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6 CONSIDERATIONS IN DEVELOPING NEW POLICY Specific impacts at the local level would be associated with any regulations to control hydrocarbon vapor emissions from marine load- ings. More than 98 percent of tank vessels' vapor emissions occur at loading ports (Figure 6-1~. Hydrocarbon emission abatement is intended to reduce ozone levels near these ports. At the same time, the vessel operators will be faced with substantial costs, falling particularly heavily on smaller inland tank barge companies and low-volume termi- nals. Cargoes carried by tank vessels might be diverted to other modes of transportation. The impacts of an accident--a fire or explosion-- would be site-specific. The responsibility for regulatory coordination, however, cannot be undertaken at the local level. Handling potentially explosive vapors carries a risk. The industry, states, and locales involved need to be sure their activities do not unduly raise this risk. Varying state con- trols could have this result, if they were implemented in a patchwork of control requirements tailored to local circumstances. The regulatory challenge is heightened by the diversity in the popu- lations of vessels and terminals. A large product carrier, equipped with multiple tanks and an inert gas (IG) system, has a great deal more flexibility in limiting its loading emission than a simple river barge. A small terminal with a low throughput is likely to install less elabo- rate vapor recovery or disposal systems than a larger, busier terminal. One locale's ozone problem may be less severe than another's. Varying approaches to control would be natural. But uniformity is vital. Flanges and connections must be standard- ized and operating pressures and loading rates compatible, as tank vessels travel from port to port, state to state, and nation to nation. Operating procedures and training standards should be uniform, to the extent possible, to reduce opportunities for human error. Gauging systems, safety equipment, and safety procedures must offer the same high degree of protection everywhere. The U.S. Coast Guard is the agency charged with the responsibility for regulating vessel safety. This agency ultimately must judge the safety of systems for vapor control. It must inspect and certificate each vessel periodically for safety and pollution-control reasons. Coast Guard inspectors have the power to refuse or revoke certification of vessels and their equipment that present safety hazards. The Coast 134

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136 Guard may review the safety of terminal systems that may affect the safe- ty of vessels; it also has the authority to close terminals for cause, in the interest of safety. Neither the Coast Guard nor the U.S. Environmental Protection Agency (EPA) has taken a major initiative to coordinate or standardize state or other local marine hydrocarbon vapor control activities to ensure safe- ty. EPA's National Ambient Air Quality Standards (NAAQS) system, under which the State Implementation Plans for ozone are to be submitted, offers no obvious mechanism for coordinating these initatives, beyond assessing their effectiveness in reducing emissions. FEDERAL AIR POLLUTION CONTROL AUTHORITY: THE CLEAN AIR ACT The NAAQS established by EPA under the Clean Air Act (CAA), require each state with nonattainment areas for ozone to submit a SIP to reduce hydrocarbon emissions. Among the sources being considered for control are marine terminals serving tank barges and tankships. The standards being considered in several states (see Appendix B) would, in effect, require loading terminals to install and operate systems for piping hydrocarbon vapors to recovery or disposal equip- ment. Vessels, too, would be retrofitted. Most tankships in use today have IG piping systems that would need relatively little modification (only detonation arrestors and a redundant gauging system) to serve as vapor headers. Inland barges and smaller, older tankships would face substantially larger costs, probably enough to justify scrapping some older barges. Marine vessels, unlike other mobile emissions sources, such as automobiles, are not expressly regulated by federal air quality legisla- tion. It is unclear whether EPA may require states to regulate marine vessel emissions. However, the CAA does not preclude states from volun- tarily doing so in the SIP. (Appendix C discusses the CAA and related legal and policy issues as they apply to the control of hydrocarbon vapor emissions from tankships and barges.) Emissions from tank vessels are currently regulated indirectly, by attributing them to their sta- tionary gathering points (in this case, marine terminals). The CAA (section 116) recognizes the primary responsibility of the states for air pollution control (with narrow exceptions such as auto- mobile and aircraft emissions and certain hazardous emissions). The CAA requires states to institute whatever controls are necessary to attain the NAAQS, without regard to cost. Where tank vessel hydrocarbon vapor emissions are significant, and other areas of abatement have been ex- ploited, a state must turn its attention to these emissions in its plan for compliance with the NAAQS. FEDERAL MARINE SAFETY REGULATORY AUTHORITY The U.S. Coast Guard, under the Port and Tanker Safety Act (PTSA) of 1978 (33 USC section 1221-31 and 46 USC chapter 37), has clear and

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137 comprehensive responsibility for marine safety and for preventing the pollution of water by tank vessels. Under this authority, the Coast Guard regulates the design, construction, repair, maintenance, operation, and manning of vessels. Except to a limited degree, the Coast Guard has no specific regula- tions in place to address the safety of vapor control devices onboard tank vessels, although it does approve and inspect vapor recovery equip- ment under its general inspection authority. The Coast Guard has gener- al authority to review and approve the safety aspects of shoreside facilities at terminals. It may shut down terminals whose operations are identified as unsafe. Some Coast Guard regulations, such as those that address water pollu- tion, implement the terms of international agreements. Vapor control regulations might apply equally to both domestic and foreign vessels visiting a port in which controls were in force, so that issues of national uniformity and deference to international regulation require careful consideration. For example, the marine pollution convention known as MARPOL 73/78 governs discharges of polluting materials from ships, and several other agreements concern the handling of potentially hazardous or polluting cargoes. The International Maritime Organization (IMO) is the body under whose auspices most international agreements regarding vessel safety and vessel-related water pollution are devel- oped. (Appendix C outlines the pertinent international agreements.) SAFETY AND OPERATIONAL COMPLEXITY The requirement for vapor control systems, it has been suggested, could increase the risks of cargo spills, fires, and explosions by adding to the operational complexity of loading operations, and in particular by requiring additional handling of potentially explosive vapors. Experience to date is too limited to justify conclusions on this score, although it does suggest that proper training and management can keep the risks of vapor control within the bounds of normal risks in the industry. Operating vapor control systems would entail standards of precision and care, for example, well above those considered normal in the indus- tries. Hydrocarbon cargoes might have to be handled using a level of care similar to that applied in handling hazardous cargoes under sub- chapter O of Title 46 of the Code of Federal Regulations. Most tank barges and some tankships generally are loaded with hatches and vents open, to allow visual inspection of cargo levels. Most tankships are closed loaded. Containing vapors will require load- ing closed, with remote tank gauging systems and vapor handling systems to carry vapors to disposal or recovery facilities ashore or retain them aboard for subsequent disposal. Experience with closed loading of tank barges is limited, but suggests that, while training and supervision would need to be upgraded, the necessary operations could be carried out with little or no increase in spills or other accidents. The Coast Guard would have to proceed on the basis of risk analysis while it and l

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138 the industries involved gather the experience necessary to quantify the risks. Such a risk analysis has not yet been made. ENERGY CONSERVATION AND THE CHOICE OF CONTROL TECHNOLOGIES A possible concern is that those implementing regulations might in- terpret the requirements of Lowest Achievable Emission Rate (LAER) and Best Available Control Technology (BACT), as provided by EPA regula- tions, to require the use of hydrocarbon destruction technologies (flares or incinerators) in cases where recovery (absorption, adsorp- tion, or refrigeration) could provide very good, but slightly less, control. While destruction technologies do, in fact, offer marginally higher control efficiencies, consideration should be given to the energy conservation attributes of recovery. If terminals loading only 25 percent of the crude and gasoline found it economical to use recovery technologies with a 95 percent recovery efficiency, there would be a conservation of almost 100,000 bbl/year of valuable hydrocarbons. Were systems required that destroyed these hydro- carbons to achieve 99 percent efficiency, there would only be an addi- tional reduction of about 500 tons of volatile organic compounds (VOC), nationwide, and none would be conserved. Considering the current pros- pect for decreasing oil reserves and increasing dependence on foreign oil supplies in this country, such a policy, if implemented, would seem to be in conflict with national energy conservation policy. INTERNATIONAL CONSIDERATIONS Few foreign vessels load gasoline or crude oil at U.S. ports (see Table 1-3~. Thus, the impact of regulations on foreign-flag shipping at this time would be very modest. Nevertheless, because domestic regula- tions would apply (however marginally) to foreign-flag ships, coordina- tion at the international level is desirable to ensure uniformity and other forms of equity. The IMO is the international body in which most maritime pollution-control and safety agreements are developed. Domes- tic actions to control vessel emissions that affect foreign-flag ship- ping should be coordinated with other maritime nations through the IMO. IMPACTS ON COMMERCE State and local environmental requirements may be invalidated by federal courts if they are judged to impose unconstitutional burdens on interstate or international commerce. The permissible extent of the burden depends on the nature of the local interest and on whether there are alternatives with less impact on interstate commerce (Buron Port- land Cement Co. v. City of Detroit, 36 U. S. 440 t19603~. A challenge to state or local regulation of vessel emissions would have to show that the burden is excessive in relation to the benefit the regulation serves

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139 (Pike v. Bruce Church, 90 S . Ct. 844, 397 U.S. 137, 25 L. Ed. 2d 174 [197039. Numerous judicial and administrative actions since the enact- ment of the CAA suggest that large impacts on trade are a matter of course in air quality programs, and that these impacts must be very harsh to result in invalidation by a court. The impacts on commerce of state vapor control regulations could be substantial. First, vessel and terminal owners and operators would suffer the direct costs associated with installing and operating the necessary systems. The committee's assessment suggests that these costs would vary widely from vessel to vessel and terminal to terminal. For example, estimates made for the committee indicate that an inland river barge would incur the same retrofit cost--$168,000--as a 70,000-dwt crude carrier with 25 times the cargo capacity. Case studies of two actual terminals show added capital and operating costs that range from more than $5,000 per ton of emissions abated for a small terminal (load- ing 1.3 million bbl/year of gasoline) to less than $3,000 per ton of emissions for a larger terminal (loading 14.9 million bbl/year). This disparity in cost could put small terminals and inland barge companies at a competitive disadvantage in relation to larger units of the industry. Second, the hydrocarbon vapor control standards under consideration for marine terminals and vessels would affect the cost-competitiveness of tank vessels in relation to other forms of transport. (Tank vessel carriage of petroleum cargoes domestically, as noted in Chapter 1, is declining as pipelines exploit considerable cost advantages.) Third, the imposition of standards only in nonattainment areas for ozone, it has been suggested, would lead many vessel operators to limit their operations to areas where vapor control is not required, or where requirements are less stringent. Without detailed economic study, it is impossible to gauge the sizes of these economic impacts. Appropriate regulatory coordination, with attention to safety and uniformity, can minimize them, but not avoid them altogether. REGULATORY ALTERNATIVES For federal regulators, the committee identified three possible approaches to the possible regulation of hydrocarbon vapor emissions from tank vessels: status quo, direct federal preemption, and a coordinated federal regulatory development program. Status Quo The first alternative, of course, is to do nothing. States would develop individual SIPs, with EPA guidance and coordination only in matters of air quality. Differing safety requirements, incompatible hardware, and varying levels of attention to operations and training would raise investment and operating costs and magnify the other economic impacts.

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140 More important, this approach would raise the risks of loading hydrocarbon cargoes, because of the lack of attention to standardiza- tion. This would leave the Coast Guard with the responsibility for ensuring the safety of vapor control systems after the fact, after standards have been imposed in various ways by different states? and after EPA's regulatory approval procedures are well under way. Direct Federal Preemption The second alternative is legislation specifically regulating vapor emissions from tank vessels, in the same way that the emissions of auto- mobiles are regulated--by direct federal standards. This alternative would provide the maximum of uniformity. However, the need to reduce ozone levels is a highly localized one, and a nation- al emission standard would affect vessels and terminals nationwide. The Coast Guard would need to play a major role in developing legis- lation and regulations in this case. Safety, the Coast Guard's prime responsibility, must be the paramount consideration, and an administra- tive mechanism giving the Coast Guard a strong advisory voice would need to be established. Coordinated Federal Regulatory Development Program The third alternative is a cooperative program of regulatory develop- ment, in which the Coast Guard would establish vessel safety regulations (including personnel certification standards) and, in consultation with EPA, would develop compatible terminal safety provisions affecting the vapor control equipment on shore. This alternative would leave states free to accept or reject vapor control requirements in their SIPs, in keeping with their own need to reduce ozone levels. At the same time, it would ensure the uniform re- quirements necessary for safety and operating efficiency, thus mini- mizing the economic impacts of vapor control requirements. A formal coordinating framework, involving federal and state regula- tors, with advice from industry, would be necessary to carry out this ap- proach. Industry especially would be urged to undertake training and education programs aimed at bringing operating and safety procedures up to standards similar to those that now prevail in the carriage of hazardous subchapter O cargoes. Such an approach would streamline the regulatory process, bringing the desired environmental improvements sooner than the status quo ap- proach. The uniformity and safety this approach would foster would tend to lower both the costs and the risks of vapor control requirements.