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

DEPARTMENT OF TRANSPORTATION

Coast Guard

[USCG-1998-4620]

Oil Pollution Act of 1990 (OPA 90) Phase-Out Requirements for

Single Hull Tank Vessels

AGENCY: Coast Guard, DOT.

ACTION: Notice of policy.

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SUMMARY: In a notice published on November 16, 1998, the Coast Guard

requested comments on whether a single hull tank vessel, converted to

include double sides or a double bottom, should be accepted as a

different hull design when applying the tank vessel phase-out dates

under the Oil Pollution Act of 1990 (OPA 90). This notice discusses the

comments received and the Coast Guard's determination. The Coast Guard

has decided that 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 46

U.S.C. 3703a.

DATES: This policy is effective April 21, 1999.

ADDRESSES: Unless otherwise indicated, documents referred to in this

notice are available for inspection or copying at the Docket Management

Facility, (USCG-1998-4620), U.S. Department of Transportation, Plaza

level, room PL-401, 400 Seventh Street SW, Washington DC 20590-0001,

between 9 a.m. and 5 p.m., Monday through Friday, except Federal

holidays. The telephone number is 202-366-9329. You may also access

this docket on the Internet at http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: For questions on this policy, please

contact Mr. Bob Gauvin, Project Manager, Office of Operating and

Environmental Standards, Commandant (G-MSO-2), U.S. Coast Guard

Headquarters, telephone 202-267-1053. For questions on viewing material

in the docket, contact Dorothy Walker, Chief, Dockets, Department of

Transportation, telephone 202-366-9329.

SUPPLEMENTARY INFORMATION: 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

[[Page 19576]]

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

[[Page 19577]]

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

[[Page 19578]]

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]

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