[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

<bullet> 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.<bullet>

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