January 9, 2003
Members will discuss recent oil spills, calls by some in the international community to accelerate the deadline to phase-out single hull tankers that carry oil in bulk, and the possible impact of such action on commerce.
Ms. Elaine Davies
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Rear Admiral Paul J. Pluta
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Mr. Timothy R. E. Keeney
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Witness Panel 2
Mr. Thomas A. Allegretti
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Mr. Tom Godfrey
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Mr. Dragos Rauta
Good afternoon. I am Dragos Rauta from the International Association of Independent Tanker Owners (INTERTANKO). INTERTANKO is an international trade association representing the majority of the world’s tanker owner and operators. INTERTANKO has 239 members controlling some 2,050 tankers with a total of 157.7 million tons deadweight (dwt) capacity. INTERTANKO members represent approximately 70 percent of the world’s independently owned tanker fleet above 10,000 dwt. Tankers operated by INTERTANKO’s members transport more than 60% of the oil and petroleum products imported into the United States. In addition to its full members, INTERTANKO also has 287 companies which are associate members. INTERTANKO has offices in Oslo, London, Singapore and Washington, D.C. INTERTANKO appreciates the opportunity to be here today to discuss the implications of the recent marine casualty involving the tanker Prestige off the coast of Spain. INTERTANKO is recognized as a leading advocate of tanker safety by national and international public and private organizations around the world. Our program emphasis has been on finding meaningful safety measures based on sound technology and procedures that can be applied globally to protect our crews, our ships and the global marine environment I. Prestige Accident INTERTANKO is grateful that the crew of the Prestige is safe, due primarily to prompt and successful rescue operations conducted by Spanish maritime authorities. We also note the bravery of the Master and his two senior colleagues who remained on board in efforts to save their ship. INTERTANKO also commends the oil spill response efforts being undertaken by national and private entities to prevent and minimize environmental damages from this accident. The Prestige accident has caused major economic impacts to persons who earn their living from the sea. While prevention must always be the first goal of government and industry, INTERTANKO is keenly ware of the human and environmental costs of marine oil spills. INTERTANKO champions continual review of the resources and technologies available for response and for support of those whose work and property are affected by these casualties. As in the case of any marine casualty, a complete and thorough inquiry into the causes of the accident must be pursued. Currently, none of us, and indeed no one in Europe, knows with precision what caused the loss of the Prestige. Until we know the cause of the initial structural damage, we cannot intelligently determine whether specific remedial measures are necessary. Structural failure of some sort appears to have been an important contributor to this incident, but we do not know whether the age of the vessel was a factor or whether a double hull vessel would have fared any better in the heavy November seas that doomed the Prestige. We believe it is essential that every effort be made to investigate and fully understand the circumstances of this accident. This includes a complete assessment of the historical record of the ship, its tragic last voyage and all the events surrounding the accident. We are therefore gratified to see that initial reports concerning the investigation underway have been, and hopefully will remain, open and impartial. We are however very concerned that vessel’s Master is still being detained, being unable to meet an extremely unreasonable level of bail and that his circumstances are prejudicing the conduct of post-incident investigations. When a vessel is lost or is fighting for its life, imminent incarceration should be the last thing a master should have to worry about. II. European Reaction European organizations and governments have reacted swiftly, but without adequate information, to the Prestige accident. Many of these reactions and subsequent initiatives generally lack supporting analysis, violate obligations under international conventions, and have the potential to create unnecessary economic hardships for many within Europe. More to the point of these hearings, many of the measures being considered in Europe have the potential of imposing adverse economic and safety impacts on other parts of the globe, including the United States. These impacts are not intentional, but rather reflect the reality of international transport of oil. When one nation or region arrogates to itself the right to impose standards that apply only in that region, other nations will be affected, often adversely. For this reason, it is essential that all significant marine safety measures be the product of international consensus. To gain that consensus, measures that address vessel design and operations must address documented issues and must be reasonable responses to those issues. The European Commission issued proposed rules on December 20, 2002 in the form of a “Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC no 417/2002) on the accelerated phasing in of double hull or equivalent design requirements for single hull oil tankers and repealing Council Regulation (EC) No 2978/94”. This proposal include basically three amendments to existing regulations: 1. Mandating that heavy grades of oil can only be carried by double-hulled tankers; 2. Shortening the phasing out schedule of single-hulled tankers; and 3. Broadening application of the special inspection regime for tankers, the so-called Condition Assessment Scheme, which is designed to assess the structural soundness of single-hulled tankers over the age of 15 years. The Commission urged the European Parliament and the Council to adopt these measures as soon as possible so that they may enter into force by March 2003. The Commission also called upon European Union (EU) member States to ensure that similar measures are adopted by the International Maritime Organization (IMO). Additionally, certain EU member states have taken unilateral measures in the aftermath of the Prestige accident. For example, on December 13, 2002, a Royal Decree-law was published by the Spanish Government banning all single hull tankers (regardless of registry) carrying heavy fuel oil, tar, asphaltic bitumen and heavy crude, from entering Spanish ports, terminals or anchorages. This decree entered into force on January 1, 2003. Spain and France also unilaterally prohibited all single hull tankers carrying heavy fuel oils and heavy crude oil from transiting through their 200 nautical mile Exclusive Economic Zone (EEZ). Portugal has supported this position. This order was implemented almost immediately, resulting in Spanish and French warships intercepting tankers in their EEZ and preventing them from transiting and utilizing internationally recognized innocent passage and rights of freedom of navigation. III. Concerns with Europe’s Response INTERTANKO is obviously very concerned with these initiatives and has undertaken to work with the EU, its member states and other organizations to develop appropriate responses to the Prestige accident, particularly once all the parties have obtained adequate information about the cause of the casualty. However, several of the proposed measures potentially fly in the face of well-established international law and procedures. INTERTANKO must point out certain infirmities with the general thrust of the reactions of Spain, France, Portugal and the EU. Single-hull tankers: There is at present no evidence that the loss of the Prestige was caused by its single hull construction or that a double hulled tanker of similar dimensions would have survived where a single hull tanker failed. It is misguided public policy to regard double hull construction as a panacea to all tanker casualties. Double hulls have been introduced to provide additional protection in low-energy groundings and collisions, neither of which were factors in the Prestige. Accelerated phase out schedules for single hull tankers operating in Europe totally ignore the less than two year old work that developed a timetable for phasing out single-hulled tankers and that took into account demand for oil, the capacity of shipyards and ship recycling yards, and the need to avoid a tanker tonnage shortage. Serious tanker owners with long-term commitments will find themselves in a most difficult situation if, for existing tonnage, new regulations make it impossible for them to fulfil their charter commitments. Some of these owners are of the quality that European authorities would have liked to serve the European trades on a regular basis. Sudden and ill-conceived changes can have dramatic market and safety implications. Vessel Age: The focus on age limitations for ships, regardless of whether they are equipped with a single or double hull, also causes particular concern. A well built and maintained vessel can last a considerable period of time, with some tankers in the United States fleet lasting almost 50 years. There is a flawed logic in limiting the age of any ship because it discourages the initial investment in durable and robust ships and dissuades expensive maintenance of the asset in later life. A robust and sophisticated new built tanker would require at least 25 years of trade to justify the initial investment. A related concern is the prospect that an internationally agreed-upon program or vessel service life and maintenance may be arbitrarily abandoned. This program mandates increasing maintenance and inspection requirements for vessels based on age and service. By proposing elimination of vessels based on arbitrary age limits, regardless of maintained condition, potentially undermine maritime safety. Economic Impacts: It is less than two years since a newly constructed timetable for phasing out single-hull tankers was introduced and agreed to at the EU and the IMO. This timetable took into account the demand for oil, the capacity of the shipyards and ship recycling yards, and the need to avoid a tonnage supply crisis. This may all be thrown out without proper consideration for tanker supply/demand situation. Attached (Appendix 1) is a graphical comparison of single hull tanker tonnage to be phased-out under the current EU/IMO phase-out for single hull tankers regulation, the EU new proposal and the OPA phase-out schedule. Heavy Oil: Another problem is the confusion and potential chaos resulting from European proposals to restrict the carriage of “heavy oil” to or from European ports, offshore terminals or anchorage areas, to double hull oil tankers. While the EU defines "heavy grades of oil" as heavy fuel oil, heavy crude oil, waste oils, bitumen and tar, application of this definition to real cargoes have widely different results. Attached (Appendix 2) is an analysis conducted by INTERTANKO on the EU- proposed definition for “heavy crude oil” and a list of crude oils (Appendix 3) which could be banned from transportation by single hull tankers. This proposal is being made without a clear understanding of its impact, the actual characteristics of the cargo and how the cargo reacts if released in the environment. There is also no analysis regarding the likely impact on the availability of appropriate tanker tonnage and probable supply implications. Unilateral Action: INTERTANKO is opposed in principle to unilateral and regional legislation for international shipping. The free passage of vessels on the high seas of the world is fundamental principle of international law. It is in everyone’s best interest to conduct discussions and impose regulations in the internationally recognized forum for marine matters, namely the International Maritime Organization (IMO). IV. Control and limitation of ships in Europe’s EEZ: Innocent Passage The EU has proposed to infringe on the long-held international principle of ships’ innocent passage. This is a principle that the United States has fought to preserve and which the United States Navy continues to protect through “freedom of navigation” operations. Following the loss of the Prestige, it is understandable that EU member states wish to “analyze and address various ways to take measures to protect their coastal waters, including the territorial sea and exclusive economic zone”…where there is a threat ...“to the marine environment”. EC Communication to the Parliament and Council of 6 December 2002. The actions of member states Spain and France however, it indicates that this review is meant to provide the basis for denying ships freedom of passage in European EEZ waters. The United Nations Convention on Law of the Seas (UNCLOS) Article 56 grants Coastal States jurisdiction in the EEZ "as provided for in the relevant provisions of this Convention with regard to, inter alia, the protection and preservation of the marine environment” (Articles 211 (5) and (6) and 220). Basically, 211(1) provides that States acting through the IMO shall establish international rules to prevent, reduce and control pollution ... and promote the adoption of routing systems designed to minimize the threat of accidents which might cause pollution. 211(5) and (6) allow Coastal States to adopt laws in respect of their EEZs "where the international rules and standards are inadequate to meet special circumstances and coastal States have reasons for believing that a particular clearly defined area of their EEZ is an area where the adoption of special mandatory measures for the prevention of pollution from vessels is required ...". Such laws may not impose design, construction, manning or equipment standards on foreign vessels other than generally accepted international rules and standards. Consultation with and approval by IMO is required, and at least 15 months notice of entry into force. Section 220(5) and (6) provide that where there is clear evidence that a vessel navigating in the EEZ or territorial sea has committed a violation of applicable international standards for the prevention of pollution resulting in a discharge causing or threatening significant pollution, the State can inspect or detain the vessel. Where there are clear grounds for believing a vessel has committed such a violation in the EEZ, the coastal State can require information from the vessel to establish whether it has in fact occurred (220(3)). INTERTANKO recognizes the concerns of coastal nations over marine safety and environmental protection. These concerns must be addressed within the context of international law. In a joint press statement on December 12, 2002, the Round Table of international shipping organizations (INTERTANKO, the International Chamber or Shipping, the Baltic and International Maritime Council and INTERCARGO) condemned the continuing contravention of the Law of the Sea Convention by coastal states in the wake of the Prestige incident. There is no justification for the illegal action taken by the Governments of Spain and France in ordering a number of foreign ships out of their 200 mile EEZ. Merchant ships are entitled to freedom of navigation through the EEZ. The flouting of international obligations by two important maritime nations sets an inexcusable and damaging precedent which should be strongly opposed by other nations worldwide. Unilateral action by one or more coastal States, or the entire EU, cannot be condoned, when clearly there are adequate provisions within international law to address these concerns. The United States Government should voice its position on this very important international law issue. V. POSITIVE INDICATIONS While we have focused upon the negative aspects of the European reactions to the Prestige, there are nevertheless some aspects that we believe are positive: · Long overdue attention that is now being given to Places of Refuge and the need for appropriate pre-planning of response arrangements. Acceleration of the designation of places of refuge is an essential activity not only in Europe but also around the world. Some independent commentators have suggested that much of the resulting oil pollution the Prestige would have been avoided if the Spanish authorities had offered the vessel sheltered waters and assistance in cargo transfer in the early hours of the vessel’s struggle with the sea; · There is recognition that several European states have failed to live up to their obligations on Port State inspections, and the hope that, in addition to enforcement of those commitments, an enhanced inspection system will include better targeting rather than adherence to simple numerical targets; · There must be renewed focus on compensation schemes, including a call for States to ratify both the Carriage of Hazardous and Noxious Substances and the Bunker Oil Pollution Damage Conventions, as well as support the introduction of the Supplementary Fund for Oil Pollution Compensation. The United States should give consideration to joining international conventions governing compensation for pollution; · There has been confirmation that the Erika 1 package will be implemented promptly; · The case for establishment of a European Maritime Safety Agency (EMSA). Such an agency could contribute to ensuring that EU states uniformly implement and enforce internationally agreed legislation and provide the European Commission with much-needed maritime competence, including a thorough analysis of post-accident inquiries, review of vessel maintenance and construction standards, training of inspectors, and designation of places of refuge; and · Support for the development of a Flag State code of practice and the model audit scheme (the Prestige was registered in the Bahamas, a flag with better safety record than many of the European flags), as well as procedures for the authorization and control of Classification Societies. All of these developments are positive. INTERTANKO is totally committed to working with all responsible parties to ensure the safe transport of oil and to protect the marine environment. The Association therefore will remain strongly engaged in assisting the international maritime community, European officials and the European Maritime Safety Agency to achieve these goals. VI. Conclusion Marine casualties are traumatic events because of the human, environmental, and economic losses they often cause. This shock often leads to an impulse to respond politically before all relevant information is available. In terms of environmental protection, it is important to identify and understand problems before we try to solve them. It is obvious that some in the EU are determined to take unilateral action, in clear contradiction of previous statements in support of multinational international regulation of shipping. By contrast, some EU member States do not agree with this approach and are advocating a more conscientious approach that does not risk diluting overall marine safety and environmental protection. The effect of hasty European proposals can have impacts both in the EU as well as other countries, including the United States. According to EIA (US Energy Information Administration), the 2001 total costs of US oil imports were $102,747,000,000. Out of this, only $5,000,000,000 (or 5%) was the cost of transportation. A market with regional regulations means a less flexible and a tighter market. Such a situation will cause problems for oil companies and traders who wish to fix ships for optional discharge areas. Although, at this point in time, INTERTANKO cannot anticipate the level or significance of a possible increase of the transportation costs, one cannot exclude that the transportation costs to the US could be increase to $2.5 per barrel instead of the approximate costs of $1.5 per barrel for long haul crude been the average over the last years. INTERTANKO is not implying that the EU rules will induce immediate shortages of tonnage. It is, however, of interest to note that US imports a large amount of crude oils which, under the proposed EU definition, might be considered “heavy crude oils”. These are all Venezuelan crudes, some from West Africa and some from the Arabian Golf. If the EU goes ahead with current proposals, all these oils would need to be transported in and out of the EU by double hull tankers only. This could result in shortage of adequate tonnage supply either in US or Europe or other parts of the world. We are prepared to work with the United States Government to ensure its concerns are addressed both internationally and domestically. INTERTANKO believes very strongly that only through all parties working together can we truly achieve higher levels of marine safety and environmental protection. Thank you again for the invitation to be here today and I would be happy to answer any questions you may have.
Mr. Robert Cowen
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Mr. Joe Cox
Prepared Statement of Mr. Joseph J. Cox President & CEO Chamber of Shipping of America Mr. Chairman, we appreciate the opportunity to testify before you today on the subject of double hull phase out dates and the potential effect of recent decisions by the European Union. The Chamber of Shipping of America (CSA) is an organization that represents companies that own, operate or charter commercial vessels. We were founded over eighty years ago and are involved in domestic and international issue affecting our members. Early in December, we attended the Maritime Security Conference at the International Maritime Organization (IMO) that deliberated on and adopted amendments to the Safety of Life at Sea Convention. Those amendments dealt with the vital issue of security in the maritime industry. The resulting requirements that must be met by the ship owning community are comprehensive and the cost will be totally borne by the ship owner. During the year it took to develop those requirements, CSA participated in numerous domestic deliberations with the Coast Guard and were members of the U.S. delegation to the three preparatory meetings held in London. We mention the conference because the main topic of discussion for many other nations' representatives at the conference was the intended actions of the European community in response to the "Prestige" incident. The "Prestige" is a single hull tanker that broke in two off the coast of Spain in November and caused a major spill. The U.S. delegation was focused on the security deliberations and they did a good job of achieving all U.S. objectives. One major point very actively debated on security was the rights of sovereign nations to control vessels entering their waters. During the conference, a working group was sent out a number of times to draft language allowing nations to take certain steps for security. The working group was very careful to allow security controls yet not violate traditional law of the sea. From the U.S. bench, we saw an incongruous situation where some of the nations at IMO were taking definitive positions on rights of ships regarding security while these same nations were taking actions against ships based on environmental concerns that went beyond what were considered prudent for security. These actions affected single hull tankers. In explanation of the incongruity of the circumstance, we should discuss briefly the background of vessel control and why double hulls and the phase out of single hulls is with us today. BACKGROUND Under well-established international maritime law, it is recognized that any sovereign nation has the right to control vessels entering its maritime jurisdiction. A nation may require an entering vessel to meet any requirements it determines prudent. The corresponding right of the vessel is to not enter the waters of a nation that has requirements it does not agree with or is unable to meet. The role of international treaties is to provide a set of universal requirements that nations can agree. Once agreed, a nation enforces those international requirements on vessels entering its waters although it retains the right as a sovereign nation to require additional measures if it sees fit to do so. This is not an optimum situation for ship owners and we usually object to a nation seeking additional requirements unilaterally. We strongly urge all nations to seek additional requirements in the international fora such as the IMO. When the "Exxon Valdez" ran aground in 1989, she was one of the newest U. S.-flag ships and was built to meet the international requirements for tankers at the time which included segregated ballast (SBT). SBT was placed into the Maritime Pollution Prevention Convention (MARPOL) in 1978 and required a certain percentage of the tanks to be for the carriage of ballast only. These non-cargo carrying tanks were also to be in locations along the hull that provided a degree of protection against collision. The requirements addressed the operational discharge of ballast water that contained oil residue and, to a degree, the threat of collision damage to a cargo tank. Existing tankers were given a short period of time to comply with requirements for dedicated clean ballast tanks or crude oil washing systems. We did not use the term "phase out" at the time but the effect of the coverage of existing tankers in this manner was to phase out the existing tanker and replace it with a more environmentally protective tanker albeit one with the same external hull. After substantial debate on the spill and the causes, Congress wrote OPA 90. Among other requirements, it included one that all tankers calling into U.S. maritime jurisdiction must be double hulled. Included in that debate was much discussion about alternatives to double hulls. While the door was left open for research, OPA 90 did not recognize any alternatives. Once again after much debate, the Congress agreed that the changeover to double hull tankers was to be accelerated by legislatively phasing out older, single hull tankers. A very deliberate approach was crafted based on age and size. The U.S. took these actions as a sovereign nation and there is no contention that the U.S. acted outside traditional maritime law, however, because the U.S. is such a large market for tankers, no international owner would consider building a tanker that did not meet the new U.S. requirement. The Coast Guard soon took the issue to the IMO and asked them to place a double hull requirement into MARPOL. After a relatively short period of review, the IMO amended MARPOL to require double hulls on tankers. A measure was also adopted that would limit the age of existing tankers although the age at which they would be phased out was conservative relative to OPA, i.e. the dates of phase out were longer than the dates contained in OPA 90. This situation, where some tankers could trade to the U.S. and, when phased out of our trade, could remain in the rest of the world's markets, was static until the late 1990's. On December 12, 1999 a vessel called the "Erika" sank and caused a very damaging spill on the coast of France. It was noted in the European press that the "Erika" could not trade into the U. S. due to OPA 90 phase out dates. The subsequent move by the European community was to ask the IMO to revise MARPOL and accelerate the phase out date of existing single hull tankers. Once again, the IMO started a discussion on amending MARPOL. The result is a new schedule that is a sliding scale much like OPA 90 although the new schedule still allows tankers to have older phase out dates than those contained in OPA 90. In the later years of effectiveness for the new MARPOL changes, a tanker is allowed to trade up to 26 years of age. These changes to MARPOL came into force on September 1 of 2002 or just four months ago. Regrettably, another incident in European waters occurred this past November and was the subject of the discussion at the conference we refer to above. The "Prestige" sank after breaking in two off the coast of Spain. Once again, there was a call for action both in the European press and among representatives of the European Union. This incident, however, highlights a number if issues. While we are not privy to technical details and believe the cause or causes are still under review, we can comment on several steps taken by authorities that we believe are unacceptable. The master of the "Prestige" knew he had a problem and requested permission to come into sheltered waters. That permission was denied and the ship was then at the mercy of her own devices in a heavy weather situation. When the ship subsequently sank, with no loss of life, the master was then taken into custody and placed in prison. Two nations, France and Spain then took steps to prevent single hull tankers not only from entering their waters but also from being within 200 miles of their coasts. We saw press coverage in December of tankers being escorted by naval vessels out of the 200 mile zone. Mr. Chairman, it was a singularly interesting moment to be at IMO debating the rights of sovereign nations to take steps regarding security and have actions being taken for environmental reasons that were in excess of those being debated for security measures. The "Prestige" was not destined for a Spanish port; she was in innocent passage, so we believe the action taken violates international law. The topic of discussion among many at the IMO meeting involved phase out dates and the fact that the "Prestige", like the "Erika" before her, could not enter U.S. waters. Several persons in authority positions in the European community were calling for a phase out of tankers as a European Union action. EUROPEAN PHASE OUT DECISION On December 20, the European Commission announced new measures to "protect our coasts". The steps announced, which have to be adopted by the European Union Council and Parliament, include not allowing single hull tankers to carry heavy fuel oil in European waters, phasing out single hull tankers to an accelerated schedule from the MARPOL schedule, and a special inspection program for those single hull tankers not yet affected by the phase out. There are several points about this action: There is no logical connection between the structural failure of the "Prestige" (or the "Erika") and the debate about single/double hulls, nor any suggestion that a double hull would have made any difference, The EU program to accelerate the phase out dates does not include an analysis of the practicability in terms of shipbuilding and ship recycling capacity, The EU is damaging the role and objectives of the IMO, the same organization that wrote the new phase out schedule just come into force at the request of the EU, The first step taken by authorities after the incident was to criminalize the incident, The denial of a refuge for the tanker when she was in trouble is not mentioned nor is a review of the policy mentioned. EFFECT ON TANKERS CALLING AT U.S. PORTS The EU proposal sets a 23-year age date for phase out. That is the same as OPA. The EU proposal does not allow any additional time for lightering or calls at offshore terminals; OPA 90 does. OPA 90 allows single hull tankers older than 23 years to offload at a deepwater port or to lighter in designated lightering zones more than sixty miles off shore. The controlling phase out dates for these tankers are the new dates contained in MARPOL that came into effect in September. The maximum age in MARPOL is 26 years although the phase out allows some older tonnage to continue following a sliding scale. We considered all tankers older than 23 years. We are indebted to Poten and Partners, a firm that provides analysis and data to the industry, for the basic data on numbers of tankers, sizes and date of build. There are 1637 tankers over 50K dwt that serve world trade. Of those, 168 are over 23 years old. That is the potential number that would be permitted to call at our offshore terminal or be involved in lightering, however we really cannot predict what can happen in the market place and using the total number of 168 would be highly misleading. Many of the tankers are not of a size appropriate to use in the Gulf of Mexico. If they are currently in the European market, they would go elsewhere than the U.S. We can assume that not all these tankers are calling at European ports or what portion of their voyages over a time period have them calling into Europe. A number are involved in trades now that are totally outside Europe and the U.S. While we cannot give a firm number of tankers displaced into which markets, we can predict with a degree of certainty that the EU proposal will tighten up the market for double hull tankers and there will probably be a rise in rates across the board. At this point, we should mention that 834 of the tankers are double hull and another 161 are double bottom or double side tankers. Single hull tankers make up less than forty percent of the tanker fleet today and the number continues to shrink. OPA 90 OPA 90 was a well thought out piece of legislation that balanced risk management and commercial impacts. Industry has planned capitol investment to comply with the OPA 90 phase out regime. While the actions of the EU affecting these few tankers may deserve review, we do not believe that a wholesale look at OPA 90 is warranted. If the few tankers described above are a concern, they can be dealt with as a separate legislative issue from the phase out that is taking place predictably and as planned. MAINTENANCE A discussion of phase out based on age does not include the most important issue of any ship, i.e. maintenance. Age is a factor although a greater one is the maintenance of the ship. For many years, the Coast Guard has recognized the need for port state control inspections to ensure that ships calling into the U.S. meet the requirements of the safety and environmental protection treaties. These inspections are more critical than a one-dimensional look at a paradigm such as age. A concern recently voiced among the CSA membership is the continuance of the level of inspections by the Coast Guard. We recognize the Coast Guard is moving to a new department with security as a focus. We do not want to experience a lessening of the degree of oversight of the industry when the move takes place. The continuance of the high quality inspections should continue to serve us well and we support continuing the Coast Guard's budget for safety/environmental compliance inspections. OTHER ISSUES The invitation to testify asked us to cover other issues. We have two: terrorism insurance and security/safety documents. Insurance is a major concern. Currently, our protection and indemnity insurance does not cover acts of terrorism. This was a theoretical concern until the "Limburg" was attacked. We have worked on this issue for a time now and our concerns have not lessened. The main point is one of pollution. Whether double hull or not, a vessel is strictly liable for an oil spill. If a spill is caused by a terrorist incident, the vessel is strictly liable and insurance is not available. Arguably, the pollution fund could be available although the determination is made after the fact and we believe that the decision about liability should not wait for oil on the water. We are working closely with the Coast Guard and others on this issue and would like to brief your staff on the issue. Any assistance your committee could provide is deeply appreciated. The issue of our documentation on security/safety is one of confidentiality. Many of the CSA members will dovetail their vessel plans for security with the existing safety management plans. The safety plan was used as a paradigm for the security plan and each contains self-audits and management follow up. Our intention is to have these plans and documents as one the company can share with the Coast Guard and other government agencies with a reason to review them and limit the availability to others. At the conference, we were asked to meet with other nations' representatives to ensure the international language permitted the confluence of the two plans. We were successful and note the Coast Guard has recognized this in the Notice of Meetings they published on December 31, 2002. Mr. Chairman, we appreciate the opportunity to testify before your committee today and would be pleased to answer any questions.
Mr. G. William Frick
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Mr. David Sandalow
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