The passage of the Oil Pollution Act of 1990 (OPA 90) by the U.S. Congress and subsequent modifications of international maritime regulations—namely, the addition of Regulations 13F and 13G to the International Convention for the Prevention of Pollution from Ships, adopted in 1973 and amended in 1978 (MARPOL 73/78)—resulted in a far-reaching change in the design of tank vessels: double-hull rather than single-hull tankers are now the industry standard. Section 4115 of OPA 90 excludes single-hull tank vessels of 5,000 gross tons or more from U.S. waters from 2010 onward, apart from those with a double bottom or double sides, which may be permitted to trade to the United States through 2015, depending on their age. Commencing in the year 2000, however, all Aframax and most Suezmax tankers1 without double bottoms or double sides that exceed 23 years of age will be barred from U.S. trade. An exemption to OPA 90 allows single-hull vessels to use U.S. deepwater ports or lightering areas2 until 2015. The international fleet governed by MARPOL is to be composed entirely of double-hull vessels (or approved alternatives) no later than 2023. Thus, nearly all vessels in the world maritime oil transportation fleet are expected to have double hulls by about 2020. The proportion of double-hull tankers in the world fleet increased from 4 percent in 1990 to 10 percent in 1994. This percentage is expected to grow rapidly between now and 2000 as new double-hull vessels replace many of the single-hull tankers constructed during the building boom of the mid-1970s.
Protection of the Marine Environment
The promulgation of OPA 90 was in large part a response to public concern over the 1989 Exxon Valdez incident, in which more than 11 million gallons of crude oil were spilled into Alaskan waters. Such incidents involving spillage of more than a million gallons of oil have dominated spill statistics over the past two decades and have focused public attention around the world on the potential hazards of oil spills from large tankers. Compared to earlier five-year periods, there was a decline in the quantity of oil spilled from vessels in U.S. waters3 in the period 1991 to 1995, as well as a reduction in the number of spills of more than 100 gallons. In particular, there were no oil spills of greater than a million gallons from tank vessels in U.S. waters. Between 1991 and 1995, tankers accounted for only about 10 percent of the total oil spilled from vessels in U.S. waters. In contrast, inland and oceangoing barges together accounted for approximately half the total spillage from vessels and were involved in the majority of oil spills in U.S. waters during this period.
The reduction in oil pollution in U.S. waters between 1991 and 1995 cannot be attributed to the requirements of Section 4115, notably the double-hull mandate and the operational and structural requirements aimed at reducing the outflow of oil following incidents that involve single-hull tank vessels. The first compulsory retirements of single-hull vessels did not occur until 1995, and the final rules on operational and structural requirements were not issued until July 1996 and January 1997, respectively. Thus, the timing of actions relating to Section 4115 precludes the possibility that they had a significant impact on oil spills in U.S. waters between 1991 and 1995. Nonetheless, the committee's analytical comparison of double-hull and single-hull designs indicates that properly designed double hulls are potentially more effective than single hulls in preventing and mitigating oil outflow after a vessel casualty. As discussed later, some double-hull vessels (mostly less than 160,000 DWT [deadweight tons]) currently operating—specifically those without longitudinal subdivision through the cargo tanks—will not provide the enhanced environmental protection in all accident scenarios that would be provided by properly designed double hulls.
In the view of the committee, the reduction in oil spillage in U.S. waters between 1991 and 1995 was the result of a number of actions that are in process or emerging, notably: an increased awareness among vessel owners and operators of the financial consequences of oil spills and a resulting increase in attention to policies and procedures aimed at eliminating vessel accidents; actions by port states to ensure the safety of vessels using their ports; increased efforts by ship classification societies to ensure that vessels under their classification meet or exceed existing requirements; improved audit and inspection programs by
charterers and terminals; and the increased liability, financial responsibility, and other provisions of OPA 90. There is a general perception within the maritime oil transportation community that the quality of vessels trading to the United States has improved in recent years, although the data available to the committee were insufficient to demonstrate any such improvement.
Design of Double-Hull Tank Vessels
On the basis of its analytical comparison of single-hull and double-hull designs using probabilistic outflow methodology, the committee concluded that in the event of an accident involving a collision or grounding, an effectively designed double-hull tanker will significantly reduce the expected outflow of oil compared to that from a single-hull vessel. Similar analytical results were obtained for oceangoing barges. The committee concluded that complete conversion of the maritime oil transportation fleet to double hulls will significantly improve protection of the marine environment.
Despite the potential advantages of double hulls, not all double-hull vessels designed or built since 1990 provide the environmental protection and safe operation that were anticipated when the double-hull mandate was adopted. Certain designs, most notably those with ''single-tank-across" cargo tank arrangements,4 may exhibit excessive oil outflow following an accident and encounter intact stability5 problems during cargo transfer operations even though they are in full compliance with design regulations of the International Maritime Organization (IMO) and major classification societies as of July 1997. The committee's analysis indicated that double-hull tankers with single-tank-across cargo tank arrangements have approximately twice the projected average outflow of tankers with longitudinal subdivision through the cargo tanks and also perform less well in the case of extreme outflow than single-hull vessels of pre-MARPOL or MARPOL design. In addition, of the nineteen double-hull designs analyzed, four—all with single-tank-across cargo tank configurations—can potentially become unstable during load and discharge operations. Several incidents involving instability of double-hull tankers at terminals in the United States and overseas have been reported. Intact stability and outflow concerns are significant because more than half of the vessels of less than 160,000 DWT in the current fleet of double-hull tankers have single-tank-across cargo tank arrangements.
These potential problems demonstrate clearly that the national and international design guidelines originally developed for single hulls are not suitable for double-hull designs. The committee is concerned that the United States, having taken the lead in mandating double hulls for vessels operating in its waters, has not assumed a leadership role in developing the technical guidelines needed to
properly implement the legislation. Given the large number of new double-hull tankers likely to enter service within the next few years as tankers constructed during the mid-1970s boom are retired, there is a need to implement additional design guidelines as soon as possible. The use of performance-based design criteria would take account of the variations in performance of different double-hull designs and provide flexibility in developing potentially superior designs.
IMO has acted recently to address intact stability issues for both new and existing double-hull vessels. MARPOL Draft Regulation I/25A(2) establishes a "design-only" requirement to ensure the intact stability of new vessels; operational measures or a combination of design and operational measures are not acceptable options. The Marine Environment Protection Committee of IMO will circulate the draft regulation with a view toward adoption in September 1997. If the draft regulation is adopted, enforcement is expected in February 1999. In addition, an IMO circular6 provides guidance on the operational measures needed to ensure adequate intact stability for existing double-hull tankers.
Outflow regulations are currently under development at IMO. The committee considers new design guidelines for outflow essential to ensure that the potential for environmental protection afforded by double-hull designs is fully realized in all new vessels.
The tanker owners and operators surveyed by the committee reported significant differences between double-hull and single-hull tankers in terms of operational safety, inspection and maintenance, and cargo operations. Despite some concerns about access to and ventilation of ballast spaces and about intact stability, industry representatives generally believe that double-hull tankers can be operated safely, albeit with additional resources and more attention than are needed to operate single-hull tankers. In the view of the committee, mandatory operational measures are necessary to ensure the safe operation of existing double-hull tankers with single-tank-across cargo tank arrangements.
The U.S. Coast Guard (USCG) should expand and expedite research efforts and cost-benefit evaluations necessary to develop rules appropriate for the design of double-hull tankers and tank barges. The following are of particular importance:
- Probabilistic analysis of oil outflow should be made an integral part of the design and review process for new double-hull tank vessels. Design requirements should ensure that all new double-hull tankers offer environmental performance at least equivalent to that provided by the IMO reference double-hull designs.
- Design requirements should include an assessment of intact stability through-
The circular, entitled "Guidance on Intact Stability of Existing Tankers During Liquid Transfer Operations," does not constitute a regulation.
- out the range of loading and ballasting conditions to identify potentially unstable conditions. Following the lead taken by IMO and to provide consistency with anticipated international requirements, adequate intact stability should be achieved by design.
Design rules should be implemented as soon as possible—if necessary in interim form—to ensure that all new double-hull tank vessels entering service do not pose a safety risk because of poor intact stability characteristics and have adequate internal subdivision to take full advantage of the spill-mitigating capabilities of double hulls.
Recommendation. The USCG should develop and implement operational procedures for existing double-hull tanker designs subject to intact stability problems. Such procedures should ensure adequate stability at all times during cargo transfer operations and should include appropriate crew training. Consistency between procedures for vessels in U.S. waters and corresponding international procedures is highly desirable.
Operational Makeup of the Maritime Oil Transportation Industry
Aside from an increase in the proportion of double-hull tankers in the world fleet between 1990 and 1994, the committee could not definitively attribute changes in the makeup of the maritime oil transportation fleet since 1990 to either OPA 90 or MARPOL 13F and 13G. Growth in the percentage of independent ownership in both the world and the U.S. trading fleets, primarily at the expense of oil company ownership, reflects a decision by some major oil companies to leave the tanker business, in large part to avoid high-liability exposure as well as for other economic reasons. The vessel size distribution of the fleet trading to the United States has changed because of an increase in short- and medium-haul oil imports from Latin America and the Caribbean, which are carried in vessels of 80,000 to 150,000 DWT, and a reduction in long-haul oil imports from the Middle East, which are carried in very large crude carriers (VLCCs) of 200,000 DWT or more. Changes in the age distribution of the fleet trading to the United States reflect both the aging of vessels built during the boom of the mid- 1970s and the relatively large number of newly constructed VLCCs. Vessels between 20 and 24 years of age and those up to 4 years of age carried more tonnage in 1994 than they did in 1990.
OPA 90 and MARPOL 13F and 13G have not yet had a significant impact on the age of vessels trading to the United States. Before the implementation of OPA 90, few vessels over 25 years of age traded to the United States. This situation may change, however, as a result of the aging of the VLCC fleet, the deepwater port and lightering zone exemption of OPA 90, and actions by other nations (such as Japan and Korea) to prevent or discourage older vessels from calling at their ports. It is probable that under the OPA 90 exemption, large single-hull vessels up to
30 years of age will operate to the United States through 2015 (see below). Measures will be needed to ensure that such vessels are adequately maintained and that their operation does not pose an unacceptable risk to the marine environment.
The USCG should implement a vessel surveillance program to ensure that the physical condition, maintenance, and operating procedures of vessels that are permitted to discharge their cargo offshore, but are barred from shore ports by the phaseout provisions of Section 4115, are held to appropriate levels. For example, the frequency and standards of inspection defined in the Port State Inspection Program and applied to vessels using non-offshore ports might also be applied to vessels using lightering areas and the U.S. deepwater port.
Economic Viability of the Maritime Oil Transportation Industry
International Tanker Fleet
The impact of the double-hull requirement on the international tanker industry will be driven by MARPOL 13F and 13G and by Section 4115 of OPA 90. Although the latter will gradually bar single-hull tankers from trading to the United States, it will not necessarily force them into retirement from non-U.S. trade. MARPOL 13G, on the other hand, mandates the retirement of all single-hull tankers in international trade at 30 years of age. To trade beyond 25 years of age, pre-MARPOL tankers must retrofit protectively located spaces or make use of hydrostatically balanced loading (HBL)7 in selected cargo tanks.
If historical trends continue, many tankers in international trade are likely to be scrapped before their statutory (MARPOL) retirement dates. In other words, their life expectancy will not be affected by legislation requiring double hulls. However, the economic factors influencing tanker lifetime may change, in part because of the double-hull mandates of MARPOL and OPA 90. The capital cost of a double-hull tanker is estimated to be 9 to 17 percent higher than that of a corresponding single-hull tanker, and operating and maintenance costs run 5 to 13 percent higher.
In the light of these increased costs, some owners of single-hull VLCCs and other large tankers that can trade economically to the U.S. deepwater port and lightering areas are expected to adopt HBL as a means of extending the operating life of their vessels from 25 to 30 years. The combination of HBL and the deepwater port and lightering zone exemption has virtually nullified the OPA 90
age requirement for large single-hull tankers (150,000 DWT and more) that use HBL and are suitable for unloading within U.S. lightering areas or at the deepwater port. Without the OPA 90 exemption, such vessels over 25 years of age would be excluded from U.S. waters after 2010. Without the option of HBL life extension from 25 to 30 years (permitted by MARPOL 13G but not by OPA 90), such vessels would be excluded from international trade and would not be able to take on cargo for delivery to the United States. Smaller single-hull tankers, particularly those for which unloading offshore is not economical, may be forced into scrapping before the end of their expected economic life. Single-hull tankers of between 60,000 and 150,000 DWT (without double bottoms or double sides) will be excluded from trade to the United States when they reach 23 or 25 years of age, in accordance with the phaseout schedule of Section 4115.
The committee estimates that the cost of replacing the current single-hull world trading fleet of about 3,000 tankers—aggregating 280 million DWT—with new double-hull vessels and operating them through one 20-year life cycle will be about $30 billion greater than building and operating an equivalent single-hull fleet. This additional cost equates to approximately 10 cents per barrel of oil transported or about one-tenth of the cost of transportation, which is itself about 5 to 10 percent of the delivered cost of oil. Although current shipyard capacity is more than adequate to meet the world demand for new double-hull tankers, existing freight rates are insufficient to meet the full operating and construction costs of such vessels. Thus, freight rates are expected to rise as the industry transitions to double hulls. Given higher freight rates, the financial community expects that sufficient capital will be available to fund the conversion.
U.S. Domestic (Jones Act) Tank Vessel Trade
The impact of the double-hull requirement on the domestic (Jones Act) fleet8 is expected to be much greater than its impact on the international tanker fleet. One reason for this is that the construction costs of Jones Act vessels are significantly higher than those of vessels in the international fleet, regardless of whether a vessel has a single or a double hull. Unlike vessels in the international fleet, Jones Act vessels will generally reach their mandated retirement dates before reaching the end of their economic life. A second reason is that there is considerable uncertainty over future demand for vessels in both the Alaskan crude oil trade and the coastal products trade. A decline in demand may not provide a sustained freight level over the vessel's life sufficient to recover investment in double hulls. Hence, new construction or the conversion of single-hull vessels to
double hulls will be discouraged, even though adequate shipyard capacity is available for these purposes.
The economic burden on the Jones Act fleet of transitioning to double-hull vessels and the resulting impact on domestic waterborne transportation capability—including possible disruptions in the supply of crude oil and products—are in urgent need of further review. In particular, concerns over national defense and the ability to meet the energy needs of the Northeast under extraordinary circumstances, such as severe winter weather and pipeline or refinery disruption, have to be addressed. The effect of uncertainties about the future state of the Jones Act market regulations should be included in the assessment.
The policy issues associated with the potential loss of domestic waterborne transportation capability should be carefully examined within the context of the double-hull mandate of Section 4115 and the committee's finding that properly designed double-hull vessels—including barges—are expected to offer enhanced environmental protection compared to single-hull designs. This examination should be undertaken by an independent body and should address the perspectives of all stakeholders, including tank vessel owners and operators, the oil industry and oil consumers, environmentalists, and state and federal regulators. The study should be initiated as soon as possible to ensure that policy determinations are made prior to potential supply disruptions or inefficient economic decisions.
Need for Better Data
The committee's analysis of oil spills in U.S. waters was complicated by difficulties in obtaining complete and reliable data. The USCG oil spill database is not readily available, even to technically competent, bona fide organizations interested in assessing progress in reducing the occurrence and severity of oil spill incidents. Data are of variable quality from year to year, in part because of major shifts in data system structure and emphasis over time. In the judgment of the committee, improvements in the USCG database in terms of consistency, completeness, and accessibility would be beneficial not only in quantifying progress toward national environmental goals but also in developing future regulations and facilitating industry planning.
The committee's efforts to identify changes in the quality of vessels trading to the United States since the promulgation of OPA 90 were also hampered by data deficiencies, including limitations in the USCG port-state inspection database. Many of the data available are subjective in nature, and it was difficult to establish valid comparisons between data for different years because of a lack of consistent metrics. An absence of data on individual vessels and operators also hindered the committee's assessment.
The USCG should ensure that its oil spill database—including information on cause—is capable of facilitating the analysis of trends and the comparison of accidents involving oil spills. This would benefit the development of future regulations aimed at preventing oil spills and would facilitate industry planning.
The USCG should ensure that its port-state inspection database permits meaningful comparisons and analyses of current and future port-state activities, particularly in regard to identification and assessment of trends in the quality of the tank vessel fleet.