[Federal Register Volume 59, Number 126 (Friday, July 1, 1994)]
[Rules and Regulations]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16034]
[[Page Unknown]]
[Federal Register: July 1, 1994]
_______________________________________________________________________
Part VII
Department of Transportation
_______________________________________________________________________
Coast Guard
_______________________________________________________________________
33 CFR Parts 4, 130, et al.
Financial Responsibility for Water Pollution (Vessels); Final Rule
DEPARTMENT OF TRANSPORTATION
Coast Guard
33 CFR Parts 4, 130, 131, 132, 137, and 138
[CGD 91-005]
RIN 2115-AD76
Financial Responsibility for Water Pollution (Vessels)
AGENCY: Coast Guard, DOT.
ACTION: Interim rule with request for comments.
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SUMMARY: The Coast Guard is promulgating interim regulations to
implement the provisions concerning financial responsibility for
vessels under the Oil Pollution Act of 1990 and the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended
(Acts). These provisions require owners and operators of vessels (with
certain exceptions) to establish and maintain evidence of insurance or
other evidence of financial responsibility sufficient to meet their
potential liability under the Acts for discharges or threatened
discharges of oil or hazardous substances. The regulations are
administrative in nature and concern procedures for evidencing
financial responsibility.
DATES: Effective Date. This rule is effective on July 1, 1994.
Comment Closing Date. Comments must be received on or before
September 29, 1994.
Implementation Date. The Coast Guard will issue new Certificates of
Financial Responsibility under this rule beginning December 28, 1994,
following the implementation schedule described in this preamble.
ADDRESSES: Comments may be mailed to the Executive Secretary, Marine
Safety Council (G-LRA/3406) (CGD 91-005), U.S. Coast Guard
Headquarters, 2100 Second Street SW., Washington, DC 20593-0001, or may
be delivered to room 3406 at the same address between 8 a.m. and 3
p.m., Monday through Friday, except Federal holidays. The telephone
number is (202) 267-1477.
The Executive Secretary maintains the public docket for this
rulemaking. Comments will become part of this docket and will be
available for inspection or copying at room 3406, U.S. Coast Guard
Headquarters, between 8 a.m. and 3 p.m., Monday through Friday, except
Federal holidays. Unless otherwise indicated, documents referred to in
this preamble also are available in this docket.
FOR FURTHER INFORMATION CONTACT: Mr. Robert M. Skall, (703) 235-4704,
or Mr. Robert S. Horowitz, (703) 235-4792, National Pollution Funds
Center. Procedural questions may be directed to Mr. Richard Castellano
at (703) 235-4810.
SUPPLEMENTARY INFORMATION:
Request for Comments
The Coast Guard encourages interested persons to participate in
this rulemaking by submitting written comments on the implementation
schedule as well as other changes to the NPRM. Commenters are requested
not to resubmit or restate comments already filed to the docket, as
those comments have been considered in promulgating this rule. Persons
submitting comments should include their names and addresses, identify
this rulemaking (CGD 91-005) and the specific section of this rule to
which each comment applies, and give the reason for each comment.
Please submit two copies of all comments and attachments in an unbound
format, no larger than 8\1/2\ by 11 inches, suitable for copying and
electronic filing. Persons wanting acknowledgment of receipt of
comments should enclose stamped, self-addressed postcards or envelopes.
The Coast Guard will consider all comments received during the
comment period. It may change this rule in view of the comments.
The Coast Guard plans no public hearing. Persons may request a
public hearing by writing to the Marine Safety Council at the address
under ADDRESSES. The request should include the reasons why a hearing
would be beneficial. If it determines that the opportunity for oral
presentations will aid this rulemaking, the Coast Guard will hold a
public hearing at a time and place announced by a later notice in the
Federal Register.
Drafting Information
The principal persons involved in drafting this document are Mr.
Robert M. Skall, Project Manager, and Mr. Robert S. Horowitz, Project
Counsel, National Pollution Funds Center.
Regulatory Information
This interim rule is being made effective on the date of
publication for the reasons given in the ``Implementation Schedule''
section of this preamble. Therefore, the Coast Guard for good cause
finds, under 5 U.S.C. 553(d)(3), that this rule should be made
effective in less than 30 days after publication. An interim, rather
than a final, rule is being issued to enable the public to comment on
the changes that have been made to the notice of proposed rulemaking
(NPRM).
Regulatory History
On September 26, 1991, the Coast Guard published an NPRM titled
``Financial Responsibility for Water Pollution (Vessels)'' in the
Federal Register (56 FR 49006). The Coast Guard received over 300
letters commenting on this proposal. On July 21, 1993, the Coast Guard
published a notice of availability of a Preliminary Regulatory Impact
Analysis (PRIA) in the Federal Register (58 FR 38994). The Coast Guard
received over 60 letters commenting on this PRIA.
Several of the commenters requested a public hearing. Extensive
comments were provided to the public docket, both concerning the NPRM
and the PRIA, during this extended comment period. In addition, on
November 9, 1991, the House Subcommittee on Coast Guard and Navigation
of the House Committee on Merchant Marine and Fisheries held a
Congressional hearing concerning the substance of the NPRM.
Certificates of Financial Responsibility Under the Oil Pollution Act:
Hearing Before the Subcommittee on Coast Guard and Navigation of the
House Committee on Merchant Marine and Fisheries, 102d Cong., 1st Sess.
(1991). Witnesses' oral and written statements at this hearing are very
similar to comments supplied to this rulemaking docket. The Coast Guard
determined that a public hearing would not further illuminate the
detailed comments provided to the docket or otherwise facilitate
development of the rule. Accordingly, a public hearing was not held by
the Coast Guard.
The Coast Guard also received about eight letters concerning this
rulemaking in response to a request for comments to the regulatory
review docket associated with former President Bush's regulations
moratorium and review (Coast Guard Docket No. CGD 92-005 and DOT Docket
No. 92-1). These comments sound the same themes as the comments to this
docket (CGD 91-005). This preamble, the PRIA and the final RIA that
accompanies this rule address the issues raised by these comments.
Background and Purpose
On August 18, 1990, the President signed into law the Oil Pollution
Act of 1990 (Pub. L. 101-380; 33 U.S.C. 2701 et seq.) (OPA 90). Under
Federal law before that date, several statutes dealt with the issue of
oil spill liability and compensation. Each was different and narrow in
scope.
To remedy this situation, OPA 90 repealed or superseded certain oil
spill liability provisions under the Federal Water Pollution Control
Act (33 U.S.C. 1321) (FWPCA), title III of the Outer Continental Shelf
Lands Act Amendments of 1978 (43 U.S.C. 1814) (OCSLAA), the Trans-
Alaska Pipeline Authorization Act (43 U.S.C. 1653) (TAPAA), and the
Deepwater Port Act of 1974 (33 U.S.C. 1517) (DPA). The financial
responsibility provisions of those acts (i.e., the provisions requiring
vessel owners and operators to maintain evidence of financial
responsibility sufficient to meet their potential liability under each
of those Acts) were replaced by a single financial responsibility
regime under section 1016 of OPA 90 (33 U.S.C. 2716). This new
financial responsibility regime is keyed to the broader and higher
limits of liability under OPA 90.
In addition to OPA 90, which is limited to all types of oil, the
Comprehensive Environmental Response, Compensation, and Liability Act,
as amended (42 U.S.C. 9601 et seq.) (CERCLA or Superfund) also concerns
pollution liability and compensation. CERCLA establishes a financial
responsibility regime for hazardous substances other than oil. The
Conference Report on OPA 90 (H. Rep. No. 653, 101st Cong., 2d Sess. 120
(1990) (Conference Report) states:
To avoid undue administrative burdens, the regulations for
financial responsibility for vessels should be consolidated,
wherever possible, with those under other Federal statutes. In this
manner, only one certificate would be required for vessels to meet
the requirements for financial responsibility for the statutes
consolidated by this Act, and other pollution laws such as the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980.
This rulemaking, therefore, consolidates financial responsibility
requirements for vessels under both OPA 90 and CERCLA. It allows the
issuance of a single, unified Certificate of Financial Responsibility
(COFR or Certificate) for vessels, replacing the separate certificates
and financial responsibility regimes under the FWPCA, OCSLAA, TAPAA,
and DPA. This new, unified COFR and financial responsibility regime
(under new part 138) also make it unnecessary for a separate
Certificate and regime under CERCLA. In effect, this rule alleviates
the need for five separate sets of regulations and certificates, as
well as the accompanying paperwork burden on government and industry.
Discussion of Comments and Changes
General Issues
This rulemaking proceeding has been contentious due to a number of
factors, most of which are not directly germane to the specifics of the
rule itself. Many in the maritime industry opposed title I of OPA 90 as
enacted, preferring instead the international liability and
compensation scheme for oil, namely the International Convention on
Civil Liability for Oil Pollution Damage of 1969 (1969 CLC) and its
companion International Convention on the Establishment of an
International Fund for Compensation for Oil Pollution Damage (1971 Fund
Convention). (These Conventions may be replaced by 1992 Protocols,
which incorporate amendments made in 1984 Protocols.) Under the 1969
CLC, insurers such as the Protection and Indemnity Clubs (P&I Clubs)
provide financial responsibility guaranties on behalf of their
shipowner members. These guaranties subject the Clubs to direct action
by all claimants and do not allow the use of policy defenses. The lower
shipowner limits of liability under the 1969 CLC are practically
unbreachable compared to OPA 90. Although this is not an issue directly
related to this rulemaking, it has, nevertheless, been the reason why
this rulemaking has been drawn out and contentious. In short, this
rulemaking has become the victim of the non-rulemaking-related
opposition to OPA 90.
The U.S. Congress, after the EXXON VALDEZ catastrophe, essentially
adopted the 1969 CLC's financial responsibility scheme, but rejected
its unbreachable limit of liability scheme, and instead enacted OPA 90.
Thus, although OPA 90's financial responsibility concept and mechanism
is very similar to that of the 1969 CLC, OPA 90 potentially exposes
owners and operators to far greater liabilities for removal costs and
damages from oil spills. OPA 90's philosophy is that, in general, the
spiller--not U.S. consumers and taxpayers--should bear the lion's share
of costs and damages.
In addition, under OPA 90, owners and operators remain subject to
potential unlimited liabilities under State laws as well. Adoption of
the 1969 CLC would have required preemption of State laws. These issues
are not matters within the Coast Guard's discretion to affect.
Nevertheless, these issues have impeded drastically the course of this
rulemaking.
Oceangoing shipowners and their wholly owned insurers, the P&I
Clubs that are members of the International Group of P&I Clubs,
objected to OPA 90's liability and compensation scheme before
enactment, after enactment, and in several comments to this rulemaking
docket. These commenters have emerged OPA 90's liability provisions
with financial responsibility issues, complicating this rulemaking
proceeding. The most serious commingling of the issues is the
unsubstantiated allegation by the P&I Clubs and their principal
reinsurer, Lloyd's of London, that, somehow, despite OPA 90's clear
statement to the contrary, the American court system would make
insurers serving as OPA 90 guarantors subject to unlimited liability.
Although it is true that no insurer can survive a legal system that
imposes unlimited liability on insurers, it is equally true that
Congress always has been well aware of that fact and paid sufficient
attention to that matter when it drafted OPA 90's provisions. No one
disputes the fact that vessel owners and operators are subject to
potential unlimited liability under OPA 90 (for example, when there is
gross negligence), but that fact should not be confused with the
alleged potential for guarantors to be liable without limit because of
this rule. There simply is no support in OPA 90 or in law for the
insurers' assertions.
The P&I Clubs, in particular, by stating early on that under no
circumstances would they open themselves up to unlimited liability by
continuing to provide 1969 CLC-type insurance guaranties to the Coast
Guard, placed an understandable fear in many segments of the maritime
industry. This fear was that, because the P&I Clubs have a virtual
monopoly on relatively inexpensive marine pollution liability
insurance, no vessel could demonstrate acceptable evidence of financial
responsibility without the P&I Clubs. The obvious consequence was said
to be that, if the Coast Guard adopted the NPRM, neither oil nor other
commodities would move in United States trade, thereby severely
disrupting the United States and global economies. In later comments to
the docket, the P&I Clubs confirmed that their shipowner boards of
directors would not permit the P&I Clubs to soften their stand. Thus,
the main focus of the debate has been whether the P&I Clubs would, in
fact, not provide these guaranties, and on the assumption that they
would not, whether there are other options (obtainable commercial
insurance or bonds) available to avoid this alleged economic
disruption. In fact, no commenters objected to the time-tested
mechanics of the proposed rule, which mechanics have been in place and
worked well for 23 years in the United States, and since 1975 in the
rest of the world under the 1969 CLC.
In order to explore all possible options, the Coast Guard has
examined all comments carefully, and looked at the suggested
alternatives to the NPRM. The PRIA, made available on July 21, 1993,
and open for public comment, refined the issues and elicited several
amplifying comments.
All issues now have been aired, and the Coast Guard has decided to
adopt the essence of the NPRM, subject to technical changes adopting
many of the commenters' suggestions and, hopefully, alleviating the
comments that P&I Clubs and other guarantors could somehow become
subject to unlimited liability. These changes are identified in the
discussion that follows. The Coast Guard has decided on this course of
action because it believes that the central objections of the
commenters to the rule are objections to OPA 90 itself (for example,
potential unlimited liability of vessel owners and operators), and, if
necessary, should be dealt with by the Congress and not the Coast
Guard. The central issue germane to this rulemaking is whether owners
and operators will be able to obtain financial responsibility
guaranties if the P&I Clubs, as they have declared, do not provide
guaranties of insurance. From the letters submitted to the regulatory
docket, the Coast Guard concludes that even if the P&I Clubs do not
provide these guaranties, alternative financial responsibility sources
will be available. These include commercial insurance entities and
surety bond companies, as well as the potential greater use of self-
insurance and financial guaranties. These alternatives are described
more fully in the final regulatory impact analysis (RIA) that
accompanies this rule, a summary of which appears under the heading
``Regulatory Impact Analysis'' in this preamble. The Coast Guard has
determined that the approach in the NPRM best fulfills the intent of
Congress to assure prompt and certain compensation by the polluter to
victims of oil spills and hazardous substance releases. Other suggested
alternatives do not satisfy that intent. Among these alternatives are:
treating P&I Club membership as an asset for self-insurance purposes;
treating P&I Club membership, with a provision making the Oil Spill
Liability Trust Fund a ``loss-payee,'' as a form of self-insurance; and
adoption through legislation of a ``Mandatory Excess Insurance
Facility.'' These alternatives are discussed in detail in the final RIA
accompanying this rule. The alternatives have not been adopted. That
was the main issue in this proceeding. The other issues primarily
concern specific technical aspects of each section of the rules.
Part and Section Numbers
The NPRM proposed that preexisting part 130 be replaced by a
completely new part 130, that parts 131 and 132 be removed, and that
subpart D of part 137 be removed and reserved. In order to phase in the
new rules with the least disruption and cost to the maritime industry,
an orderly compliance schedule is being adopted. This schedule allows
existing Certificates for non-tank vessels to be used until their
regularly scheduled expiration dates, as described in the section of
this preamble labeled, ``Implementation Schedule.'' Because of this
phased approach, preexisting parts 130, 131, and 132, and subpart D of
part 137, must temporarily remain effective after the effective date of
this rule. Accordingly, a new part 138 has been designated for the rule
that will replace preexisting parts 130, 131, and 132, and subpart D of
part 137. Conforming amendments have been made to 33 CFR parts 130,
131, and 132, and subpart D of part 137. The following table shows the
location in the new part 138 of the corresponding sections of the NPRM:
------------------------------------------------------------------------
NPRM Part 130 Part 138
------------------------------------------------------------------------
130.1(b)........................... 138.10.
130.1(a); 130.2(b) (``vessel'').... 138.12.
138.15 [new].
130.2.............................. 138.20.
130.3.............................. 138.30.
130.4.............................. 138.40.
130.5.............................. 138.50.
130.6.............................. 138.60.
130.1(c)........................... 138.65.
130.7.............................. 138.70.
130.8.............................. 138.80.
130.9.............................. 138.90.
130.10............................. 138.100.
130.11............................. 138.110.
130.12............................. 138.120.
130.13............................. 138.130.
130.14............................. 138.140.
130.15............................. 138.150.
Appendix A......................... Appendix A.
Appendix B......................... Appendix B.
Appendix C......................... Appendix C.
Appendix D......................... Appendix D.
Appendix E......................... Appendix E.
Appendix F......................... Appendix F.
Appendix G......................... 138.80(f).
------------------------------------------------------------------------
Implementation Schedule
Section 1016(h) of OPA 90 (33 U.S.C. 2716(h)) states that financial
responsibility regulations under acts repealed or superseded by OPA 90
remain in effect until superseded by new regulations issued under OPA
90. Therefore, the financial responsibility requirements in 33 CFR part
130 (FWPCA), 33 CFR part 131 (TAPAA), 33 CFR part 132 (OCSLAA), and 33
CFR part 137, subpart D (DPA) will remain in effect with respect to
individual vessels in the manner prescribed by section 138.15 of this
rule. The intent of the implementation schedule (which could also be
termed a compliance schedule) is to allow for an orderly transition to
part 138 by allowing, as some commenters recommended, COFRs issued
under the preexisting regulations to remain valid until their
expiration dates. The Coast Guard is adopting that comment, but only
with respect to non-tank vessels. (As explained below, tank vessels
will be required to demonstrate financial responsibility under the new
part 138 on a more expedited schedule.) This phased-in transition will
also enable the Coast Guard to issue new Certificates in an orderly
manner utilizing existing resources. Rather than attempting to issue
approximately 23,000 new COFRs by a single, mandatory date, the Coast
Guard expects the future Certificate renewal cycle, applicable to
Certificates issued under this rule, to result in the renewal of about
one-third that number each year. No new Coast Guard resources would be
required for that routine renewal cycle.
The existing operators of non-tank vessels which presently are
subject to the regulations issued under one or more of the preexisting
CFR parts may continue to comply with those preexisting regulations
for, in some cases, three and one half years after publication of this
rule in the Federal Register, depending upon the expiration dates of
their preexisting COFRs. These operators also have the option of
choosing to comply with this rule soon after its initial implementation
date, which is 180 days after the publication date, i.e., ``effective
date''.
On the other hand, self-propelled tank vessels, followed by non-
self-propelled tank vessels, will be required to comply with this rule
sooner than non-tank vessels because of the generally greater danger of
large and possibly catastrophic spills from tank vessels. Self-
propelled tank vessels will be required to submit, not later than 180
days after publication of this rule in the Federal Register, at least
the evidence of financial responsibility required by this rule (new
application forms will be required later). Non-self-propelled tank
vessels (i.e., tank barges) will be required to submit, not later than
one year after publication of this rule in the Federal Register,
application forms as well as evidence of financial responsibility
required by this rule.
Although this phased transition to the new rule may appear
complicated it is designed to impose the least burdensome requirements
on the regulated community while balancing the need of potential
claimants to be assured that the vessels posing the greatest pollution
threat, tank vessels, are in compliance within a reasonable time. It
also accounts for the administrative needs of the Coast Guard. A
reading of the actual regulation (Sec. 138.15) is encouraged to ensure
a full understanding of the compliance deadlines.
There are three dates germane to this implementation schedule. The
first is the ``effective date''. The other two can be termed the
``initial implementation date'' and the ``final implementation date''.
The effective date, as already discussed, is the date of publication in
the Federal Register. The initial implementation date is the date 180
days after the effective date. The final implementation date is the
date three years plus 180 days after the effective date. The final
implementation date is the date by which every vessel subject to OPA
90/CERCLA financial responsibility provisions is required to have an
OPA 90/CERCLA COFR issued under this new part 138.
Effective Date: The effective date of this rule is the date of its
publication in the Federal Register (see DATES at the beginning of this
preamble), for the following reasons:
(1) The phased implementation schedule imposes both a benefit and a
condition on current Certificate holders. The benefit is the ability to
use, temporarily, an existing Certificate. The condition is that the
Coast Guard will not accept the surrender (for the purpose of obtaining
a new Certificate with an extended expiration date) of a Certificate
during the 179 day period beginning on the effective date (publication
date) of this rule. Otherwise, Certificate holders simply could
surrender their existing Certificates and request the Coast Guard to
issue new Certificates with new three-year expiration dates. Were the
Coast Guard to allow this, the Coast Guard would be encouraging vessel
owners and operators to unreasonably delay compliance with the law and
this new rule. The likely result would be that thousands of COFRs would
be surrendered with requests for reissuance with new three-year
expiration dates, as would otherwise be permitted by the preexisting
rules. This would be an intolerable situation--one not contemplated by
Congress, and wholly inconsistent with the intent of the orderly
implementation schedule now being adopted.
(2) A second reason for the immediate effective date is to enable
vessel owners and operators that either are required, or wish, to carry
new Certificates under the new rule on or soon after the initial
implementation date, to file their applications as soon as possible.
For example, operators who already purchase OPA 90/CERCA liability
insurance and whose insurers' agree to issue the insurance guaranty
appended to this rule, may wish to apply for OPA 90/CERCLA COFRs on or
shortly after the effective date of this rule. The same applies to
operators who can obtain OPA 90/CERCLA surety bond or financial
guaranties, or who can self-insure.
(3) Although this rule is being made effective immediately, no
vessel is required to possess a new OPA 90/CERCLA COFR (part 138 COFR)
until at least the initial implementation date (180 days after the
effective date). Therefore, there is no burden placed upon any vessel
owner or operator by making the effective date immediate. For these
reasons, the Coast Guard has determined under 5 U.S.C. 553(d)(3) that
good cause exists for making the rule effective in less than 30 days
after publication in the Federal Register.
Initial and Final Implementation Dates: New Sec. 138.15 (and the
conforming new Secs. 130.0, 131.0, 132.0, and 137.300 in the
preexisting regulations) sets forth the effects of these dates on all
vessels, including vessels having existing COFRs issued under the
preexisting regulations, i.e., issued before the initial implementation
date of this new rule. The discussion in this preamble under
Sec. 138.15 explains these requirements.
Upon the final implementation date, 33 CFR parts 130, 131, and 132
and subpart D of part 137 (which concern vessel financial
responsibility under the FWPCA, TAPAA, OCSLAA, and DPA for water
pollution) will be removed. Title 33 CFR part 138 will then be the sole
rule governing vessel financial responsibility for oil spill incidents
and hazardous substance releases. ``Incidents'' and ``releases'' are
statutory terms with legal significance under OPA 90 and CERCLA,
respectively.
Mobile Offshore Drilling Units (MODUs)
Requirements for OPA 90 COFRs for offshore facilities per se do not
fall under the jurisdiction of the U.S. Coast Guard and, therefore, are
not included in this rule. However, COFRs issued to vessels which are
MODUs under this rule will cover not only the general (i.e., non-tank
vessel) liability of MODUs (section 1004(a)(2) of OPA 90) but their
tank vessel liability as well (section 1004(b)(1) of OPA 90).
Specifically, MODUs, when being used as offshore facilities, are deemed
by OPA 90 to be tank vessels with respect to discharges of oil on or
above the surface of the water. This rule, therefore, concerns only
vessel financial responsibility, not offshore facility financial
responsibility. Financial responsibility requirements for offshore
facilities under OPA 90 are administered by the Department of
Interior's Minerals Management Service.
Some commenters observed that the delineation of responsibility
between a MODU operator and an offshore leaseholder should be clarified
by these rules. The Coast Guard believes there are two distinct issues
here: (1) Demonstration of financial responsibility, and (2) liability
in the event of an oil discharge or substantial threat of a discharge.
(Clarification of what constitutes a MODU is accomplished in
Sec. 138.12(b) and in the definition of ``self-elevating lift vessel''.
See discussion associated with Secs. 138.12 and 138.20.) As to
financial responsibility, since a MODU, when operating as an offshore
facility, has the potential for liability as a ``tank vessel'', a MODU
must demonstrate financial responsibility that would apply to both non-
tank vessel and tank vessel situations. All of the guaranty forms
provide for such all-purpose coverage.
It could be argued that questions of allocating liability lie
outside the scope of this rulemaking respecting financial
responsibility. However, the Coast Guard is aware of the importance to
responsible parties and guarantors of assessing liability exposure in
making decisions relating to the provision of coverage, and hence
financial responsibility, for that exposure. Consequently, while
recognizing that the courts will determine matters of liability under
the provisions of OPA 90, the Coast Guard believes the following
legislative history is pertinent to the determination of Congressional
intent as to the scope of liability respecting MODUs operating as
offshore facilities.
The enactment of title I of OPA 90 represented the culmination of
the work of many Congresses on comprehensive oil pollution liability
and compensation at the federal level. The text of subsection (b) of
section 1004 of OPA 90, 33 U.S.C. 2704(b), which concerns the
delineation of MODU owner and operator and lessee or permittee
liability, derived from related provisions in bills considered by prior
Congresses.
The first bills concerning comprehensive oil spill liability and
compensation in which this delineation was made were H.R. 2222 and
2368, introduced and considered by the 98th Congress. Chairman Studds
of the House Coast Guard and Navigation Subcommittee of the House
Merchant Marine and Fisheries Committee, at a hearing of that
Subcommittee relating to those bills and H.R. 2115 held on April 20,
1983, called attention to the addition of text relating to that
delineation:
Mr. Biaggi has introduced H.R. 2115, which is identical to the
bill approved by our committee in the last Congress.
I have introduced H.R. 2222, which incorporates the main themes
of past legislation with three significant variations. First, it
incorporates the proposed change in allocating liability between oil
contractors and lessees which was included in H.R. 5906 last year; *
* *. Oil Pollution Liability: Hearing on H.R. 2222 (H.R. 2115, H.R.
2368), before the Subcomm. on Coast Guard and Navigation of the
House Comm. on Merchant Marine and Fisheries, 98th Cong., 1st Sess.
1 (1983).
The bill referred to by Mr. Studds, H.R. 5906 (97th Cong.), as
being the one in which the related change originated, passed the House
of Representatives on December 13, 1982. 128 Cong. Rec. 30336 (1982).
That bill would have amended title III of the Outer Continental Shelf
Lands Act Amendments of 1978, the extant federal statute concerning oil
pollution liability and compensation relative to vessels and facilities
engaged in Outer Continental Shelf Lands Act activities. Mr. Studds,
speaking on behalf of H.R. 5906, informed the House that one of the
goals of that bill was:
To reapportion the liability among the parties operating on the
OCS to reflect more closely the industry practice that prevailed
prior to enactment of the OCSLAA.
* * * * *
Finally, the reapportionment of liability mandated by H.R. 5906
will allocate the risks associated with OCS development more
equitably among the participants in that development. While title
III presently imposes liability solely upon the owners and operators
of offshore facilities and vessels, H.R. 5906, as amended, will
apportion it among the holders of leases, permits, and easements
issued under the OCSLAA, as well as the owners and operators of
vessels, mobile offshore drilling units and pipelines. Id. at 30334.
In the ensuing remarks during the House's consideration of H.R.
5906, those of Mr. Breaux were of special pertinence to the particular
scope of the intended liability of the MODU owner or operator:
The current statute has resulted in Coast Guard interpretations
holding the drilling contractors solely responsible for all oil
spills and the major oil company lessees free from liability.
* * * * *
Essentially, the amendment enacts into statute the preferred
industry practice for the apportionment of liability. The general
rule, therefore, is the imposition of liability on oil company
lessee for any oil spill emanating from their lease and the oil
reservoir contained therein. * * * The Committee intends that the
point of origin of an uncontrolled flow of oil determines where an
oil pollution incident originates, and not where the oil and water
first come into contact with one another. For example, the Pemex Bay
of Campeche oil spill originated below the surface of the water.
Within this general rule, the amendment would impose liability
on the drilling contractor operating on a lease for those oil spills
originating on or above the surface of the water. Our intent in
dividing liability in this manner is to hold the contractor
responsible only for the required petroleum and other oil that is
present on the rig in order for it to conduct its operations and
which are clearly under the control of the rig owner. (Emphasis
added) Id. at 30335.
A careful examination of the legislative history of the succeeding
bills relating to comprehensive oil spill liability and compensation
has failed to disclose any expressed alteration in Congressional intent
respecting the allocation of liability for MODUs engaged in drilling
operations.
This apparent Congressional intent comports with the position
advocated by some commenters. Moreover, if the words ``on or above the
surface'' were applied literally, a result certainly unintended by
Congress could easily occur. That result would be to invite liability
considerations to take precedence over safety and environmental
protection decisions. Clearly, in this comprehensive environmental
legislation, it would be unreasonable to interpret the statute in a way
that could easily degrade safety and the environment. By recognizing
that when the source of a discharge is below the seabed, the spill is
not an above the surface spill, emergency response actions will be
predicated on the best and safest means to abate the blowout, rather
than on the means (e.g., shutting in the blowout preventer and risking
a pressure buildup that could result in a catastrophic sub-seabed well
blowout) which would shift liability without regard to safety or the
environment. If the parties involved (the leaseholder and the MODU
owner or operator) so choose, they can enter into indemnification
agreements to allocate among themselves an apportionment of liability.
The indemnification agreements cannot be used, however, to avoid
completely liability to a claimant under OPA 90.
Paperless COFRs
One commenter recommended that the Fleet Certificate concept (which
concerns non-tank barges) be expanded to cover tank barges as well, and
that no COFR or copy be required aboard any barge on inland waters. In
view of its evolving computer technology for COFR enforcement purposes,
the Coast Guard may be able to adopt that recommendation in the future.
However, the Coast Guard's computer network has not yet evolved to a
level where this suggestion can be implemented. When it becomes
possible for the Coast Guard to adopt such a system, a notice proposing
this change will be published in the Federal Register.
Applicable Amounts of Financial Responsibility
Appendices B through F are guaranty form for evidencing financial
responsibility. Each contains an ``Applicable Amount Table''. Appendix
G of the NPRM, which also contained the Applicable Amount Table, has
been moved to a new paragraph (f) of Sec. 138.80. Section 138.80(f) and
the Applicable Amount Table in each form set out the means by which
applicants and guarantors calculate the amounts of financial
responsibility required to be established and maintained under this
rule.
The amount of financial responsibility which must be established
and maintained with respect to each vessel to be covered under section
1016(a) of OPA 90 (33 U.S.C. 2716(a)) (i.e., the amount applicable to
the vessel under OPA 90) is calculated by applying the appropriate
formula specified in Sec. 138.80(f)(1) (Part I of the Applicable Amount
Table in the forms) in accordance with the type of vessel and its size
in gross tons. The formulae set out in Sec. 138.80(f)(1) and Part I are
based upon the provisions of paragraphs (a)(1) and (a)(2) of section
1004 of OPA 90 (33 U.S.C. 2704), as mandated by section 1016(a) of OPA
90.
With respect to CERCLA, the NPRM proposed that all vessels
demonstrate financial responsibility at the minimum amount of $5
million, by applying the formula specified under Part II of the Table,
as proposed. The formula was derived from the provisions of section
108(a)(1) of CERCLA. In deriving the formula for Part II as proposed,
the Coast Guard took cognizance of practical considerations of which
Congress must be deemed to have been aware when drafting CERCLA. The
term ``hazardous substances'' as defined for the purposes of CERCLA (42
U.S.C. 9601(14)) includes an almost limitless number of materials. In
addition, there are numerous methods by which any one of those
materials, especially in small amounts, may be carried as cargo aboard
vessels. At the time a CORF application for a particular vessel is
processed, and even after a COFR is issued, there is no known way for
the Coast Guard to determine that a hazardous substance is not being
carried, or will not be carried (especially in small amounts), aboard
that vessel as cargo.
Consequently, in order to assure that the statutorily required
amount of financial responsibility had been calculated and established
and would be maintained for every subject vessel, it was considered
necessary to assume that all vessels subject to the provisions of
section 108(a)(1) of CERCLA carry, or might carry, hazardous substances
as cargo. For this reason, the formula in part II of the Table as
proposed prescribed a minimum of $5,000,000 for all vessels. Comments
were encouraged regarding possible means by which a determination could
be made at the time of certification that, in fact, a particular vessel
is not carrying and will not carry hazardous substances as cargo.
Some commenters, however, object to having to demonstrate financial
responsibility at this minimum $5 million level. They assert that this
is inconsistent with CERCLA in that CERCLA recognizes that for vessels
not carrying hazardous substances as cargo, the liability limit is a
minimum of ``(500,000 (section 108(a)(1) of CERCLA requires financial
responsibility to cover the liability prescribed under section
107(a)(1), and that section in paragraph (B) establishes a minimum
liability limit of $500,000 for vessels not carrying hazardous
substances as cargo). One commenter states that if the Coast Guard can
rely upon a declaration of a vessel owner that the vessel is a non-tank
vessel, a similar declaration should be allowed for carriage of
hazardous substances as cargo. Another commenter alleges that vessels
carrying hazardous substances as cargo can only do so in accordance
with Coast Guard safety regulations, and that it is inappropriate to
assume that vessels will operate in violation of those regulations.
In adjusting this rule, the Coast Guard has adopted revisions that
balance two of CERCLA's apparently contrary mandates: (1) That the
Coast Guard certify that the required minimum amount of financial
responsibility ($5 million) is maintained by a responsible party in the
event of a release or threatened release of a hazardous substance
carried as cargo; and (2) the provision in CERCLA that vessels that do
not carry hazardous substances as cargo need demonstrate financial
responsibility only at the greater of $500,000 or $300 per gross ton.
The Coast Guard concludes that the fairest way to accommodate these two
opposing interests is by allowing the vessel operator and the provider
of financial responsibility to decide the matter between themselves.
For example, if an insurer or surety company is satisfied that its
insured or principal in fact does not and will not carry hazardous
substances as cargo, then the cost of the insurance or surety bond
guaranty with respect to CERCLA may be priced at the $500,000/$300 per
gross ton premium. The proposed and now adopted wording of the
insurance and the financial guaranty forms, as well as the new wording
of the surety bond guaranty, is such that, should a release occur and
the facts show that a vessel was carrying a hazardous substance as
cargo, the limit of the guaranty will automatically be raised to the
higher amount, i.e., the greater of $300 per gross ton or $5 million.
(The guaranty forms have also been amended to achieve a parallel result
with respect to OPA 90 financial responsibility if the vessel is in
fact a tank vessel.) This will not affect the qualifications of self-
insurers or financial guarantors who, as proposed, still must
demonstrate working capital and net worth according to the $300 per
gross ton/$5 million formula. Only by methods such as these may the
Coast Guard certify that financial responsibility requirements have
been met, whether or not hazardous substances are carried as cargo. The
Coast Guard has determined that this protection is necessary given the
peculiar nature of hazardous substance carriage, and the inability to
be assured ahead of time that no hazardous substances are being or will
be carried as cargo. Section 138.80(f)(2) (Part II of the Applicable
Amount Table in the forms) has been adjusted to reflect this decision.
The Coast Guard also notes that, with respect to carriage of
hazardous substances, this decision only affects vessels under 16,666
gross tons. Above 16,666 gross tons, at $300 per gross ton a vessel
would have to meet the $5 million minimum threshold. However, those
operators of smaller vessels who can assure their financial
responsibility providers that hazardous substances are not and will not
be carried as cargo, may obtain a cost savings by being able to
purchase guaranties of financial responsibility at the $500,000/$300
per gross ton premium level.
Section 138.80(f)(3) (Part III of the Table in the forms) is simply
the addition of the amounts of financial responsibility required by
paragraphs (f)(1) and (f)(2) of Sec. 138.80 (Parts I and II of the
Table in the forms). This sum is termed the ``total applicable
amount''. The formula is derived from the provisions of section 1004 of
OPA 90 and section 107(a) of CERCLA (as noted above) and reflects the
fact that liability stemming from one event may arise under both Acts.
In such a circumstance, and only in such a circumstance, it is
necessary that two separate and distinct amounts of financial
responsibility be available to meet equally separate and distinct
amounts of liability under the Acts. The ``total applicable amount'' is
not an aggregate amount applicable to a guarantor's liability under
just one of the Acts.
One company commented that some of its barges are unable to carry
both oil and hazardous substances at the same time, and therefore, that
it should not have to establish an amount of financial responsibility
reflecting both OPA and CERCLA with respect to such single-commodity
barges. The Coast Guard concluded, however, that it is not in a
position to issue a special tank barge COFR just for OPA 90 and a
separate tank barge COFR just for CERCLA. In the first place, the Coast
Guard could never be certain that a particular tank barge, which had
been issued only a CERCLA COFR, was not carrying oil, or vice versa. In
order to become certain that a barge's COFR matched its permissible
cargo, it would be necessary to physically detain the barge, test its
cargo and determine whether it was either an OPA 90-regulated oil or a
CERCLA-regulated hazardous substance derivative of oil, and then match
such cargo against the type of COFR being carried that particular day.
The tremendous cost, delay and burden such an enforcement system would
entail, both for the barge industry and the Coast Guard, would not
justify separate certification and enforcement procedures.
Section-by-Section Discussion
A number of drafting changes have been made to improve readability
and to specify the persons upon whom obligations are placed. These
changes are considered non-substantive and are not further explained.
Also, new sections have been added to add further clarity to the rule.
These are: Sec. 138.12 (applicability); Sec. 138.15 (implementation
schedule); and Sec. 138.65 (issuance and carriage of Certificates).
Only Sec. 138.15 contains entirely new text, reflecting the compliance
schedule adopted by this rule.
Section 138.10 Scope
This section addresses the general purpose of these regulations,
namely that they establish the procedures for establishing and
maintaining evidence of financial responsibility under OPA 90 and
CERCLA. This section is derived from proposed Sec. 130.1(b). (Proposed
Sec. 130.1(a) is new Sec. 138.12(a), and proposed Sec. 130.1(b) is new
Sec. 138.65.) Section 138.10 clarifies the proposed text by adding the
term ``demise charterer'' to the class of persons who must be covered
by the evidence of financial responsibility required under this part.
This clarification is being made because both OPA 90 and CERCLA define
an ``owner or operator'' of a vessel as including any demise charterer
of the vessel. Thus, if any vessel subject to this part simultaneously
has an owner, a demise charterer and an ``operator'' (as defined in
this part), all three of those entities automatically will be covered
by the guaranty of insurance or other evidence of financial
responsibility submitted under this part. Demise charterer, as used in
this part, is synonymous with the common parlance term ``bareboat
charterer''.
Section 130.1(d) of the NPRM, which concerned ``public vessels'',
has been deleted. New Sec. 138.12(d) provides that 33 CFR part 138 does
not apply to any public vessel. Thus, it will not be necessary for
public vessels to apply for COFRs. However, all public vessels which
are not readily identifiable as such (i.e., vessels which are not naval
war ships, Coast Guard cutters, etc.) and which are crewed by
nongovernmental personnel, are strongly encouraged to carry appropriate
government documentation indicating that the vessels are, in fact,
public vessels, i.e., vessels owned or bareboat chartered by a
government and not engaged in commerce. Such documentation, including a
copy of any bareboat charter party, will serve to avoid
misunderstandings with enforcement personnel who are not readily able
to determine whether a particular vessel, especially a vessel owned and
operated by private interests, and engaged in business which could be
construed as commercial in nature (e.g., dredging), is or is not a
public vessel.
Section 138.12 Applicability
New Sec. 138.12 has been created to state clearly the applicability
of part 138. This section is comprised of parts of proposed
Sec. 130.1(a), and of the definition of ``vessel'' from proposed
Sec. 130.2(b).
Paragraph (a)(1): In response to comments, this paragraph, which is
derived from proposed Sec. 130.1(a)(1), has been amended to make it
clear that ``vessels of any size using the waters of the exclusive
economic zone to transship or lighter oil'' means both delivering and
receiving vessels. The term ``vessel of any size'' does not include the
towing/pushing vessel (tug) that has custody of a barge transshipping
or lightering oil within the exclusive economic zone. That is, a tug of
300 gross tons or less would not be made a tank barge (i.e., would not
be made subject to the financial responsibility requirements of this
rule) just because it had custody of a transshipping or lightering
vessel.
Paragraph (a)(2): This paragraph is derived from proposed
Sec. 130.1(a)(2). The FWPCA excluded from the requirement to establish
and maintain evidence of financial responsibility, a non-self-propelled
``barge'' that does not carry oil as cargo or fuel. Section 1016(a)(1)
of OPA 90 excludes from that requirement a non-self-propelled
``vessel'' that does not carry oil as cargo or fuel. In this rule, the
Coast Guard considers OPA 90's use of the term ``non-self-propelled
vessels'' to mean non-self-propelled barges. This construction is
consistent with a similar exception in CERCLA. Therefore, in
Sec. 138.12(a)(2)(ii) of this rule, the exception refers to ``barges''
rather than ``vessels''.
Paragraph (b): This paragraph concerns MODU liability and is
derived from the proposed definition of the term, ``vessel''. Some
commenters asserted that a mobile offshore drilling unit (MODU) should
not be treated as a tank vessel when drilling. The Coast Guard cannot
adopt this suggestion as the liability ascribed to a MODU when drilling
has been fixed by Congress. Therefore, paragraph (b) of Sec. 138.12 has
been amended to make it clear that under OPA 90, when there is an ``on
or above the surface of the water'' discharge or substantial threat of
a discharge of oil from a MODU, the MODU is treated as tank vessel (for
purposes of determining the limits of liability and the identity of the
responsible party) (33 U.S.C. 2704(b)). Since a MODU has potential
liability as a tank vessel, the MODU operator must demonstrate
financial responsibility at tank vessel limits to cover the time that
the MODU is operating as an offshore facility and has a spill ``on or
above the surface of the water.''
Paragraph (c): This paragraph has been added to make it clear that
CERCLA's financial responsibility provisions and this rule apply to
self-propelled vessels which exceed 300 gross tons, even if they do not
carry hazardous substances. Congress mandated that owners, demise
charterers, and operators of all self-propelled vessels over 300 gross
tons comply with CERCLA's financial responsibility provisions, without
regard to whether or not the vessels actually carry hazardous
substances. In this connection, the following points may be indicative
of Congressional thinking: Most, if not all, self-propelled vessels
over 300 gross tons carry hazardous substances in one form or another
(e.g., ships' stores); and insurance coverage for liabilities
concerning releases of hazardous substances from brown water vessels
has never been unavailable or subject to high premiums in the United
States (viz: coverage provided by the Water Quality Insurance
Syndicate, New York, NY). Further, with respect to blue water
(oceangoing) vessels, the International Group of P&I Clubs
traditionally has provided unlimited liability coverage for releases of
hazardous substances, and still does; and P&I Club premiums for this
coverage (while not broken out from the total calls and premiums for
P&I cover) are understood to be relatively low. Accordingly, prudent
vessel operators would choose to take advantage of the available,
relatively inexpensive insurance and carry such coverage as a matter of
course. Whatever the reason for the Congressional mandate may have
been, the Coast Guard has no rulemaking flexibility where the law is
clear on its face.
Paragraph (d): This paragraph recites that 33 CFR part 138 does not
apply to public vessels.
Section 138.15 Implementation Schedule
This new section sets forth the implementation schedule for vessels
requiring COFRs under OPA 90 and CERCLA by specifying mandatory
compliance dates for categories of vessels. As discussed earlier under
``Implementation Schedule,'' this section establishes a phased
compliance schedule, based on two categories of vessels--tank vessels
(which are broken into two groups, self-propelled and non-self-
propelled), and non-tank vessels. As to the latter category, this
section, for the most part, allows vessels to operate with their
prexisting COFRs until they expire. This section also prevents vessel
owners and operators from surrendering prexisting COFRs solely for the
purpose of obtaining, under the preexisting rules, new COFRs with
extended expiration dates.
Paragraph (a): This paragraph governs the compliance schedule for
tank vessels. Paragraph (a)(1) provides that a self-propelled tank
vessel may continue to carry its preexisting COFR (or obtain one and
carry it) until December 28, 1995, so long as acceptable evidence of
financial responsibility has been submitted under the new part 138 by
December 28, 1994. A non-self-propelled tank vessel may continue to
carry its preexisting COFR (or obtain one and carry it) until July 1,
1995.
Paragraph (a)(2) concerns self-propelled tank vessels and requires
that they submit evidence of financial responsibility under the new
part 138 by December 28, 1994. An application form for a new COFR may
be submitted at a later date. For administrative convenience,
preexisting Certificates issued under 33 CFR parts 130, 131, or 132 may
continue to be carried on these self-propelled tank vessels so long as
the new part 138 evidence of financial responsibility has been
submitted. If this new evidence of financial responsibility is not
submitted by December 28, 1994, the preexisting Certificates for that
vessel will be revoked on that date. By December 28, 1995, a self-
propelled tank vessel must have applied for, and be carrying, a new
part 138 Certificate, regardless of the expiration date on any
preexisting Certificates.
Paragraph (a)(3) concerns the requirements for a self-propelled
tank vessel that does not possess a preexisting COFR issued under 33
CFR part 130 before December 28, 1994. This vessel may not operate on
or after that date unless it carries a new part 138 COFR. Accordingly,
this vessel must apply for a new part 138 COFR following the procedures
specified in Secs. 138.50 and 138.60.
Paragraph (a)(4) requires a non-self-propelled tank vessel to
submit evidence of financial responsibility and a new application form
under this new rule at least 21 days before July 1, 1995. (The 21 days
refers to a time constraint imposed by Sec. 138.50.) By July 1, 1995, a
non-self-propelled tank vessel must carry a new OPA 90/CERCLA (part
138) COFR. On that date, preexisting COFRs for non-self-propelled tank
vessels will be revoked.
Paragraph (b): This paragraph governs the compliance schedule for
non-tank vessels. Paragraph (b)(1) provides that a non-tank vessel must
carry a part 138 Certificate no later than December 28, 1997, provided
that before that date, the vessel carries a non-expired, part 130
Certificate. A part 132 Certificate, if applicable to that vessel, must
also be carried. A non-tank vessel subject to part 138 may apply for a
part 138 Certificate any time on or after July 1, 1994.
Paragraph (b)(2) provides that on and after December 28, 1994, and
before December 28, 1997, a Certificate issued to replace an existing
33 CFR part 130 or 132 Certificate for non-tank vessels will bear the
same expiration date as the Certificate being replaced. The
circumstances where this might occur are when a Certificate has been
lost, or there is a vessel name change or operator name change. A
change in legal identity is not a mere name change. This paragraph also
provides that during this interval, the expiration date on a renewal
Certificate issued under 33 CFR part 132 will be the same as the
expiration date on the 33 CFR part 130 Certificate for that vessel.
Paragraph (b)(3) provides that a non-tank vessel holding a 33 CFR
part 130 Certificate issued before December 28, 1994, may continue to
operate with that Certificate until it expires.
Paragraphs (b)(4) and (b)(5) provide that new Certificates issued
under 33 CFR parts 130 and 132 on or after July 1, 1994, and before
December 28, 1994, will bear an expiration date three years after the
date of issuance, except that a Certificate surrendered during that
interval with a request for the issuance of a new Certificate for that
same vessel will bear an expiration date the same as the expiration
date appearing on the surrendered Certificate.
Paragraph (c): This paragraph provides that after the effective
date of this rule, a vessel that is 300 gross tons or less and,
therefore, does not carry a Certificate under 33 CFR part 130, need no
longer carry a Certificate issued under 33 CFR part 131 (relating to
TAPAA) or part 132 (relating to OCSLAA), so long as that vessel is not
required by OPA 90 to obtain a Certificate because the vessel is
engaged in lightering in the Exclusive Economic Zone. A vessel of this
size engaged in lightering is required to maintain its part 131 or 132
Certificate until the vessel obtains a certificate under paragraph (a)
or (b) of this section, as may be applicable.
Section 138.20 Definitions
Cargo: At the suggestion of one commenter, the definition of cargo
has been amended to make it clear that neither hazardous substances nor
oil, when carried solely for use aboard vessels (oil to power or lube
onboard machinery; paints; cleaners; degreasers; etc.), are included in
the definition of cargo.
Demise Charterer: A definition has been added to make it clear that
this term is synonymous with the common term ``bareboat charterer''.
Fish tender vessel and fishing vessel: A definition was added for
these terms in order to indicate that the terms have the same meaning
as set forth in 46 U.S.C. 2101. This will aid in determining the
meaning of the term ``tank vessel''. Section 5209 of Pub. L. 102-587
provided that each of these types of vessel is not a tank vessel. This
law was enacted after the NPRM was published.
Guarantor: For the sake of convenience to persons who must comply
with this rule, a definition of ``guarantor'', based on the definition
in OPA 90 and CERCLA, was added to the rule.
Hazardous material: Some commenters observed that this term is
different from ``hazardous substances'' as used in CERCLA, and were
concerned that tank vessel liability not be ascribed to vessels
carrying non-liquid hazardous substances. A definition of this term has
been added to make clear that a vessel carrying liquid hazardous
materials is a tank vessel. In the Conference Report, at page 102,
Congress stated, ``The term `tank vessel' has the same meaning as that
term has under section 2101 of title 46, United States Code.'' This 46
U.S.C. 2101 definition of tank vessel uses the term ``hazardous
material,'' which is defined in 46 U.S.C. 2101(14), and that definition
of hazardous material controls.
Insurer: This definition has been amended to clarify the meaning of
``insurer'' or ``insurers'' as used in this rule (see, for example,
Sec. 138.80(b)(1) concerning insurance guaranties). The words ``is a
type of guarantor'' have been added to make it clear that, insofar as
insurers are concerned, this rule applies only to that class of
insurers who choose to be guarantors.
Offshore supply vessel: A definition of this term was added to
indicate that it has the same meaning as set forth in 46 U.S.C. 2101,
and will assist in the determination of the term ``tank vessel''.
Section 5209 Public Law 102-587, enacted after the NPRM was published,
provided that an offshore supply vessel is not a tank vessel.
Operator: Some commenters felt this definition was confusing and
some recommended that the term ``responsible party'' be used instead.
Accordingly, the definition of operator was amended first, to narrow
its scope by deleting the words ``including but not limited to'' and,
second, to clarify its meaning by adding the words ``or who agree by
contract to become responsible'' [for a vessel in the capacity of an
operator]. The first change was made to make the definition less open
ended. There are entities, such as agents, ``manager'', traditional
time charterers and traditional voyage charterers (i.e., charterers who
do not take operational responsibility for the vessels they charter)
that are not intended to be included in this definition. The second
change was made for the benefit of persons, such as ship repair yards,
who objected to the word ``repairer'' in the definition of operator.
For example, one commenter stated that the owner or operator who brings
a vessel to the shipyard remains absolutely the owner or operator, and
there is no transfer of rights or responsibilities to the repair
facility. In a case such as this, the term ``operator'' would not apply
to repair facilities. However, in a case where a ship repair yard
either is responsible under law, or for commercial reasons agrees with
owners to become responsible for pollution liability in connection with
a vessel under the repairer's custody, that repair facility is and has
been subject to vessel financial responsibility requirements since
1971. See discussion at 43 FR 35705, August 11, 1978. In short, this
rule does not transform non-liable repairers of vessels into legally
liable ``operators'' of those vessels. Shipyards and other persons who
would not otherwise be responsible for vessels are free, of course, to
contract with vessel owners, as they may see fit, with respect to
becoming responsible for (i.e., becoming the operators of) vessels in
their custody. As always, if repairers or other person are not
responsible for the non-owned vessels in their custody, this rule will
not apply to them. In a case such as that, any valid COFR, issued to a
vessel's owner, operator, or bareboat charterer, will remain valid and
must be retained aboard the vessel while in the repairer's custody. The
third change to the definition of ``operator'' was the addition of the
word ``custodian''. This change was made merely to confirm that a
person who is responsible for a vessel need not physically operate the
vessel--move it from place to place--to be its ``operator'' for
purposes of this rule.
Public Vessel: In accordance with a ruling by the General Counsel
of the Department of Transportation interpreting the statutory
definition of ``public vessel'', this definition has been modified by
deleting the words ``and operated''. Accordingly, any vessel owned or
bareboat chartered by the United States, or by a State or political
subdivision of a State, or by a foreign nation, is a public vessel
except when engaged in a commercial service. (An example of a
commercial service is holding oneself out for hire to carry passengers
or cargo, and the lack of profit is not necessarily determinative of a
commercial service.)
Accordingly, it is no longer necessary that a vessel be physically
operated by a governmental entity or under its direct day-to-day
control in order to qualify as a public vessel, i.e., vessels owned or
bareboat chartered by governmental agencies may be crewed by commercial
entities and remain ``public vessels'', for the purpose of this
regulation, provided the vessels engage only in governmental
(noncommercial) service.
Self-elevating lift vessel: This definition was added because OPA
90 defines a ``mobile offshore drilling unit'' (MODU) as a vessel,
other than a ``self-elevating lift vessel'', capable of use as an
offshore facility. It has been argued that because a self-elevating
lift vessel can, literally, be a type of MODU known as a jack-up
drilling rig, Congress intended the term ``self-elevating lift vessel''
to include a jack-up drilling rig, i.e., that MODUs do not include
jack-up drilling rigs. One argument to the contrary is that Congress
could not have meant to exclude jack-up drilling rigs from the
definition of MODUs because jack-up drilling rigs constitute the most
common type of MODU; had Congress intended to exclude from the
classification of MODUs the most common type of MODU (jack-up drilling
rigs), it surely would have at least hinted at that result, in the
law's legislative history. Another argument to the contrary is that had
Congress intended to exclude jack-up drilling rigs, it would have used
the term ``self-elevating drilling vessel'', not ``self-elevating lift
vessel.'' The Coast Guard interprets OPA 90's use of the term ``self-
elevating lift vessel'' to mean a self-elevating, offshore work boat
(or work barge) that does not engage in actual drilling operations.
Tank Vessel: This definition has been changed by deleting the
proposed regulatory definition and substituting the definition in
section 1001(34) of OPA 90 (33 U.S.C. 2701(34)), with three
clarifications. This accords with Congressional intent expressed in the
Conference Report at page 102. First, the word ``liquid'' has been
inserted before the words ``hazardous material'', in accordance with
the definition of hazardous material in 46 U.S.C. 2101(14) (see
explanation under ``hazardous material''). Second, specific exclusions
to the definition of ``tank vessel'' have been added in accordance with
section 5209 of Public Law 102-587, which was enacted after the NPRM
was published. Third, in accordance with one comment, the definition
has been amended to make it clear that a vessel towing or pushing, or
having in its custody, a tank barge, cannot for those reasons alone, be
deemed included in the definition of tank vessel. Some carriers of
liquefied natural gas (LNG) argued that they should be able to
demonstrate lower levels of financial responsibility than is required
for oil-carrying tank vessels. Tank vessel limits are set by Congress
and the Coast Guard is not empowered to lower those limits. A vessel
carrying LNG clearly meets the definition of ``tank vessel''.
Section 138.30 General
Paragraph (a): A number of commenters were concerned that the NPRM
was ambiguous, possibly multiplying the liability limit with respect to
a vessel by three--that is, the owner, operator, and demise charterer
would each have liability up to the specified limit, and their
liabilities would be added together. That was not the intent of the
NPRM. Nevertheless, potential guarantors were likewise concerned that
they might be liable for three times the amount of the guaranty. The
Coast Guard believes that OPA 90 and CERCLA impose only one limit of
liability, per incident or release or threatened release, under each
Act for a guarantor with respect to a vessel. Therefore, this
subsection has been amended to clarify the fact that even though the
owner, demise charterer, and operator of a vessel are jointly and
severally liable, and must all be covered by the evidence of financial
responsibility submitted for a COFR, the amount of that financial
responsibility provided by a guarantor is for the single limit. For
example, if the operator of a 40,000 gross ton tanker spills oil and
the $1,200 per gross ton limit of liability is not broken, the owner,
demise charterer, operator, and guarantor would be jointly and
severally liable for that incident, and the guarantor's liability
(without regard to whether the limit is broken) under OPA 90 should the
owner, demise charterer, and operator pay nothing, cannot exceed the
amount of financial responsibility provided by the guarantor, in this
case $48 million ($1,200 x 40,000).
This section also has been amended to confirm that the total amount
of financial responsibility provided by a guarantor is not applicable
to an incident or release or threatened release of just oil or just
hazardous substances--only the amount guarantied for an oil incident is
available for that incident, and only the amount guarantied for a
hazardous substance release or threatened release is available for that
event.
Paragraph (b): As recommended by some commenters, this paragraph
has been amended to state that this rule does not apply to time
charterers or voyage charterers, i.e., charterers who do not assume,
and do not have imposed upon them by contract or otherwise, the
responsibility associated with operation of a vessel.
Paragraphs (c)-(f): Potential insurance guarantors commented that
guarantors should be able to rely upon official tonnage certificates,
particularly with respect to tank vessels under OPA 90. A tank vessel
greater than 3,000 gross tons carries a minimum liability of ten
million dollars while a tank vessel of 3,000 gross tons or less carries
a minimum liability of two million dollars. Guarantors justifiably
relying on tonnage set out in tonnage certificates understandably wish
to avoid situations where, after incidents involving tank vessels, they
could find themselves exposed in a direct action to a ten million
dollar liability rather than the anticipated lower limit applicable to
tank vessels of 3,000 gross tons or less.
Thus, in a case where a tank vessel's official, applicable tonnage
document declares the vessel's official tonnage to be (for example)
2,990 gross tons, the Coast Guard agrees that the vessel's guarantor
should be able to rely on a maximum liability under OPA 90 of
$3,588,000 (2,990 tons x $1,200 per ton) even if it develops that
2,990 gross tons was a typographical error on the official, applicable
tonnage certificate or the vessel was incorrectly measured, and that
the vessel's true tonnage is over 3,000 gross tons. The rule has been
amended in order to provide that protection to guarantors, except where
a guarantor knew or should have known that the applicable tonnage
certificate was incorrect. (This additional defense is reflected in the
various guaranty forms appended to this rule.) Paragraphs (c), (d), and
(e) have been revised slightly to clarify the appropriate tonnage to
use for various vessel types and flags, and a clause has been added to
each section to clarify the appropriate tonnage used for determining
the limits of liability under OPA 90 CERCLA.
Section 138.50 Time to Apply
Paragraph (a): Paragraph (a) was amended at the request of one
commenter, to provide that the Coast Guard may waive the requirement to
file an application for a Certificate of Financial Responsibility at
least 21 days before the Certificate is required. This same amendment
was made in Sec. 138.70(a), concerning applications to renew
Certificates. An example of a circumstance when the 21-day requirement
might be waived is when a tank vessel, not having a current COFR and
not planning on entering the United States, does not have an
opportunity to file an application 21 days in advance because it is
redirected on short notice to call at a United States port. The Coast
Guard makes every attempt to accommodate unusual circumstances.
Section 138.60 Application, General Instructions
Paragraph (c): This paragraph was amended at the request of one
commenter, by deleting the words ``other empowered'' and substituting
therefore the more correct words ``the chief executive officer, or any
other duly authorized'', to describe who may sign an application on
behalf of a corporate applicant.
Paragraph (d): This paragraph was amended at the request of one
commenter, to change ``days'' to ``business days'' in order to provide
more time for an applicant to inform the Coast Guard of a change in the
information provided in an application. For the same reason, ``days''
was changed to ``business days'' in Sec. 138.80(b)(3)(iii)(B).
Section 138.65 Issuance and Carriages of Certificates
This new section is derived from the text of proposed
Sec. 130.1(c). It is placed more properly in a section other than
``scope.''
The text has been amended to make it clear that vessels are not
subject to sanctions for failure to carry a valid Certificate of
Financial Responsibility in cases where a COFR is removed from a vessel
temporarily, at the request of U.S. law enforcement personnel.
Section 138.70 Renewal of Certificates
A new paragraph (c) was added to clarify that the first time a
Certificate is required under part 138, to replace a Certificate issued
under 33 CFR part 130, a new full application form, rather than a
letter, is required. However, the Coast Guard is not requiring a
``first time'' application fee under these circumstances, recognizing
that under preexisting practice, a ``first time'' fee is not required
for a renewal application. Once a new application form has been filed
for a part 138 Certificate, any additional Certificates may be applied
for by letter.
Section 138.80 Financial Responsibility, How Established
A number of changes, explained under each paragraph, were made to
address several comments. These changes concern use of multiple
guarantors, defenses available to guarantors, and the addition of a
catchall method, ``other evidence of financial responsibility''.
Paragraph (b)(1) (Insurance): In the proposed phrase ``executed by
an insurer that has been approved by * * * the Director, NPFC, for
purposes of this part'', the word ``approved'' was deleted and the
words ``found acceptable'' were substituted. The word ``acceptable'' is
preferred because it is used in the definition of ``Insurer'' in
Sec. 138.20(b). Section 138.80(b)(1) also has been amended to clarify
the fact that more than one insurer may execute an insurance guaranty,
and that the subscribing insurers shall be jointly and severally liable
unless percentages of participation are provided on the guaranty by
each subscribing insurer. For purposes of this part, and as discussed
below, a percentage means a vertical percentage (rather than a
horizontal layering).
One commenter recommended that the Coast Guard incorporate
standards for approval of insurers, sureties, and financial guarantors.
Standards for sureties are set by the Department of the Treasury, as
OPA 90 requires bonding companies to be authorized to do business in
the United States, a reference to Treasury-approved sureties. Financial
guarantors must meet the detailed standards for self-insurers. Insurers
must be acceptable to the Coast Guard, and for many years,
acceptability had been determined by the Federal Maritime Commission
(FMC) on a case-by-case basis. The Coast Guard has followed the
criteria established by these decisions. Any insurer desiring to be
recognized, as an acceptable insurer may telephone, write to, or meet
with the Coast Guard to review the factors considered. The Coast Guard
is evaluating the possibility of a future rulemaking adopting
acceptability standards, but has decided not to develop these standards
through this financial responsibility rule.
Paragraph (b)(2) (Surety bond): This paragraph was amended to
clarify the fact that more than one surety may execute a surety bond
guaranty form. As in the cage of insurers, sureties must state vertical
percentages of participation if they wish to avoid joint and several
liability.
Paragraph (b)(3) (Self-insurance): A number of commenters
recommended that the Coast Guard adjust the net worth and working
capital formulae by allowing worldwide assets rather than only U.S.-
based assets to be counted in the asset side of the equation. The Coast
Guard has not adopted this suggestion. The reasons are explained fully
in the Regulatory Impact Analysis associated with this rulemaking.
Paragraph (b)(3)(vi) permits the Coast Guard to waive the working
capital requirement under certain circumstances. Under paragraph
(b)(3)(vi)(A) the Coast Guard may waive the working capital requirement
for prospective self-insurers who are regulated public utilities,
municipal or other governmental entities, or charitable, non-profit
making organizations under section 501(c) of the Internal Revenue Code.
One commenter stated that it is a tax-exempt, not-for-profit U.S. oil
spill response corporation, that operates vessels for that purpose. It
commented that it does not believe it will be able to obtain a surety
bond, insurance or financial guaranty, or be able to qualify as a self-
insurer under the proposed rule. It, therefore, believes that the
proposed rule will hamper ``reliable'' response organizations and thus,
undermine an essential purpose of OPA 90--a quick, effective response
to oil spills. It proposes, among other things, that the section in
question be amended so that the availability of the working capital
waiver would not be limited to charitable organizations; i.e., that the
waiver be made available to any non-profit response organization
qualifying as a social welfare organization under section 501(c)(4) of
the Internal Revenue Code.
This comment requesting an extension of the applicability of the
working capital requirement under proposed Sec. 130.8(b)(3)(vi)(A)
apparently does not take into consideration the next paragraph (i.e.,
Sec. 138.80(b)(3)(vi)(B)) of the rule which allows an alternative basis
for certain organizations to apply for waivers. Accordingly, paragraph
(b)(3)(vi)(A) of Sec. 138.80 has not been amended. The Coast Guard does
not believe that this rule will inhibit the commenter's ability to
obtain COFRs, or otherwise undermine any essential purpose of the law.
The essential purpose of OPA 90 to be implemented by this rule is to
deny the use of United States waters to entities which do not have the
financial capacity to meet OPA 90 and CERCLA liability, by
demonstrating self-insurance capacity, or by purchasing an insurance or
surety bond guaranty or by obtaining a financial guaranty.
Paragraph (b)(4) (Financial Guaranty): This paragraph was amended,
consistent with the insurance and surety bond guaranty methods, to
allow more than one financial guarantor to execute a financial guaranty
form. Financial guarantors also must state vertical (i.e., non-layering
type) percentages of participation to avoid joint and several
liability.
Paragraph (b)(5) (Other evidence): This is a new paragraph which
has been added to the rule as a result of the numerous comments
requesting the Coast Guard to accept evidence of financial
responsibility by methods other than the four proposed methods. This
new paragraph will permit ``other evidence of financial
responsibility'' if it meets the criteria set forth in this new
paragraph and in expanded Sec. 138.80(d). ``Other evidence'' meeting
that criteria, if being submitted for the first time, must be submitted
at least 45 days before a Certificate is required. The Coast Guard will
not accept an ``other evidence'' method that merely alters or deletes a
provision of one of the established methods. For example, a proposed
``other evidence'' guaranty form that includes a clause requiring COFRs
to be renewed each year rather than every three years as provided in
the rule would not be accepted. Some commenters suggested that the use
of letters of credit be authorized. The use of letters of credit is
discussed at the end of this section. Since commenters stated they
would not utilize this method, it has not been included separately.
However, it is a method that could be proposed under paragraph (b)(5).
An applicant seeking approval of ``other evidence'' must submit a
sample, proposed guaranty form.
Paragraph (c): This paragraph has been amended in response to
comments that neither OPA 90 nor CERCLA specifically requires the Coast
Guard to make co-subscribers to an insurance, surety bond, or financial
guaranty jointly and severally liable. The Coast Guard agrees with
these comments.
The gist of these comments is that if the Coast Guard would permit
co-subscribers to be liable only up to their individual limits of
participation on a particular bond, no individual amount of financial
responsibility required by OPA 90 and CERCLA (the Total Applicable
Amount) would be impossible to write. For example, a major surety
broker commented that at least 32 Treasury-approved sureties have
indicated to that broker an interest in writing surety bond guaranties.
One of these companies is approved to write bonds in excess of $200
million, and the 32 companies have an approved, combined underwriting
capacity in excess of $1 billion. Accordingly, the Coast Guard has
acceded to this request and has amended proposed Sec. 130.8(c) (new
Sec. 138.80(c)) to specifically allow limited (i.e., non-joint and
several as among themselves) participation on a single bond or other
guaranty.
The Coast Guard will only accept, for purposes of a guaranty,
percentages of participation on a vertical, non-layered basis (tiers,
one in excess of another, are not acceptable). For example, four
insurers may each limit their participation to 25 percent. If a spill
results in $10,000 in costs and damages, each insurer would be liable
as a guarantor for $2,500. The Coast Guard will not accept a horizontal
arrangement whereby one insurer subscribes to a first tier of $2,500, a
second insurer to the next tier of $2,500, and so forth. Under this
latter, layered arrangement, if the total costs and damages were
$10,000, but the first insurer, subscribing for only the first $2,500
layer was bankrupt, the other insurers may be under no obligation to
pay. The Coast Guard cannot accept this result.
In addition, the Coast Guard has limited this shared participation
to no more than four guarantors executing a guaranty form. The Coast
Guard believes this limitation is needed to provide a manageable
process for claimants dealing with guarantors. More than four insurers
or sureties, however, can still participate in a guaranty by appointing
a lead underwriter or surety to act on their behalf, such as is done by
Lloyd's Underwriters. Further, in order to facilitate dealing with
multiple guarantors and to avoid complications that might ensue if the
guarantors do not all agree on a particular action, the Coast Guard is
requiring the guarantors to appoint a lead guarantor to act on behalf
of, and have the authority to bind, the co-guarantors. Paragraph (c)
further provides that if one or more guarantors do not specify
percentages of participation, then as between or among them, they share
joint and several liability for the total of the unspecified portion.
Those guarantors specifying percentages will be liable only up to
respective specified limits, as noted above. The Coast Guard considers
this an important incentive to permit new providers of financial
responsibility to become guarantors under OPA 90 and CERCLA.
Paragraph (d) (Direct action): This paragraph has been rewritten in
response to comments requesting clarification of the exposure and
limits of liability of guarantors under OPA 90 and CERCLA. Anything
that might be considered new, e.g., a guarantor's right to limit its
liability to the tonnage on an official tonnage document, has already
been discussed herein, or is discussed below in connection with
specific guaranty forms. It is appropriate to note in this section of
the preamble, however, that a claim against an insurer or a surety in
connection with an insurance or surety bond guaranty established under
this part does not entitle a claimant to somehow ``cut-through'' the
guarantor and reach the guarantor's ensuring entity. No right of direct
action against a guarantor relating to financial responsibility
provided under this part endows a claimant with rights against a
guarantor's reinsurer. This is not to say, of course, that a guarantor
and its reinsurer are in any way precluded from entering into a
reinsurance arrangement that permits cut-throughs by claimants against
reinsurers. Such cut-through clauses, however, are not imposed by this
rule.
Letters of Credit: Section 1016(e) of OPA 90 allows the Coast Guard
to consider inclusion of a letter of credit in the permissible methods
of establishing financial responsibility. The use of letters of credit
as evidence of financial responsibility has never been and is not now
being requested by the international vessel operating industry. Years
ago, lengthy, in-depth exploration of this matter was undertaken with
one of the largest U.S. financial institutions in an effort to
determine the value of irrevocable letters of credit as evidence of
financial responsibility under direct action statutes. It was concluded
by all concerned that such instruments were of little or no value for
such purposes. One of the reasons for that conclusion was that, unlike
insurance companies defending their own money, banks and other
financial institutions that issue letters of credit generally would
have no interest in providing the legal and other resources necessary
to seriously investigate or defend claims against their principals'
money for removal costs and economic damages.
During this rulemaking, not one financial institution came forward
to state that it would be willing to issue letters of credit as OPA 90
guaranties, and no commenter explained how letters of credit could be
structured so that they could become appropriate mechanisms for the
financial responsibility purposes of OPA 90 and CERCLA. Nor has any
vessel operator come forward to state that it would be willing to allow
a bank to act as a guarantor and put at risk millions of dollars of the
operator's money without a vigorous defense mechanism.
In the proposal stage of this rulemaking, it was assumed that there
may be some vessel operators who did not wish to use insurance,
financial or surety bond guaranties. The Coast Guard, therefore,
encouraged comments on how letters of credit might be used as evidence
of financial responsibility. Several commenters stated that letters of
credit were not viable options for demonstrating financial
responsibility.
Although no commenter stated that it would or could use a letter of
credit as evidence of financial responsibility, some commenters argued
that, nevertheless, the non-inclusion of letters of credit constituted
a fatal flaw in the NPRM. The Coast Guard does not agree, given the
general convergence of views among the commenters. Therefore, no change
is being made, i.e., letters of credit are not being specifically
included in this final rule.
No door on any financial responsibility method is being closed with
finality, however. The Coast Guard has taken the advice of several
commenters that an additional category, permitted by section 1016(e) of
OPA 90, be included in the rule, and has added a catchall category,
``other evidence of financial responsibility'' (see discussion under
Sec. 138.80(b)(5)). If an applicant and bank wish to use a letter of
credit, it can be proposed, in a specific situation, as ``other
evidence'' under the guidelines established in Sec. 138.80(b)(5).
Paragraph (f): This new paragraph has been added to incorporate the
``Applicable Amount Table'' that was contained in Appendix G of the
NPRM. This paragraph (and the corresponding applicable amount table in
each guaranty form) sets out the means by which applicants and
guarantors calculate the amounts of financial responsibility required
to be established and maintained under this rule. As discussed earlier,
this calculation has been amended to reflect the actual limits of
liability applicable to vessels under CERCLA, rather than just the
limit applicable to vessels carrying hazardous substances as cargo.
Section 138.90 Individual and Fleet Certificates
Fleet Certificates
This rule will further reduce the existing burden on operators of
non-tank barges that sometimes carry oily cargo or small amounts of oil
or hazardous substances. Such operators currently bear the expense and
paperwork burden of obtaining individual COFRs and paying certification
fees for a COFR for each barge, just on the chance that one or more of
those barges may technically become subject to financial responsibility
requirements. Examples of such non-tank barges are deck or hopper
barges that might occasionally carry a few barrels of oil, oily metal
shavings or non-bulk hazardous substances. Upon request (and with the
cooperation of a guarantor), a single COFR, designated as a Fleet
Certificate, may now be issued to the operator of these non-tank
barges. Only a certified copy of that single Fleet COFR would need to
be carried on each barge, and then only when that barge had oil or
hazardous substances aboard. See Sec. 138.90(b) of this rule.
Paragraph (b): Paragraph (b) has been changed in one respect. In
the proposal, only an insurance guaranty was envisioned as being an
appropriate method of establishing financial responsibility for Fleet
Certificates. Upon reflection, there is no reason why other types of
guaranties should be excluded. This paragraph reflects this broader
approach.
Paragraphs (d) and (e): Some of the notice requirements in these
paragraphs have been stated more precisely by adding specific time
limits.
Section 138.120 Certificates, Denial or Revocation
Some commenters recommended that this section be revised to afford
more procedural protections to certificants whose Certificates are
subject to revocation. Proposed Sec. 130.12 (new Sec. 138.120) has been
redrafted to afford greater procedural protections to applicants and
certificants, and to remove ambiguities from the proposed text.
Paragraph (a): This paragraph governs the circumstances under which
the issuance of a Certificate may be denied. It is derived from
paragraphs (a) and (b) of proposed Sec. 130.12.
Paragraph (b): This paragraph governs the circumstances under which
a Certificate may be revoked. It also is derived from paragraphs (a)
and (b) of proposed Sec. 130.12.
Paragraph (c): Paragraph (c) governs the circumstances under which
a Certificate is automatically revoked, without prior notice. It is
derived from paragraph (b) of proposed Sec. 130.12(b).
Paragraph (d): This paragraph is derived from proposed
Sec. 130.12(c) and provides that before a Certificate is denied under
paragraph (a) of this section or revoked under paragraph (b), the Coast
Guard will advise the applicant or certificant, in writing, of the
proposed denial or revocation, and the reasons therefore.
Paragraph (e): This paragraph is derived from proposed
Sec. 130.12(d) and provides that proposed revocations due to failure to
file required financial statements and other information become
effective within 10 days of the notice, unless the certificant
demonstrates that the information has been filed.
Paragraph (f): This paragraph is derived from proposed
Sec. 130.12(e) and provides an applicant or certificant the opportunity
to present information showing why a proposed denial under paragraph
(a)(1) or (a)(3) of this section or revocation under paragraph (b)(1)
or (b)(2) is unwarranted. A new sentence is added to clarify that a
Certificate remains valid pending a decision under this paragraph. Note
that these procedures do not apply to an immediate revocation under
paragraph (c) of this section.
Paragraph (g): Paragraph (g) is new, and provides an applicant or
certificant the opportunity to request reconsideration of an
unfavorable decision on issuance or revocation. This paragraph states
the applicable procedures for filing a request for reconsideration, and
also provides that a revoked certificate remains invalid pending a
decision on reconsideration.
Section 138.130 Fees
A few commenters objected to the doubling of the fees charged for
applications and for Certificates. The preexisting fees were instituted
in 1977 to implement the general user fee statute, now codified at 31
U.S.C. 9701. Since that time the U.S. Consumer Price Index has more
than doubled. Office of Management and Budget revised Circular Number
A-25 provides general guidelines for calculating the proper level of
fees. Applying these principles, the Coast Guard calculates that
currently, average COFR revenues do not cover average COFR costs. COFR
costs include salaries, rent, computers and other office equipment,
travel, and supplies. Doubling the fees, as proposed, will more closely
recover for the Coast Guard the costs of administering the vessel
financial responsibility certification program. Accordingly, to fulfill
the intent of 31 U.S.C. 9101, this rule maintains the fees at the
levels proposed. Calculations showing these program costs and projected
revenues from the fees are available for inspection in the docket.
The justification for the assessment of different fees for new
``first-time'' applications than for Certificates is based upon the
amount of processing time required by vessel certification program
personnel. On average, it takes twice as long to process a new
application and issue a new Certificate than it does to issue
additional or modified Certificates.
Although vessel certification fees must be paid, the Coast Guard
has decided not to collect the application fee for an application filed
to obtain a Certificate under part 138 that will replace an existing
Certificate issued under 33 CFR 130. This is reflected in the first
clause of Sec. 138.130(c), which references Sec. 138.70(c). This
approach continues the scheme currently in place whereby an application
fee is not paid each time a Certificate is replaced or renewed. The
only fee collected in that circumstance is the certification fee.
Section 138.140 Enforcement
Some commenters believed the penalties identified in this section
are unfair. This section simply restates, for the convenience of the
user, the sanctions prescribed by Congress in OPA 90 and CERCLA. The
Coast Guard has no discretion to alter these potential sanctions.
Another commenter recommended that an appeals process be incorporated
in connection with the Coast Guard's detention of a vessel. This
suggestion is beyond the scope of this rulemaking, which deals with
methods for demonstrating financial responsibility, and associated
matters. It is noted that actions by Coast Guard enforcement personnel
are governed by other regulations. For example, certain actions taken
by Coast Guard Captains of the Port may be appealed according to
procedures elaborated in 33 CFR part 160.
Section 138.150 Service of Process
Text has been added to this section to reflect responsibilities
placed upon responsible parties and guarantors by OPA 90, such as
receipt of a notice of designation of source. The additional text
clarifies that the persons designated by applicants and guarantors as
agents to receive service of process also may be served with notices of
designations and presentations of claims under the Acts. The
Application Form and guaranty forms have also been amended to reflect
this clarification.
Appendix A--Application for Certificate
The application form was left basically the same as in the
proposal. Substantive changes are as follows:
Part I, Question 4: This portion of the application was amended to
permit United States applicants the option of appointing themselves as
U.S. agents for service of process, as is currently permitted under
part 130. Doing so would preclude the need for the applicant and U.S.
agent to complete part IV, Concurrence of Agent. As is presently the
case, Certificates will not be issued to vessel operators who have not
appointed U.S. agents for service of process, with accompanying written
concurrence by such agents. This is the purpose of part IV of the
application form. Since 1971, each P&I Club has arranged for a blanket
concurrence of agent for service of process to be maintained on file
with the Coast Guard's National Pollution Funds Center. This makes it
unnecessary for vessel owners and operators who are members of the P&I
Clubs, or their U.S. agents for service of process, to complete part IV
of the application form.
Because vessel owners and operators who are members of P&I Clubs
apparently will not currently permit their Clubs to act as guarantors
for purposes of this rule, it has to be further assumed that the P&I
Clubs will not be permitted to continue to arrange blanket concurrences
of U.S. agents for service of process for purposes of this rule.
Accordingly, each applicant who is a member of a P&I Club now will have
to: (1) Locate in the United States an entity willing to act as that
applicant's agent for service of process and; (2) mail to that agent
part IV of an application form, with a request to forward the
completed, executed part IV-A to the National Pollution Funds Center
(part IV-B is to be completed by the applicant before mailing to the
agent). Applicants are encouraged to mail parts I, II and III, fees,
and any evidence of financial responsibility directly to the National
Pollution Funds Center to minimize mail handling. In most cases,
guarantors are instructed by vessel operators to mail guaranties
directly to the National Pollution Funds Center.
A U.S. agent for service of process who is willing to act as agent
for an operator's entire fleet of vessels need complete part IV-A only
once. An agent for service of process, acting solely as agent, does not
incur any OPA 90/CERCLA liability for removal costs or damages. An
agent's responsibilities are as agreed between itself and the vessel
operator on whose behalf the agent agrees to act.
Part II, column (d): As proposed, column (d) requested an applicant
to indicate a vessel's ``Registration Number''. As amended, column (d)
requests a ``Documentation Number'' for U.S.-flag vessels and an ``IMO
Number'' for non-U.S.-flag vessels. A ``Registration Number'' is
requested if an ``IMO Number'' has not been assigned.
Part III, question 11: Question 11 is an addition to the proposed
Part II, and was necessary to accommodate an applicant who wishes to
establish evidence of financial responsibility other than by self-
insurance, insurance guaranties, surety bond guaranties, or financial
guaranties. If that is the case, new question 11 requests the applicant
to provide, separately, all of the information required by
Sec. 138.80(b)(5) of this rule (see discussion under
Sec. 138.80(b)(5)).
Appendices B Through F
These appendices are, respectively, the insurance guaranty form,
the master insurance guaranty form, the surety bond guaranty form, the
financial guaranty form and the master financial guaranty form. Each of
these guaranty forms has undergone numerous changes in format and
wording which have no impact on meaning or content. However, each
guaranty form has undergone the following common substantive
amendments:
Defenses: The defenses are those enumerated in Sec. 138.80(d).
Rather than merely say that in the event of a direct action a guarantor
may invoke only the rights and defenses specifically permitted by the
Acts, those rights and defenses are now mentioned in more detail in
each guaranty form. These statutorily permitted rights and defenses
comprise defense numbers one and two of a new section in each guaranty
form, which new section lists the rights and defenses available to
guarantors in the event of a direct action. Right or defense number
three confirms that a guarantor shall have the right to limit its OPA
90/CERCLA liability under its guaranty to the amount of that guaranty,
despite the number of claimants and venues in which claims are brought
against the guarantor for the same incident, release or threatened
release. Number four, in this new listing of rights and defenses,
provides that a guarantor shall have the right to limit its liability
to the amount obtained by using the gross tonnage entered on the
involved vessel's international tonnage certificate or other
certificate of measurement, whichever is the vessel's official,
applicable declaration of tonnage, except where the guarantor knew or
should have known that the applicable tonnage certificate was
incorrect. The Coast Guard intends the right to so limit liability to
be available to guarantors despite any higher or different tonnage
which may be listed on the COFR application form or guaranty form.
Indeed, the Coast Guard intends this right of a guarantor to so limit
its liability to apply even if it is determined after an incident or
release that the official tonnage document is incorrect and that a
vessel's correctly admeasured tonnage exceeds the tonnage listed on the
incorrect tonnage document. The Coast Guard agrees with a commenter
that a guarantor should be able to rely on a vessel's official tonnage
document rather than find itself liable for a $10 million tank vessel
liability when it accepted an exposure and a premium based on a tonnage
document that indicated a substantially lesser amount of liability (see
the liability minimums for tank vessels under section 1004(a) of OPA
90). This right is being extended to guarantors under the general
rulemaking authority contained in OPA 90 and CERCLA to define terms
such as gross tons, and under section 1016(e) of OPA 90. Only a
guarantor may invoke this right or defense. The responsible party's
liability is based on the actual gross tonnage of the vessel.
Right or defense number five in the new section of the guaranty
forms is that ``the claim is not one made under either of the Acts.''
Potential guarantors were concerned that by executing the guaranty
form, they would be subjecting themselves to direct action under other
laws as well, whether in federal or state courts. The Coast Guard does
not believe that this was the intent of Congress. Accordingly, the
purpose of this defense is to ensure that guarantors are not subject to
direct actions under other laws solely because they executed the OPA
90/CERCLA guaranty to the Coast Guard.
The Coast Guard does not intend, and does not believe Congress
intended, that execution of a guaranty appended to or acceptable under
this part in any way indicates that the guarantor is implicitly
agreeing to liability in an amount or scope different than set forth in
such guaranty. No guaranty accepted under and executed for purposes of
this part, without more, is to be construed as subjecting the guarantor
to unlimited liability in any venue for any purpose. The Coast Guard
considers this defense to be absolute, and necessary to effectuate the
purposes of OPA 90, in accordance with section 1016(e) of OPA 90.
Joint and several liability: The second common change to the
guaranty forms is the granting of an option to co-subscribing
guarantors. In the proposed rule, joint guarantors to a single guaranty
form would be jointly and severally liable for the full amount of the
guaranty. This second common amendment to the guaranty forms, however,
permits each joint guarantor the option of limiting its liability to
less than the full amount of the guaranty by specifying its particular
percentage of participation in each guaranty it co-executes. However,
that participation must be in a vertical, non-layered share (see
discussion under Sec. 138.80(c)). Any co-insurer not specifying a
percentage of participation would be held liable for the unspecified
portion of any risk. If no co-insurers specify a percentage of
participation, each would be held jointly and severally liable up to
the full amount of the guaranty. The Coast Guard will continue to
permit acceptable market entities such as the Institute of London
Underwriters and the Underwriters at Lloyd's to execute a guaranty
under the signature of a lead underwriter, or underwriters, with each
co-subscribing, limited-liability signatory counting as only one
guarantor. Thus, for example, twenty or so Lloyd's syndicates may join
together under one lead underwriter (i.e., one signature on the
guaranty form) for 40 percent of a risk, with numerous Institute of
London Underwriters joining together under one lead underwriter (i.e.,
one signature guaranty on the guaranty form) for the remaining 60
percent. This method would count as only two guarantors under this new
rule. Co-guarantors must appoint and name on the form a lead guarantor,
having authority to bind all co-guarantors. This will facilitate
handling of claims or other activities under the Acts. The co-
guarantors decide among themselves which guarantor will serve as lead,
and certainly should specify among themselves how claims or other
activities under the Acts will be handled.
Deletion of the sixty-day notice: The third common change made to
the guaranty forms is the deletion of the proposed requirement for a
sixty-days written notice of cancellation requirement in connection
with laden tankers. The Coast Guard concludes that, based on 23 years
experience, thirty days written notice of cancellation of a guaranty
will provide adequate notice in almost all cases.
Service of process: The fourth common change is the clarification
that an agent designated to receive service of process also is required
to receive notices of designation or presentations of claims under the
Acts.
Total Applicable Amount: The fifth and final common change made to
the guaranty forms is the relaxation in the method of calculating the
total applicable amount with respect to vessels carrying hazardous
substances as cargo. The relaxation (with respect to guaranties) of the
proposed requirement that financial responsibility always would have to
be demonstrated at the minimum amount of $5 million, already has been
discussed in this preamble under the heading ``Applicable Amounts of
Financial Responsibility.''
As already discussed, a guarantor and its principal or insured may
decide among themselves as to the level of premium to be paid for the
cover, it being understood that the guarantor will in any case be
liable for the limit of liability applicable to the type of vessel in
question at the time of the incident, release or threatened release,
despite the level of premium accepted by the guarantor. This concept of
full coverage, regardless of the type of vessel, applies under current
part 130 and was the basis for certain language in all of the guaranty
forms appended to this part. Nevertheless, in view of the relaxation of
the total applicable amount calculation, all of the guaranty forms
appended to this part (except the two insurance guaranty forms) have
been amended to emphasize that concept of full coverage, including tank
vessel liability. Thus, the surety bond guaranty form, for example, has
been amended by adding the following clause:
Principal and Surety or Sureties further agree that if at the
time of an incident, release, or threatened release a covered vessel
is a tank vessel or is carrying a hazardous substance as cargo, the
penal sum of this surety bond guaranty automatically increases, if
necessary, to the total applicable amount appropriate for such
vessel as determined in accordance with the Applicable Amount Table
below. In no case, however, shall the penal sum be increased to an
amount greater than the total applicable amount.
This change is especially appropriate to the surety bond guaranty
form (Appendix D) because of the bond guaranty's provision for showing
the penal sum of the guaranty. It was believed appropriate to also
amend the financial guaranty forms (Appendices E and F) in order to
remind prospective financial guarantors that the amounts of working
capital and/or net worth to be demonstrated (in order to qualify as
financial guarantors) would be based on the minimum $5 million formula
for CERCLA, and $1,200 per gross ton/$10 million for OPA 90, when
calculating the total applicable amount to be guarantied.
Appendix D Surety Bond Guaranty Form
A change peculiar to the bond guaranty form is the addition of the
following clause:
If the Principal is responsible for more than one vessel covered
by this guaranty, then the penal sum is the total applicable amount
for the vessel having the greatest liability under the Acts.
This change was made solely to clarify the surety's limit of OPA
90/CERCLA liability under a bond guaranty, regardless of the actual
penal sum indicated on the bond guaranty. This new clause, when coupled
with a second new clause that has been added to the form, permits the
bond guaranty automatically to cover all of the vessels for which the
vessel operator-principal is responsible under the Acts, yet provides
protection to the surety if any of such vessels are specifically named
in other evidence of financial responsibility (on behalf of the vessel
operator-principal named on the bond guaranty) applicable during an
incident, release or threatened release giving rise to a claim against
the surety or vessel operator-principal. This second new clause appears
directly above the name of the surety's U.S. agent for service of
process, and will aid in determining the specific vessels covered by a
bond guaranty, should such question ever arise.
Assessment
The NPRM was classified as not ``major'' under former Executive
Order 12291, which was revoked and replaced by Executive Order 12866
(September 30, 1993), but was considered significant under the
regulatory policies and procedures of the Department of Transportation
(DOT) (44 FR 11040, February 26, 1979) because of substantial public
interest. Many commenters to the NPRM stated that the proposed should
be classified as major under Executive Order 12291. In fact, this
rulemaking has followed most of the procedural aspects of a ``major''
rule, notably, the publication of the PRIA for public comment.
Executive Order 12866 now governs this proceeding.
This rule is a significant regulatory action under section 3(f) of
Executive Order 12866 because it is perceived to raise novel legal and
policy issues. It has been reviewed by the Office of Management and
Budget under that order. It requires an assessment of potential costs
and benefits under section 6(a)(3) of that order. It is significant
under the regulatory policies and procedures of DOT. A Regulatory
Impact Analysis (``assessment'' under the new Executive Order) has been
prepared and is available in the docket for inspection or copying where
indicated under ADDRESSES. The purpose of Executive Order 12866 (and
its predecessor) is to improve the internal management of the federal
government and it does not create any procedural or substantive rights
or benefits enforceable at law by a party against the United States.
These regulations are promulgated under section 1016(a) of OPA 90
(33 U.S.C. 2716) and section 108(a)(1) of CERCLA (42 U.S.C.
9608(a)(1)), concerning the ``establishment and maintenance'' of
evidence of financial responsibility for vessels. This rulemaking is
intended to implement that joint statutory mandate and, therefore,
primarily is limited to matter relating to ``establishment and
maintenance'' of financial responsibility, such as how to apply for a
COFR and how to establish evidence of financial responsibility.
This rule imposes no new paperwork burdens on vessel operators. The
methods for applying for a COFR and establishing evidence are similar
to those in the preexisting regulations under the FWPCA, TAPAA, OCSLAA,
and DPA. Vessel operators will be required to complete and submit a
prescribed application form for a COFR and, if other than a self-
insurer, a prescribed form, completed by their guarantors, evidencing
acceptable financial responsibility. A similar requirement, however, is
being imposed presently under preexisting 33 CFR parts 130, 131, and
132, and subpart D of part 137. This rule not only adopts these
application procedures but actually reduces the paperwork burden by
requiring that only one application be submitted under OPA 90/CERCLA,
rather than separate applications under the FWPCA, TAPAA, and OCSLAA,
which is now the case. The implementation schedule, discussed under
Sec. 138.15, will also alleviate some burden in that, for most vessels,
new COFRs will only have to be obtained at their normal renewal cycle.
This rule may affect a slightly different population of vessels
than under the preexisting regulations. This difference results from
section 1016(a) of OPA 90 (33 U.S.C. 2716(a)). Before OPA 90 was
enacted, the most encompassing Federal statute concerning financial
responsibility (the FWPCA) was limited to vessels over 300 gross tons.
(TAPAA, OCSLAA, and DPA have no vessel tonnage limits, but very few
vessels of 300 gross tons or less operate under those regimes.) Under
section 1016(a)(2) of OPA 90, all vessels ``using the waters of the
exclusive economic zone to transship or lighter oil destined for a
place subject to the jurisdiction of the United States'' also must meet
the financial responsibility requirements. The exact number of vessels
of 300 gross tons or less engaged in transshipping or lightering oil,
not already subject to the preexisting regulations, is unknown. The
Coast Guard requested information on the vessel population not subject
to a financial responsibility regime under Federal law before enactment
of OPA 90 and which must now comply with the requirements of section
1016 of OPA 90, but none was provided.
Regulatory Impact Analysis
General Issues
Due to the substantial public interest in this rulemaking, on July
21, 1993, a Preliminary Regulatory Impact Analysis was made available
for public comment (58 FR 38994), in accordance with the request of
many commenters to the NPRM. Nearly 600 copies of the PRIA were
distributed worldwide. The PRIA analyzed the costs and benefits of four
options, namely: (1) Retain the preexisting rules; (2) adopt the NPRM;
(3) amend the NPRM to accept entry in a Protection and Indemnity Club
(P&I Club) as an asset for self-insurance; and (4) amend the NPRM's
self-insurance formulate (i.e., eliminate the working capital
requirement and/or the requirement to maintain assets in the United
States by allowing worldwide assets to be measured against worldwide
liabilities). The PRIA noted that these were the options (not all of
which are, necessarily, legally permissible options) most often
mentioned in comments to the NPRM.
Over 60 letters commenting on the PRIA were received. The comments
fall into four general categories: (1) Those that support the NPRM; (2)
those that support the P&I Club membership as an asset option, with an
added feature of making the Oil Spill Liability Trust Fund an assignee
of the member's rights under the Club policy; (3) those that oppose the
NPRM altogether (primarily the P&I Clubs and Lloyd's of London); (4)
and those that support enactment of legislation to create a Mandatory
Excess Insurance Facility (MEIF), to address tank vessel owners'
desires to be granted higher levels of insurance than appear to be
available in the commercial marketplace. The MEIF then could also serve
as a COFR insurance guarantor.
The central concern expressed by most vessel owners and operators
is how to provide evidence of financial responsibility if their P&I
Clubs do not issue insurance guaranties. The Clubs act in unison
through the International Group of P&I Clubs. They have unequivocally
stated in their comments that these same vessel owners and operators
will not permit the Clubs to provide insurance guaranties, and that
there is no rule change that could be made to induce them to do so. The
reason for this position has not, in the Coast Guard's judgment, been
made clear nor has it been adequately justified. Thus, the PRIA and
final RIA assess the so-called ``train-wreck'' scenario, i.e., the
unlikely scenario whereby the NPRM is adopted as a rule, the P&I Clubs
remain prohibited by their shipowner members to provide insurance
guaranties, and no other sources of financial responsibility exist. The
final RIA takes into account all the comments and concludes that a
``train-wreck'' is not likely to occur because it appears that other
sources of financial responsibility will develop. Even if they do not
develop, there need not be a ``train-wreck'' because the shipowners can
vote to permit their Clubs to issue the guaranties. The choice of
compliance with this rule is entirely up to the shipowners.
Summary of Costs and Benefits
The options have been measured against the fundamental legislative
precept, namely, that the polluter should pay promptly and with
assurance for removal costs and damages resulting from an oil spill or
release of hazardous substances. The option that most closely fulfills
this congressional objective is the approach proposed in the NPRM and
adopted in this rule. It is legally defensible, it enhances claimants'
rights to compensation, it does not impose undue administrative
burdens, and it need not impose measurable costs on consumers. On the
other hand, the other options all lack the Congressionally intended
assurance that the polluter or its guarantor will pay promptly for
costs and damages.
The ``do nothing'' approach means that financial responsibility is
maintained at much lower levels than are required by OPA 90, and that
CERCLA vessel financial responsibility remains unimplemented. If an oil
spill or hazardous substance release occurs under this circumstance,
there is serious concern whether a guarantor or the spiller will pay
removal costs and damages that exceed the lower, preexisting limits of
liability.
The P&I Club membership-as-an-asset approach is not supported by
Generally Accepted Accounting Principles, and allows the P&I Clubs to
avoid paying claims by invoking an unlimited number of policy defenses
and the pay-to-be-paid rule. Under this rule, a Club only is required
to ``indemnify'' its shipowner-member for payments actually made by the
shipowner. In the case of bankruptcy, for example, where the shipowner
is discharged from paying removal costs and damages, there would be no
obligation for the shipowner's P&I Club to pay claimants. This option,
even with the added feature of the assignment clause, offers not much
greater protection to claimants because policy defenses could still be
invoked. Additionally, the assignment clause would require the assent
of the P&I Clubs, and there is no evidence in the record that the Clubs
would provide this assent. Hence, there is no assurance that shipowners
would have this method available to them, even if it could be adopted
under OPA 90 and CERCLA.
The Mandatory Excess Insurance Facility (MEIF), proposed primarily
to provide shipowners with very high levels of insurance, could provide
assurance of payment fulfilling, on the surface, the polluter pays
concept. This approach, however, requires legislation, a necessarily
long-term endeavor. Its initially conceived funding mechanisms place
the cost of this approach on U.S. consumers and taxpayers, but the
funding mechanisms have not been fully developed. A full assessment of
the MEIF, including the demands that might be placed on the public
treasury, has not been possible. Even though the funding details have
not been fully developed, the MEIF, overall, would be a more costly
option than the NPRM approach. Its tanker owner proponents have stated
that their primary objective is to address the lack of high levels of
insurance to cover a shipowner's potential unlimited liability under
OPA 90. Most of the MEIF's costs are attributable to the higher levels
of insurance and not with OPA 90 financial responsibility requirements.
For these reasons, and since there appear to be commercial alternatives
to P&I Club insurance guaranties, the MEIF currently is not viewed as a
timely or practical source of insurance guaranties. Nevertheless, the
Coast Guard understands tankers owners' concerns regarding the lack of
very high levels of oil pollution insurance in the commercial
marketplace. The Coast Guard intends to continue examining the MEIF for
this purpose, recognizing that this is, fundamentally, a liability
issue beyond the scope of this rulemaking and one that would have to be
dealt with through legislation.
The main concern about the NPRM approach is whether it will cause a
``train-wreck.'' Representatives of two new insurance entities now
being formed commented in response to the PRIA that they were
developing insurance alternatives to P&I Clubs for the purpose of
providing financial responsibility guaranties. Representatives of
surety companies commented that surety bonds can be a source of
financial responsibility guaranties. The major provider of financial
responsibility backing for FWPCA COFRs for the inland and near coastal
fleet, the Water Quality Insurance Syndicate, has not stated any
refusal to issue OPA 90 and CERCL A financial responsibility
guaranties. One domestic insurance company and one independent P&I Club
voiced an interest as well, and many domestic and foreign insurance
companies would be able to issue guaranties immediately, if they chose
to do so. Thus, the record demonstrates that alternative sources of
financial responsibility backing are likely to be available, suggesting
that the ``train-wreck'' will not occur.
This is not to say that if the P&I Clubs and their members maintain
their refusal to issue financial responsibility guaranties this rule
will not result in more costs to the shipowner. Most of those costs are
likely to be passed to the end consumer, principally in a fractional
increase in the cost of a gallon of refined product, such as gasoline.
Assessment of costs is very difficult because, for commercial reasons,
the intended insurance providers have been unwilling to submit cost
estimates to the docket. On the other hand, one surety company did
submit rough cost estimates. The final RIA makes a number of
assumptions about possible costs, and calculates the possible range of
costs. The presumed ``worst-case'' cost translates to less than two-
fifths of one cent per gallon of refined product.
The final RIA, which is available in the docket for inspection or
copying, as indicated under ADDRESSES, details the cost calculations
and assumptions. The Coast Guard concludes that the cost of the
approach taken in this rule is minimal and that the benefits to the
public justify these costs. Further, since these costs need not be
incurred, the Coast Guard concludes that cost is not the sole
controlling factor in the decision on which option to select.
Small Entities
In the NPRM, the Coast Guard solicited comments from small
businesses, as defined by the Regulatory Flexibility Act (5 U.S.C. 601
et seq.), to ascertain whether the proposed rule will have a
significant economic impact on their business. One commenter, the Delta
Queen Steamboat Company (``Delta''), seeks exemption from this
regulation, as it believes is permitted under 5 U.S.C. 603(c)(4).
Delta states that it is a small cruise line operator, whose two
overnight, passenger, paddlewheel steamboats operate on the inland
rivers of the Mississippi, Ohio, Cumberland and Tennessee. The largest
of those vessels, at 3,364 gross tons, requires combined OPA 90 and
CERCLA financial responsibility under the NPRM of $7,018,400. Even
though the company stated it currently has $500,000,000 of oil
pollution insurance with a P&I Club, the Club has indicated that it
will not provide a guaranty of insurance for purposes of the COFR rule.
Delta also states that it cannot demonstrate financial responsibility
using the other methods listed in the NPRM. Therefore, Delta requests
exemption from the final COFR rule.
The Coast Guard believes that Delta will be able to demonstrate
financial responsibility through alternative means, and is in no
different position than any other vessel owner or operator. For
example, one of the alternative insurance companies indicated that it
believed the cost of insurance for non-tankers would be minimal. The
amount of financial responsibility required by Delta is within the
capacity of the Water Quality Insurance Syndicate, which has not
declared it will not provide the guarantees of insurance, and any
number of surety companies.
Title 5 U.S.C. 603(c)(4) provides that consistent with the
objectives of the relevant statutes (in this case OPA 90 and CERCLA),
this analysis shall discuss significant alternatives, such as an
exemption from the rule for small entities. Neither OPA 90 nor CERCLA
provide a basis to exempt covered vessels from the requirement to
demonstrate evidence of financial responsibility. Accordingly, no
provision for exemptions is provided in this rule. As noted above, no
exemption is warranted in the case of Delta (or similar entities) as
alternative sources of financial responsibility guaranties are expected
to be available.
This rule will have minimal direct economic impact on small
business. The rule retains procedures presently in effect, and through
consolidation, eliminates duplication of effort on the part of the
regulated industry. Therefore, the Coast Guard certifies under section
605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) that
this rule will not have a significant economic impact on a substantial
number of small entities.
Collection of Information
This rule contains collection-of-information requirements. The
Coast Guard has submitted these requirements to the Office of
Management and Budget (OMB) for review under section 3504(h) of the
Paperwork Reduction Act (44 U.S.C. 3501 et seq.), and OMB has approved
them. The information collection requirements under this rule continue
previous requirements. OMB Control Number 2115-0545 was assigned to 33
CFR parts 130, 131, 132, and 137. The collection-of-information
requirements in these four parts are being consolidated into part 138.
Under this rule, the need to apply for separate Certificates under
separate laws is eliminated, along with the associated paperwork.
Because of the phase-in provisions in this rule, the information
collection requirements in 33 CFR parts 130, 131, 132, and 137 remain
in effect for varying periods of time. The table in 33 part 4 is being
amended to show this approval number.
Federalism
The Coast Guard has analyzed this rule under the principles and
criteria contained in Executive Order 12612. Section 1018 of OPA 90
specifically allows states to enact their own liability laws, and many
states have indeed established their own requirements. Therefore, the
Coast Guard has determined that this rule does not have sufficient
federalism implications to warrant the preparation of a Federalism
Assessment.
Environment
The Coast Guard considered the environmental impact of this rule
and concluded that, under section 2.B.2 of Commandant Instruction
M16475.1B, this rule is categorically excluded from further
environmental documentation. This rulemaking is administrative in
nature and has no environmental impact. This rule provides the
procedure by which a vessel operator establishes evidence of financial
responsibility.
A ``Categorical Exclusion Determination'' is available in the
docket for inspection or copying where indicated under ADDRESSES.
List of Subjects
33 CFR Part 4
Reporting and recordkeeping requirements.
33 CFR Part 130
Insurance, Maritime carriers, Reporting and recordkeeping
requirements, Water pollution control.
33 CFR Part 131
Alaska, Insurance, Maritime carriers, Oil pollution, Pipelines,
Reporting and recordkeeping requirements.
33 CFR Part 132
Continental shelf, Insurance, Maritime carriers, Oil pollution,
Reporting and recordkeeping requirements.
33 CFR Part 137
Claims, Harbors, Insurance, Oil pollution, Reporting and
recordkeeping requirements, Vessels.
33 CFR Part 138
Insurance, Maritime carriers, Reporting and recordkeeping
requirements, Water pollution control.
For the reasons set out in the preamble, the Coast Guard amends 33
CFR parts 4, 130, 131, 132, and 137, and adds a new part 138, as
follows:
PART 4--OMB CONTROL NUMBERS ASSIGNED PURSUANT TO THE PAPERWORK
REDUCTION ACT
1. The authority citation for part 4 continues to read as follows:
Authority: 44 U.S.C. 3507; 49 CFR 1.45(a).
Sec. 4.02 [Amended]
2. In Sec. 4.02, add the following entries in numerical order to
the table:
Part 130
2115-0545
Part 131
2115-0545
Part 132
2115-0545
Part 138
2115-0545.
PART 130--FINANCIAL RESPONSIBILITY FOR WATER POLLUTION
3. The authority citation for part 130 is revised to read as
follows:
Authority: 33 U.S.C. 2716; 49 CFR 1.46.
4. Section 130.0 is added to read as follows:
Sec. 130.0 Dates.
(a) A Certificate will not be issued under this part on or after
December 28, 1997.
(b) A Certificate issued under this part on or after July 1, 1994,
has the expiration date specified in Sec. 138.15 of this chapter.
PART 131--FINANCIAL RESPONSIBILITY FOR OIL POLLUTION--ALASKA
PIPELINE
5. The authority citation for part 131 is revised to read as
follows:
Authority: 33 U.S.C. 2716; 49 CFR 1.46.
6. Section 131.0 is added to read as follows:
Sec. 131.0 Dates.
(a) A Certificate will not be issued under this part on or after
July 1, 1995.
(b) A Certificate issued under this part on or after July 1, 1994,
has the expiration date specified in Sec. 138.15 of this chapter.
PART 132--FINANCIAL RESPONSIBILITY FOR OIL POLLUTION--OUTER
CONTINENTAL SHELF
7. The authority citation for part 132 is revised to read as
follows:
Authority: 33 U.S.C. 2716; 49 CFR 1.46.
8. Section 132.0 is added to read as follows:
Sec. 132.0 Dates.
(a) A Certificate will not be issued under this part on or after
December 28, 1997.
(b) A Certificate issued under this part on or after July 1, 1994,
has the expiration date specified in Sec. 138.15 of this chapter.
PART 137--DEEPWATER PORT LIABILITY FUND
9. The authority citation for part 137 is revised to read as
follows:
Authority: 33 U.S.C. 2716; 49 CFR 1.46.
Subparts B and C--[Removed and Reserved]
10. Subparts B and C of part 137 are removed and reserved.
Subpart D--[Amended]
11. Section 137.300 is added to subpart D to read as follows:
Sec. 137.300 Dates.
(a) The Fund Administrator will not accept certification of
coverage of a vessel under this part on or after July 1, 1995.
(b) The Fund Administrator will only accept certification of
coverage of a vessel under this part if that vessel holds a Certificate
issued under part 130 of this chapter.
Note: The functions of the Fund Administrator have been assumed
by the Director, National Pollution Funds Center, United States
Coast Guard, 4200 Wilson Boulevard, suite 1000, Arlington, Virginia
22203-1804, attention: cv. The telephone number is 703-235-4813 and
the facsimile number is 703-235-4835.
Subpart E--[Removed and Reserved]
12. Subpart E of part 137 is removed and reserved.
13. Part 138 is added to read as follows:
PART 138--FINANCIAL RESPONSIBILITY FOR WATER POLLUTION (VESSELS)
Sec.
138.10 Scope.
138.12 Applicability.
138.15 Implementation schedule.
138.20 Definitions.
138.30 General.
138.40 Where to apply for and obtain forms.
138.50 Time to apply.
138.60 Applications, general instructions.
138.65 Issuance and carriage of Certificates.
138.70 Renewal of Certificates.
138.80 Financial responsibility, how established.
138.90 Individual and Fleet Certificates.
138.100 Non-owning operator's responsibility for identification.
138.110 Master Certificates.
138.120 Certificates, denial or revocation.
138.130 Fees.
138.140 Enforcement.
138.150 Service of process.
Appendix A to Part 138--Application Form.
Appendix B to Part 138--Insurance Guaranty Form
Appendix C to Part 138--Master Insurance Guaranty Form
Appendix D to Part 138--Surety Bond Guaranty Form
Appendix E to Part 138--Financial Guaranty Form
Appendix F to Part 138--Master Financial Guaranty Form
Authority: 33 U.S.C. 2716; 42 U.S.C. 9608; sec. 7(b), E.O.
12580, 52 FR 2923, 3 CFR, 1987 Comp., p. 198; 49 CFR 1.46;
Sec. 138.30 also issued under the authority of 46 U.S.C. 2103; 46
U.S.C. 14302; 49 CFR 1.46.
Sec. 138.10 Scope.
This part sets forth the procedures by which an operator of a
vessel may establish and maintain, for itself, and, where the operator
is not the owner or demise charterer, for the owner and demise
charterer of the vessel, evidence of financial responsibility to cover
liability of the owner, operator, and demise charterer arising under--
(a) Section 1002 of the Oil Pollution Act of 1990 (OPA 90) (33
U.S.C. 2702); and
(b) Senate 107(a)(1) of the Comprehensive Environmental Response,
Compensation, and Liability Act, as amended (CERCLA) (42 U.S.C.
9607(a)(1)).
Sec. 138.12 Applicability.
(e) This part applies to--
(1) A tank vessel of any size, and to a foreign-flag vessel of any
size, using the waters of the exclusive economic zone to transship or
lighter oil (whether delivering or receiving) destined for a place
subject to the jurisdiction of the United States; and
(2) A vessel using the navigable waters of the United States or any
port or place subject to the jurisdiction of the United States,
including an offshore facility subject to the jurisdiction of the
United States, except--
(i) A vessel that is 300 gross tons or less; and
(ii) A non-self-propelled barge that does not carry oil as cargo or
fuel and does not carry hazardous substances as cargo.
(b) For the purposes of financial responsibility under OPA 90, a
mobile offshore drilling unit is treated as a tank vessel when it is
being used as an offshore facility and there is a discharge, or a
substantial threat of a discharge, of oil on or above the surface of
the water. A mobile offshore drilling unit is treated as a vessel other
than a tank vessel when it is not being used as an offshore facility.
(c) For the purposes of financial responsibility under CERCLA, this
part applies to a self-propelled vessel over 300 gross tons, even if it
does not carry hazardous substances.
(d) This part does not apply to a public vessel.
Sec. 138.15 Implementation schedule.
(a) A tank vessel is subject to the following implementation
schedule:
(1) Until December 28, 1994, a tank vessel is required to carry a
Certificate issued under parts 130, 131, and 132 of this chapter, as
may be applicable to that vessel. On or after that date, and until July
1, 1995, a non-self-propelled tank vessel must carry a Certificate
issued under parts 130, 131, and 132 of this chapter, as may be
applicable to that vessel, unless it carries a Certificate issued under
this part.
(2) A self-propelled tank vessel to which this part applies and
which carries a valid Certificate issued under part 130 of this chapter
may not operate on or after December 28, 1994, unless the operator of
that vessel has submitted to the Director, NPFC, before that date
acceptable evidence of financial responsibility applicable to that
vessel under this part. A self-propelled tank vessel covered by that
evidence of financial responsibility before December 28, 1994, may
continue to operate with the Certificate issued under part 130 of this
chapter. The expiration date of the Certificate issued under part 130
of this chapter for that vessel will be deemed to be December 28, 1995,
regardless of the expiration date appearing on the Certificate.
Thereafter, a Certificate issued under this part is required.
(3) A self-propelled tank vessel to which this part applies, but
which does not carry a valid Certificate issued under part 130 of this
chapter before December 28, 1994, may not operate on or after that date
unless it carries a Certificate under this part.
(4) A non-self-propelled tank vessel to which this part applies may
not operate on or after July 1, 1995, without a Certificate issued
under this part. A non-self-propelled tank vessel may continue to
operate with a Certificate issued under parts 130, 131, and 132 of this
chapter, as may be applicable to that vessel, until that date.
(b) A vessel that is not a tank vessel (non-tank vessel) is subject
to the following implementation schedule:
(1) Until December 28, 1997, a non-tank vessel is required to carry
a Certificate issued under parts 130 and 132 of this chapter, as may be
applicable to that vessel, unless that vessel carries a Certificate
issued under this part. On or after December 28, 1997, each non-tank
vessel subject to this part must carry a Certificate issued under this
part.
(2) A Certificate is issued, on and after December 28, 1994, and
before December 28, 1997, under parts 130 and 132 of this chapter only
to replace a lost Certificate or to replace a Certificate due to a
vessel or operator name change (a change of legal identity, such as
reincorporation or other reorganization, is not considered a name
change). The expiration date that will appear on the replacement
Certificate will be the same as the expiration date of the Certificate
being replaced. During that three-year time period, with respect to
part 132 of this chapter, the expiration date that will appear on a
Certificate being replaced, or on an existing Certificate being
renewed, will be adjusted to coincide with the expiration date of the
Certificate, if any, for that vessel issued under part 130 of this
chapter.
(3) A non-tank vessel that has a Certificate issued before December
28, 1994, under part 130 of this chapter is not required to carry a
Certificate under this part until the date of expiration of the
Certificate issued under part 130 of this chapter.
(4) Except as provided in paragraph (b)(5) of this section, a
Certificate issued on and after July 1, 1994, and before December 28,
1994, under parts 130 and 132 of this chapter is issued with an
expiration date three years from the date of issuance.
(5) If a Certificate issued under part 130 of this chapter with an
expiration date of December 28, 1994, or later is surrendered, and a
new Certificate is requested for the same non-tank vessel before
December 28, 1994, the new Certificate will have the same expiration
date as that of the surrendered Certificate.
(c) On or after July 1, 1994, a vessel that is subject to either
part 131 or 132, or both, of this chapter but that is not subject to
part 130 of this chapter because the vessel is 300 gross tons or less
is not required to comply with part 131 or 132 of this chapter, unless
that vessel is subject to this part under Sec. 138.12(a)(1).
Sec. 138.20 Definitions.
(a) As used in this part (including the appendices to this part),
the following terms have the same meaning as set forth in--
(1) Section 1001 of the Oil Pollution Act of 1990 (33 U.S.C. 2701),
respecting the financial responsibility referred to in
Sec. 138.10(b)(1): claimant, damages, discharge, exclusive economic
zone, navigable waters, mobile offshore drilling unit, natural
resources, offshore facility, oil, person, remove, removal, removal
costs, and United States; and
(2) Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. 9601), respecting the
financial responsibility referred to in Sec. 138.10(b)(2): claimant,
damages, environment, hazardous substance, navigable waters, natural
resources, person, release, remove, removal, and United States.
(b) As used in this part (including the appendices to this part)--
Acts means OPA 90 and CERCLA.
Applicant means an operator who has applied for a Certificate or
for the renewal of a Certificate under this part.
Application means ``Application for Vessel Certificate of Financial
Responsibility (Water Pollution)'', as illustrated in Appendix A of
this part.
Cargo means goods or materials on board a vessel for purposes of
transportation, whether proprietary or nonproprietary. A hazardous
substance or oil carried solely for use aboard the carrying vessel is
not ``cargo''.
CERCLA means title I of the Comprehensive Environmental Response,
Compensation, and Liability Act, as amended (42 U.S.C. 9601 et seq.).
Certificant means an operator who has been issued a Certificate
under this part.
Certificate means a ``Vessel Certificate of Financial
Responsibility (Water Pollution)'' issued under this part, unless
otherwise indicated.
Director, NPFC, means the head of the U.S. Coast Guard National
Pollution Funds Center (NPFC).
Financial responsibility means statutorily required financial
ability to meet liability under the Acts.
Fish tender vessel and fishing vessel have the same meaning as set
forth in 46 U.S.C. 2101.
Fuel means any oil or hazardous substance used or capable of being
used to produce heat or power by burning, including power to operate
equipment.
Guarantor means any person who provides evidence of financial
responsibility, under the Acts, on behalf of a vessel owner, operator,
and demise charterer. A vessel operator who can qualify as a self-
insurer may act as both a self-insurer of vessels it operates and as a
financial guarantor of other vessels, under Sec. 138.80(b)(4).
Hazardous material means a liquid material or substance that is--
(1) Flammable or combustible;
(2) Designated a hazardous substance under section 311(b) of the
Federal Water Pollution Control Act (33 U.S.C. 1221); or
(3) Designated a hazardous material under section 104 of the
Hazardous Material Transportation Act (49 App. U.S.C. 1803).
Incident means any occurrence or series of occurrences having the
same origin, involving one or more vessels, facilities, or any
combination thereof, resulting in the discharge or substantial threat
of discharge of oil into or upon the navigable waters or adjoining
shorelines or the exclusive economic zone.
Insurer is a type of guarantor and means one or more insurance
companies, associations of underwriters, shipowners' protection and
indemnity associations, or other persons, each of which must be
acceptable to the Coast Guard.
Master Certificate means a Certificate issued under this part to a
person acting as vessel operator in its capacity as a builder,
repairer, scrapper, or seller of vessels.
Offshore supply vessel has the same meaning as set forth in 46
U.S.C. 2101.
OPA 90 means title I of the Oil Pollution Act of 1990 (33 U.S.C.
2701 et seq.).
Operator means a person who is an owner, a demise charterer, or
other contractor, who conducts the operation of, or who is responsible
for the operation of, a vessel. A builder, repairer, scrapper, or
seller who is responsible, or who agrees by contract to become
responsible, for a vessel is an operator.
Owner means any person holding legal or equitable title to a
vessel. In a case where a Certificate of Documentation or equivalent
document has been issued, the owner is considered to be the person or
persons whose name or names appear thereon as owner. For purposes of
CERCLA only, ``owner'' does not include a person who, without
participating in the management of a vessel, holds indicia of ownership
primarily to protect the owner's security interest in the vessel.
Public vessel means a vessel
Owned or bareboat chartered by the United States, or by a State or
political subdivision thereof, or by a foreign nation, except when the
vessel is engaged in commerce.
Self-elevating lift vessel means a vessel with movable legs capable
of raising its hull above the surface of the sea and that is an
offshore work boat (such as a work barge) that does not engage in
drilling operations.
Tank vessel means a vessel (other than an offshore supply vessel, a
fishing or fish tender vessel of 750 gross or less that transfers fuel
without charge to a fishing vessel owned by the same person, or a
towing or pushing vessel (tug) simply because it has in its custody a
tank barge) that is constructed or adapted to carry, or that carries,
oil or liquid hazardous material in bulk as cargo or cargo residue, and
that--
(1) Is a vessel of the United States;
(2) Operates on the navigable waters; or
(3) Transfers oil or hazardous material in a place subject to the
jurisdiction of the United States.
Total Applicable Amount means the amount determined under
Sec. 138.80(f)(3).
Vessel means every description of watercraft or other artificial
contrivance used, or capable of being used, as a means of
transportation on water.
Sec. 138.30 General.
(a) The regulations in this part set forth the procedures whereby
an operator of a vessel subject to this part can demonstrate that it
and the owner and demise charterer of the vessel are financially able
to meet potential liability for costs and damages in the amounts
established by this part. The owner, operator, and demise charterer are
strictly, jointly, and severally liable for the costs and damages
resulting from an incident or a release or threatened release, but
together they need only establish and maintain an amount of financial
responsibility equal to the single limit of liability per incident,
release, or threatened release. Only that portion of the evidence of
financial responsibility under this part with respect to--
(1) OPA 90 is required to be made available by a guarantor for the
costs and damages related to an incident where there is not also a
release or threatened release; and
(2) CERCLA is required to be made available by a guarantor for the
costs and damages related to a release or threatened release where
there is not also an incident. A guarantor (or a self-insurer for whom
the exceptions to limitations of liability are not applicable),
therefore, is not required to apply the entire amount of financial
responsibility to an incident involving oil alone or a release or
threatened release involving a hazardous substance alone.
(b) Where a vessel is operated by its owner, or the owner is
responsible for its operation, the owner is considered to be the
operator and shall submit the application for a Certificate. In all
other cases, the vessel operator shall submit the application. A time
or voyage charterer that does not assume responsibility for the
operation of the vessel is not considered an operator for the purposes
of this part.
(c) For a United States-flag vessel, the applicable gross tons or
gross tonnage, as referred to in this part, is determined as follows:
(1) For a documented U.S. vessel measured under both 46 U.S.C.
Chapters 143 (Convention Measurement) and 145 (Regulatory Measurement).
The vessel's regulatory gross tonnage is used to determine whether the
vessel exceeds 300 gross tons where that threshold applies under the
Acts. If the vessel's regulatory tonnage is determined under the Dual
Measurement System in 46 CFR part 69, subpart D, the higher gross
tonnage is the regulatory tonnage for the purposes of the 300 gross ton
threshold. The vessel's gross tonnage as measured under the
International Convention on Tonnage Measurement of Ships, 1969
(``Convention''), is used to determine the vessel's required amount of
financial responsibility, and limit of liability under section 1004(a)
of OPA 90 and under section 107(a) of CERCLA.
(2) For all other United States vessels. The vessel's gross tonnage
under 46 CFR part 69 is used for determining both the 300 gross ton
threshold, the required amount of financial responsibility, and limit
of liability under section 1004(a) of OPA 90 and under section 107(a)
of CERCLA. If the vessel is measured under the Dual Measurement System,
the higher gross tonnage is used in all determinations.
(d) For a vessel of a foreign country that is a party to the
Convention, gross tonnage, as referred to in this part, is determined
as follows:
(1) For a vessel assigned, or presently required to be assigned,
gross tonnage under Annex I of the Convention. The vessel's gross
tonnage as measured under Annex I of the Convention is used for
determining the 300 gross ton threshold, if applicable, the required
amount of financial responsibility, and limit of liability under
section 1004(a) of OPA 90 and under section 107(a) of CERCLA.
(2) For a vessel not presently required to be assigned gross
tonnage under Annex I of the Convention. The highest gross tonnage that
appears on the vessel's certificate of documentation or equivalent
document and that is acceptable to the Coast Guard under 46 U.S.C.
chapter 143 is used for determining the 300 gross ton threshold, if
applicable, the required amount of financial responsibility, and limit
of liability under section 1004(a) of OPA 90 and under section 107(a)
of CERCLA. If the vessel has no document or the gross tonnage appearing
on the document is not acceptable under 46 U.S.C. chapter 143, the
vessel's gross tonnage is determined by applying the Convention
Measurement System under 46 CFR part 69, subpart B, or if applicable,
the Simplified Measurement System under 46 CFR part 69, subpart E. The
measurement standards applied are subject to applicable international
agreements to which the United States Government is a party.
(e) For a vessel of a foreign country that is not a party to the
Convention, gross tonnage, as referred to in this part, is determined
as follows:
(1) For a vessel measured under laws and regulations found by the
Commandant to be similar to Annex I of the Convention. The vessel's
gross tonnage under the similar laws and regulations is used for
determining the 300 gross ton threshold, if applicable, the required
amount of financial responsibility, and limit of liability under
section 1004(a) of OPA 90 and under section 107(a) of CERCLA. The
measurement standards applied are subject to applicable international
agreements to which the United States Government is a party.
(2) For a vessel not measured under laws and regulations found by
the Commandant to be similar to Annex I of the Convention. The vessel's
gross tonnage under 46 CFR part 69, subpart B, or, if applicable,
subpart E, is used for determining the 300 gross ton threshold, if
applicable, the required amount of financial responsibility, and limit
of liability under section 1004(a) of OPA 90 and under section 107(a)
of CERCLA. The measurement standards applied are subject to applicable
international agreements to which the United States is a party.
(f) A person who agrees to act as a guarantor or a self-insurer is
bound by the vessel's gross tonnage as determined under paragraphs (c),
(d), or (e) of this section, regardless of what gross tonnage is
specified in an application or guaranty form illustrated in the
appendices to this part. Guarantors, however, may limit their liability
under a guaranty of financial responsibility to the applicable gross
tonnage appearing on a vessel's International Tonnage Certificate or
other official, applicable certificate of measurement and shall not
incur any greater liability with respect to that guaranty, except when
the guarantors knew or should have known that the applicable tonnage
certificate was incorrect.
Sec. 138.40 Where to apply for and obtain forms.
(a) An operator shall file an application for a Certificate and a
renewal of a Certificate together with fees and evidence of financial
responsibility, with the Coast Guard National Pollution Funds Center at
the following address: U.S. Coast Guard, National Pollution Funds
Center (cv), 4200 Wilson Boulevard, Suite 1000, Arlington, VA 22203-
1804, telephone (703) 235-4813, Telex 248324 (Answerback CGNPFC UR),
Telefax (703) 235-4835.
(b) Forms may be obtained at the address in paragraph (a) of this
section, and all requests for assistance, including telephone
inquiries, in completing applications should be directed to the U.S.
Coast Guard at that same address.
Sec. 138.50 Time to apply.
(a) A vessel operator who wishes to obtain a Certificate shall file
a completed application form, evidence of financial responsibility and
appropriate fees at least 21 days prior to the date the Certificate is
required. The Director, NPFC, may waive this 21-day requirement.
(b) The Director, NPFC, generally processes applications in the
order in which they are received at the National Pollution Funds
Center.
Sec. 138.60 Applications, general instructions.
(a) The application for a Certificate (Form CG-5585) is illustrated
in Appendix A of this part. An application and all supporting documents
must be in English. All monetary terms must be expressed in United
States dollars.
(b) An authorized official of the applicant shall sign the
application. The title of the signer must be shown in the space
provided on the application.
(c) The application must be accompanied by a written statement
providing authority to sign, where the signer is not disclosed as an
individual (sole proprietor) applicant, a partner in a partnership
applicant, or a director, chief executive officer, or any other duly
authorized officer of a corporate applicant.
(d) If, before the issuance of a Certificate, the applicant becomes
aware of a change in any of the facts contained in the application or
supporting documentation, the applicant shall, within five business
days of becoming aware of the change, notify the Director, NPFC, in
writing, of the change.
Sec. 138.65 Issuance and carriage of Certificates.
Upon the satisfactory demonstration of financial responsibility and
payment of fees, the Director, NPFC, issues a Vessel Certificate of
Financial Responsibility (Water Pollution), the original of which
(except as provided in Secs. 138.90 (a) and (b) and 138.110(f)) is to
be carried aboard the vessel covered by the Certificate. The carriage
of a valid Certificate or authorized copy indicates compliance with
these regulations. Failure to carry a valid Certificate or authorized
copy subjects the vessel to enforcement action, except where a
Certificate is removed temporarily from a vessel for inspection by a
United States Government official.
Sec. 138.70 Renewal of Certificates.
(a) An operator shall file a written application for the renewal of
a Certificate at least 21 days, but not earlier than 90 days, before
the expiration date of the Certificate. Except as provided in paragraph
(c) of this section, a letter may be used for this purpose. The
Director, NPFC, may waive this 21-day requirement.
(b) The applicant shall identify in the renewal application any
changes which have occurred since the original application for a
Certificate was filed, and set forth the correct information in full.
(c) An applicant that applies for the first time for a Certificate
issued under this part to replace a Certificate issued under part 130
of this chapter shall submit an application form illustrated in
Appendix A of this part. An applicant is not required to pay an
application fee under Sec. 138.130(c) for this first-time application.
Sec. 138.80 Financial responsibility, how established.
(a) General. In addition to submitting an application and fees, an
applicant shall submit, or cause to be submitted, evidence of financial
responsibility in an amount determined under Sec. 138.80(f). A
guarantor may submit directly to the Director, NPFC, the evidence of
financial responsibility.
(b) Methods. An applicant shall establish evidence of financial
responsibility by one or more of the following methods:
(1) Insurance. By filing with the Director, NPFC, an insurance
guaranty form CG-5586, illustrated in Appendix B of this part (or, when
applying for a Master Certificate, a master insurance guaranty form CG-
5586-1, illustrated in Appendix C of this part), executed by not more
than four insurers that have been found acceptable by and remain
acceptable to the Director, NPFC, for purposes of this part.
(2) Surety bond. By filing with the Director, NPFC, a surety bond
guaranty form CG-5586-2, illustrated in Appendix D of this part,
executed by not more than four acceptable surety companies certified by
the United States Department of the Treasury with respect to the
issuance of Federal bonds in the maximum penal sum of each bond to be
issued under this part.
(3) Self-insurance. By filing the financial statements specified in
paragraph (b)(3)(i) of this section for the applicant's last fiscal
year preceding the date of application and by demonstrating that the
applicant maintains, in the United States, working capital and net
worth each in amounts equal to or greater than the total applicable
amount calculated in accordance with Sec. 138.80(f), based on a vessel
carrying hazardous substances as cargo. As used in this paragraph,
working capital means the amount of current assets located in the
United States, less all current liabilities anywhere in the world; and
net worth means the amount of all assets located in the United States,
less all liabilities anywhere in the world. After the initial
submission, for each of the applicant's fiscal years, the applicant or
certificant shall submit statements as follows:
(i) Initial and annual submissions. An applicant or certificant
shall submit annual, current, and audited non-consolidated financial
statements with the associated notes, certified by an independent
Certified Public Accountant. These financial statements must be
accompanied by an additional statement from the Treasurer (or
equivalent official) of the applicant or certificant certifying both
the amount of current assets and the amount of total assets included in
the accompanying balance sheet, which are located in the United States.
If the financial statements cannot be submitted in non-consolidated
form, a consolidated statement may be submitted if accompanied by an
additional statement prepared by the same Certified Public Accountant,
certifying to the amount by which the applicant's or certificant's--
(A) Total assets, located in the United States, exceed its total
(i.e., worldwide) liabilities; and
(B) Current assets, located in the United States, exceed its total
(i.e., worldwide) current liabilities. This additional statement must
specifically name the applicant or certificant, indicate that the
amounts so certified relate only to the applicant or certificant, apart
from any other affiliated entity, and identify the consolidated
financial statement to which it applies.
(ii) Semiannual submissions. When the applicant's or certificant's
demonstrated net worth is not at least ten times the total applicable
amount of financial responsibility, the applicant's or certificant's
Treasurer (or equivalent official) shall file affidavits covering the
first six months of the applicant's or certificant's fiscal year. The
affidavits must state that neither the working capital nor the net
worth have, during the first six months of the current fiscal year,
fallen below the applicant's or certificant's required amount of
financial responsibility as determined in accordance with this part.
(iii) Additional submissions. An applicant or certificant--
(A) Shall, upon request of the Director, NPFC, submit additional
financial information; and
(B) Who establishes financial responsibility under paragraph (b)(3)
of this section shall notify the Director, NPFC, within five business
days of the date the applicant or certificant knows, or has reason to
believe, that the working capital or net worth has fallen below the
amounts required by this part.
(iv) Time for submissions. All required annual financial statements
must be received by the Director, NPFC, within 90 days after the close
of the applicant's or certificant's fiscal year, and all affidavits
required by paragraph (b)(3)(ii) of this section within 30 days after
the close of the applicable six-month period. Upon written request, the
Director, NPFC, may grant an extension of the time limits for filing
the annual financial statements or affidavits. An applicant or
certificant that requests an extension must set forth the reason for
the extension and deliver the request at least 15 days before the
statements or affidavits are due. The Director, NPFC, will not consider
a request for an extension of more than 60 days.
(v) Failure to submit. The Director, NPFC, may revoke a certificate
for failure of the certificant to submit any statement, data,
notification, or affidavit required by paragraph (b)(3) of this
section.
(vi) Waiver of working capital. The Director, NPFC, may waive the
working capital requirement for any applicant or certificant that--
(A) Is a regulated public utility, a municipal or higher-level
governmental entity, or an entity operating solely as a charitable,
non-profit making organization qualifying under section 501(c) Internal
Revenue Code. The applicant or certificant must demonstrate in writing
that the grant of a waiver would benefit a local public interest; or
(B) Demonstrates in writing that working capital is not a
significant factor in the applicant's or certificant's financial
condition. An applicant's or certificant's net worth in relation to the
amount of its required amount of financial responsibility and a history
of stable operations are the major elements considered by the Director,
NPFC.
(4) Financial Guaranty. By filing with the Director, NPFC, a
Financial Guaranty Form CG-5586-3, illustrated in Appendix E of this
part (when applying for a Master Certificate, a Master Financial
Guaranty Form CG-5586-4, illustrated in Appendix F of this part),
executed by not more than four financial guarantors, such as a parent
or affiliate acceptable to the Coast Guard. A financial guarantor shall
comply with all of the self-insurance provisions of paragraph (b)(3) of
this section. In addition, a person that is a financial guarantor for
more than one applicant or certificant shall have working capital and
net worth no less than the aggregate total applicable amounts of
financial responsibility provided as a guarantor for each applicant or
certificant, plus the amount required to be demonstrated by a self-
insurer under this part, if also acting as a self-insurer.
(5) Other evidence of financial responsibility. The Director, NPFC,
will not accept a self-insurance method other than the one described in
paragraph (b)(3) of this section. An applicant may in writing request
the Director, NPFC, to accept a method different from one described in
paragraph (b) (1), (2), or (4) of this section to demonstrate evidence
of financial responsibility. An applicant submitting a request under
this paragraph shall submit the request to the Director, NPFC, at least
45 days prior to the date the Certificate is required. The applicant
shall describe in detail the method proposed, the reasons why the
applicant does not wish to use or is unable to use one of the methods
described in paragraph (b) (1), (2), or (4) of this section, and how
the proposed method assures that the applicant is able to fulfill its
obligation to pay costs and damages in the event of an incident or a
release or threatened release. The Director, NPFC, will not accept a
method under this paragraph that merely deletes or alters a provision
of one of the methods described in paragraph (b) (1), (2), or (4) of
this section (for example, one that alters the termination clause of
the insurance guaranty form illustrated in Appendix B of this part). An
applicant that makes a request under this paragraph shall provide the
Director, NPFC, a proposed guaranty form that includes all the elements
described in paragraphs (c) and (d) of this section. A decision of the
Director, NPFC, not to accept a method requested by an applicant under
this paragraph is final agency action.
(c) Forms--(1) Multiple guarantors. Four or fewer insurers (a lead
underwriter is considered to be one insurer) may jointly execute an
insurance guaranty form. Four or fewer sureties (including lead
sureties) may jointly execute a surety bond guaranty form. Four or
fewer financial guarantors may jointly execute a financial guaranty
form. If more than one insurer, surety, or financial guarantor executes
the relevant form--
(i) Each is bound for the payment of sums only in accordance with
the percentage of vertical participation specified on the relevant form
for that insurer, surety, or financial guarantor. Participation in the
form of layering (tiers, one in excess of another) is not acceptable;
only vertical participation on a percentage basis is acceptable unless
none of the participants specifies a percent of participation. If no
percentage of participation is specified for an insurer, surety, or
financial guarantor, the liability of that insurer, surety, or
financial guarantor is joint and several for the total of the
unspecified portions; and
(ii) The guarantors must designate a lead guarantor having
authority to bind all guarantors for actions required of guarantors
under the Acts, including but not limited to receipt of designation of
source, advertisement of a designation, and receipt and settlement of
claims.
(2) Operator name. An applicant shall ensure that each form
submitted under this part sets forth in full the correct legal name of
the vessel operator to whom a certificate is to be issued.
(d) Direct Action. (1) Acknowledgment. Any evidence of financial
responsibility submitted under this part must contain an acknowledgment
by the insurer or other guarantor that an action in court by a claimant
(including a claimant by right of subrogation) for costs and damage
claims arising under the provisions of the Acts, may be brought
directly against the insurer or other guarantor. The evidence of
financial responsibility must also provide that, in the event an action
is brought under the Acts directly against the insurer or other
guarantor, the insurer or other guarantor may invoke only the following
rights and defenses:
(i) The incident, release, or threatened release was caused by the
willful misconduct of the person for whom the guaranty is provided.
(ii) Any defense that the person for whom the guaranty is provided
may raise under the Acts.
(iii) A defense relating to the amount of a claim or claims, filed
in any action in any court or other proceeding, that exceeds the amount
of the guaranty with respect to an incident or with respect to a
release or threatened release.
(iv) A defense relating to the amount of a claim or claims that
exceeds the amount of the guaranty, which amount is based on the gross
tonnage of the vessel as entered on the vessel's International Tonnage
Certificate or other official, applicable certificate of measurement,
except when the guarantor knew or should have known that the applicable
tonnage certificate was incorrect.
(v) The claim is not one made under either of the Acts.
(2) Limitation on guarantor liability. A guarantor that
participates in any evidence of financial responsibility under this
part shall be liable because of that participation, with respect to an
incident or a release or threatened release, in any proceeding only for
the amount and type of costs and damages specified in the evidence of
financial responsibility. A guarantor shall not be considered to have
consented to direct action under any law other than the Acts, or to
unlimited liability under any law or in any venue, solely because of
the guarantor's participation in providing any evidence of financial
responsibility under this part. In the event of any finding that
liability of a guarantor exceeds the amount of the guaranty provided
under this part, that guaranty is considered null and void with respect
to that excess.
(e) Public access to data. Financial data filed by an applicant,
certificant, and any other person is considered public information to
the extent required by the Freedom of Information Act (5 U.S.C. 552)
and permitted by the Privacy Act (5 U.S.C. 552a).
(f) Total applicable amount. (1) The applicable amount under OPA 90
is determined as follows:
(i) For a tank vessel--
(A) Over 300 gross tons (and a vessel of 300 gross tons or less
using the waters of the United States Exclusive Economic Zone to
transship or lighter oil destined for a place subject to the
jurisdiction of the United States, as specified in Sec. 138.12(a)(1))
but not exceeding 3,000 gross tons, the greater of $2,000,000 or $1,200
per gross ton; and
(B) Over 3,000 gross tons, the greater of $10,000,000 or $1,200 per
gross ton.
(ii) For a vessel other than a tank vessel, over 300 gross tons,
the greater of $500,000 or $600 per gross ton.
(2) The applicable amount under CERCLA is determined as follows:
(i) For a vessel over 300 gross tons carrying a hazardous substance
as cargo, the greater of $5,000,000 or $300 per gross ton.
(ii) For any other vessel over 300 gross tons, the greater of
$500,000 or $300 per gross ton.
(3) The total applicable amount is the maximum applicable amount
calculated under paragraph (f)(1) of this section plus maximum
applicable amount calculated under paragraph (f)(2) of this section.
Sec. 138.90 Individual and Fleet Certificates.
(a) The Director, NPFC, issues an individual Certificate for each
vessel listed on a completed application when the Director, NPFC,
determines that acceptable evidence of financial responsibility has
been provided and appropriate fees have been paid, except where a Fleet
Certificate is issued under this section or where a Master Certificate
is issued under Sec. 138.110. Each Certificate of any type issued under
this part is issued only in the name of a vessel operator and is
effective for not more than three years from the date of issue, as
indicated on each Certificate. An authorized official of the applicant
may submit to the Director, NPFC, a letter requesting that additional
vessels be added to a previously submitted application for an
individual Certificate. The letter must set forth all information
required in item 5 of the application form. The authorized official
shall also submit or cause to be submitted acceptable evidence of
financial responsibility, if required, and certification fees for these
additional vessels. The certificant shall carry the original individual
Certificate on the vessel named on the Certificate, except that a
legible copy (certified as accurate by a notary public or other person
authorized to take oaths in the United States) may be carried instead
of the original if the vessel is an unmanned barge and does not have a
document carrying device which the vessel operator believes would offer
suitable protection for the original Certificate. If a notarized copy
of an individual Certificate is carried aboard a barge, the Certificate
shall retain the original in the United States and shall make it
readily available for inspection by United States Government officials.
(b) An operator of two or more barges that are not tank vessels and
that from time to time may be subject to this part (e.g., a hopper
barge over 300 gross tons when carrying oily metal shavings or similar
cargo), so long as the operator of such a fleet is a self-insurer or
arranges with an acceptable guarantor to cover, automatically, all such
barges for which the operator may from time to time be responsible, may
apply to the Director, NPFC, for issuance of a Fleet Certificate. A
legible copy of the Fleet Certificate, certified as accurate by a
notary public or other person authorized to take oaths in the United
States, must be carried on each barge when subject to this part. In
addition, the certificant shall retain in the United States the
original Fleet Certificate and shall make it readily available for
inspection by United States Government officials. The original Fleet
Certificate, when invalid, must be completed on the reverse side and
returned immediately to the Director, NPFC, and all copies must be
destroyed. When the certificant ceases to be responsible for a barge
covered by a Fleet Certificate, the certificant shall immediately
destroy the copy of the Fleet Certificate carried aboard that barge.
(c) A person shall not make any alteration on any Certificate
issued under this part or copy of that Certificate, except the
notarized certifications permitted in Sec. 138.110(f) and paragraphs
(a) and (b) of this section. A Certificate or copy containing any
alteration is void.
(d) If, at any time after a Certificate has been issued, a
certificant becomes aware of a change in any of the facts contained in
the application or supporting documentation, the certificant shall
notify the Director, NPFC, in writing within 10 days of becoming aware
of the change. A vessel or operator name change or change of a
guarantor shall be reported as soon as possible by telefax or other
electronic means to the Director, NPFC, and followed by a written
notice sent within three business days.
(e) Except as provided in Sec. 138.90(f), at the moment a
certificant ceases to be the operator of a vessel for any reason,
including a vessel that is scrapped or transferred to a new operator,
the individual Certificate naming the vessel, and any copies of the
Certificate, are void and their further use is prohibited. In that
case, the certificant shall, within 10 days of the Certificate becoming
void, complete the reverse side of the original individual Certificate
naming the involved vessel and return the Certificate to the Director,
NPFC. If the Certificate cannot be returned because it has been lost or
destroyed, the certificant shall, within three business days, submit
the following information in writing to the Director, NPFC:
(1) The number of the individual Certificate and the name of the
vessel.
(2) The date and reason why the certificant ceased to be the
operator of the vessel.
(3) The location of the vessel on the date the certificant ceased
to be the operator.
(4) The name and mailing address of the person to whom the vessel
was sold or transferred.
(f) In the event of the temporary transfer of custody of an
unmanned barge certificated under this part, where the certificant
transferring the barge continues to be liable under the Acts and
continues to maintain on file with the Director, NPFC, acceptable
evidence of financial responsibility with respect to the barge, the
existing individual Certificate remains in effect. A temporary new
individual Certificate is not required. A transferee is encouraged to
require the transferring certificant to acknowledge in writing that the
transferring certificant agrees to remain responsible for pollution
liabilities.
Sec. 138.100 Non-owning operator's responsibility for identification.
(a) Each operator that is not an owner of a vessel certificated
under this part, other than an unmanned barge, shall ensure that the
original or a legible copy of the demise charter-party (or other
written document on the owner's letterhead, signed by the vessel owner,
which specifically identifies the vessel operator named on the
Certificate) is maintained on board the vessel.
(b) The demise charter-party or other document required by
paragraph (a) of this section must be presented, upon request, for
examination to a United States Government official.
Sec. 138.110 Master Certificates.
(a) A contractor or other person who is responsible for a vessel in
the capacity of a builder, a scrapper, or seller (including a repairer
who agrees to be responsible for a vessel under its custody) may apply
for a Master Certificate instead of applying for an individual
Certificate for each vessel. A Master Certificate covers all of the
vessels subject to this part held by the applicant solely for purposes
of construction, repair, scrapping, or sale. A vessel which is being
operated commercially in any business venture, including the business
of building, repairing, scrapping, or selling (e.g., a slop barge used
by a shipyard) cannot be covered by a Master Certificate. Any vessel
for which a Certificate is required, but which is not eligible for a
Master Certificate, must be covered by either an individual Certificate
or a Fleet Certificate.
(b) An applicant for a Master Certificate shall submit an
application form in the manner prescribed by Sec. 138.60. An applicant
shall establish evidence of financial responsibility in accordance with
Sec. 138.80, by submission, for example, of an acceptable Master
Insurance Guaranty Form, Surety Bond Guaranty Form, Master Financial
Guaranty Form, or acceptable self-insurance documentation. An
application must be completed in full, except for Item 5. The applicant
shall make the following statement in Item 5: ``This is an application
for a Master Certificate. The largest tank vessel to be covered by this
application is [insert applicable gross tons] gross tons. The largest
vessel other than a tank vessel is [insert applicable gross tons] gross
tons.'' The dollar amount of financial responsibility evidenced by the
applicant must be sufficient to meet the amount required under this
part.
(c) Each Master Certificate issued by the Director, NPFC,
indicates--
(1) The name of the applicant (i.e., the builder, repairer,
scrapper, or seller);
(2) The date of issuance and termination, encompassing a period of
not more than three years; and
(3) The gross tons of the largest tank vessel and gross tons of the
largest vessel other than a tank vessel eligible for coverage by that
Master Certificate. The Master Certificate does not identify the name
of each vessel covered by the Certificate.
(d) Each additional vessel which does not exceed the respective
tonnages indicated on the Master Certificate and which is eligible for
coverage by a Master Certificate is automatically covered by that
Master Certificate. Before acquiring a vessel, by any means, including
conversion of an existing vessel, that would have the effect of
increasing the certificant's required amount of financial
responsibility (above that provided for issuance of the existing Master
Certificate), the certificant shall submit to the Director, NPFC, the
following:
(1) Evidence of increased financial responsibility.
(2) A new certification fee.
(3) Either a new application or a letter amending the existing
application to reflect the new gross tonnage which is to be indicated
on a new Master Certificate.
(e) A person to whom a Master Certificate has been issued shall
submit to the Director, NPFC, every six months beginning the month
after the month in which the Master Certificate is issued, a report
indicating the name, previous name, type, and gross tonnage of each
vessel covered by the Master Certificate during the preceding six-month
reporting period and indicating which vessels, if any, are tank
vessels.
(f) The certificant shall ensure that a legible copy of the Master
Certificate (certified as accurate by a notary public or other person
authorized to take oaths in the United States) is carried aboard each
vessel covered by the Master Certificate. The certificant shall retain
the original Master Certificate at a location in the United States and
shall make it readily available for inspection by United States
Government officials.
(g) Upon revocation or other invalidation of the Master
Certificate, the certificant shall return the original Certificate
within 10 days to the Director, NPFC. The certificant shall ensure that
all copies of the Certificate are destroyed.
Sec. 138.120 Certificates, denial or revocation.
(a) The Director, NPFC, may deny a Certificate when an applicant--
(1) Willfully or knowingly makes a false statement in connection
with an application for an initial or renewal Certificate;
(2) Fails to establish acceptable evidence of financial
responsibility as required by this part;
(3) Fails to pay the required application or certificate fees;
(4) Fails to comply with or respond to lawful inquiries,
regulations, or orders of the Coast Guard pertaining to the activities
subject to this part; or
(5) Fails to timely file required statements, data, notifications,
or affidavits.
(b) The Director, NPFC, may revoke a Certificate when a
certificant--
(1) Willfully or knowingly makes a false statement in connection
with an application for an initial or a renewal Certificate, or in
connection with any other filing required by this part;
(2) Fails to comply with or respond to lawful inquiries,
regulations, or orders of the Coast Guard pertaining to the activities
subject to this part; or
(3) Fails to timely file required statements, data, notifications,
or affidavits.
(c) A Certificate is immediately invalid, and considered revoked,
without prior notice, when the certificant--
(1) Fails to maintain acceptable evidence of financial
responsibility as required by this part;
(2) Is no longer the responsible operator of the vessel in
question; or
(3) Alters any Certificate or copy of a Certificate except as
permitted by this part in connection with notarized certifications of
copies.
(d) The Director, NPFC, advises the applicant or certificant, in
writing, of the intention to deny or revoke a Certificate under
paragraph (a) or (b) of this section and states the reason therefor.
Written advice from the Director, NPFC, that an incomplete application
will be considered withdrawn unless it is completed within a stated
period, is the equivalent of a denial.
(e) If the intended revocation under paragraph (b) of this section
is based on failure to timely file the required financial statements,
data, notifications, or affidavits, the revocation is effective 10 days
after the date of the notice of intention to revoke, unless, before
revocation, the certificant demonstrates to the satisfaction of the
Director, NPFC, that the required documents were timely filed or have
been filed.
(f) If the intended denial is based on paragraph (a)(1) or (a)(4)
of this section, or the intended revocation is based on paragraph
(b)(1) or (b)(2) of this section, the applicant or certificant may
request, in writing, an opportunity to present information for the
purpose of showing that the applicant or certificant is in compliance
with the part. The request must be received by the Director, NPFC,
within 10 days after the date of the notification of intention to deny
or revoke. A Certificate subject to revocation under this paragraph
remains valid until the Director, NPFC, issues a written decision
revoking the Certificate.
(g) An applicant or certificant whose Certificate has been denied
under paragraph (a) of this section or revoked under paragraph (b) or
(c) of this section may request the Director, NPFC, to reconsider the
denial or revocation. The certificant shall file a request for
reconsideration, in writing, to the Director, NPFC, within 20 days of
the date of the denial or revocation. The certificant shall state the
reasons for reconsideration. The Director, NPFC, issues a written
decision on the request within 30 days of receipt, except that failure
to issue a decision within 30 days shall be deemed an affirmance of a
denial or revocation. Until the Director, NPFC, issues this decision, a
revoked certificate remains invalid. A decision by the Director, NPFC,
affirming a denial or revocation, is final agency action.
Sec. 138.130 Fees.
(a) The Director, NPFC, will not issue a Certificate until the fees
set forth in paragraphs (c) and (d) of this section have been paid.
(b) Fees must be paid in United States currency by check, draft, or
postal money order made payable to the ``U.S. Coast Guard''. Cash will
not be accepted.
(c) Except as provided in Sec. 138.70(c), an applicant that submits
an application for the first time under this part, shall pay an
initial, non-refundable application fee of $150 for each type of
application (i.e., individual Certificate(s), Fleet Certificate, and
Master Certificate). An applicant that submits an application for an
additional (i.e., supplemental) individual Certificate, or to replace,
amend or renew an existing Certificate, is not required to pay a new
application fee. However, if an applicant for any reason withdraws or
permits the withdrawal of an application for an individual
Certificate(s) and the applicant holds no valid individual
Certificate(s), in order to reapply for an individual Certificate(s)
covering the same or different vessels the applicant shall submit a new
application form and an application fee of $150. Similarly, an
applicant shall submit a new application form and fee to obtain a new
Fleet or Master Certificate following invalidation of a Fleet or Master
Certificate.
(d) In addition to the application fee of $150, an applicant shall
also pay a certification fee of $80 for each Certificate requested. An
applicant shall submit the certification fee for each vessel listed in,
or later added to, an application for an individual Certificate(s). An
applicant shall submit the $80 certification fee to renew or to reissue
a Certificate for any reason, including, but not limited to, a vessel
or operator name change or a lost certificate.
(e) A certification fee is refunded, upon receipt of a written
request, if the application is denied or withdrawn before issuance of
the Certificate. Overpayments of application and certification fees are
refunded, on request, only if the refund is for $50 or more. However,
any overpayments not refunded will be credited, for a period of three
years from the date of receipt of the monies by the Coast Guard, for
the applicant's possible future use or transfer to another applicant
under this part.
Sec. 138.140 Enforcement.
(a) Any person who fails to comply with this part with respect to
evidence of financial responsibility under section 1016 of OPA 90 (33
U.S.C. 2716) is subject to a civil penalty of not more than $25,000 per
day of violation, in accordance with section 4303(a) of OPA 90 (33
U.S.C. 2716a(a)). In addition, under section 4303(b) of that Act (33
U.S.C. 2716a(b)), the Attorney General may secure such relief as may be
necessary to compel compliance with this part including termination of
operations. Further, any person who fails to comply with this part with
respect to evidence of financial responsibility under section 108(a)(1)
of CERCLA (42 U.S.C. 9608(a)(1)) is subject to a Class I administrative
civil penalty of not more than $25,000 per violation and a Class II
administrative civil penalty or judicial penalty of $25,000 per day of
violation (or $75,000 per day in the case of a second or subsequent
violation), in accordance with section 109(a) of CERCLA (42 U.S.C.
9609(a)).
(b) The Secretary of the Treasury shall withhold or revoke the
clearance required by section 4197 of the Revised Statutes (46 U.S.C.
91) to any vessel subject to this part that does not produce evidence
of financial responsibility required by this part.
(c) The Coast Guard may deny entry to any port or place in the
United States or the navigable waters of the United States, and may
detain at a port or place in the United States in which it is located,
any vessel subject to this part, which, upon request, does not produce
evidence of financial responsibility required by this part.
(d) Any vessel subject to this part which is found in the navigable
waters without the necessary evidence of financial responsibility is
subject to seizure by and forfeiture to the United States.
(e) Knowingly and willfully using an invalid Certificate, or any
copy thereof, is fraud.
Sec. 138.150 Service of process.
(a) When executing the forms required by this part, each applicant
and guarantor shall designate thereon a person located in the United
States as its agent for service of process for purposes of this part
and for receipt of notices of designations and presentations of claims
under the Acts (collectively referred to as ``service of process'').
Each designated agent shall acknowledge the designation in writing
unless the agent has already furnished the Director, NPFC, with a
``master'' (i.e., blanket) concurrence showing that it has agreed in
advance to act as the United States agent for service of process for
the applicant, certificant, or guarantor in question.
(b) If any applicant, certificant, or guarantor desires, for any
reason, to change any designated agent, the applicant, certificant, or
guarantor shall notify the Director, NPFC, of the change and furnish
the relevant information, including the new agent's acknowledgment in
accordance with paragraph (a) of this section, if a ``master''
concurrence is not applicable. In the event of death, disability, or
unavailability of a designated agent, the applicant, certificant, or
guarantor shall designate another agent in accordance with paragraph
(a) of this section within 10 days of knowledge of any such event. The
applicant, certificant, or guarantor shall submit the new designation
to the Director, NPFC. The Director, NPFC, may revoke a certificate if
an applicant, certificant, or guarantor fails to designate and maintain
an agent for service of process.
(c) If a designated agent can not be served because of death,
disability, unavailability, or similar event and another agent has not
been designated under this section, then service of process on the
Director, NPFC, will constitute valid service of process. Service of
process on the Director, NPFC, will not be effective unless the
server--
(1) Sends the applicant, certificant, or guarantor (by registered
mail, at its last known address on file with the Director, NPFC), a
copy of each document served on the Director, NPFC; and
(2) Attests to this registered mailing, at the time process is
served upon the Director, NPFC, indicating that the intent of the
mailing is to effect service of process on the applicant, certificant,
or guarantor and that service on the designated agent is not possible,
stating the reason why.
BILLING CODE 4910-14-M
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Dated: June 27, 1994.
Robert E. Kramek,
Admiral, U.S. Coast Guard Commandant.
[FR Doc. 94-16034 Filed 6-30-94; 8:45 am]
BILLING CODE 4910-14-C
