[DOCID: f:sr445.110]
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Calendar No. 940
110th Congress Report
SENATE
2d Session 110-445
======================================================================
A BILL TO AMEND THE OIL POLLUTION ACT OF 1990 TO DOUBLE THE LIABILITY
LIMITS FOR SINGLE-HULL TANKERS AND TANK BARGES FOR 2009, AND FOR OTHER
PURPOSES
_______
August 22, 2008.--Ordered to be printed
Filed under authority of the order of the Senate of August 22
(legislative day, August 1), 2008
_______
Mrs. Boxer, from the Committee on Environment and Public Works,
submitted the following
R E P O R T
[To accompany S. 2700]
[Including cost estimate of the Congressional Budget Office]
The Committee on Environment and Public Works, to which was
referred the bill (S. 2700) to amend the Oil Pollution Act of
1990 to double the liability limits for single-hull tankers and
tank barges for 2009, and for other purposes, reports favorably
thereon with an amendment and recommends that the bill, as
amended, do pass.
Background
This bill to amend the Oil Pollution Act of 1990 to double
liability limits for single-hull tankers and tank barges for
2009, and for other purposes, would double existing federal
liability limits for responsible parties to an oil spill in
U.S. waters if the spill comes from a single-hull tank vessel,
and remove all federal limitations on liability for such spills
occurring after 2009.
After the Exxon Valdez oil spill on March 24, 1989, in
Prince William Sound, Alaska, this Committee in the 101st
Congress reported legislation which was later enacted as the
Oil Pollution Act of 1990 (Public Law 101-380). This
comprehensive legislation overhauled the nation's marine oil
spill prevention and response policies, and specifically
recognized the risks of catastrophic oil spills due to the
single-hull design of certain tank vessels. Consequently, the
Oil Pollution Act of 1990 set a deadline of 2010 for the phase-
out of the use of certain single-hull tank vessels in the U.S.,
with extensions to 2015 for certain of those ships with double-
sides only or double-bottom only.
Under the Oil Pollution Act of 1990, liability for cleanup
costs and damages resulting from oil spills rests with a
`responsible party' who is usually the owner or operator of a
vessel. In the event of a spill, the responsible party must pay
removal costs incurred by the government or others, and damages
to claimants who are injured by the spill. Damages may include
natural resources damages, damages to real or personal
property, damages for loss of a subsistence use of a natural
resource (fishing, etc.), damages for lost revenue or profit
caused by a spill, and damages for the cost of government
response necessitated by the spill.
The Oil Pollution Act of 1990 set limitations on liability
for damages and cleanup costs for parties deemed responsible
for a spill. Damage and cleanup costs exceeding these limits
could be paid out of the federal Oil Spill Liability Trust
Fund, which is capitalized by a $0.05 tax on each barrel of
oil. The Coast Guard Authorization Act of 2006 (Public Law 109-
241) increased the liability limits for all types of vessels,
and is mandated to adjust liability limits for inflation every
three years. This bill would further increase liability limits
for one year and then phase out all liability limits for
single-hull tank vessels.
Since 1990, no single-hull tank vessel has been built in
the United States. More robust double-hull tank ship designs
have been built and used throughout the world, as other
countries took similar action to phase out the use of single-
hull tank vessels for certain petroleum commodities. Recently,
some countries, including those in the European Union, have
taken action to phase out single-hull tank vessels more rapidly
than the 2015 deadline required by the Oil Pollution Act of
1990.
According to the Government Accountability Office, between
1990 and 2006, there were 24 major oil spills from tank vessels
in the U.S. (i.e., those spills requiring federal intervention
and assistance for cleanup and damages, including cleanup and
damages claims to the federal Oil Spill Liability Trust Fund,
totaling more than $1 million). Government Accountability
Office, Maritime Transportation, Major Oil Spills Occur
Infrequently, but Risks to the Federal Oil Spill Fund Remain,
GAO-07-1085 (2007).
Purpose of the Legislation
The Committee believes that while the Oil Pollution Act of
1990 provides a firm deadline for the complete phase-out of the
use of single-hull tank vessels in the U.S., current federal
limitations on liability may not be sufficient to deter such
ships from being used in the U.S. petroleum trade after they
have been banned from other countries sooner than they will be
banned in the U.S. As such, this bill would double existing
liability limits to $6,000 per gross ton for single-hull tank
vessels during calendar year 2009, and remove all federal
limitations on liability after 2009. This complete removal of
liability limits is intended to encourage oil tank vessel
owners and petroleum shippers to begin using double-hull tank
vessels earlier than outlined in the Oil Pollution Act of 1990.
During debate on the bill at executive session on May 19,
2008, Committee members expressed concern that the bill as
drafted may be interpreted to have retroactive effect--that is,
the updated liability limits would apply to spills occurring
before 2009. Committee members present, including the bill's
sponsor, agreed that this was not the intent of the bill and
that further amendment of the language may be required to
ensure the bill would reflect no retroactive effect.
Summary of the Legislation
Section 1. Increased single-hull liability limits for 2009
This section would amend Section 1004(a)(1)(A) of the Oil
Pollution Act of 1990 (33 U.S.C. 2704) to update limitations on
liability for the calendar year 2009 and beyond. For CY 2009,
the liability limit for oil spills involving single-hull tank
ships would be $6,000 per gross ton, up from $3,000 per gross
ton. After 2009, federal liability for oil spills from such
vessels would not be limited, to the extent the U.S.
Constitution allows.
Legislative History
On December 8, 2004, Senators Lautenberg and Corzine
introduced S. 3035, the Oil Spill Prevention and Liability Act
of 2004, which proposed, inter alia, phasing out federal
limitations on liability for single-hull tank vessels. The
Committee took no action on the bill; however, several of the
bill's provisions were included in the enacted version of the
Coast Guard Authorization Act of 2006.
On March 4, 2008, Senator Lautenberg introduced S. 2700. It
was referred to the Committee on Environment and Public Works,
which did not hold any hearings on the bill.
On May 21, 2008, the Committee on Environment and Public
Works approved the bill by voice vote.
Rollcall Votes
There were no rollcall votes during the consideration of
the bill by the Committee. A Lautenberg substitute amendment
that provided technical corrections to clarify dates in which
proposed changes to certain federal oil spill liability limits
will apply was adopted by unanimous consent.
Mandates Assessment
In compliance with the Unfunded Mandates Reform Act of 1995
(Public Law 104-4), the Committee agrees with the findings of
the Congressional Budget Office, noted below, that this bill
would impose no Federal intergovernmental unfunded mandates on
State, local or tribal governments. The bill does not directly
impose any private sector mandates.
Congressional Budget Office Estimate
S. 2700--A bill to amend the Oil Pollution Act of 1990 to double the
liability limits for single-hull tankers and tank barges for
2009
Summary: S. 2700 would amend the Oil Pollution Act of 1990
(OPA) to raise the statutory limits on liability that owners or
operators of single-hull tanker vessels face when an oil spill
occurs. The bill would double the liability limits for spills
that occur during the 2009 calendar year and essentially
eliminate such limits for spills that occur after 2009.
CBO estimates that enacting higher limits would reduce
direct spending from the Oil Spill Liability Trust Fund (OSLTF)
by $3 million over the 2009-2013 period and by $6 million over
the 2009-2018 period. Enacting S. 2700 would not affect
revenues or spending subject to appropriation.
S. 2700 contains no intergovernmental or private sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 2700 is shown in the following table.
The costs of this legislation fall within budget function 300
(natural resources and environment).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
----------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING
Estimated Budget Authority...... * * -1 -1 -1 -1 -1 -1 * *
Estimated Outlays............... * * -1 -1 -1 -1 -1 -1 * *
----------------------------------------------------------------------------------------------------------------
Note.--* = reduction in direct spending of less than $500,000.
Basis of estimate: S. 2700 would raise existing limits on
the liability of owners or operators of single-hull tanker
vessels that are responsible for oil spills into U.S. navigable
waters. Under existing law, specified liability limits
determine the total amount that a responsible party must pay to
clean up an oil spill and to compensate third parties for
damages. If the costs of a spill exceed those limits, the
federal government generally pays any remaining costs and
claims from the OSLTF. Current liability limits for single-hull
tanker vessels generally vary with the size of the vessel. For
example, the liability limit for single-hull tanker vessels
that weigh less than 3,000 gross tons is the greater of $3,000
per ton or $6 million per spill, whereas the liability limit
for single-hull tanker vessels that weigh more than 3,000 gross
tons is the greater of $3,000 per ton or $22 million per spill.
Under S. 2700, the per-ton liability limit for single-hull
tank vessels would be raised from $3,000 to $6,000 for spills
that occur in 2009 (the per-spill limits would not change). For
spills occurring after 2009, no limit is specified by the bill;
instead, the limit would be established at the maximum
allowable amount that is consistent with the due process
requirements of the fifth amendment of the Constitution. CBO
assumes that this provision would essentially eliminate any
limit of liability for spills occurring after 2009 from single-
hull tank vessels.
The savings to the federal government associated with
raising (and subsequently eliminating) liability limits for
single-hull tanker vessels is uncertain because significant oil
spills are relatively rare and cannot be predicted. In fact,
since the implementation of OPA in 1991, liability limits have
been applied only five times for spills from single-hull
vessels. In total, those spills have accounted for about $262
million--around 60 percent of the $409 million that has been
spent from the OSLTF through 2007. Morever, spills from single-
hull vessels could be even rarer in the future because OPA
requires that the use of such vessels be phased out by 2015. At
present, total tonnage carried by single-hull tankers is
roughly 115 million tons, an 84 percent decline from the 1998
level.
Raising the liability limits would reduce federal costs for
spills from single-hull vessels that occur during the 2009-2014
period, after which we expect that the use of such vessels will
be phased out. CBO estimates that, starting in 2009, enacting
S. 2007 would reduce direct spending from the OCLTF until all
anticipated claims on single-hull vessels have been paid. Based
on the cost of previous spills from such vessels (adjusted for
the decline in the amount of fuel likely to be carried by such
tankers in the future), CBO estimates that the bill would
reduce spending by $500,000 in each of fiscal years 2009 and
2010 and by $1 million in each of fiscal years 2011 through
2016. Savings would be lower in 2009 and 2010 because some
claims for spills that occur in those years would be paid in
later years.
Intergovernmental and private-sector impact: S. 2700
contains no intergovernmental or private sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Estimate prepared by: Federal Costs: Deborah Reis, Jeffrey
LaFave, and Gregory Hitz. Impact on State, Local, and Tribal
Governments: Neil Hood. Impact on the Private Sector: Jacob
Kuipers.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
Evaluation of Regulatory Impact
Section 11(b) of rule XXVI of the Standing Rules of the
Senate requires publication in the report of the Committee
estimate of the regulatory impact made by the bill as reported.
No regulatory impact is expected by the passage of the bill.
The bill will not affect the personal privacy of individuals.
ADDITIONAL VIEWS OF MR. INHOFE
The Oil Pollution Act (33 U.S.C. 2701 et seq.) was
originally enacted in 1990 in response to the Exxon Valdez
spill in Alaska: Congress recognized the need to adopt
legislation that would establish an oil spill trust fund to
assure the public that in the event of a spill, cleanups would
be done without a financial burden on the taxpayer if a
responsible party could not pay. In addition, Congress found it
imperative to include spill liability limits for law-abiding
responsible parties in order to sustain the crucial oil
transport industry. Congress, acknowledging that a higher
likelihood of spills exists with single hull tankers, called
for the reasonable phasing out of single hull vessels by 2010,
unless the vessel has a double bottomed or double sided hull.
However, if a vessel operator is found to be in violation of
Coast Guard laws and regulations at the time of a spill,
liability limits are waived and the responsible party must pay
the entire cost of cleanup, regardless of the set liability
limits established under the Oil Pollution Act. This ensures
that tanker vessels follow the laws and regulations that
protect our valuable water resources.
In 2006, Congress amended the Oil Pollution Act of 1990 by
adjusting the 16-year-old liability limits by nearly 40% to
account for inflation. Congress also authorized the Coast Guard
to review and adjust liability limits every three years at the
rate of inflation based on the Consumer Price Index (CPI) to
ensure responsible parties met the true intent of the law. The
next liability adjustment is scheduled for 2009.
S. 2700, a bill to amend the Oil Pollution Act of 1990,
raises the liability limits for year 2009 and strikes the
liability limits after 2010 for any single hull vessel (or
vessel with double sides or double bottoms). Anecdotal
statements regarding European Union laws and regulations will
ultimately initiate the expanded use of single hull vessels in
the United States have no factual evidence to illustrate that
conclusion. I believe the ultimate removal of liability limits
is unnecessary and creates an excessive burden on vessel owners
who comply with the law and the current single hull phase-out
established by Congress. I also believe this legislation comes
at a difficult time during record-high oil prices and that this
country needs to boost supply, not minimize it through laws
that would discourage the delivery and transport of oil.
Congress created the 25-year single hull phase-out timetable
with the understanding that the critical tanker industry would
suffer great economic hardships during a shortened compliance
schedule. Therefore, Congress should maintain the unfettered
compliance schedule outlined in the Oil Pollution Act of 1990.
James M. Inhofe.
Changes in Existing Law
In compliance with section 12 of rule XXVI of the Standing
Rules of the Senate, changes in existing law made by the bill
as reported are shown as follows: Existing law proposed to be
omitted is enclosed in [black brackets], new matter is printed
in italic, existing law in which no change is proposed is shown
in roman:
* * * * * * *
----------
OIL POLLUTION ACT OF 1990
* * * * * * *
SEC. 1004. LIMITS ON LIABILITY.
(a) General Rule.--Except as otherwise provided in this
section, the total of the liability of a responsible party
under section 1002 and any removal costs incurred by, or on
behalf of, the responsible party, with respect to each incident
shall not exceed--
(1) for a tank vessel, the greater of--
[(A) $1,200 per gross ton; or]
(A) with respect to a single-hull vessel,
including a single-hull vessel fitted with
double sides only or a double bottom--
(i) $3,000 per gross ton, if the
incident for which liability is imposed
under section 1002 occurs after the
date of enactment of this clause and
before January 1, 2009;
(ii) $6,000 per gross ton, if the
incident for which liability is imposed
under section 1002 occurs after
December 31, 2008, and before January
1, 2010; and
(iii) the maximum amount allowable,
consistent with the substantive due
process requirements of the Fifth
Amendment to the United States
Constitution, if the incident for which
liability is imposed under section 1002
occurs after December 31, 2009;
* * * * * * *
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