[Congressional Record Volume 142, Number 106 (Thursday, July 18, 1996)]
[Senate]
[Pages S8299-S8301]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    CBO ESTIMATE ON S. 1730, THE OIL SPILL PREVENTION AND RESPONSE 
                            IMPROVEMENT ACT

 Mr. CHAFEE. Mr. President, I ask to have printed in the Record 
supplemental budgetary estimates on Calendar Number 466, S. 1730, the 
Oil Spill Prevention and Response Improvement Act of 1996. Section 403 
of the Congressional Budget and Impoundment Act requires that a 
statement of the cost of a reported bill be included in the report. 
When the Committee on Environment and Public Works filed the report to 
S. 1730 on June 26, 1996, we included only a portion of the estimated 
impact of the bill. CBO had not completed the estimated impact at the 
time of filing. I am pleased to report that the cost statements to be 
included in today's Record complete the CBO estimate for S. 1730.
  The estimates follow:

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                    Washington, DC, July 17, 1996.
     Hon. John H. Chafee,
     Chairman, Committee on Environment and Public Works, 
         Washington, DC.
       Dear Mr. Chairman: The Congressional Budget Office has 
     prepared the enclosed mandate cost statements for S. 1730, 
     the Oil Spill Prevention and Response Improvement Act, as 
     reported by the Senate Committee on Environment and Public 
     Works on June 26, 1996. CBO transmitted its estimate of the 
     impact of S. 1730 on the federal budget on June 26, 1996.
       Enactment of S. 1730 would impose both intergovernmental 
     and private-sector mandates as defined by the Unfunded 
     Mandates Reform Act of 1995 (Public Law 104-4). The costs of 
     the mandates would not exceed the respective $50 million and 
     $100 million annual thresholds.
       If you wish further details on these estimates, we will be 
     pleased to provide them.
           Sincerely,
                                                     James L. Blum
                                            (For June E. O'Neill).

    Congressional Budget Office Estimated Cost of Intergovernmental 
                        Mandates, July 17, 1996

       1. Bill number: S. 1730.
       2. Bill title: The Oil Spill Prevention and Response 
     Improvement Act.
       3. Bill status: As reported by the Senate Committee on 
     Environment and Public Works on June 26, 1996.
       4. Bill purpose: The bill would amend federal law dealing 
     with oil pollution by: imposing new operational, structural, 
     and safety requirements on tanker and towing vessels; 
     allowing more funds to be spent out of the emergency fund of 
     the Oil Spill Liability Trust Fund; and limiting the 
     liability of certain tanker vessels that have double hulls 
     and are responsible for oil spills.
       5. Intergovernmental mandates contained in bill:
       Vessel Requirements. The bill would require the Secretary 
     of Transportation to incorporate additional measures in three 
     sets of rules being proposed by the Coast Guard. The rules 
     deal with navigational equipment for towing vessels and 
     operational and structural requirements for tanker vessels 
     that have a single hull and weigh more than 5,000 gross tons. 
     These requirements are intergovernmental mandates because a 
     small fraction of these vessels, less than 2 percent, are 
     owned by state, local, and tribal governments.
       Under-Keel Clearance. S.1730 would preempt the authority of 
     captains of ports to establish minimum under-keel clearances 
     in their ports by requiring the Secretary of Transportation 
     to establish minimum under-keel clearances for each port. 
     This preemption constitutes an intergovernmental mandate 
     because ports are owned by state and local governments or 
     their subsidiaries. However, this preemption might occur 
     under current law. The Coast Guard is about to issue a final 
     rule regarding structural and operational measures for tanker 
     vessels that have a single hull and weigh more than 5,000 
     gross tons. The Coast Guard's proposed rule would prohibit 
     vessels with an under-keel clearance of less than 0.5 meters 
     from entering or exiting a port without the approval of the 
     captain of the port.
       6. Estimated direct costs of mandates to State, local, and 
     tribal governments:
       (a) Is the $50 Million Threshold Exceeded? No.
       (b) Total Direct Costs of Mandates: The new requirements on 
     tanker and towing vessels owned by state, local, or tribal 
     governments would have a negligible effect on their

[[Page S8300]]

     budgets. Preempting the authority of port captains to 
     establish a minimum under-keel clearance for their ports 
     would have no direct impact on the budgets of ports.
       (c) Estimate of Necessary Budget Authority: Not applicable.
       7. Basis of estimate:
       Vessel Requirements. S. 1730 would modify three rulemakings 
     that the Coast Guard is currently carrying out. If the final 
     rules are not in place by the dates specified in the bill 
     (all of which are in the next six months), S. 1730 would 
     require that the proposed rules be in effect until the final 
     rules are put in place.
       Based on information provided by the Coast Guard, CBO 
     expects that all the final rules will be in place by the 
     deadlines specified in the bill or by October 1, 1996, the 
     assumed enactment date of the bill. Enactment of S. 1730 
     should therefore not result in the rules being imposed 
     earlier than they would otherwise be imposed under current 
     law. If the Coast Guard does not meet the deadlines, however, 
     the shipping industry would face about $15 million per month 
     in additional costs because it would have to comply with the 
     proposed rules at an earlier date than would occur under 
     current law. Vessels owned by state, local, and tribal 
     governments would bear a small fraction of these costs.
       The bill would also require the Coast Guard to add 
     additional requirements to its final rules, such as fire 
     suppression equipment on towing vessels and safety measures 
     for single-hull barges. CBO estimates that the up-front costs 
     for the shipping industry as a whole would be no more than 
     $18 million and annual operational costs would be minimal. 
     Because less than 2 percent of these vessels are owned by 
     state, local, and tribal governments, the cost of these 
     intergovernmental mandates would be negligible.
       Under-Keel Clearance. Preempting the authority of port 
     captains to establish a minimum under-keel clearance for 
     their ports would have no direct impact on the budgets of 
     ports. Ports could experience indirect costs, however; these 
     costs are discussed below in the section titled ``Other 
     Impacts On State, Local, and Tribal Governments.''
       8. Appropriation or other federal financial assistance 
     provided in bill to cover mandate costs: None.
       9. Other impacts on State, local, and tribal governments:
       Under-Keel Clearance. The current proposed rule for tanker 
     vessels includes a minimum under-keel clearance that would 
     apply uniformly to all ports. Because the shipping industry 
     and port authorities have objected to a national standard, it 
     is unclear whether the final rule will set a minimum under-
     keel clearance. The bill would settle the dispute by 
     requiring the Secretary of Transportation to establish a 
     separate minimum clearance for each port. CBO has no basis 
     for predicting whether these standards would be more or less 
     stringent than the standards that would be established under 
     current law.
       If the clearance requirements are less stringent than the 
     requirement under current law, ports would not incur 
     additional costs. If the clearance requirements are more 
     stringent, ports could choose to increase their under-keel 
     clearance and could face additional costs for activities such 
     as dredging in order to avoid losing business to deeper 
     ports. Because the enforceable duty would be imposed on 
     operators of vessels, not on ports, such costs would be 
     considered an indirect effect of a mandate.
       Spending from the Oil Spill Liability Trust Fund (OSLTF). 
     CBO estimates that federal direct spending from the emergency 
     fund of the Oil Spill Liability Trust Fund (OSLTF) would 
     increase by $40 million (from $20 million to $60 million) in 
     fiscal year 1997 and by $45 million (from $15 million to $60 
     million) annually thereafter.
       These increases would result from broadening how the funds 
     can be used and by increasing the overall cap on direct 
     spending from $50 million to $60 million. (Even though the 
     current annual cap is $50 million, we expect that spending 
     from the emergency fund will be between $15 million and $20 
     million annually under current law.) CBO expects that some of 
     these additional funds would go to the states.
       States currently have the legal and operational 
     responsibility to cap idle oil wells. This bill would allow 
     emergency funds from the OSLTF to pay for some of these 
     costs, but the states would have to pay at least half. In 
     addition, some of the costs associated with oil spills that 
     are often paid for by states, including the full cost of 
     assessing damages to natural resources and mitigating 
     ecological injuries, would now be an eligible use of OSLTF 
     emergency funds.
       Limit on Oil Spill Liability. Current law caps the 
     liability of parties who are responsible for oil spills. 
     However, the cap does not apply to cases where federal 
     safety, construction, or operating regulations are violated. 
     S. 1730 would extend the liability cap to these cases if the 
     tanker involved has a double hull. State, local, and tribal 
     governments are often the recipients of awards from liability 
     claims. Because the bill would expand the cases to which the 
     liability cap applies, state, local, and tribal governments 
     may receive smaller awards in future liability cases.
       10. Previous CBO estimate: None.
       11. Estimate prepared by: John Patterson.
       12. Estimate approved by: Robert A. Sunshine, for Paul N. 
     Van de Water, Assistant Director for Budget Analysis.
                                                                    ____


    Congressional Budget Office Estimate of Costs of Private Sector 
                        Mandates, July 17, 1996

       1. Bill number: S. 1730.
       2. Bill title: The Oil Spill Prevention and Response 
     Improvement Act.
       3. Bill status: As reported by the Senate Committee on 
     Environment and Public Works on June 26, 1996.
       4. Bill purpose: The bill would amend provisions of the Oil 
     Pollution Act of 1990 (OPA) that address oil spill prevention 
     and safety measures.
       5. Private sector mandates contained in bill:
       S. 1730 would require the Secretary of Transportation to 
     incorporate additional mandates in the operational, 
     structural, and navigational rules currently proposed by the 
     U.S. Coast Guard. In addition, the bill would put into effect 
     the Coast Guard's current proposed rules by specified dates 
     (all of which occur within the next six months) if the Coast 
     Guard's final rules are not effective by deadlines specified 
     under current law. The rules address navigational and safety 
     equipment for towing vessels and operational and structural 
     requirements for tanker vessels that have a single hull and 
     weight more than 5,000 gross tons.
       Based on information provided by the U.S. Coast Guard, CBO 
     assumes that the final rules will be effective by the 
     specified deadlines or by October 1, 1996, the assumed 
     enactment date of the bill. CBO also assumes that the Coast 
     Guard's final operational, structural, and navigational rules 
     will reflect the respective currently proposed rules. If the 
     Coast Guard does not meet the specified deadlines, the 
     shipping industry would incur additional costs because the 
     industry would have to comply with interim rules sooner than 
     under current law. In addition, S. 1730 would require the 
     final operational rule to include specific safety 
     requirements to prevent the grounding of single-hull barges 
     and the establishment of a minimum under-keel clearance for 
     those vessels. The final navigational rule would have to 
     include a requirement that towing vessels have fire-
     suppression systems. Further, advertisements that currently 
     indicate the designation and procedures by which claims may 
     be presented would also have to announce that claimants may 
     present interim claims for short-term damages.
       6. Estimated direct cost to the private sector:
       S. 1730 would impose private-sector mandates that would 
     most likely fall below the annual threshold as defined in 
     Public Law 104-4. In the unlikely event that the Coast 
     Guard's operational rule is delayed seven months after S. 
     1730 is enacted, costs could exceed the $100 million 
     threshold in the first year.
       Interim Rules. If S. 1730 were to be enacted before the 
     Coast Guard's final operational rule is effective, the bill 
     would impose interim private-sector mandates for operational 
     activities. The interim operational rule would be identical 
     to the proposed operational rule published by the Coast Guard 
     in the Supplemental Notice of proposed Rulemaking (60 Fed. 
     Reg. 55,904 (1995)), and would be in effect until the Coast 
     Guard's final rule is effective. Based on information 
     contained in the proposed rule, CBO estimates that the 
     mandates imposed by the interim rule would cost the private 
     sector approximately $15 million per month during the first 
     year the interim rule is in effect. After the first year, the 
     annual costs would decline. The costs imposed by the interim 
     operational rule would not exceed the $100 million threshold 
     unless the Coast Guard's final operational rule is still not 
     effective seven months after S. 1730 is enacted.
       S. 1730 also would impose an interim rule on vessel 
     structure that would be identical to the proposed rule 
     published by the Coast Guard in the Notice of Proposed 
     Rulemaking (58 Fed. Reg. 54,870 (1993)) if the final 
     structural rule is not effective by December 18, 1996. In the 
     event that the final structural rule is not effective before 
     the deadline, compliance with the proposed structural rule 
     would not be required for three years. Therefore, the private 
     sector would not likely make structural changes during the 
     interim.
       Similarly, the bill would impose an interim navigational 
     rule if the Coast Guard's final rule on safety equipment for 
     towing vessel does not become effective by September 30, 
     1996. The interim navigational rule would be identical to the 
     proposed rule published by the Coast Guard in the Notice 
     Proposed Rulemaking (58 Fed. Reg. 54,870 (1993)). In the 
     event that the final navigational rule is not effective 
     before the deadline, the private sector would not likely make 
     any significant changes during the interim since compliance 
     with some of the provisions would not be required for one to 
     five years.
       New Rulemaking Requirements. Under section 101 of the bill, 
     the final rule on operational requirements must include a 
     provision requiring all single-hull barges over 5,000 gross 
     tons operating in open ocean or coastal waters to have at 
     least one of the following: (1) a crew member on board and an 
     operable anchor, (2) an emergency system on board the vessel 
     towing the barge, or (3) any other measure that provides 
     similar protection. Based on discussions with industry 
     representatives, CBO estimates that the incremental cost of 
     complying with this provision would be less than $1 million 
     over five years.
       Section 101 of the bill would require that the final 
     operation rule include a provision requiring the 
     establishment of a minimum

[[Page S8301]]

     under-keel clearance for each port in which a single-hull 
     vessel operates. It is unclear if this provision would result 
     in more or less stringent requirements than the 0.5 meter 
     uniform under-keel clearance in the Coast Guard's proposed 
     rule. The effect of this requirement would be to impose 
     operational restrictions on such vessels not meeting the 
     port's established under-keel clearance when entering or 
     departing from the port and when operating in an inland or 
     coastal waterway. If the effect of the under-keel clearance 
     provision in the bill is to provide greater flexibility than 
     the 0.5 meter uniform under-keel clearance in the proposed 
     rule, then this provision of the bill would result in lower 
     private-sector costs compared to the costs associated with 
     the current proposed operational rule. However, if the bill 
     leads to more stringent under-keel clearance requirements 
     relative to current practice, this provision would result in 
     increased costs to the private sector since vessels would 
     have to lighter cargo or use alternative ports.
       Section 103 would require that the final navigational rule 
     include a provision requiring a towing vessel to have a fire-
     suppression system or other equipment to suppress an onboard 
     fire. Based on information provided by the Coast Guard and 
     the private sector, CBO estimates that this provision would 
     result in costs to the private sector between $6 million and 
     $18 million during the first year for installation and a 
     minimal amount for operating costs thereafter.
       Advertising Requirements. S. 1730 would impose an 
     additional mandate concerning the advertising requirements in 
     the Oil Pollution Act of 1990. Currently, the responsible 
     party or guarantor of an incident must advertise the 
     designation and the procedures by which claims may be 
     presented. Section 201 would require that such advertisements 
     must also announce that claimants may present interim claims 
     for short-term damages. CBO estimates that the additional 
     advertising requirement would impose minimal costs on the 
     private sector.
       7. Previous CBO estimate: None.
       8. Estimate prepared by: Amy Downs (226-2940)
       9. Estimate approved by: Jan Acton, Assistant Director for 
     Natural Resources and Commerce.

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