Oil Pollution Act of 1990 (OPA 90) Phase-Out Requirements for Single Hull Tank Vessels

The Coast Guard published a request for comments (63 FR 63768) on November 16, 1998. The notice encouraged interested persons to provide written comments, information, opinions and arguments on whether single hull tank vessels that were altered with double sides or a double bottom should be considered a different hull configuration for

determining their OPA 90 phase-out date. The comment period ended on January 15, 1999, and there were 32 submissions to the docket. The Coast Guard held no public meeting on this request for comments. Two comments did request a public meeting, but the Coast Guard determined that the written comments in the docket adequately addressed the issues and that a public meeting would not be helpful in acquiring additional information.

Background

Section 4115 of the Oil Pollution Act of 1990 (Pub. L. 101-380, August 18, 1990) (OPA 90) amended title 46, United States Code, by adding a new section 3703a. This section contains the double hull requirements and phase-out schedule for single hull tank vessels operating in U.S. waters. It requires an owner to remove a single hull tank vessel from bulk oil service on a specific date, depending on a vessel's gross tonnage, build date, and hull configuration. The phase- out schedule allows more years of service for single hull tank vessels configured to include double sides or a double bottom than for single hull tank vessels without these hull configurations. The OPA 90 timetable for double hull requirements and phase-out schedule for single hull tank vessels are implemented in 33 CFR part 157, Appendix G. Both OPA 90 and our implementing regulations are silent on if, or when, a vessel owner can convert a single hull tank vessel to include double sides or a double bottom to qualify for a later phase-out date. As a result, some vessel owners have asked the Coast Guard to clarify the types of vessel conversions permitted and their associated phase-out dates. In 1997, the Vessel Compliance Division replied to a question asking if a single hull tank vessel with wing cargo tanks reconfigured as segregated ballast tanks or void spaces to create double sides would qualify for a different OPA 90 phase-out date. They indicated that this type of conversion and an associated later phase-out date was acceptable provided that the modified tanks meet the double side dimension requirements applied to new tank vessels in 33 CFR 157.10d(c)(1). Converted double side segregated ballast tanks must also provide protection to the full extent of a vessel's cargo tank length. In 1998, we received another inquiry from the same source asking if hull conversions completed after a single hull tank vessel's original phase-out date qualified the vessel to reenter bulk oil service with a later phase-out date. Recent inquiries by the maritime industry indicate a continued interest in the possibility of converting single hull tank vessels to include double sides or a double bottom to increase a vessel's operational life past its original OPA 90 phase-out date. In our November 16, 1998, request for comments, we asked for information to help us develop a clear policy on phase-out dates.

Summary of Comments

The comments fell into two clearly opposed groups on whether a single hull tank vessel could, after August 18, 1990, add double sides or a double bottom and use that alteration to change the vessel's category under Sec. 3703a and thus have a later phase-out date. The comments generally urged that the Coast Guard either-- • NOT ALLOW a single hull tank vessel converted with double sides or a double bottom after August 18, 1990, to be considered under a different category in Sec. 3703a to result in later phase-out dates; or, • ALLOW single hull tank vessels converted with double sides or a double bottom after August 18, 1990, to be considered under a different category in Sec. 3703a that would result in a later phase-out date or a return to operation after the vessel's phase-out date. Conversion to add double sides or a double bottom SHOULD NOT be allowed to change the phase-out date under OPA 90. Nineteen comments stated that no change or extension of a single hull tank vessel phase-out date is allowed by OPA 90. These comments came from members of the U.S. Senate, U.S. House of Representatives, MARAD, the U.S. shipbuilding industry and associations, major ship companies and associations, environmental groups and individual citizens. One individual's comment included eighty (80) signatures supporting the ``* * * replacement of single hull oil tankers by double hull oil tankers * * *'' as scheduled by OPA 90. This group of nineteen comments offered the following reasons for their position: • Congress intended OPA 90 to protect the environment from the increased risk of oil spills that were specifically linked to older single hull tank vessels. • The phase-out schedule of Sec. 3703a was deliberate and designed to ensure balance between the environment and the interests of the vessel owners. When developing the phase-out schedule, Congress took into account economic conditions; owner capital investment concerns; national oil transportation needs; shipbuilding resources availability; existing vessels and need for tank vessels which would operate in U.S. trade after OPA 90 became effective. • The phase-out schedule was liberal, but, as with all of OPA 90, it does not provide for equivalence, waivers, or exemptions to its requirements. • OPA 90 was intended to protect the environment from operational or accidental discharge of oil by removing older single hull tankers from service, as soon as possible, and by constructing new double hull tankers with the latest technology, design, and materials for safer operations, reducing damage to the environment. • Allowing the continued operation of existing single hull tank vessels for longer periods of time than established by the OPA 90 schedule is not acceptable or fair to owners who have invested in the building of new double hull vessels. Conversion to add double sides or a double bottom SHOULD be allowed to change the phase-out date under OPA 90. Thirteen comments supported allowing a change of phase-out date after a single hull tank vessel converts to either double sides or a double bottom. These thirteen comments came from ship owners, oil companies, a shipyard company, a marine terminal company, and a licensed U.S. merchant mariner. This group of thirteen comments offered the following reasons for their position: • There is no language in OPA 90 or U.S. regulations that prohibits a conversion of a single hull tank vessel to add double sides or a double bottom from being considered under a different category in Sec. 3703a for the additional operating years allowed for that hull configuration. • If Congress had intended not to allow such a conversion of single hull tank vessels to be considered, they would have used the words ``vessels built with double sides or a double bottom,'' instead of ``vessels equipped with double sides or a double bottom.'' Not defining when the vessel had to be equipped with double sides or a double bottom, allows it to occur after the statute became effective (August 18, 1990). • The acceptance of the alteration of an existing vessel's design is not considered a major conversion under 33 CFR 157.03. This also allows the ``natural action'' of single hull tank vessels, or a single hull tank vessel originally built with double sides or a double bottom, to be converted to a

complete double hull and meet the OPA 90 requirements. It provides an incentive to completely double hull an existing vessel and has been used by U.S. tanker and barge owners to convert their tank vessels to be compliant with the double hull standards. • One comment pointed out that section 3606 of Pub. L. 105- 85 halted the industry practice of reducing gross tonnage to extend the phase-out date. This comment suggested that if the Congress did not approve of a Coast Guard position to allow double sides or a double bottom modification, then they could take legislative action once again. • Given the current market conditions and expectations for needs of transportation and supply of oil to the U.S., this issue will not effect an increase of shipyard orders for new double hull tank vessels, specifically built in U.S. shipyards for the Jones Act trade. The cost to build a U.S. Jones Act tanker is approximately three times the cost to build the same tanker in the foreign shipyard market. • There may be short periods within the next five to ten years when there will be an insufficient number of tankers available to transport the Alaska North Slope (ANS) crude. ANS crude transportation needs are slowing on a schedule from approximately 1.3 million barrels a day in 1999, to approximately 460,000 barrels a day in 2015. Due to this slowing schedule for ANS crude, the phasing out of the existing tankers in the ANS operation (23 in service at this time) will shrink until only nine to eleven tank vessels will be needed to sustain ANS crude delivery to the west coast of the U.S. Many single hull tankers, or single hull tankers with double bottoms only, will phase-out in ANS trade and will not be replaced. The ability to extend a single hull tank vessel for up to five years will allow coverage of possible tonnage shortages during the reduction of the fleet and reduction of oil to be transported from Alaska. • There is no increase of risk to the environment in allowing such conversions. Statements in the Congressional Record during the OPA 90 Congressional Conference and studies completed for the Coast Guard, support that double sides provide protection from a collision and a double bottom provides protection from a grounding.

Specific Questions

Comments, both supporting and opposing phase-out date changes, responded to the four specific questions in our November 16, 1998, Federal Register notice. The answers not already included in the general comments summary are enclosed below. 1. If the Coast Guard does not allow single hull tank vessels to qualify for later OPA 90 phase-out dates by converting the single hulls to single hulls with double sides or a double bottom, what would be the effect on U.S. oil transportation and supplies? • There would be little to no effect on oil transportation in the U.S. as there were more than a sufficient number of tankers available and planned, to meet U.S. demands. • Any extensions of the phase-out schedule would slow down the demand by owners to build new U.S. double hull tankers. • Shortages of tanker tonnage may occur in the specialty class U.S. tramp tanker trade within the clean product market. This will raise tanker rates and the cost of oil to the consumer. Extensions of the phase-out schedule will moderate charter tanker rates and meet the shortages for tank vessels during these periods. 2. If single hull tank vessels which have passed their initial phase-out date could qualify for later phase-out dates, and reenter service by converting their single hulls with double sides or a double bottom, what would be the effect on U.S. oil transportation and supplies? • There will be no impact on U.S. oil transportation or supplies. • There will be a sufficient number of tankers for U.S. oil transportation. • Older single hull tank vessels would become heavily relied upon, if their phase-out dates are extended, and no ready replacements of new double hull vessels would be built or be available, should the older converted single hull tank vessels be abruptly lost from service. • There would not be enough tankers in the Jones Act trade and the population would be reduced from the 49 in operation now to 21. Allowing this small period of extension (5 years maximum), could be used by vessel owners to ensure that no shortfalls of needed tonnage would occur and moderate tanker charter rates. • A phased out single hull tank vessel could be laid up, if not needed. If a future transportation need occurred, the vessel could be converted and brought back into trade until the transportation need subsided or the converted single hull tank vessel with double sides or a double bottom reached its changed phase-out date or January 1, 2015, which ever comes first. This option would be beneficial in the ANS trade. 3. If single hull tank vessels could qualify for later phase-out dates through these types of hull conversions, what would be the effect on the conversion of the tank vessel fleet to double hull tank vessels? Would there be an adverse impact on the marine environment? • The U.S. environment would be adversely impacted by vessels not complying with the original OPA 90 phase-out schedule for single hull tankers. • Allowing extension of the phase-out dates for converted single hull tank vessels reduces the incentive for double hull new buildings and slows the building of double hulls, advancing the average age and reducing the levels of safety in the existing tank vessel fleet. • Allowing extensions of the phase-out dates would indefinitely delay the environmental benefit of the double hull tank vessels anticipated by Congress and the U.S. population, who have advocated the need for double hull tankers for twenty-five (25) years. • The older converted single hull tank vessels use more fossil fuels than the newer double hull tank vessels, increasing the amount of hazardous air pollutants emitted into the atmosphere. • Overall double hull conversions in the U.S. would be modestly impacted, with no impact to the environment. A converted single hull tank vessel offers a sensible alternative for short-term periods (5 years) of U.S. tonnage needs. • Owners of vessels will naturally wait until the deadline before considering a double hull because at this time the economic situation does not support the cost involved. • A single hull tank vessel having its side cargo tanks converted to segregated ballast tanks would provide a larger double side spacing than required of new double hulls, providing more protection to the environment. 4. Are there any other concerns regarding whether we should recognize a single hull tank vessel converted to include double sides or a double bottom as a different hull design when applying the vessel phase-out dates under OPA 90? • Depending on the type of conversion to a single hull tanker, it could effect the gross tonnage of the tank vessel, imparting a change to the vessel's phase-out due to reduction of the vessel's gross tonnage from original admeasurement. This would extend the tank vessel's phase-out even later (possibly 7 to 8 years) from its original phase-out per Sec. 3703a. • The reconfiguration of oil cargo tanks could pose new operational risks; ballast tanks experience high corrosion rates accounted for in the design of new double hull tank vessels. • The average age of the U.S. tanker fleet would increase. Older single hull

tankers would not be maintained, and become unsafe as they got older and closer to the extended phase-out date, making them a greater risk to the environment. • Allowing the extension of the phase-out schedule by recognizing the conversion of single hull tank vessels under OPA 90 could be of strategic value to the U.S. in certain national security scenarios. • Eliminating the conversion of single hull tank vessels could possibly reduce, rather than increase, shipyard activity in the U.S. • For the U.S. tanker industry to succeed it is essential that the companies involved know that the rules and standards are clear, inherently stable and likely to stay that way for the foreseeable future. With investment decisions reaching out over 20 years, we should not make changes to the ground rules which could have catastrophic effects. • Examination of this issue has been couched as an evaluation by a federal agency of the economics of the U.S. flag market. Such decisions should be left up to the Congress. • There would be increasing difficulty in hiring qualified U.S. merchant seaman. When crew members lose jobs due to the phase-out of their vessels, their tendency is to migrate to fields outside the maritime field and not to return. Extensions of the phase-out schedules could assist keeping these seamen employed until vessel replacement is completed.

Discussion

OPA 90 and our implementing regulations in 33 CFR 157 require that tank vessels either convert to full double hull configuration or be removed from the carriage of oil in bulk service by the dates set out in 46 U.S.C. Sec. 3703a. We have not, before today, established a policy on whether a single hull tank vessel could alter its hull configuration with a double bottom or double sides in order to change its OPA 90 phase-out date. Previously, we had interpreted OPA 90 as not specifically precluding a change in phase-out date for tank vessels that reduced their gross tonnage. However, in section 3606 of Pub. L. 105-85, enacted on November 18, 1997, Congress added a new paragraph (e) to Sec. 3703a. It effectively stopped the industry practice of using protectively located segregated ballast tanks to reduce a tank vessel's gross tonnage and change its phase-out date under OPA 90. After a vessel's phase-out date, OPA 90 allows tank vessels without double hulls to continue to deliver oil until January 1, 2015, either to a deepwater port or in one of the four lightering zones we established in the Gulf of Mexico. (See 33 CFR 156.300.) Many vessel owners, including American Heavy Lift, Maritrans, and Bouchard Transportation Services, have already modified, or are in the process of modifying, existing single hull tank barges or tankers with double hulls to meet the requirements of OPA 90. Although a number of comments discussed possible shortages of tankers in the Alaska North Slope (ANS) crude trade, the Department of Energy does not anticipate such shortages in ANS operations. Further, there are Jones Act trade vessels currently trading foreign that could be employed in ANS operations, if needed. While the comments contained a variety of responses both for and against a policy of allowing vessels to change their phase-out dates based on conversions after the effective date of OPA 90, most of these issues were considered by Congress when developing OPA 90. No comments cited immediate operational problems or pressing need to allow vessels to operate beyond their currently scheduled phase-out date. The OPA 90 double hull requirements were intended to protect the environment from oil spills. The only amendment Congress has made to the OPA 90 phase-out schedule in Sec. 3703a stopped the change of phase-out dates resulting from reductions in gross tonnage. By enactment of Pub. L. 105-85, Congress demonstrated its unwillingness to delay the OPA 90 schedule for the double hull requirement.

Policy

Based on all of the reasons set out above, the Coast Guard has decided that its policy should be consistent with the plain language of Sec. 3703a and the intent of OPA 90. Therefore, changing the hull configuration of an existing single hull tank vessel to a single hull tank vessel with double sides or a double bottom, after August 18, 1990, will not result in a change to the tank vessel's originally scheduled phase-out date as required by Sec. 3703a. This policy is effective immediately and applies to all tank vessels. The Coast Guard will shortly open a rulemaking to make appropriate changes to the double hull regulations in 33 CFR part 157 and will revise Navigation and Vessel Inspection Circular No. 10-94 consistent with this policy.

Dated: April 15, 1999. James M. Loy, Admiral, U.S. Coast Guard Commandant. [FR Doc. 99-9899 Filed 4-20-99; 8:45 am] BILLING CODE 4910-15-P