[Senate Report 110-445]
[From the U.S. Government Publishing Office]



                                                       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:

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OIL POLLUTION ACT OF 1990

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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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