coastal reporting systems extending from the Strait of Gibraltar up to the entrance to the North Sea. These systems also ensure the surveillance of ships navigating in their particular area.

c) There have been several significant developments in the field of communication technologies:

- The most important is undoubtedly the advent of automatic ship identification systems or transponders. The IMO has approved the specifications and drawn up a provisional timetable providing for the mandatory installation of such systems on board all ships above 300 tons with effect from 2002.

- Another notable development is the growing use of telematics networks for data transmission. It is worth pointing out in this connection that the Commission has initiated a memorandum of understanding between several Member States concerning the introduction of an electronic data exchange network (EDI) between Member States' administrations for the implementation of Directive 93/75/EEC (at present five Member States plus Norway are party to this agreement and others may join shortly).

d) Construction of the global navigation and positioning infrastructure is now a European Union priority through the GALILEO project. This initiative will lead to a reliable and highly accurate service (3 metres on the high seas and 1 metre in port areas), which should serve as a reference for positioning systems applicable to ships in or near Community waters. Together with ECDIS [26], GALILEO offers a unique level of service in contributing to improved conditions of navigability and safety. The system, based on a satellite array, will also permit the relay of distress signals as provided for by the GMDSS concept. [27] The Commission also plans to use satellite images to detect polluting ships. The shipping community is closely involved in the design of the GALILEO services and will thus be able to identify other possible applications for the system.

[26] ECDIS or Electronic Chart Display and Information System, which gives a continuous plot of the ship in its nautical environment, including its immediate position, on an on-board computer.

[27] GMDSS or Global Maritime Distress and Safety System consists of a radio communication system designed primarily for rapid alert of the shore-based search and rescue authorities and any ships in the vicinity in the event of an emergency.

All of these elements will lead the Commission to propose a general overhaul of the reporting system as described in Directive 93/75/EEC and in the proposed Eurorep Directive. [28] The new proposal should help render more efficient and simplify the monitoring of ships in Community waters, in conditions compatible with the international law of the sea.

[28] Another issue related to marine accidents is the availability of ports of refuge for ships which get into difficulties. There is often a reluctance by local authorities to admit a vessel which is perceived to be unsafe or a pollution threat, while sending it further out to sea could increase the danger or result in more widespread pollution. This is another problem which could be addressed in this context.

3. The enlargement process

The Luxembourg European Council decided in December 1997 to start negotiations with six candidate countries for accession to the European Union: Cyprus, Hungary, Poland, Estonia, Czech Republic and Slovenia. The Helsinki European Council increased in December 1999 this number by deciding to start negotiations with Romania, Slovakia, Lithuania, Bulgaria and Malta. In addition the Helsinki European Council recognised the application of Turkey.

From the point of view of maritime safety, the accession negotiations present a challenge. If the 13 candidate countries were to join the European Union today, the average number of ships detained flying the European flag would increase to 13.26% compared with 5.73% in 1998. This high percentage is due to the very sub-standard performance of ships flying the flag of certain applicant countries, notably Malta and Cyprus, which have the fourth and fifth largest fleets in the world.

Such a fall in the level of safety of EU shipping is unacceptable and cannot be justified by enlargement. It is therefore essential that the candidate countries undertake to apply the international and European maritime safety standards scrupulously as soon as possible but not later than by the date of their accession.

The Commission has already notified them of its serious concerns in this area and has entered into specific discussions to help them remedy this situation. More particularly, the Commission has focussed on the transposition by Cyprus of the existing Community legislation. In its consolidated report on enlargement to the Helsinki European Council, the Commission stated that Cyprus and Malta will have to make substantial efforts to reach the level of the other Member States. Specific measures to this effect have already been adopted by the Cypriot authorities, and the Commission is currently verifying their application. Other measures will have to follow.

In view of the insufficient safety standards of the fleets of most candidate countries and the particular need to strengthen both their flag State Administrations and their port State control systems, the EU has identified alignment of legislation on "maritime safety" as a short-term priority in the revised 1999 Accession Partnerships for most acceding countries, including Cyprus and Malta.

Improving the performance of the candidate countries as flag States is of crucial importance to the Commission in the context of the accession negotiations. The Commission will provide these countries with all the necessary aid and expertise, but will not cease to insist that they must apply all the relevant Community legislation at the date of their accession.

4. Towards a European structure for Maritime Safety

As a result of the questions raised about the effectiveness of safety inspections in Community ports following the Erika accident, a great deal of support was voiced for creating a European coastguard or a European Maritime Safety Agency.

Such a debate would have been unthinkable ten years ago. The situation today has evolved considerably. Some of the Member States' national competencies in the field of maritime safety have been transferred to the Community level. The body of Community legislation covers the key aspects of the IMO Conventions in force, its main objective being to ensure efficient and uniform application of the international safety rules in the European Union.

A European structure, whatever form it takes [29], should be limited to supporting the action of Member States and the Commission in applying and monitoring Community legislation and in evaluating the effectiveness of the measures in place. To this end, such a structure should have the task of collecting and analysing factual or statistical information without being empowered to take decisions. It could be entrusted with ad hoc evaluations or audit missions (e.g. assessing classification societies on the basis of the criteria in the Annex to Directive 94/57/EC). It would be up to the Member States, and in particular the Commission in its capacity as executor or guardian of Community legislation, to perform the necessary follow-up.

[29] Any decision on this issue shall be made in the light of the outcome of the general debate on the externalisation of Commission tasks.

It would be somewhat unrealistic, or at least very premature, to envisage setting up an integrated European operational structure or coastguard that would take over the role of the national maritime administrations.

The administrative structures involved in maritime safety differ considerably from one Member State to another: some are civil, others military and they perform very different tasks, from ship inspection as port State or flag State to fisheries protection, customs, combating drug trafficking or immigration controls. Unlike certain countries such as the USA, which have a unitary structure and thus the ability to impose uniform procedures and verify compliance, the European Union has to work with the diverse administrative traditions of its Member States.

The Commission therefore believes that the establishment of a European structure for Maritime Safety should be considered, which could be entrusted with the following tasks:

- assessment and audit of classification societies,

- on-the-spot inspection of the conditions under which Member States carry out port State control of ships,

- contribution to European training courses for port State control inspectors or flag State inspectors,

- fact-finding missions in the applicant countries, in order to assess the manner in which their maritime administrations comply with their obligations as flag States and port States,

- information gathering and processing of statistics,

- operation of Commission databases (e.g.: database on inspection of passenger ships under Directive 1999/35/EC).

All of these tasks should be performed exclusively by personnel highly qualified in the area of maritime safety who have both comprehensive technical knowledge and are fully familiar with European and international maritime safety and pollution prevention regulations. In the longer term, the possibility should be examined of assigning broader tasks to this structure, e.g. relating to the control of shipping, because of the possibilities offered by the new positioning technologies.

5. Liability of the maritime players

a) The civil liability system in force for damage caused by oil pollution

The existing maritime liability regime has developed over centuries and is consequently a complex one. It consists of a patchwork of international conventions relating to specific types of liability and a variety of rules on limitation of liability, insurance and jurisdiction, often governed by national laws which depend on whether - and if so, what version of - the conventions have been ratified by the States concerned. Generally speaking, the regime emphasises the responsibility of the shipowner, as opposed to that of the other players involved (such as the ship operator, manager, cargo owner, charterer, intermediaries or the classification society). On the other hand, shipowners have a right to limit their financial liability at a maximum amount, which normally is relatively low.

In the case of oil pollution, however, the international liability system is tailor-made for the purpose and comparatively straightforward. All EU coastal States are either parties to, or in the process of ratifying, the 1992 Protocols to the International Convention on Civil Liability for Oil Pollution (CLC) and the International Convention setting up the Oil Pollution Compensation Fund (Fund Convention). These two conventions establish a two-tier liability system, which cover pollution damage, including preventive measures and to a limited extent environmental damage per se for accidents occurring in the coastal waters (up to 200 miles) of the States.

The first tier consists of the liability of the shipowner, which is governed by the CLC. The shipowner's liability is strict and thus not depending on fault or negligence on his part. The owner is normally allowed to limit his liability to an amount which is linked to the tonnage of the ship, presently maximum EUR 80 million for the biggest ships, in the case of Erika only around EUR 13 million. The shipowner loses the right to limit his liability only if it is proved that the pollution damage resulted from his personal act or omission, committed with the intent to cause damage, or recklessly and with knowledge that such damage would probably result. The CLC also requires shipowners to have liability insurance and gives claimants the right of direct action against the insurer.

The CLC regime is supplemented by the International Oil Pollution Compensation Fund (IOPC Fund), which was established through the Fund Convention in order to compensate victims when the shipowner's liability is insufficient to cover the damage. The Fund is financed by contributions from companies receiving oil and recourse to the Fund may take place in three cases. The most common is where the damage exceeds the shipowner's maximum liability. The second case is where the shipowner can invoke any of the (few) defences allowed in the CLC. The last case is where the shipowner is financially incapable of meeting his obligations. The maximum compensation by the Fund is around EUR 185 million.

Victims of oil spills may present their claims directly against the Fund and, to the extent claims are justified and meet the relevant criteria, the Fund will compensate the claimant directly. If the total of approved claims exceeds the maximum limit of the Fund all claims will be reduced proportionately. If the claimant and the Fund cannot reach agreement, the claimant can pursue his claim against the Fund before the courts of the State where the damage occurred. Since it was first established in 1978, the Oil Pollution Compensation Fund has dealt with some 90 cases, most of which have been settled directly with the Fund, outside courts.

Generally speaking, this dual regime has proved to be workable. Particularly when compared to other areas of pollution liability which are currently unregulated (such as accidents involving hazardous and noxious substances other than oil, or bunker oil from ships other than oil tankers), the regime is very advanced. Therefore the Commission believes that the existing oil pollution compensation regime should provide the basis for future measures. A general environmental liability regime, as outlined in the recent Commission White Paper on environmental liability, [30] is the appropriate tool for developing areas of liability which are not yet harmonised at a European level. However, liability and compensation for oil pollution from ships is already subject to a uniform world-wide regime. The existing system provides the legislative framework and the internationally recognised concepts upon which European measures could and should build.

[30] COM(2000) 66 final, 9 February 2000.

b) Measures proposed to improve the existing regime

At least the following three criteria have to be examined when considering whether a liability and compensation system is fully satisfactory:

(1) It should provide prompt compensation to victims without having to rely on extensive and lengthy judicial procedures.

(2) The maximum compensation limit should be set at a sufficiently high level to cover admissible claims from any potential disaster occurring as a result of an oil tanker accident.

(3) The regime should discourage tanker operators and cargo interests from transporting oil in anything other than tankers of an impeccable quality.

The Commission considers that on the first point the mechanism provided by the CLC and Fund Convention is satisfactory. Generally speaking, claims have been handled promptly and without lengthy legal battles.

On the second point action is needed. As long as the maximum limits are not high enough to cover any potential disaster, victims of an oil disaster with very extensive damage will receive less compensation than victims of a smaller-scale accident. This is questionable from a point of view of principle and some recent oil spills have indicated that even comparatively small amounts of oil may raise doubts as to the sufficiency of the current limit.

On the third point, the existing system also fails. The right of the shipowner to limit his liability is at present practically unbreakable. Cargo interests, on their part, have no individual responsibility at all. The fact that ships of an appalling condition continue to be employed for transportation of oil shows that charterers do not have sufficient disincentives to give up their intolerable practice of deliberately selecting low-quality tonnage.

For these reasons the Commission proposes the following actions.

i) Strengthening the international regime

As a first step, the immediate raising of the limits of both the CLC and the Fund conventions is important. Provided that the necessary majority is achieved, the limits can be increased through the simplified tacit acceptance procedure which was introduced in the 1992 Protocols. [31] This measure would considerably raise (by some 50%) the compensation available and would share the financial burden between shipowners and oil receivers.

[31] Article 15 of the 1992 Protocol to the CLC and Article 33 of the 1992 Protocol to the Fund Convention. Any amendment made under these articles will enter into force at the earliest 36 months after its adoption by the IMO Legal Committee.

In the meantime, the need for a more fundamental revision of the CLC and Fund conventions shall be examined. In particular, it has to be questioned whether the current threshold for loss of limitation right for the shipowner is acceptable. Another question that needs to be given serious consideration is whether the current definition of pollution damage should be extended.

The Commission urges the Member States to do their utmost to support any effort to improve the existing oil pollution liability regime at an international level.

ii) A European third tier Fund

The Commission is aware that the international procedures that have to be followed to achieve concrete results are lengthy and that there is no guarantee of success. Therefore, it takes the view that complementary action at a European level is needed in order to ensure adequate compensation for victims of an oil spill occurring in European waters.

Adequate compensation of victims of a European oil spill can be ensured through the creation of a European third liability tier, which would compensate internationally eligible claims relating to oil spills in European waters exceeding the maximum limitation limits. Liability under such a European third tier could be based on the same principles and rules as the current IOPC Fund system, but subject to a ceiling which is deemed to be sufficient for any potential disaster and financed by European oil importers, in the same way as they contribute to the IOPC Fund. It is considered that an overall ceiling of EUR 1 billion would provide the necessary safeguard of coverage for any potential disaster. This limit corresponds both to the ceiling of the oil spill compensation fund established under federal laws in the United States and to existing insurance practices as regards shipowners' third party liability cover for oil pollution.

An international agreement between the EU/EEA Member States on the additional contributions for the European Fund would seem the appropriate way forward.

iii) Liability for damage

The Commission will also consider the introduction of rules, at EU level, under which any party who has caused or contributed to oil pollution damage, should be made strictly liable for the damage caused; this can concern parties both on the carriers and the chartering side, to the extent that they are exercising control of the shipment concerned. This would enhance the implementation of the polluter pays principle and thus be in line with the Commission's White Paper on Environmental Liability of 9 February 2000 (COM(2000) 66 final).

iv) Sanctions for gross negligence

The Commission finally considers that any party who has caused or contributed to the oil pollution incident by grossly negligent behaviour should be subject to a deterrent sanction.

Such a fault-based sanction could apply to shipowners as well as charterers and other cargo interests. Making the sanctions payable to the State where the pollution occurred would seem appropriate in this context, as the national government normally is the party responsible for clean-up and rescue operations. Such sanctions could further be subject to a number of common principles, depending on, inter alia, the response and co-operation by the responsible party after the accident, and could thus contribute to significant preventive effects.

The Commission accordingly considers that it should be examined, having regard to the principles of the Treaty, how such a fault-based sanction regime could be put in place in the Community. A Community legal instrument laying down the common principles for the implementation of appropriate sanction mechanisms at Member State level would seem to be a way forward.

C : Voluntary agreement with industry

Without awaiting the entry into force of the legal measures proposed above and without awaiting the results of the measures to be undertaken in the second phase, the Commission proposes, in support of its "Quality Shipping" initiative, to discuss with the oil companies possible terms of a voluntary agreement. Such an agreement would establish certain principles according to which the oil companies would agree to operate, such as:

- not to transport oil in vessels above 15 years of age, unless their safety has been proven through adequate inspection;

- to exercise more transparency relating to their ship chartering practices;

- to contribute to the third layer European compensation Fund for the benefit of victims of oil spills;

- to improve the effectiveness of their private inspection schemes; and

- to define their responsibilities in chartering oil tankers.

The Commission will report on the outcome of such discussions to the Council meeting of Transport Ministers in October 2000.

CONCLUSION

The Commission proposes to the European Parliament and the Council that they:

- adopt the three proposals for legislative measures attached to this communication as soon as possible,

- approve the main guidelines described in the second set of measures,

- take note that the Commission will enter into discussions with a view to conclusion of voluntary agreements with the oil industry, and report on the outcome.

ANNEX 1 A

TANKER ACCIDENTS

This Annex firstly provides details of the Erika accident and then gives a short account of significant tanker accidents in EU waters and some others which are seen as relevant to the case of Erika.

A. ERIKA disaster - summary of events

1. The accident

Erika sailed from Dunkerque on 10 December 1999 loaded with approximately

30 000 tonnes of heavy fuel oil, bound for Livorno in Italy. The ship was chartered by the Total-Fina oil company. On the afternoon of 11 December, when approaching the Ushant traffic Separation Scheme, the ship developed a large starboard list, thought to be because of leakage of cargo into a ballast tank. The Captain transmitted a distress message, which was subsequently cancelled after transferring ballast to correct the list. The ship altered course for the oil port of Donges (France), as a port of refuge.

By the evening of 11 December cracks had begun to appear on the main deck above no.2 ballast tank, and the list had worsened. In deteriorating weather attempts were once again made by the crew to correct the list by transferring ballast and cargo.

In the early hours of 12 December a second distress message was sent informing that some hull plating had washed away. The French authorities immediately initiated a search and rescue operation. By 0645 the helicopter evacuation of the crew had begun. Shortly after 0800 the hull fractured in the way of No. 2 ballast tank and broke in two in a position 40 nautical miles south of Pointe de Penmarc'h. The whole crew was safely rescued.

Salvage tugs began the operation of towing the two hull sections further away from the coast. However both sections sank on 13 December.

2. Details of the ship:

Erika was a 37 000 tonne deadweight single-hulled tanker built in Japan in 1975, registered in Malta since 1993 and classed with the Italian Classification Society RINA, having transferred from Bureau Veritas in June 1998. The ship was owned by the Tevere Shipping Company of Malta. The tanker was converted in 1997 by designating Segregated Ballast tanks.

During her 25-year life the ship had changed name seven times and had been classed by four different Classification societies. She had flown the flags of Liberia and Japan before becoming registered in Malta.

The SIRENAC database of the Paris Memorandum of Understanding on port State control shows that Erika was subjected to four inspections since November 1997. Although revealing certain deficiencies no major structural problems were noted.

In 1998 the ship underwent a special survey by RINA in Montenegro, where 100 tonnes of steel was renewed in the ship's tanks. In November 1999 (just before the accident,) a RINA surveyor recommended that thickness measurements be carried out on longitudinal stiffeners in the ballast tanks. The ship was permitted to sail on condition that the checks were completed in January 2000.

3. Preliminary conclusions

The preliminary report of the French accident investigation [32] concluded that the ship suffered major structural failure, initially causing cargo to leak between cargo and ballast tanks requiring transfer of weight on board to correct the resulting list. Later, in deteriorating weather conditions, the hull completely fractured in the way on no.2 ballast tank resulting in the ship breaking in two.

[32] NAUFRAGE DU PETROLIER "ERIKA" published by Ministère de l'Equipement des Transports et du Logement, 13.01.2000

4. Consequences of the accident

On being informed of the break-up and sinking of Erika and the ensuing pollution threat, the European Commission immediately activated its emergency team and offered the French authorities the services of the Community Oil Pollution Task Force experts, costs being borne by the Commission. The Commission provided a liaison officer between the French authorities and assisting foreign vessels. The estimated initial spill was 10000 tonnes of heavy fuel situated about 60 km off the French coast (South Brittany).

The two halves of the vessel lie in about 120 metres of water and are thought to contain about 15 000 tonnes of oil. Since the sinking more oil has been reported as leaking from the wreck. Since the accident Total Fina SA, the owner of the cargo, has entered into an agreement with the French Government to take action to prevent further escape of oil from the two halves and directly finance all related inspections and, if feasible, oil removal operations from the wreck.

The cost of the total damage caused by the accident is not yet known, however a number of claims have already been received by the Claims Handling Office established in Lorient by the vessel underwriters (Steamship Mutual Underwriting Association (Bermuda) Ltd.) and the IOPC 1992 Fund. [33]

[33] See chapter 2 paragraph 5 for details of liability and compensation regimes.

B. Other tanker accidents

Between January 1992 and March 1999 the world total losses, all ship types, was reported to be 593 merchant vessels of 8.0 million tdwt.

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Tanker losses compared to total ship losses (over 500 gt.)

During the same period the world total of reported tanker (all categories) losses amounted to 77 vessels with 2.5 million tdwt. Tankers account for only 13% of the number of ships of total losses. However in terms of tonnage lost the impact is bigger as accidents involving tankers account for 31% in deadweight terms of the world total tonnage lost.

Since the Torrey Canyon ran aground on the Seven Stones' Reef off Lands End in 1967 there have been a number of major tanker accidents in EU waters resulting in severe oil pollution. All these except one involved large tankers carrying crude oil. The one exception, Erika, was carrying heavy fuel oil.

CAUSES

Tanker accidents falling into three main categories:

- Grounding, because of navigational or pilotage errors (Sea Empress, Torrey Canyon, Aegean Sea)

- Grounding because of mechanical failure, (Amoco Cadiz, Braer)

- Fire and explosion caused during on-board operations, (Haven)

- Collision with another vessel, followed by fire / explosion. (British Trent)

- Collision with another vessel, resulting in pollution. (No fire.)

- Structural failure. (Betelgeuse, Mimosa, Erika).

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Major tanker accidents causing pollution in EU waters

TORREY CANYON

Torrey Canyon was a 120 000 tonne deadweight Liberian-flagged tanker which ran aground on the Seven Stones' reef between Land's End and the Isles of Scilly on 18 March 1967. This resulted in 119 000 tonnes of crude oil being spilled causing severe pollution along the coasts of south west England and northern France. The cause of the grounding was primarily human error in the form of bad navigation. The accident led to the establishment of much more stringent regulations specifically for tankers in the form of the IMO International Convention for the Prevention of Pollution from Ships (MARPOL).

URQUIOLA

On 12 May 1976 the tanker Urquiola struck a submerged object when entering La Coruña. As the cargo was leaking from the ship it was ordered out of the harbour because of the danger of fire and explosion. While being assisted out of the harbour it grounded again causing further damage. The ship exploded two hours later killing the captain. A total of 100 000 tonnes of oil was spilled. The initial cause of the accident was a navigational error, which was compounded during the attempt to tow the ship away from the port.

BETELGEUSE

On 8 January 1979 the French tanker Betelgeuse, owned by Total, exploded while discharging crude oil in Bantry Bay, Ireland. The official enquiry concluded that the cause of the explosion was hull fracture caused by stressing the hull during cargo operations. A major contributing factor was serious steel wastage due to corrosion in the ballast tanks. The owners were censured for deciding not to renew badly corroded longitudinal stiffeners at her second special survey. The ship was classed with Bureau Veritas.

AMOCO CADIZ

On 17 March 1978 the Liberian-flagged Amoco Cadiz ran aground on the north-west coast of Brittany and lost its entire cargo of 223 000 tonnes of crude oil. The tanker had lost its ability to steer in heavy weather and ran aground while attempts were being made to take it in tow. T