Source: https://www.federalregister.gov/documents/2008/09/17/E8-21554/financial-responsibility-for-water-pollution-vessels-and-opa-90-limits-of-liability-vessels-and
Timestamp: 2018-07-21 22:26:37
Document Index: 301720794

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A Rule by the Coast Guard on 09/17/2008
This final rule is effective October 17, 2008.
73 FR 53691
53691-53705 (15 pages)
Docket No. USCG-2005-21780
E8-21554
https://www.federalregister.gov/d/E8-21554 https://www.federalregister.gov/d/E8-21554
Comments and material received from the public, as well as documents mentioned in this preamble as being available in the docket, are part of docket USCG-2005-21780 and are available for inspection or copying at the Docket Management Facility (M-30), U.S. Department of Transportation, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. You may also find this docket on the Internet at http://www.regulations.gov.
If you have questions on this rule, call Benjamin White, National Pollution Funds Center, Coast Guard, telephone 202-493-6863. If you have questions on viewing the docket, call Renee V. Wright, Program Manager, Docket Operations, telephone 202-366-9826.
CERCLA Title I of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. 9601-9675).
COFR Certificate of Financial Responsibility.
DPA Deepwater Port Act of 1974, as amended (33 U.S.C. 1501 et seq.).
DRPA Delaware River Protection Act of 2006, Title VI of the Coast Guard and Maritime Transportation Act of 2006, Public Law 109-241, July 11, 2006, 120 Stat. 516.
FRFA Final Regulatory Flexibility Analysis.
Fund Oil Spill Liability Trust Fund.
IRFA Initial Regulatory Flexibility Analysis.
LOOP Louisiana Offshore Oil Port.
MODU Mobile Offshore Drilling Unit.
NEPA National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f).
OPA 90 The Oil Pollution Act of 1990, as amended (33 U.S.C. 2701, et seq.).
U.S.C.C.A.N. United States Code Congressional and Administrative News.
On August 18, 2006, before initiating this rulemaking, we published a notice of policy in the Federal Register (71 FR 47737) entitled “New Oil Pollution Limits of Liability for Vessels—Delaware River Protection Act of 2006 Amendment to the Oil Pollution Act of 1990” (hereafter the “Notice of Policy”).
On February, 5, 2008, we published a notice of proposed rulemaking (NPRM) in the Federal Register (73 FR 6642), entitled “Financial Responsibility for Water Pollution (Vessels) and OPA 90 Limits of Liability (Vessels and Deepwater Ports)”.
On February 13, 2008, we published corrections to the NPRM in the Federal Register (73 FR 8250), to clarify the proposed effective date of the rule and the distinction between the financial responsibility applicable amounts of § 138.80(f) and the OPA 90 limits of liability in proposed Subpart B.
We received seven letters during the public comment period raising 13 Start Printed Page 53692issues, and one additional letter after the public comment period closed on May 5, 2008, raising one issue. No public meeting was requested and none was held.
In general, under the Oil Pollution Act of 1990, as amended (33 U.S.C. 2701, et seq.) (OPA 90), responsible parties (i.e., the owners and operators, including demise charterers) for a vessel or a facility from which oil is discharged, or which poses the substantial threat of a discharge of oil, into or upon the navigable waters or adjoining shorelines or the exclusive economic zone are liable for the removal costs and damages specified in OPA 90 that result from such incident, up to prescribed limits of liability. (33 U.S.C. 2702(a); 33 U.S.C. 2704). Embodying the polluter pays principle, this liability is strict, joint and several.[1] Similar requirements apply under Section 107 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. 9607) (CERCLA) to owners and operators of vessels and facilities that release or threaten to release hazardous substances.
The OPA 90 limits of liability are set out in 33 U.S.C. 2704(a). The CERCLA limits of liability are set out in 42 U.S.C. 9607.
In addition to the limit of liability provisions, 33 U.S.C. 2716(a) of OPA 90 and 42 U.S.C. 9608(a) of CERCLA require that the owners and operators, including demise charterers, of certain vessels establish and maintain evidence of financial responsibility (i.e., ability to pay) sufficient to meet the maximum amount of liability to which they could be subjected under 33 U.S.C. 2704 and 42 U.S.C. 9607.
According to 33 U.S.C. 2716(a)(1) and (2), the evidence of financial responsibility requirements apply, in relevant part for purposes of OPA 90, to responsible parties for: Any vessel over 300 gross tons (except a non-self propelled vessel that does not carry oil as cargo or fuel) using any place subject to the jurisdiction of the United States; and any vessel using the waters of the exclusive economic zone to transship or lighter oil destined for a place subject to the jurisdiction of the United States. OPA 90, at 33 U.S.C. 2716(c), also imposes evidence of financial responsibility requirements on offshore facilities and deepwater ports. This rulemaking, however, only concerns the OPA 90 evidence of financial responsibility requirements that must be met by vessels under 33 U.S.C. 2716(a).
The OPA 90 limits of liability are subject to amendment both by statute and, under 33 U.S.C. 2704(d), by regulation, and when the limits of liability are amended the financial responsibility requirements must be adjusted by regulation. On July 11, 2006, the President signed the Delaware River Protection Act of 2006, Title VI of the Coast Guard and Maritime Transportation Act of 2006, Public Law 109-241, July 11, 2006, 120 Stat. 516 (DRPA). Section 603(a) of DRPA amended the OPA 90 limits of liability for vessels at 33 U.S.C. 2704(a).
The following table shows the OPA 90 limits of liability in effect before DRPA, and the new limits of liability under OPA 90 as amended by DRPA Section 603(a), by vessel type:
Changes to OPA 90 Vessel Limits of Liability 2
2 Sources: 33 U.S.C. 2704(a) immediately prior to amendment by DRPA, and 33 U.S.C. 2704(a) as amended by DRPA Section 603(a). Although the original and current versions of 33 U.S.C. 2704(a) both distinguish between vessels on the basis of their gross tonnage and whether they are tank vessels, 33 U.S.C. 2704(a) as amended by DRPA Section 603(a) now also distinguishes between single-hulled and double-hulled tank vessels.
On August 18, 2006, before initiating this rulemaking, we published a Notice of Policy in the Federal Register (71 FR 47737, see, Regulatory History) explaining:
That the OPA 90 limits of liability for vessels were changed by DRPA effective July 11, 2006 for non-tank vessels, and effective October 9, 2006 for tank vessels;
The amounts of the new OPA 90 vessel limits of liability;
That the OPA 90 proof of financial responsibility (applicable amount) requirements for vessels at 33 CFR part 138 would stay at the applicable amount levels in effect prior to the DRPA amendments until changed by rulemaking; and
That a rulemaking project would be initiated to require vessel owners and operators to provide evidence of financial responsibility applicable amounts under 33 CFR part 138 to the amended OPA 90 limits of liability.
This rulemaking was initiated, as contemplated in the Notice of Policy, to ensure that the owners and operators (including demise charterers, hereafter referred to jointly as the operators) of any vessel required to have a certificate of financial responsibility under 33 U.S.C. 2716, demonstrate that they are Start Printed Page 53693financially able to meet their potential liability under OPA 90, 33 U.S.C. 2704, under the new limits of liability as amended by DRPA, in the event of an incident where an OPA 90 limit of liability applies. The rulemaking amends 33 CFR part 138 to ensure consistency between the OPA 90 vessel evidence of financial responsibility applicable amounts at § 138.80(f)(1) and the OPA 90 vessel limits of liability as amended by DRPA.[3]
This rulemaking also establishes the framework for ensuring consistency when regulatory changes to the OPA 90 limits of liability for vessels and deepwater ports are promulgated in the future under 33 U.S.C. 2704(d).
Specifically, the rulemaking divides part 138 of Title 33 CFR into two subparts. The vessel financial responsibility requirements, former 33 CFR part 138, as amended by this rulemaking now appears under 33 CFR part 138, new subpart A. In addition, a new subpart has been created, at 33 CFR part 138, subpart B, to set forth the OPA 90 limits of liability for vessels and deepwater ports, and reserving paragraphs for other oil spill source categories that are regulated by the Coast Guard. Last, rather than specifically enumerating the OPA 90 financial responsibility applicable amounts for vessels in § 138.80(f)(1), that section now cross-references to the OPA 90 limits of liability for vessels as amended by DRPA or hereafter by regulation, as set forth in new subpart B. This change ensures that the OPA 90 financial responsibility applicable amounts that must be proven by vessel operators, under 33 CFR part 138, subpart A, will always be consistent with the OPA 90 limits of liability set forth in 33 CFR part 138, subpart B.
This rulemaking also eliminates the requirement in former § 138.65 that an original Certificate of Financial Responsibility (Certificate or COFR), or an authorized copy thereof, be carried aboard covered vessels. Improved technology now enables the Coast Guard to view vessel COFRs electronically, which is more cost effective than tasking inspectors to view a paper Certificate on board each vessel.
In addition, the rule increases the COFR application and certification fees found in § 138.130. The prior fee amounts were established in 1994 in the interim rule entitled “Financial Responsibility for Water Pollution (Vessels)” (59 FR 34210), and the amounts had not been increased since that time. The new fee amounts established by this rulemaking approximate the fluctuations to the Consumer Price Index occurring as a result of inflation since 1994.
Finally, this rulemaking revises the definition of “owner” in § 138.20 to reflect amendments to OPA 90 by the Coast Guard and Maritime Transportation Act of 2004, Public Law 108-293, August 9, 2004, 118 Stat. 1045.
We received seven letters raising 13 issues during the public comment period for the proposed rule (73 FR 6642 and 73 FR 8250), and one additional letter raising one issue after the public comment period closed on May 5, 2008. The letters we received during the public comment period were from a private citizen, three COFR guarantors, a proposed liquid natural gas (LNG) deepwater port developer, a State environmental agency, and an association of oil spill regulatory agencies from Alaska, British Columbia, Washington, Oregon, Hawaii and California. The letter received after the public comment period closed was from an offshore drilling association. The following discussion summarizes the public comments we received and our responses to the comments.
One commenter was concerned with an oil spill off the coast of New Jersey more than one year ago where the responsible party was never identified, and proposed that, to improve security and prevent pollution, the U.S. have information on every ship carrying any cargo that enters any U.S. waters at any time. This rulemaking only addresses the requirements under 33 U.S.C. 2716 for vessels to provide evidence of financial responsibility. The comment is therefore beyond the scope of this rulemaking, and no change has been made in the final rule in response to this comment. The Coast Guard, however, agrees that maritime domain awareness is important to our national security and efforts to reduce pollution, and is taking steps to improve vessel tracking systems.
The same commenter proposed that the Coast Guard establish a requirement for vessels to post a five million dollar bond to pay for any damage in the event of an oil spill incident. This comment is beyond the scope of this rulemaking. OPA 90 does not authorize the Coast Guard to impose a bonding requirement on vessels including cargo vessels. Therefore, no change has been made to the final rule in response to this comment. OPA 90 does, however, establish limits of liability at 33 U.S.C. 2704(a), applicable to all vessels. Those limits are generally more than five million dollars for tank vessels, and for most large ocean-going vessels. Furthermore, at 33 U.S.C. 2716 and in these regulations, OPA 90 requires that all vessels—including cargo vessels—over 300 gross tons establish and maintain evidence of financial responsibility sufficient to meet the maximum amount of liability to which the responsible party could be subjected under 33 U.S.C. 2704(a).
Two commenters recommended adding the following proviso at the end of the first sentence of § 138.80(d)(2) Limitation on guarantor liability: “, provided that the guarantor was immediately notified as required by 33 U.S.C. 2714 and given the same opportunity to respond to an incident or a release or threatened release, as that given to the responsible party.” This comment is beyond the scope of this rulemaking. This rulemaking only addresses the requirements under 33 U.S.C. 2716 for vessels to provide evidence of financial responsibility. The provisions of OPA 90 concerning designation of sources, and notification of responsible parties and guarantors, are set forth in 33 U.S.C. 2714(a), and are detailed further in regulations at 33 CFR part 136, subpart D (33 CFR 136.305(a)).
Furthermore, there is no provision in 33 U.S.C. 2714(a) or elsewhere in OPA 90 that limits a guarantor's liability for removal costs and damages in the event the government does not notify the responsible party or guarantor of a source designation. A failure to notify only affects the responsible party's and guarantor's obligations concerning advertisement to potential claimants, under 33 U.S.C. 2714(b) and implementing regulations at 33 CFR part 136. The Coast Guard therefore disagrees with the proposed change to § 138.80(d).
One commenter recommended changing the reference to the Louisiana Offshore Oil Port (LOOP) in § 138.220(b), to encompass any limit of liability established under 33 U.S.C. 2704(d)(2)(A)-(C). We agree that the wording in the proposed regulatory text was unnecessarily narrow and have amended § 138.220(b) accordingly.
One commenter asked that § 130.220(b) be expanded to describe the nature of any studies that might be required of deepwater port license applicants or license holders and the specific administrative process to be followed under 33 U.S.C. 2704(d)(2) for seeking adjustments to the limits of liability for deepwater ports under 33 Start Printed Page 53694U.S.C. 2704(a). This comment concerns issues that go beyond the scope of this rulemaking. This rulemaking identifies the existing limits of liability for vessels and deepwater ports, but it does not adjust any limits of liability. Nor does it concern the studies and other criteria under 33 U.S.C. 2704(d) for adjusting the limits. Instead, it primarily concerns the evidence of financial responsibility requirements applicable to vessels under 33 U.S.C. 2716.
One commenter asked several questions concerning how the Coast Guard determines a vessel's category for purposes of implementation of the COFR rule. First, the commenter wanted to know what documents will serve as a reference point for the Coast Guard to determine whether a vessel has a single or double hull, and whether the Coast Guard would use a classification society survey or some other official document that is generally accepted as an accurate record of the hull construction. The same commenter asked what document will be used by the Coast Guard as the reference point for classifying a vessel in circumstances where a vessel has changed type (e.g., from a Very-large Crude Carrier tanker to a dry cargo vessel).
The Coast Guard may confirm vessel details provided in the application for a certificate of financial responsibility, including any guarantee schedule, by referring to certificates of inspection and other normally available information sources such as Class Society surveys, Lloyds List, and Protection & Indemnity Club information. We have clarified the rule in response to these questions, consistent with legislative intent, by replacing the words “other than a vessel referred to in § 138.220(a)(1),” in § 138.220(a)(2) and (4), with the term “double hull”, and by adding at the end of § 138.220(a) that the term “double hull” has the meaning used in 33 CFR part 157 and that the term “single hull” means any hull that is not a “double hull”. (See, 152 Cong. Rec. H1640, H1663).
The commenter also asked how the Coast Guard intends to enforce the imminent phase-out of single-hull tank vessels? Specifically, the commenter asked, in a hypothetical instance where a single-hull tank vessel owner misstates in an application for a guaranty that the vessel is double hulled: How would the Coast Guard determine that the vessel should not enter the U.S. Exclusive Economic Zone? What would the consequence be to the vessel owner? Would there be any consequence for the guarantor? Enforcement of the phase-out of single-hull tankers is outside the scope of this rulemaking. Furthermore, the consequences of any illegal vessel entry would depend in part on the circumstances of the entry and the applicable law(s). No change is made to the rule in response to these questions.
Two commenters noted that the rulemaking did not increase the OPA 90 limits of liability, under 33 U.S.C. 2704(d), to reflect significant increases in the Consumer Price Index. One of the commenters noted that the notice of proposed rulemaking did not increase the limits of liability for facilities under the Coast Guard's jurisdiction for inflation. The same commenter also stated that “the proposed increases for vessels, including tank barges, is at the 2006 DRPA level only: No [Consumer Price Index] increases since 2006 are reflected in the proposed rule[,]” and noted that DRPA also amended the provision 33 U.S.C. 2704(d) authorizing increases to limits of liability based on the Consumer Price Index.
The other commenter stated that “the limits of liability for non-tank vessels should be increased”. The same commenter stated that the “proposed rulemaking fails to address the issue of limits of liability for oil handling facilities”, and erroneously characterized the NPRM as proposing to change the limits of liability for vessels “based on the consumer price index”.
These commenters misunderstand the scope of this rulemaking. This rulemaking does not adjust the OPA 90 limits of liability for any source category. Nor does this rulemaking adjust any limits of liability for inflation. This rulemaking is primarily intended to conform the OPA 90 financial responsibility “applicable amounts” for vessels under 33 U.S.C. 2716 (at 33 CFR part 138, subpart A, § 138.80(f)), to the limits of liability for vessels under OPA 90 as amended by DRPA.
Although the rulemaking establishes a new subpart B setting forth the OPA 90 limits of liability for vessels and deepwater ports, and establishes the framework for future regulatory changes to the OPA 90 limits of liability, including adjustments for inflation, the primary purpose of this rulemaking is to ensure consistency between the OPA 90 vessel financial responsibility applicable amounts at § 138.80(f) and the OPA 90 limits of liability now in effect and as may hereafter be amended by regulation. Consumer Price Index increases to the OPA 90 limits of liability for Coast Guard delegated source categories, including oil handling facilities, other facilities, tank barges and other vessels, will be promulgated by regulation, in accordance with 33 U.S.C. 2704(d), in separate rulemakings.
To eliminate some of the confusion concerning the scope of this rulemaking, we have eliminated the reference to the Consumer Price Index that appeared in proposed § 138.200. We also have edited the regulatory text of § 138.85 to clarify the distinction between the effective date of this rule and the date by which operators must establish evidence of financial responsibility in an amount equal to or greater than the new applicable amounts. Finally we have amended subpart B for clarity and to reserve space for future regulatory adjustments to the limits of liability under 33 U.S.C. 2704(d), including adjustments to reflect significant increases in the Consumer Price Index.
One commenter commented favorably that the rulemaking would “eliminate the requirement for vessel operators to maintain their certificates of financial responsibility (COFR) on board ships. We support this direction towards electronic certification. We currently use the USCG online database for vessel contingency plans. In addition the addition of the online COFR database will prove to be beneficial for cross-agency partnership work.” No changes have been made to the rule in response to this comment.
One commenter, who submitted a comment after the close of the public comment period, asked for a supplemental rulemaking to treat all mobile offshore drilling units (MODUs) as double hull tank vessels for purposes of the financial responsibility requirements of 33 CFR part 138, subpart A. OPA 90 at 33 U.S.C. 2716(a) requires that evidence of financial responsibility be provided up to the applicable limits of liability. OPA 90 at 33 U.S.C. 2704(b), in turn, provides that when a MODU is used as an offshore facility it is generally treated as a tank vessel for purposes of OPA 90. There, however, is no provision in OPA 90 authorizing treatment of single-hulled MODUs when used as offshore facilities as double-hulled tank vessels for purposes of determining the applicable limit of liability or the financial responsibility requirements. The Coast Guard therefore will not initiate a supplemental rulemaking in response to this comment.
We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 13 of these statutes or executive orders.Start Printed Page 53695
This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. A final Regulatory Assessment is available in the docket as indicated under ADDRESSES. A summary of the Regulatory Assessment follows:
On February 5, 2008, an NPRM was published (73 FR 6642) which included a supplemental Preliminary Regulatory Assessment of the costs and benefits of the proposed rule. The comment period ended on May 5, 2008. No comments were received on the Preliminary Regulatory Assessment. Prior to developing the Final Regulatory Assessment, we confirmed that the data contained in the Preliminary Regulatory Assessment had not changed.
There are two regulatory costs of this rule:
Regulatory Cost 1: The rule increases the cost to responsible parties associated with application for and certification of COFRs. This rule increases the cost per application from $150 to $200 and the cost per certification from $80 to $100. We estimate that there will be 1,600 COFR application fees submitted per year and 8,600 COFR certification fees submitted per year for the foreseeable future. The aggregated annual increase in cost due to these fee increases is approximately $252,000 per year.
Regulatory Cost 2: The rule increases the cost associated with establishing financial responsibility under 33 CFR part 138. This occurs in two ways: Responsible parties using commercial insurance as their method of guaranty will incur higher insurance premiums; and, responsible parties using self-insurance as their method of guaranty will need to seek out and acquire commercial insurance for vessels they operate that are no longer eligible for self-insurance based on their working capital and net worth.
There are approximately 16,982 vessels using commercial insurance and 823 vessels using self insurance methods of guaranty. The 10-year present value of this regulatory cost at a 3 percent discount rate is between $73.8 million and $83.4 million. The 10-year present value of this regulatory cost at a 7 percent discount rate is between $63.3 million and $71.9 million. The ranges reflect two vessel profiles that were developed and analyzed separately to account for the uncertainty, due to data gaps, of when existing single-hulled tank vessels will be phased out.
The 10-year present value of the total cost of the rule (Regulatory Cost 1 + Regulatory Cost 2) at a 3 percent discount rate is between $76 million and $85.6 million. The 10-year present value of the total cost of the rule (Regulatory Cost 1 + Regulatory Cost 2) at a 7 percent discount rate is between $65.2 million and $73.8 million.
There are two regulatory benefits of this rule: First, the rule aligns the financial responsibility amounts for vessels in 33 CFR part 138 in subpart A with the amended statutory limits of liability under OPA 90, as specified in 33 U.S.C. 2704. This ensures the ability of responsible parties to meet their maximum liability limit under OPA 90 in the event of an incident. Second, the rule eliminates the burden on owners and operators of maintaining COFRs onboard vessels.
A Final Regulatory Flexibility Analysis (FRFA) discussing the impact of this rule on small entities is available in the docket where indicated under the ADDRESSES section of this preamble.
The NPRM for this rulemaking published on February 5, 2008 (73 FR 6642) included an Initial Regulatory Flexibility Analysis (IRFA) which quantified the economic impacts to small entities of the proposed rule. The comment period ended on May 5, 2008. No comments were received on either the IRFA or with respect to any aspects of the NPRM that might concern small entities. Prior to developing the FRFA, we confirmed that the data contained in the IRFA had not changed.
In our analysis, we researched vessel operator size and revenue data using public and proprietary business databases. We then determined which entities were small based on the U.S. Small Business Administration's criteria as they pertain to business size standards for all sectors of the North American Industry Classification System (NAICS).
There are an estimated 600 small entities affected by this rule. We found that 82 distinct NAICS codes are represented in the population of small entities (of which 32 contained more than 5 entities). The available data indicate that: increases in insurance premiums will result in an average annual cost of $523 per vessel, increases in self-insurer costs will result in an average annual cost of $7,200 per vessel, and increases in COFR application fees will result in an average annual cost of $12 per vessel.
The data further indicate that, of the small entities impacted, 92 percent will experience an annual economic impact that is less than 1 percent of their annual sales. Furthermore, 98 percent of the small entities will experience an economic impact less than 3 percent of their total sales. Two percent will experience an annual economic impact that is equal to or greater than 3 percent of their annual sales and none will experience an annual economic annual impact greater than 10 percent of their annual sales. Based on this analysis, we believe that implementation of this rule would not have a significant economic impact on a substantial number of small entities under 5 U.S.C. 605(b). Therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that this final rule will not have a significant economic impact on a substantial number of small entities.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered in the NPRM to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking. No assistance was requested from small entities.
This rule calls for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). As defined in 5 CFR 1320.3(c), “collection of information” comprises reporting, recordkeeping, monitoring, posting, labeling, and other, similar actions. The title and description of the Start Printed Page 53696information collections, a description of those who must collect the information, and an estimate of the total annual burden follow. The estimate covers the time for reviewing instructions, searching existing sources of data, gathering and maintaining the data needed, and completing and reviewing the collection.
Summary of the Collection of Information: Not later than 90 days after the effective date of this regulation, operators are required to establish evidence of financial responsibility to the amended applicable amounts in § 138.80(f).
This rule eliminates the existing recordkeeping burden associated with 33 CFR part 138, and revises the current information collection entitled, Financial Responsibility for Water Pollution (Vessels) (Office of Management and Budget control number 1625-0046, approved December 7, 2006).
Need for Information: This information collection is necessary to enforce this rule. Without this collection, it would not be possible for the Coast Guard to know which operators were in compliance with the amended financial responsibility applicable amounts determined under § 138.80(f), and which were not. Vessels not in compliance will be subject to the penalties provided under § 138.140.
Use of Information: The Coast Guard will use this information to verify that vessel operators have established evidence of financial responsibility to reflect the amended financial responsibility applicable amounts determined under § 138.80(f).
Description of the Respondents: Operators, as this term is defined in 33 CFR part 138, subpart A, and guarantors of vessels that require COFRs under 33 CFR part 138, Subpart A.
Number of Respondents: There are approximately 900 United States operators, 9,000 foreign operators and 100 guarantors of vessels that will submit information to the Coast Guard.
Frequency of Response: This is a one-time submission occurring not later than 90 days after the effective date of this regulation. Subsequent submissions that may be required as a result of regulatory changes to limits of liability under 33 U.S.C. 2704(d) are not included here because they will be addressed in future rulemakings.
Increased burden associated with reporting requirements: 10,000 respondents × 1.0 hours per response = 10,000 hours.
Reduced burden associated with recordkeeping requirements: 9,900 respondents × 0.0138 hours/respondent = 137 hours.
Estimate of Total Annual Burden: We used the “All Occupations” average hourly wage of $18.21 per hour, found in the May 2005 National Occupational Employment and Wage Estimates United States, published by the Department of Labor's Bureau of Labor Statistics, and applied a 43 percent overhead factor to estimate employee benefits to calculate the burdened labor rate. Bureau of Labor Statistics data show that total employee benefits is approximately 30 percent of total compensation. By applying a benefit factor of 43 percent to the hourly wage, we calculated total compensation: $18.21 per hour + ($18.21 per hour × 43 percent) = $26 per hour.
Increased burden associated with reporting requirements: 10,000 hours × $26 per hour = $260,000.
Reduced burden associated with recordkeeping requirements: 137 hours × $26 per hour = $3,562.
As required by 44 U.S.C. 3507(d), we submitted a copy of the proposed rule to the Office of Management and Budget (OMB) for its review of the collection of information. OMB has yet to complete its review of this collection. Therefore, § 138.85 may not be enforced until this collection is approved by OMB. We will publish notice in the Federal Register of OMB's decision to approve, modify, or disapprove the collection.
The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with Start Printed Page 53697applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.
We have analyzed this rule under Commandant Instruction M16475.lD and Department of Homeland Security Management Directive 5100.1, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(a), of the Instruction, from further environmental documentation. This rulemaking only addresses the requirements under 33 U.S.C. 2716 for vessels to provide evidence of financial responsibility. It has no effect on the environment. A final environmental analysis checklist and a final categorical exclusion determination are available in the docket where indicated under ADDRESSES.
Implementation schedule for amendments to applicable amounts by regulation.
Authority: 33 U.S.C. 2716, 2716a; 42 U.S.C. 9608, 9609; Sec. 1512 of the Homeland Security Act of 2002, Pub. L. 107-296 , Title XV, Nov. 25, 2002, 116 Stat. 2310 (6 U.S.C. 552); E.O. 12580, Sec. 7(b), 3 CFR, 1987 Comp., p. 198; E.O. 12777, 3 CFR, 1991 Comp., p. 351; E.O. 13286, Sec. 89 (68 FR 10619, Feb. 28, 2003); Department of Homeland Security Delegation Nos. 0170.1 and 5110. Section 138.30 also issued under the authority of 46 U.S.C. 2103, 46 U.S.C. 14302.
(1) Section 1001 of the Oil Pollution Act of 1990 (33 U.S.C. 2701), respecting the financial responsibility referred to in § 138.10(a): claim, claimant, damages, discharge, exclusive economic zone, liable, liability, navigable waters, mobile offshore drilling unit, natural resources, offshore facility, oil, owner or operator, person, remove, removal, removal costs, security interest, and United States; and
(2) Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. 9601), respecting the financial responsibility referred to in § 138.10(b): claim, claimant, damages, environment, hazardous substance, liable, liability, navigable waters, natural resources, offshore facility, owner or operator, person, release, remove, removal, security interest, and United States.
Applicable amount means an amount of financial responsibility that must be demonstrated under this subpart, determined under § 138.80(f)(1) for OPA 90 or § 138.80(f)(2) for CERCLA.
Application means an Application for Vessel Certificate of Financial Responsibility (Water Pollution) (Form CG-5585), which can be obtained from the U.S. Coast Guard National Pollution Start Printed Page 53698Funds Center as provided in §§ 138.40 and 138.45.
Certificate means a Vessel Certificate of Financial Responsibility (Water Pollution) (Form CG-5585) issued by the NPFC under this subpart, as provided in § 138.65.
E-COFR means the Electronic Certificate of Financial Responsibility web-based process located on the NPFC Web site (http://www.npfc.gov/​cofr), which may be used by operators to apply for and renew Certificates.
(a) The regulations in this subpart set forth the procedures for an operator of a vessel subject to this subpart to demonstrate that the responsible parties of the vessel are financially able to meet their potential liability for costs and damages in the applicable amounts set forth in this subpart at § 138.80(f). Although the owners, operators, and demise charterers of a vessel are strictly, jointly and severally liable under OPA 90 and CERCLA for the costs and damages resulting from each incident or release or threatened release, together they need only establish and maintain evidence of financial responsibility under this subpart equal to the combined OPA 90 and CERCLA limits of liability arising from a single incident and a single release, or threatened release. Only that portion of the total applicable amount of financial responsibility demonstrated under this subpart with respect to—
(1) OPA 90 is required to be made available by a vessel's responsible parties and guarantors for the costs and damages related to an incident where Start Printed Page 53699there is not also a release or threatened release; and
All forms referred to in this subpart may be obtained from NPFC by requesting them in writing at the address given in § 138.45(a) or by clicking on the Forms link at the NPFC E-COFR Web site, http://www.npfc.gov/​cofr.
(a) An operator must submit all Applications for a Certificate and all requests for renewal of a Certificate, together with all evidence of financial responsibility required under § 138.80 and all fees required under § 138.130, to the NFPC at the following address: U.S. Coast Guard, National Pollution Funds Center (Cv), 4200 Wilson Boulevard, Suite 1000, Arlington, VA 22203-1804, telephone (202) 493-6780, Telefax (202) 493-6781; or electronically using NPFC's E-COFR Web-based process at http://www.npfc.gov/​cofr.
(b) All requests you have for assistance in completing Applications, requests for renewal and other submissions under this subpart, including telephone inquiries, should be directed to the U.S. Coast Guard Start Printed Page 53700NPFC at the addresses in paragraph (a) of this section.
(a) You may obtain an Application for Vessel Certificate of Financial Responsibility (Water Pollution) (Form CG-5585) by following the instructions in §§ 138.40 and 138.45.
(a) The operator of a vessel required to have a Certificate under this subpart must submit a written or E-COFR request for renewal of the Certificate to the NPFC at least 21 days, but not earlier than 90 days, before the expiration date of the Certificate. A letter may be used for this purpose. The request for renewal must comply in all other respects with the requirements in § 138.60 concerning Applications. The Director, NPFC, may waive this 21-day requirement for good cause shown.
(a) General. In addition to submitting an Application, requests for renewal, and fees, an applicant must file, or cause to be filed, with the Director, NPFC, evidence of financial responsibility acceptable to the Director, NPFC, in an amount equal to the total applicable amount determined under § 138.80(f)(3). A guarantor may file the evidence of financial responsibility on behalf of the applicant directly with the Director, NPFC.
(1) Insurance. By filing with the Director, NPFC, an Insurance Guaranty (Form CG-5586) or, when applying for a Master Certificate under § 138.110, a Master Insurance Guaranty (Form CG-5586-1), executed by not more than four insurers that have been found acceptable by, and remain acceptable to, the Director, NPFC, for purposes of this subpart.
(3) Self-insurance. By filing with the Director, NPFC, the financial statements specified in paragraph (b)(3)(i) of this section for the applicant's fiscal year preceding the date of Application and by demonstrating that the applicant or certificant maintains, in the United States, working capital and net worth each in amounts equal to or greater than the total applicable amount determined under § 138.80(f)(3), based on a vessel carrying hazardous substances as cargo. As used in this paragraph, working capital means the amount of current assets located in the United States, less all current liabilities anywhere in the world; and net worth means the amount of all assets located in the United States, less all liabilities anywhere in the world. For each fiscal year after the initial filing, the applicant or certificant must also submit statements as follows:
(ii) Semiannual self-insurance submissions. When the self-insuring applicant's or certificant's demonstrated net worth is not at least ten times the total applicable amount of financial responsibility determined under § 138.80(f)(3), the applicant's or certificant's Treasurer (or equivalent official) must file affidavits with the Director, NPFC, covering the first six months of the applicant's or certificant's current fiscal year. The affidavits must state that neither the working capital Start Printed Page 53701nor the net worth have, during the first six months of the current fiscal year, fallen below the applicant's or certificant's required total applicable amount of financial responsibility as determined under this subpart.
(4) Financial Guaranty. By filing with the Director, NPFC, a Financial Guaranty (Form CG-5586-3), or, when applying for a Master Certificate, a Master Financial Guaranty (Form CG-5586-4), executed by not more than four financial guarantors, including, but not limited to, a parent or affiliate acceptable to the Director, NPFC. A financial guarantor must comply with all of the self-insurance provisions of paragraph (b)(3) of this section. In addition, a person who is a financial guarantor for more than one applicant or certificant must have working capital and net worth no less than the aggregate total applicable amounts of financial responsibility determined under § 138.80(f)(3) provided as a financial guarantor for each applicant or certificant, plus the total applicable amount required to be demonstrated by a self-insurer under this subpart if the financial guarantor is also acting as a self-insurer.
(i) The incident, release, or threatened release was caused by the willful Start Printed Page 53702misconduct of the person for whom the guaranty is provided.
Each operator of a vessel described in § 138.15 must establish evidence of financial responsibility acceptable to the Director, NPFC, in an amount equal to or greater than the total applicable amounts determined under § 138.80(f), by not later than January 15, 2009. In the event an applicable amount determined under § 138.80(f) is thereafter amended by regulation, each operator of a vessel described in § 138.15 must establish evidence of financial responsibility acceptable to the Director, NPFC, in an amount equal to or greater than the amended total applicable amount, by not later than 90 days after the effective date of the final rule, unless another date is required by statute or specified in the amending regulation.
(a) The Director, NPFC, issues an individual Certificate for each vessel listed on a completed Application or request for renewal when the Director, NPFC, determines that acceptable evidence of financial responsibility has been provided and appropriate fees have been paid, except where a Fleet Certificate is issued under this section or where a Master Certificate is issued under § 138.110. Each Certificate of any type issued under this subpart is issued only in the name of a vessel operator and is effective for not more than 3 years from the date of issuance, as indicated on each Certificate. An authorized official of the applicant may submit to the Director, NPFC, a letter requesting that additional vessels be added to a previously submitted Application for an individual Certificate. The letter must set forth all information required in item 5 of the Application form. The authorized official must also file, or cause to be filed with the Director, NPFC, acceptable evidence of financial responsibility, if required, and must pay all applicable certification fees for the additional vessels.
(d) If, at any time after a Certificate has been issued, a certificant becomes aware of a change in any of the facts contained in the Application or supporting documentation, the certificant must notify the Director, NPFC, in writing within 10 days of becoming aware of the change. A vessel or operator name change or change of a guarantor must be reported by the operator as soon as possible by telefax or other electronic means to the Director, NPFC, and followed by a written notice sent within 3 business days. (See, § 138.45, Where to apply for and renew Certificates, for contact information).
(b) An applicant for a Master Certificate must submit an Application form in the manner prescribed by §§ 138.40 through 138.60. An applicant must establish evidence of financial responsibility in accordance with § 138.80, by submission, for example, of an acceptable Master Insurance Guaranty Form, Surety Bond Guaranty Form, Master Financial Guaranty Form, or acceptable self-insurance documentation. An Application for a Master Certificate must be completed in full, except for Item 5. The applicant must make the following statement in Item 5: “This is an application for a Master Certificate. The largest tank vessel to be covered by this application is [insert applicable gross tons] gross tons. The largest vessel other than a tank vessel is [insert applicable gross tons] gross tons.” The dollar amount of financial responsibility evidenced by the applicant must be sufficient to meet the amount required under this subpart.
(g) An applicant or certificant whose Certificate has been denied under paragraph (a) of this section or revoked under paragraph (b) or (c) of this section Start Printed Page 53704may request the Director, NPFC, to reconsider the denial or revocation. The certificant must submit a request for reconsideration, in writing, to the Director, NPFC, within 20 days of the date of the denial or revocation. The certificant must state the reasons for requesting reconsideration. The Director, NPFC, will generally issue a written decision on the request within 30 days of receipt, provided that, if the Director, NPFC, does not issue a decision within 30 days, the request for reconsideration will be deemed to have been denied, and the denial or revocation will be deemed to have been affirmed. Unless the Director, NPFC, issues a decision reversing the revocation, a revoked Certificate remains invalid. A decision by the Director, NPFC, affirming a denial or revocation, is final agency action.
Director, National Pollution Funds Center, United States Coast Guard.
1. See, Oil Pollution Desk Book, Environmental Law Institute 1991, hereinafter OPA 90 Desk Book, p. 88, H.R. Conf. Report 101-653, at p. 102, reprinted in 1990 U.S.C.C.A.N. 779, 780 [”The term ‘liable' or ‘liability' * * * is to be construed to be the standard of liability * * * under section 311 of the [Federal Water Pollution Control Act, 33 U.S.C. 1321] * * *. That standard of liability has been determined repeatedly to be strict, joint and several liability.”]; OPA 90 Desk Book p. 93, H.R. Conf. Report 101-653, at 118, 1990 U.S.C.C.A.N., at 797 (Aug. 3, 1990) [“[T]he primary responsibility to compensate victims of oil pollution rests with the person responsible for the source of the pollution[.]”].
3. This rulemaking does not change the limits of liability or applicable amount provisions for vessels under CERCLA at 42 U.S.C. 9607(c), 42 U.S.C. 9608(a), and § 138.80(f)(2).
[FR Doc. E8-21554 Filed 9-16-08; 8:45 am]