

                                       
                                       
Discharge Removal Equipment
--------------------------------------------------------------------------------

Notice of Final Rulemaking
Updated Final Regulatory Analysis 
USCG - 2011 - 0430
RIN:  1625-AA02


February 2016


Prepared by:
United States Coast Guard
Office of Standards Evaluation and Development
Standards Evaluation and Analysis Division
United States Coast Guard Headquarters
Washington, DC


Contents
Executive Summary	i
1.0  Introduction	1
1.1  Statutory Authority	1
1.2  Background	1
1.2.1  Justification of this Final Rule	2
1.3  Objective and Legal Basis	2
1.4  Need for Federal Regulatory Action	5
1.5  Alternatives Considered	5
1.7.1  Overview of Sources	7
1.8  Organization of the RA	8
2.0  Overview of the 1993 DRE Interim Final Rule and the Supporting Regulatory Analysis	9
2.1  DRE Rule's Key Provisions Evaluated in This Analysis	11
2.1.1  Deck Coaming	11
2.1.2  Deck Spill Equipment	11
2.1.3  Internal Cargo Transfer Capability	12
2.1.4  Damage Stability Information	12
2.2  Summary of 1993 RIA Methodology, Data, and Results	13
3.0  Affected Population	15
3.1  Updated Period of Analysis	15
3.1.1  Estimating the Number of Vessels Likely Affected by the Final Rule from 1994 through 2012 (Update)	15
3.1.2  Estimating the Number of Vessels Likely Affected by the Rule from 2013 through 2016	23
4.0  Updated Analysis of Affected Spill Incident Data (with the IFR in effect)	30
4.1  Spill Incident Analysis	30
4.1.1  Estimating the Number and Volumes of Spills from 1994 through 2012	31
4.1.2  Spill Data 1994 through 2001	32
4.1.3  Spill Data 2002 through 2012	36
5.0  Updated Cost Analysis	46
5.1  Deck Coaming	46
5.2  Deck Spill Equipment	49
5.3  Internal Cargo Transfer Capability	51
5.4  Damage Stability Information	52
5.5  Summary of Costs	54
6.0  Benefits	59
6.1  Methodology for Calculating the Oil Volumes Mitigated by the Rule	60
6.2  Deck Coaming	62
6.3  Deck Spill Equipment	62
6.4  Internal Cargo Transfer Equipment	63
6.5  Damage Stability Information	65
6.6  Note on 2002 -2012 Spill Data	66
6.7  Summary of Benefits	67


List of Tables

Table ES-1.  Summary of Estimated Costs, Replication of 1993 RIA (7 and 3 Percent Discount Rates) ($Millions, 1993 Dollars), 1994-2016	iii
Table ES-2.  Comparison of Annualized Updated Costs and 1993 RIA Costs (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars), 1994-2016	v
Table ES-3	Comparison of Estimated Updated Benefits to 1993 RIA Estimated Benefits (Bbls Mitigated) (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars) 1994-2016	viii
Table ES-4.  Summary of Annualized Updated Benefits in Bbls Mitigated (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars) 1994-2016	xi
Table 1.1.  Title 33, CFR Part 155, Amendments by DRE IFR	3
Table 1.2.   Subsequent Changes to the IFR Regulations	4
Table 2-1.  Summary of the Interim Final Rule's Key Provisions, and Regulatory Alternatives Evaluated and Baseline Compliance Level Assumed in the RIA	10
Table 2-2.  Summary of Costs and Benefits Estimated by the 1993 RIA, 1993 dollars	14
Table 3-1.  Summary of Steps Taken to Screen and Analyze USCG vessel Data	16
Table 3-2A	Estimated Updated Number of Oil Tankers Affected by the Final Rule, and Size (length), 1994 - 2012	19
3-2a, 2b5,	19
Table 3-2B.  Estimated Updated Number of Offshore Barges Affected by the Rule, and Size (length), 1994 - 2012	20
Table 3-2C.  Estimated Updated Number of Inland Barges and Secondary Vessels Affected by the Rule by Vessel Type 1994 - 2012	21
Table 3-3.  Comparison of Vessel Population Estimates Between the 1993 RIA and this Updated Analysis	22
Table 3-4.  Summary of Data Relevant to Oil and Petroleum Product Transported in the United States, 1990 - 2009	23
Table 3-5A.  Estimated Updated Number of Oil Tankers Affected by the Final Rule, by Vessel Type and Size (length), 2013 - 2016	28
Table 3-5B.  Estimated Updated Number of Offshore Oil Barges Affected by the Final Rule, by Vessel Type and Size (length), 2013 - 2016	28
Table 3-5C.  Estimated Updated Number of Inland barges and Secondary Vessels Affected by the Final Rule by Vessel Type, 2013-2016 (cont'd)	29
Table 4-1A.  Updated Estimate of Volume of Spills Affected by the Final Rule, by Vessel Type, Size (length), and Cause (BBLs), 1994- 2001	34
Table 4-1B.  Updated Estimate of Number and Volume of Spills Affected by the Rule, by Vessel Type, Size (length) (BBLs), 1994 - 2001	35
Table 4-2.  Summary Steps Taken To Consolidate And Analyze USCG Spill Incident Data	36
Table 4-3A.  Updated Estimate of Volume of Spills Affected by the Final Rule, by Vessel Type, Size (length), and Cause (BBLs), 2002 - 2012	38
Table 4-3B.  Updated Estimate of Number and Volume of Spills Affected by the Rule, by Vessel Type, Size (length) (BBLs), 2002  -  2012	39
Table 4-4A.  Comparison of Spill Estimates for Small Offshore Oil Barges and Inland Oil Barges	40
Small Offshore Oil Barges, L<400 ft (BBLs)	40
Table 4-4B.  Comparison of Spill Estimates for Small Offshore Oil Barges and Inland Oil Barges Inland Oil Barges (cont'd) (BBLs)	41
Table 4-5.  Number and Volume of Spills Reported by the 2012 USCG Compendium Report	42
Table 4-6A.  Projection of Estimated Volume of Spills Affected by the Final Rule, by Vessel Type, Size (length), and Cause, 2013-2016	45
Table 4-6B.  Projection of Estimated Number and Volume of Spills Affected by the Rule, by Vessel Type, Size (length), 2013-2016	45
Table 5-1.  Estimated Updated Deck Coaming Costs (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars), 1994-2016	48
Table 5-2.  Estimated Updated Deck Spill Equipment Costs (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars), 1994-2016	50
Table 5-3.  Estimated Updated Internal Cargo Transfer Equipment Costs (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars), 1994-2016	52
Table 5-4.  Estimated Updated Damage Stability Information Costs (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars), 1994-2016	54
Table 5-5.  Updated Summary and Comparison of Estimated Costs to the 1993 RIA (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars), 1994-2016	56
Table 5-6.  Summary of Updated and 1993 RIA Annualized Costs (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars) 1994-2016	57
Table 6-1.  Summary of Assumptions Used to Estimate the Benefits of the DRE Rule	61
Table 6-2.  Estimated Updated Deck Coaming Benefits, in Bbls Mitigated	62
Table 6-3.  Estimated Updated Deck Spill Equipment Benefits, in Bbls Mitigated	63
Table 6-4.  Estimated Updated Internal Cargo Transfer Equipment Benefits, in Bbls Mitigated	64
Table 6-5.  Reported Spill Volumes in the 2002-2012 Oil Spill Incident Data Set that are Likely Associated with Spill Incidents Involving the Use of DRE Equipment	66
Table 6-6.  Summary of Estimated Updated Benefits and 1993 RIA Estimates in bbls Mitigated (7 and 3 Percent Discount Rates), 1994-2016	68
Table 6-7.  Summary of Annualized Benefits in Bbls Mitigated, 1994-2016	71


Acronyms
ANPRM	Advanced Notice of Proposed Rulemaking
BLS		Bureau of Labor Statistics
CFR		Code of Federal Regulations
COI		Certificate of Inspection
DHS		Department of Homeland Security
EO		Executive Order
IMO		International Maritime Organization
TRFA		Threshold Regulatory Flexibility Analysis
MISLE		Marine Information for Safety and Law Enforcement database
NAICS		North American Industry Classification System
NPRM		Notice of Proposed Rulemaking 
NPV		Net Present Value
RFA		Regulatory Flexibility Act
USCG		United States Coast Guard
WTP		Willingness to pay



Executive Summary
This final Regulatory Analysis (RA) provides a updated assessment of the impacts to industry of the Discharge Removal Equipment final rule.  Under Section 6(a)(3)(c) of Executive Order (EO) 12866, "Regulatory Planning and Review," USCG is required to conduct an analysis of the costs, benefits, and other impacts of a significant rulemaking where the impacts of the rule have an annual effect on the economy of $100 million or more as defined in Section 3(f)(1) of the Order.  

Since there has been a considerable time lag since the preliminary (1993) RIA and Interim Final Rule (IFR) were published, a number of things have changed.  Notably, certain changes in the statutes were made that reduced the costs of the 1993 IFR.  This analysis reflects the most up-to-date data and information available relating to the vessels, activities, and impacts associated with implementing the DRE requirements, in accordance with the IFR rule to be finalized.  The comments of the 2013 Notice of Intent (NOI) required no changes to the final rule.  USCG is not changing or adding new requirements to the final rule.

The 1993 RIA attempted to cost out 5 requirements from the IFR.  It also estimated the benefits from those implemented requirements.  Since that time, one requirement has been phased out due to a subsequent rulemaking and another was found to be less of a requirement since industry was already implementing most of it.  In addition, the 1993 RIA is not strictly comparable to our analysis here mainly due to data issues.  Also, since industry has complied with all of the remaining requirements, the actual net costs are zero.  Our cost analysis estimates presented in this report are only if industry had not complied with the IFR and are updated in nature. 

Analytical Approach
Because the rule has been in effect on an interim basis since 1994, our analysis assesses impacts: that "looks back" on the costs and benefits of the IFR as an update (from 1994 through 2012) as well as the then expected costs from 2013-2016 in order to emulate the 23-year period of the 1993 RIA analysis.

Estimated Costs 
The costs of the rule are based on the number of affected vessels and spills.  Our comparison of the baseline and incremental scenarios indicates that the number of spills are unaffected by the implementation of the rule.  We estimate the incremental costs of the rule as an update using our estimates of the actual number of affected vessels and spills (with the IFR in effect) reflected in the historic vessel and spill incident data recorded by the USCG.  The four DRE items of interest here are the following: 
         o Deck Coaming;
         o Deck Spill kits;
         o Internal cargo transfer; and
         o Damage Stability Information.
We estimate the costs, as an update, from 1994 (Year 1) through 2016.  Costs are estimated over the twenty - three years for purposes of comparing the costs and benefits estimated by the 1993 regulatory impact analysis ("1993 RIA") over the same period of time.  Costs are estimated in 1993 dollars and present value costs and benefits are calculated assuming that year 1 (1994) is the base year.
As shown in Table ES-1, we estimate for the updated analysis (years 1994-2016) a total present value cost (in 1993 dollars) of $251.2 million using a discount rate of seven percent.


Table ES-1.  Summary of Estimated Costs, Replication of 1993 RIA (7 and 3 Percent Discount Rates) ($Millions, 1993 Dollars), 1994-2016
                               IFR KEY PROVISION
                                  OIL TANKERS
                           LARGE OFFSHORE OIL BARGES
                             (LENGTH > 400 FT)
                           SMALL OFFSHORE OIL BARGES
                             (LENGTH < 400 FT)
                               INLAND OIL BARGES
                               SECONDARY VESSELS
                                   TOTAL (5)
USCG Replication
Deck coaming (1)
(Section 5.1)
                                                                           $0.0
                                                                           $0.0
                                                                      $1.3 (3%)
                                                                      $1.3 (7%)
                                                                     $14.9 (3%)
                                                                     $14.4 (7%)
                                                                           $0.0
                                                                     $15.8 (3%)
                                                                     $14.6 (7%)
Deck spill equipment (2)
(Section 5.2)
                                                                           $0.0
                                                                           $0.0
                                                                      $2.4 (3%)
                                                                      $1.9 (7%)
                                                                      $8.8 (3%)
                                                                      $6.8 (7%)
                                                                      $1.0 (3%)
                                                                      $0.7 (7%)
                                                                      $13.1(3%)
                                                                      $9.2 (7%)
Internal cargo transfer capability  -  hoses and couplings (3)
(Section 5.3)
                                                                    $259.5 (3%)
                                                                    $178.1 (7%)
                                                                      $7.5 (3%)
                                                                      $5.6 (7%)
                                                                     $17.5 (3%)
                                                                     $13.0 (7%)
                                                                           $0.0
                                                                           $0.0
                                                                      $269.33%)
                                                                    $180.9 (7%)
Damage stability information (4)
(Section 5.4)
                                                                     $23.3 (3%)
                                                                     $16.3 (7%)
                                                                      $0.7 (3%)
                                                                      $0.6 (7%)
                                                                      $2.6 (3%)
                                                                      $1.9 (7%)
                                                                     $14.8 (3%)
                                                                     $10.6 (7%)
                                                                           $0.0
                                                                     $39.0 (3%)
                                                                     $27.0 (7%)
TOTAL (5)
                                                                    $282.8 (3%)
                                                                    $194.4 (7%)
                                                                      $8.3 (3%)
                                                                      $6.1 (7%)
                                                                     $23.8 (3%)
                                                                     $18.1 (7%)
                                                                     $38.6 (3%)
                                                                     $31.8 (7%)
                                                                      $1.0 (3%)
                                                                      $0.7 (7%)
                                                                    $354.4 (3%)
                                                                    $251.2 (7%)
1993 RIA ESTIMATE 
Deck coaming (1) and spill equipment (2)
                                                                           $0.0
                                                                           $0.0
                                                                      $1.7 (7%)
                                                                      $4.5 (7%)
                                                                      $4.8 (7%)
                                                                     $11.0 (7%)
Internal cargo transfer capability  -  hoses and couplings (3)
                                                                     $91.3 (7%)
                                                                      $8.9 (7%)
                                                                           $0.0
                                                                           $0.0
                                                                    $100.3 (7%)
Damage stability information (4)
                                                                      $6.9 (7%)
                                                                      $0.8 (7%)
                                                                             NA
                                                                           $0.0
                                                                      $7.7 (7%)
TOTAL (5)
                                                                     $98.2 (7%)
                                                                     $11.4 (7%)
                                                                      $4.5 (7%)
                                                                      $4.8 (7%)
                                                                    $118.9 (7%)
Sources:  USCG updated analysis and 1993 RIA.
(1) Assumes a baseline compliance rate of 100 percent for oil tankers and large offshore oil barges.  Assumes a baseline compliance rate of 50 percent for small offshore and inland barges.  Deck coaming not required for secondary vessels.  1993 RIA assumed that inland barges would be exempt from coaming requirement.
(2) Assumes a baseline compliance rate of 100 percent for oil tankers and large offshore oil barges.  Assumes a baseline compliance rate of 50 percent for small offshore barges, inland barges, and secondary vessels.
(3) Assumes a baseline compliance rate of zero percent for oil tankers and offshore oil barges.  Internal cargo transfer capability not required for inland oil barges and secondary vessels.
(4) Damage stability information not required for secondary vessels.  1993 RIA did not estimate costs for inland barges. 
(5) Totals may not sum due to rounding.

The 1993 RIA estimated a total cost of $118.9 million (without towing vessel and warehousing provisions that were removed from requirements shortly after IFR publication) assuming a discount rate of seven percent, which is  less than half of our estimate over the course of 22 years.  Our present value cost estimates (in 1993 dollars assuming a base year of 1994) are not directly comparable to those from the 1993 RIA because the 1993 RIA erroneously assumed that inland barges would be exempt from the coaming requirement.  In addition,  they were not required to estimate damage stability information costs for inland barges.  We summarize the cost estimate differences below.
   * For both deck coaming and deck spill equipment, the 1993 RIA estimated a total cost of $11.0 million (assuming a discount rate of seven percent), $1.7 million for small offshore barges, $4.5 million for inland barges, and $4.8 million for secondary vessels.  The 1993 RIA had erroneously assumed that inland barges would be exempt from the coaming requirement.  We estimate, as an update,  a cost of $25.1 million for deck coaming and deck spill equipment, $3.2 million for small offshore barges, $21.2 million for inland barges, and $0.7 million for secondary vessels.
   * For internal cargo transfer capability, the 1993 RIA estimated a total cost of $100.3 million (assuming a discount rate of seven percent, in 1993 dollars), $91.3 million for tankers and $8.9 million for barges.  We estimate , as an update, a cost of $196.6 million, $178.1 million for tankers and $18.6 million for barges.
   * For the damage stability information requirement, the 1993 RIA estimated a total cost of $7.7 million (assuming a discount rate of seven percent, in 1993 dollars), $6.9 million for tankers and $0.8 million for offshore barges.  However, the 1993 RIA did not estimate the costs for inland oil barges.  We estimate, as an update,  a cost of $29.5 million, $16.3 million for tankers, $2.5 million for offshore barges, and $10.6 million for inland barges.  The main reason for the differences in the 1993 RIA estimated benefits to this updated analysis  is that the former used an estimated number of vessels and product flows and the updated estimate used actual data for the most of the years since (we had to estimate 2013-2016).  Also inland barges were mistakenly not included in the former analysis.
TABLE ES-2.  Comparison of Annualized Updated Costs and 1993 RIA Costs (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars), 1994-2016
                               IFR KEY PROVISION
                                  OIL TANKERS
                           LARGE OFFSHORE OIL BARGES
                             (LENGTH > 400 FT)
                           SMALL OFFSHORE OIL BARGES
                             (LENGTH < 400 FT)
                               INLAND OIL BARGES
                               SECONDARY VESSELS
                                   TOTAL (5)
USCG Replication 
Deck coaming (1)
(Section 5.1)
                                                                           $0.0
                                                                           $0.0
                                                                      $0.1 (3%)
                                                                      $0.1 (7%)
                                                                      $0.9 (3%)
                                                                      $1.3 (7%)
                                                                           $0.0
                                                                      $1.0 (3%)
                                                                      $1.4 (7%)
Deck spill equipment (2)
(Section 5.2)
                                                                           $0.0
                                                                           $0.0
                                                                      $0.1 (3%)
                                                                      $0.2 (7%)
                                                                      $0.5 (3%)
                                                                      $0.6 (7%)
                                                                      $0.1 (3%)
                                                                      $0.1 (7%)
                                                                      $0.7 (3%)
                                                                      $0.8 (7%)
Internal cargo transfer capability  -  hoses and couplings (3)
(Section 5.3)
                                                                     $15.8 (3%)
                                                                     $15.8 (7%)
                                                                      $0.5 (3%)
                                                                      $0.5 (7%)
                                                                      $1.1 (3%)
                                                                      $1.1 (7%)
                                                                           $0.0
                                                                           $0.0
                                                                     $17.3 (3%)
                                                                     $17.4 (7%)
Damage stability information (4)
(Section 5.4)
                                                                      $1.4 (3%)
                                                                      $1.4 (7%)
                                                                      $0.0 (3%)
                                                                      $0.0 (7%)
                                                                      $0.2 (3%)
                                                                      $0.2 (7%)
                                                                      $0.9 (3%)
                                                                      $0.9 (7%)
                                                                           $0.0
                                                                      $2.5 (3%)
                                                                      $2.6 (7%)
TOTAL (5)
                                                                     $17.2 (3%)
                                                                     $17.2 (7%)
                                                                      $0.5 (3%)
                                                                      $0.5 (7%)
                                                                      $1.4 (3%)
                                                                      $1.6 (7%)
                                                                      $2.3 (3%)
                                                                      $2.8 (7%)
                                                                      $0.1 (3%)
                                                                      $0.1 (7%)
                                                                     $21.6 (3%)
                                                                     $22.3 (7%)
1993 RIA ESTIMATE
Deck coaming (1) and spill equipment (2)
NA
$0.0
$0.1 (7%)
NA
NA
                                                                               
Internal cargo transfer capability  -  hoses and couplings (3)
                                                                      $7.4 (7%)
                                                                      $0.7 (7%)
                                                                           $0.0
                                                                           $0.0
                                                                               
Damage stability information (4)
                                                                      $0.6 (7%)
                                                                      $0.1 (7%)
                                                                             NA
                                                                           $0.0
                                                                               

         Total(5)


$8.0 (7%)                            $.9(7%)

       0






Sources:  USCG updated analysis and 1993 RIA.
(1) Assumes a baseline compliance rate of 100 percent for oil tankers and large offshore oil barges.  Assumes a baseline compliance rate of 50 percent for small offshore and inland barges.  Deck coaming not required for secondary vessels.  1993 RIA did not calculate the annualized costs for tankers, inland oil barges, and secondary vessels.  1993 RIA assumed that inland barges would be exempt from coaming requirement.
(2) Assumes a baseline compliance rate of 100 percent for affected oil tankers and large offshore oil barges.  Assumes a baseline compliance rate of 50 percent for small offshore barges, inland barges, and secondary vessels.
(3) Assumes a baseline compliance rate of zero percent for oil tankers and offshore oil barges.  Internal cargo transfer capability not required for inland oil barges and secondary vessels.
(4) Damage stability information not required for secondary vessels.  1993 RIA did not estimate costs for inland barges.
(5) Totals may not sum due to rounding.


For years 1-23, the estimated annualized updated cost of the rule is $22.3 million assuming a discount rate of seven percent.  For both deck coaming and deck spill equipment, we could not readily compare our estimates to the 1993 RIA because the 1993 RIA did not calculate annualized costs for tankers and secondary vessels.  In addition, the 1993 RIA erroneously assumed that inland barges would be exempt from the coaming requirement.
For the internal cargo transfer capability requirement, our annualized updated cost estimate is more than twice that of the 1993 RIA for tankers and offshore barges ($17.4 vs. $8.1 million at 7% discount rate).  We estimate much higher numbers of affected tankers and offshore barges than the 1993 RIA based on the historic vessel data recorded by USCG.  By 2010, we estimate almost twice as many tankers (2,805 vs. 1,493) and more than 40 percent more offshore barges (323 vs. 231) than the 1993 RIA.  In addition, our equipment unit cost assumption ($20,000 to $40,000 per vessel in 1993 dollars) is moderately higher than that of the 1993 RIA ($14,500 to $29,000 per vessel in 1993 dollars).
Finally, our annualized updated cost estimate for the damage stability information requirement is more than twice that of the 1993 RIA for tankers ($16.3 million vs. $6.9 million at 7% discount rate).  Again, we estimate higher tanker numbers, which more than offsets the generally lower unit costs we assume ($2,500 initial and $540 annually per tanker adjusted in 1993 dollars, versus the 1993 RIA's $4,000 initial and $3,000 annually per tanker).
Estimated Updated Benefits
The benefits of the rule are based on the incremental reduction in the volume of oil spilled into the environment from the baseline condition.  We compare the spill volumes we estimated and projected under the baseline scenario (the world without the rule) and the incremental scenario (world with the rule, as reflected in the historic spill incident data recorded by USCG) to estimate the incremental volume of oil that is averted from entering the environment by the rule.
We estimate, as an update, the quantitative benefits associated with three of the four major provisions or requirements of the rule that are to be finalized in the final rule.  We quantify the benefits in terms of barrels (bbls) of oil not lost to the environment, on a present value basis for each of the two time periods described above.  Estimated updated annualized benefits are found in Table ES-4.



Table ES-3	Comparison of Estimated Updated Benefits to 1993 RIA Estimated Benefits (Bbls Mitigated) (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars) 1994-2016
                               IFR KEY PROVISION
                                  OIL TANKERS
                           LARGE OFFSHORE OIL BARGES
                             (LENGTH > 400 FT)
                           SMALL OFFSHORE OIL BARGES
                             (LENGTH < 400 FT)
                               INLAND OIL BARGES
                               SECONDARY VESSELS
                                   TOTAL (5)
USCG Replication
Deck coaming (1)
(Section 6.2)
                                                                            0.0
                                                                            0.0
                                                                      74.8 (3%)
                                                                      55.2 (7%)
                                                                      71.2 (3%)
                                                                      47.3 (7%)
                                                                            0.0
                                                                     146.0 (3%)
                                                                     102.5 (7%)
Deck spill equipment (2)
(Section 6.3)
                                                                            0.0
                                                                            0.0
                                                                      13.0 (3%)
                                                                      11.6 (7%)
                                                                       7.2 (3%)
                                                                       5.8 (7%)
                                                                     157.8 (3%)
                                                                     102.8 (7%)
                                                                     178.0 (3%)
                                                                     120.2 (7%)
Internal cargo transfer capability  -  hoses and couplings (3)
(Section 6.4)
                                                                     461.0 (3%)
                                                                     344.3 (7%)
                                                                      46.4 (3%)
                                                                      39.8 (7%)
                                                                      67.5 (3%)
                                                                      56.6 (7%)
                                                                            0.0
                                                                            0.0
                                                                     574.9 (3%)
                                                                     440.7 (7%)
Damage stability information (4)
(Section 6.5)
                                                                             NA
                                                                             NA
                                                                             NA
                                                                             NA
                                                                             NA
                                                                             NA
TOTAL (5)
                                                                     461.0 (3%)
                                                                     344.3 (7%)
                                                                      46.4 (3%)
                                                                      39.8 (7%)
                                                                     155.3 (3%)
                                                                     123.4 (7%)
                                                                      78.4 (3%)
                                                                      53.1 (7%)
                                                                     157.8 (3%)
                                                                     102.8 (7%)
                                                                     898.9 (3%)
                                                                     663.4 (7%)
1993 RIA ESTIMATE 
Deck coaming (1) and spill equipment (2)
                                                                            0.0
                                                                            0.0
                                                                     149.4 (7%)
                                                                      11.8 (7%)
                                                                     236.4 (7%)
                                                                     397.6 (7%)
Internal cargo transfer capability  -  hoses and couplings (3)
                                                                   6,700.0 (7%)
                                                                     840.0 (7%)
                                                                            0.0
                                                                            0.0
                                                                   7,540.0 (7%)
Damage stability information (4)
                                                                             NA
                                                                             NA
                                                                             NA
                                                                             NA
                                                                             NA
TOTAL (5)
                                                                   6,700.0 (7%)
                                                                     989.4 (7%)
                                                                      11.8 (7%)
                                                                     236.4 (7%)
                                                                   7,937.6 (7%)
Sources:  USCG updated analysis and 1993 RIA.
Notes:
(1) Assumes a pre-existing compliance rate of 100 percent for affected oil tankers and large offshore oil barges.  Assumes a pre-existing compliance rate of 50 percent for small offshore and inland barges.  Deck coaming not required for secondary vessels.  1993 RIA assumed that inland barges would be exempt from coaming requirement.
(2) Assumes a pre-existing compliance rate of 100 percent for affected oil tankers and large offshore oil barges.  Assumes a pre-existing compliance rate of 50 percent for small offshore barges, inland barges, and secondary vessels.
(3) Assumes a pre-existing compliance rate of zero percent for affected oil tankers and offshore oil barges.  Internal cargo transfer capability not required for inland oil barges and secondary vessels.
(4) Benefits not estimated for the damage stability information requirement.
(5) Totals may not sum due to rounding.

As shown in Table ES-3, for the RIA Replication, we estimate a total present value benefit of 663 barrels assuming a discount rate of seven percent.
The 1993 RIA estimated a total benefit of 7,938 barrels assuming a discount rate of seven percent, which is almost 12 times our estimate.  Our  d analysis of the present value benefit estimates are not directly comparable to those from the 1993 RIA because the 1993 RIA assumed that inland barges would be exempt from the coaming requirement.  That false assumption was corrected in the updated analysis.We summarize the benefit estimate differences below.
   * For both deck coaming and deck spill equipment, the 1993 RIA estimated a total benefit of 397 barrels (assuming a discount rate of seven percent), 149.4 barrels for small offshore barges, 11.8 barrels for inland barges, and 236.4 barrels for secondary vessels.  The 1993 RIA had assumed that inland barges would be exempt from the coaming requirement.  We estimate  a benefit of 222.7 barrels for deck coaming and deck spill equipment, 66.8 barrels for small offshore barges, 53.1 barrels for inland barges, and 102.8 barrels for secondary vessels, all at a seven-percent discount rate.
   * For internal cargo transfer capability, the 1993 RIA estimated a total benefit of 7,544 barrels (assuming a discount rate of seven percent), 6,700 barrels for tankers and 840 barrels for barges.  Our RIA Replication estimates a benefit of 440.7 barrels, 344.3 barrels for tankers and 96.4 barrels for barges.  The 1993 RIA does not provide sufficient detail to analyze why its estimate for tankers is so high, but likely it is because the 1993 RIA had forecasted much higher spill volumes for tankers.  Also, our methodology accounted for some 85 percent of possible spilled bbls.
Exhibit ES-4 summarizes our annualized benefits for the rule.  The 1993 RIA did not calculate the estimated benefits on an annualized basis.


Table ES-4.  Summary of Annualized Updated Benefits in Bbls Mitigated (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars) 1994-2016
                               IFR KEY PROVISION
                                  OIL TANKERS
                           LARGE OFFSHORE OIL BARGES
                             (LENGTH > 400 FT)
                           SMALL OFFSHORE OIL BARGES
                             (LENGTH < 400 FT)
                               INLAND OIL BARGES
                               SECONDARY VESSELS
                                   TOTAL (5)
Annualized in Barrels, RIA Replication
Deck coaming (1)
(Section 6.2)
                                                                            0.0
                                                                            0.0
                                                                       4.5 (3%)
                                                                       4.9 (7%)
                                                                       4.3 (3%)
                                                                       4.2 (7%)
                                                                            0.0
                                                                       8.9 (3%)
                                                                       9.1 (7%)
Deck spill equipment (2)
(Section 6.3)
                                                                            0.0
                                                                            0.0
                                                                       0.8 (3%)
                                                                       1.0 (7%)
                                                                       0.4 (3%)
                                                                       0.5 (7%)
                                                                       9.6 (3%)
                                                                       9.1 (7%)
                                                                      10.8 (3%)
                                                                      10.7 (7%)
Internal cargo transfer capability  -  hoses and couplings (3)
(Section 6.4)
                                                                      28.0 (3%)
                                                                      30.5 (7%)
                                                                       2.8 (3%)
                                                                       3.5 (7%)
                                                                       4.1 (3%)
                                                                       5.0 (7%)
                                                                            0.0
                                                                            0.0
                                                                      35.0 (3%)
                                                                      39.1 (7%)
Damage stability information (4)
(Section 6.5)
                                                                             NA
                                                                             NA
                                                                             NA
                                                                             NA
                                                                             NA
                                                                             NA
TOTAL (5)
                                                                      28.0 (3%)
                                                                      30.5 (7%)
                                                                       2.8 (3%)
                                                                       3.5 (7%)
                                                                       9.4 (3%)
                                                                      10.9 (7%)
                                                                       4.7 (3%)
                                                                       4.7 (7%)
                                                                       9.6 (3%)
                                                                       9.1 (7%)
                                                                      54.7 (3%)
                                                                      58.7 (7%)
Sources:  USCG updated analysis and 1993 RIA.
Notes:
(1) Assumes a pre-existing compliance rate of 100 percent for affected oil tankers and large offshore oil barges.  Assumes a pre-existing compliance rate of 50 percent for small offshore and inland barges.  Deck coaming not required for secondary vessels.  1993 RIA assumed that inland barges would be exempt from coaming requirement.
(2) Assumes a pre-existing compliance rate of 100 percent for affected oil tankers and large offshore oil barges.  Assumes a pre-existing compliance rate of 50 percent for small offshore barges, inland barges, and secondary vessels.
(3) Assumes a pre-existing compliance rate of 86 percent (Years 21-30) or zero percent (Years 1-23) for affected oil tankers and offshore oil barges.  Internal cargo transfer capability not required for inland oil barges and secondary vessels.
(4) Benefits not estimated for the damage stability information requirement.
(5) Totals may not sum due to rounding.

Collection of Information 
There is already an existing collection of information.  This rule would not require a new collection of information, nor would it change the existing collection of information under the Paperwork Reduction Act (44 U.S.C. 3501-3520).  



1.0  Introduction
This final Regulatory Analysis (RA) represents an updated analysis of the costs and benefits of the 1993 IFR.  This analysis provides an updated assessment of the impacts to industry of proposed changes detailed in the Discharge Removal Equipment IFR that is being finalized into a Final Rule (DRE Final Rule).  In the DRE FR, Coast Guard is finalizing with no changes to 46 CFR part 155 as well as to add clarity and increase safety standards of the Oil Pollution Act of 1990 (OPA).  Consequently, this RA is designed to support the Final Rule and reproduces the 1993 RIA with current available data.

The OPA was passed by Congress in 1990 in response to the Exxon Valdez oil spill.  The Oil Pollution Act staff in Coast Guard Headquarters was charged with the responsibility to draft regulations and provide analysis that meets the requirements established in the OPA. The preliminary RA (then known as a Regulatory Impact Analysis or RIA) was developed and then issued in 1993, with the IFR implemented shortly thereafter.

Over the last twenty years, subsequent rulemakings modified the original 1993 IFR, but never finalized the original DRE IFR.  This RA is the supporting analysis for the Final Rule for DRE. In this RA, we have replicated the original RIA with current and observed data and provide an updated review of the 1993 IFR, accounting for the changes in the original IFR over the past 20 years, with estimates of those impacts. Since the IFR has been implemented over the past 20 years, the impacts are zero.  That is, the net impact of the DRE FR is zero.

1.1  Statutory Authority 
The statutory authorities for this final rule is Section 4201(a)(6) of the Oil Pollution Act of 1990 (Pub. L. 101-380; 104 Stat. 484; August 18, 1990) that amended section 311(j) of the Federal Water Pollution Control Act (33 U.S.C.1321(j)) by, among other things, adding a new paragraph (6) to require vessels operating and carrying oil or a hazardous substance in bulk as cargo to carry appropriate discharge removal equipment (DRE) on board.

1.2  Background 
On December 22, 1993, the U.S. Coast Guard (USCG) published an Interim Final Rule (IFR) that established DRE requirements for on-deck oil spills, and also required vessels to install spill prevention coamings, to install emergency towing arrangements, and to have a prearranged capability to calculate damage stability in the event of a casualty (58 FR 67988).   The rule was published on December 22, 1993 to "reduce the risk of oil spills, improve vessel oil spill response capabilities, and minimize the impact of oil spills on the environment."  
On March 27, 2012, the USCG published a Notice of Intent (NOI) stating its intent to finalize the IFR and seeking public comment due to the amount of time that had passed since the IFR and accompanying regulatory impact analysis ("1993 RIA") were published (77 FR 18151).  The public comment period ended on May 29, 2012.  With respect to the 1993 RIA, the USCG was seeking current information related to the cost of compliance with certain DRE requirements.  We received no public comments relevant to the costs and benefits of DRE IFR.
The purpose of this RA is to provide an updated analysis of the costs and benefits of the final rule.  This analysis reflects the most up-to-date data and information available relating to the vessels, activities, and impacts associated with implementing the DRE requirements, in accordance with the interim final rule and rule to be finalized.  USCG does not anticipate changing or adding new requirements in the final rule.

1.2.1  Justification of this Final Rule
Agencies take regulatory action for various reasons, one being the failure of the market to reach the socially optimal outcome.  This can occur when there are economic incentives lacking for industry to pursue that outcome and such market failures are the impetus for this proposed rule.  A negative externality is the byproduct of a transaction between two parties that is not accounted for in the transaction. Vessels carrying bulk petroleum products that operate with lower environmental standards may cause harm or increased risk of harm without accounting for the consequences to third parties, who do not directly participate in the business transactions of the affected entities.  These costs are not borne by the responsible entities and are therefore external to the business decisions of the responsible entity.  The final rule addresses accountability for petroleum based spills and mitigation thereof, into U.S.A. waterways.   This Final Rule is finalizing the requirements of the IFR with no additional impacts.

The net impact of this final rule is expected to be zero; nevertheless, under Executive Order 13563, we conducted an updated analysis of the costs and benefits of the 1993 IFR.  Retrospective, or in this case updated analysis is a tool used to "look back" at an existing regulation to evaluate its actual benefits, costs, impacts, effectiveness, and unintended consequences.  Retrospective reviews were first mandated by Executive Order 12866 ("Regulatory Planning and Review"), which states that federal agencies will periodically review existing regulations.  In 2011, Executive Order 13563 ("Improving Regulation and Regulatory Review") strengthened the role of retrospective analysis by stating that each federal agency must develop and submit a plan for periodic review of its economically significant regulations.

1.3  Objective and Legal Basis

The legal basis for this rule is Executive Order 12777 (56 FR 54757; Oct. 18, 1991), sec. 2(f), which delegated the President's authority under 33 U.S.C. 1321(j)(6)(B) to require discharge removal equipment on vessels operating on navigable waters and carrying oil in bulk as cargo to the Secretary of the Department in which the Coast Guard is operating. The Secretary of Homeland Security delegated this authority to the Coast Guard in DHS Delegation No. 0170.1 .  Coast Guard is to finalize an existing IFR promulgated some 23years ago.  Initially, the IFR imposed the changes displayed in Table 1.1.

Table 1.1.  Title 33, CFR Part 155, Amendments by DRE IFR
                                  Section No.
                                      2-1 Title
                                    3-1 Amendment
§ 155.140
Incorporation by reference
Revised paragraph (a): in paragraph (b), added  an entry for International Maritime Organization  (IMO)  Resolution A.535(13) in Subpart A.
§ 155.200
Definitions
Added new section to subpart B.
§ 155.205
Discharge removal equipment for vessels 400 feet or  greater in length
Added new section to subpart B.
§ 155.210
Discharge removal equipment for vessels less than 400 feet in length
Added new section to subpart B.
§ 155.215
Discharge removal equipment for inland oil barges
Added new section to subpart B.
§ 155.220
Discharge removal equipment for vessels carrying oil as secondary cargo
Added new section to subpart B.
§ 155.225
Internal cargo transfer capability.
Added new section to subpart B.
§ 155.230
Emergency towing capability for oil barges
Added new section to subpart B.
§ 155.235
Emergency towing capability for oil tankers
Added new section to subpart B.
§ 155.240
Damage stability information for oil tankers and off-shore oil barges
Added new section to subpart B.
§ 155.245
Damage stability information for inland oil barges
Added new section to subpart B.
§ 155.310140
Containment of oil and hazardous material cargo discharges
Revised the section heading and the introductory text to paragraph (b); added paragraphs (c) and (d).
Source: Federal Register/ V. 77, No.59/ Tuesday, March 27, 2012, page 18153
Subsequently, additional modifications were made to the original DRE Interim Rule, resulting in various CFR changes.  Most notable was the replacement of the emergency towing guidelines.  These changes are presented in Table 1.2. 

Table 1.2.   Subsequent Changes to the IFR Regulations
                                  Section No.
                            Source(s) of Amendment
                                   Amendment
                                   §155.140
CGD 96-026, 61 FR 33666, June 28, 1996: CGD-95-028, 62 FR 51194, Sept. 30, 1997; USCG-1998-4443, 63 FR71763, Dec. 30, 1998; USCG-1999-5151, 64FR 67176, Dec. 1, 1999; USCG-2008-0179, 73 FR 35015, June 19, 2008; USCG-1998-3417, 73 FR 80648, Dec. 31, 2008, as amended by USCG-2001-8661, 74 FR 45026, Aug. 31, 2009; USCG-2010-0351, 75 FR 36285, June25, 2010
Periodically updated CG and other addresses, replaced emergency towing arrangement guidelines for tankers in 1997, revised format of section in 2008.
                                   §155.200
USCG-2001-9046, 67 FR58524, Sept. 17, 2002, 73 FR 79316, Dec. 29, 2008
Added definition in 2002, then removed same definition in 2008.
                                   §155.205
USCG-1998-3799, 64 FR 35531, June 30, 1998
In paragraph (a), removed compliance date that had passed.
                                   §155.210
USCG-1998-3799, 64 FR 35531, June 30, 1998
In paragraph (a), removed compliance date that had passed.
                                   §155.215
USCG-1998-3799, 64 FR 35531, June 30, 1998
In paragraph (a), removed compliance date that had passed.
                                   §155.220
USCG-1998-3799, 64 FR 35531, June 30, 1998
In paragraph (a), removed compliance date that had passed.
                                   §155.225
USCG-1998-3799, 64 FR 35531, June 30, 1998
In paragraph (a), removed compliance date that had passed.
                                   §155.230
USCG-1998-4443, 65 FR 31811, May 19,2000,as amended by USCG-2001-8661,74 FR 45026, Aug. 31, 2009; USCG-2010-0351, 75 FR 36285, June 25, 2010
Replaced section in 2000, renamed to emergency control systems for tank barges.
                                   §155.235
CGD 95-028, 62 FR 51194, Sept. 30, 1997; USCG-2001-8661, 74 FR 45026, Aug. 31, 2009
Replaced section in 1997 and again in 2009.  Revised into one paragraph stating emergency towing arrangements must be on both ends of oil tankers not less than 20,000 deadweight tons (dwt). Referenced more recent IMO Maritime Safety Committee resolution.
                                   §155.240
USCG-1998-3799, 63 FR 35531, June 30, 1998
In paragraph (a), removed compliance date that had passed; and in paragraph (d) redesignated paragraphs (i), (ii), and (iii) as paragraphs (1), (2), and (3) respectively.
                                   §155.245
USCG-1998-3799, 63 FR 35531, June 30, 1998
Removed compliance date that had passed.
                                    155.310
USCG-1998-3799, 63 FR 35531, June 30, 1998
Removed compliance date that had passed.
Source:  Federal Register/ V. 77, No.59/ Tuesday. March 27, 2012// page 18154

1.4  Need for Federal Regulatory Action
This final rule addresses environmental requirements from OPA 90.  Section 4202(a) (6) of the Oil Pollution Act of 1990 (OPA 90) (Pub L. 101-360; 104 Stat. 484; August 18, 1190) amends section 311(j) of the Federal Water Pollution Control Act (33 U.S.C. 1321(j))by, among other things, adding a new paragraph (6) to require vessels operating on the navigable waters of the United States and carrying oil or a hazardous substance in bulk as cargo to carry appropriate DRE on board.  Since the IFR has been implemented over the past 20 years, we expect the net impacts of this final rule on industry to be zero.  However, in accordance with Executive Order 12866, "Regulatory Planning and Review," as well as Executive Order 13563, "Improving Regulation and Regulatory Review," the CG is conducting an updated review of the 1993 IFR to evaluate the actual impacts and effectiveness of the IFR on industry.

1.5  Alternatives Considered
USCG considered several alternatives when developing this final rule.  Executive Order 12866 directs Federal agencies to assess all costs and benefits of available regulatory alternatives, including the alternative of not regulating.  

Additionally, OMB Circular A-4 is designed to assist regulatory agencies by defining good regulatory analysis.  The Circular provides guidance to standardize the way benefits and costs of Federal regulatory actions are measured and reported.  

The alternatives considered by USCG included:

Alternative One  -  No Action.  The Coast Guard considered and rejected the no action alternative, which would leave the existing regulations (pre OPA 1990 rules) without finalizing them. 
 
Alternative Two  -  Use of International Rules.  USCG rejected this alternative as too costly since the IFR rule has already been implemented with no response from industry. The International Maritime organization (IMO), for example, has similar rules that Coast Guard estimated qualitatively would likely be prohibitively expensive to integrate within our own structure.

Alternative Three  -  Current rulemaking that finalizes the USCG  IFR of 23 years ago. We selected this approach since industry has already implemented it with subsequent rulemaking modifications over these last 21 years.

1.6   Analytical Approach
IN THIS SECTION, WE PROVIDE AN OVERVIEW OF THE ANALYTIC FRAMEWORK APPLIED IN THIS REPORT.  THE ANALYSIS ESTIMATES:  HISTORICAL INCREMENTAL IMPACTS RESULTING FROM IMPLEMENTATION OF THE IFR.

1.6.1  Updated Analysis of the IFR
In looking at the IFR impacts retrospectively from 1994 through 2016, we are interested in assessing and estimating the actual incremental costs and benefits of the IFR.  To isolate these incremental impacts, we must compare actual outcomes with a hypothetical baseline scenario describing what the world would have looked like without the IFR.  As discussed above, characterizing the baseline condition is an important first step in appropriately assessing the incremental effects of the IFR.  This would be measured in terms of the volume of affected oil spills andits associated compliance costs to industry (e.g., amount of deck coaming installed), and benefits realized (e.g., volume of oil spilled that is averted from entering the environment by the rule specifically).
The affected vessel and spill incident data recorded historically by USCG, however, does not reflect the baseline condition, but rather reflects the world with the IFR in effect.  In other words, the recorded number of affected vessels and the number and volume of affected oil spills already reflect the DRE measures put in place as a result of the IFR.  Because the baseline scenario is unobservable, we do not have data that allow us to directly characterize the baseline condition since the time the IFR went into effect.
As a result, in Chapters 3 and 4, we first process, analyze, and present the actual level of vessel and oil spill activity with the IFR in effect.  To narrow down which vessel and oil spill incident statistics we are most interested in characterizing for the baseline condition, and how we might calculate them, we reviewed the methodology of the 1993 RIA.  Our review indicates, most importantly, that the rule's primary benefit is to reduce the volume of oil spilled into the environment once a spill occurs.  In other words, the rule is not intended to reduce the absolute number of spill incidents, but the volume that these incidents released into the environment once they occur.  In addition, the costs of the rule will result in the same number of affected vessels.  They operate with or without the rule.  Finally, our review indicates that the incremental costs for all of the final rule's provisions to be finalized are based on the number of affected vessels (e.g., the number of deck spill equipment kits required) or the number of affected spills (e.g., the frequency at which deck spill equipment is used and replaced) but not on spill volume.  As a result, the actual number of affected vessels and spills (i.e., with the IFR in effect), as reflected in the USCG-recorded data, would not be different from the baseline condition and are therefore appropriate for estimating the rule's updated costs (Chapter 5).
The realized benefits of the final rule, however, are based on the incremental reduction in the volume of oil spilled into the environment from the baseline condition.  As described in Chapter 6, we therefore estimate retrospectively the baseline spill volumes using the assumptions developed in the 1993 RIA (e.g., the rule's effectiveness in reducing oil spill volume and the baseline compliance rates of affected vessels) and adjusting the historical data recorded by USCG (reflecting the actual volume of spills with the IFR in effect).
1.7.1  Overview of Sources
Throughout this analysis, we discuss the available information, data, and sources we researched and used to analyze the impacts of this final rule.  We first searched the federal docket (Docket No. USCG-2011-0430) for any public comment that had been submitted in response to the March 27, 2012 NOI.  We found that there was only one public comment submitted in response to the NOI, which expressed support for the final rule but requested that USCG add requirements for training the crew in the proper and expeditious use of DRE.
We communicated with commercial vendors, suppliers, and providers of DRE, coamings, and damage stability programs to elicit cost and benefit information.  We then conducted literature searches and reviewed available information on the past and projected future trends in the transport of oil by vessel and the number and amount of oil carrying vessels and oil spills that the rule may affect.  We also used USCG data sets (including the Coast Guard's Marine Information for Safety and Law Enforcement, MISLE, database) regarding the specific vessels, businesses (e.g., vessel owners and operators), and oil spill events potentially affected by the rule In summary, our sources include, but are not limited to:
   * The 1993 RIA for the DRE IFR;
   * Cost and benefit information provided by commercial vendors, suppliers, and providers of DRE, coamings, and damage stability programs;
   * Publicly-available and government data and information relating to the past trends in marine oil transport and the number and amount of oil carrying vessels and oil spills potentially affected by the rule [e.g., U.S. Department of Transportation (USDOT) Bureau of Transportation Statistics (BTS), USDOT Maritime Administration (MARAD), and the U.S. Energy Information Administration (EIA)]; and
   * USCG reports and data relating to the specific vessels, businesses (e.g., vessel owners and operators), and oil spill incidents that may be affected by the rule, including data on the domestic and foreign vessels known to carry oil in U.S. waters, information on spill incidents from 1993 through 2012 extracted from USCG's information systems, and the USCG Office of Investigations & Compliance Analysis (CG-INV) report Polluting Incidents In and Around U.S. Waters, A Spill/Release Compendium:  1969-2011 (December 2012) ("2012 USCG compendium report").
      
1.8  Organization of the RA
This RA provides an updated analysis of the requirements of the 1993 IFR on industry over the past 22 years.  The updated analysis includes the costs, benefits, and other economic impacts associated with implementing the 1993 IFR for Discharge Removal Equipment.  The following summarizes the chapters of the RA:
         *      Chapter 2: Overview of the DRE Interim Rule and the 1993 RIA;
         *      Chapter 3: Population Affected;
         *      Chapter 4: Oil Spill Incident Data; 
         *      Chapter 5: Cost;
         *      Chapter 6: Benefits; and
Given that the IFR was published on an interim basis in 1993 and has been in effect since January 21, 1994, we provide an updated analysis of the costs and benefits looking back to calendar year 1994 (Year 1) from the present.  We estimate the costs and benefits retrospectively on an annual basis for 23- year period from 1994 through 2016 for the RIA Duplicative example. We summarize and present the costs and benefits estimated over the time period:



2.0  Overview of the 1993 DRE Interim Final Rule and the Supporting Regulatory Analysis
As discussed in Chapter 1, USCG issued the DRE rule on an interim basis in 1993.  The accompanying 1993 RIA, prepared by the U.S. Department of Transportation's Volpe National Transportation Systems Center, estimated the interim rule's potential costs and benefits.  In addition, the 1993 RIA evaluated a number of regulatory alternatives that the USCG was considering at the time (e.g., USCG was considering exempting certain types of vessels from some of the equipment requirements).
As published in the Federal Register, the IFR requirements apply to "all vessels carrying oil in bulk as cargo or cargo residue that are certificated as tank vessels under 46 CFR Chapter I, Subchapter D; all other certificated vessels that are permitted to carry limited quantities of oil, as defined in Section 311(a)(1) of the Federal Water Pollution Control Act (FWPCA, 33 U.S.C. 1321(j)); and uninspected vessels, including foreign flag vessels, that carry oil in bulk as cargo or cargo residue" that are operating on the navigable waters of the United States.  The 1993 RIA identified and categorized these affected vessel types into the following four main vessel categories:
   1. Oil tankers;
   2. Offshore oil barges (also known as coastal tank or offshore tank barges);
   3. Inland oil barges; and
   4. Secondary cargo vessels (e.g., offshore vessels, utility boats, tow boats, and fishing vessels that carry significant quantities of oil for delivery to other vessels or installations).
The IFR requirements vary by each of these vessel categories.  In addition, the 1993 RIA assumed that a proportion of the affected vessel population was already complying with the rule's requirements for coaming and deck spill equipment because the industry had already been complying with Section 155.310 to minimize the monetary costs associated with oil spill pollution.  This assumption is important when estimating the costs and benefits associated with complying with the rule; if the equipment already exists on a particular vessel, then there is no cost incurred or benefit accrued as a result of the rule.  As presented earlier, Exhibit 2-1 summarizes the key provisions of the IFR as published in the Federal Register, the additional regulatory alternatives evaluated in the 1993 RIA, and the level of baseline compliance assumed in the 1993 RIA.
TABLE 2-1.  Summary of the Interim Final Rule's Key Provisions, and Regulatory Alternatives Evaluated and Baseline Compliance Level Assumed in the RIA
                               IFR KEY PROVISION
                                 (58 FR 67988)
                                  OIL TANKERS
                           LARGE OFFSHORE OIL BARGES
                             (LENGTH > 400 FT)
                           SMALL OFFSHORE OIL BARGES
                             (LENGTH < 400 FT)
                               INLAND OIL BARGES
                               SECONDARY VESSELS
                        1993 RIA ALTERNATIVES EVALUATED
Deck coaming (33 CFR 155.310)
                                       
(100% already comply)
                                       
                             (100% already comply)
                                       
                             (50% already comply)
                                       
                             (50% already comply)
                                 Not required
Assumed that offshore and inland oil barges carrying "clean product" (i.e., non-persistent, more volatile petroleum products) are exempt due to safety concerns.
As an alternative, inland oil barges carrying "dirty product" (e.g., crude oil) are also exempt.
Deck spill equipment (33 CFR 155.205 through 155.220)
                                       
                             (100% already comply)
                                       
                             (100% already comply)
                                       
                             (50% already comply)
                                       
                             (50% already comply)
                                       
                             (50% already comply)

Internal cargo transfer capability  -  hoses and couplings (33 CFR 155.225)
                                       
                              (0% already comply)
                                       
                              (0% already comply)
                                       
                              (0% already comply)
                                 Not required
                                 Not required
For tankers> 700 ft loa
Emergency towing capability (33 CFR 155.230 and 155.235)
      2-1 
                              (0% already comply)
                                       
                              (0% already comply)
                                       
                              (0% already comply)
                                 Not required
                                 Not required
This provision was replaced by separate rulemakings (1).
Damage stability information (33 CFR 155.240 and 155.245)
                                       
                              (0% already comply)
                                       
                              (0% already comply)
                                       
                              (0% already comply)
                                       
                              (0% already comply)
                                 Not required
                                       
Sources:  Interim final rule (58 FR 67988, December 22, 1993), 1993 RIA

Notes:
(1) According to the March 27, 2012 NOI, the requirement for emergency towing capability on board tankers and barges had been replaced by separate rulemakings in 1997, 2000, and 2009 (77 FR 18154, March 27, 2012).  As a result, this analysis does not evaluate or update the impacts associated with this requirement.

The 1993 RIA also evaluated a proposed alternative requiring "warehoused equipment" (e.g., booms, skimmers, and temporary storage devices) to facilitate the containment and removal of oil from the water and shorelines.  The IFR did not promulgate this requirement and sought further public comment for consideration.  The March 2012 NOI stated that the USCG eventually determined that requiring vessels to carry such equipment onboard was economically, environmentally, and technologically unfeasible and believed that shore-based equipment is the preferred method for responding to actual or potential on-water oil spills (77 FR 18156, March 27, 2012).  As a result, this analysis does not evaluate or update the impacts associated with this proposed requirement.

In Section 2.1, we discuss each of the following four remaining provisions of the rule that we analyze for the final rulemaking.  In Section 2.2, we provide a summary of the methodology, data, and results of the 1993 RIA for reference.

2.1  DRE Rule's Key Provisions Evaluated in This Analysis
Our updated analysis therefore evaluates those impacts associated with the remaining four IFR provisions.  USCG has indicated that, for purposes of this updated analysis, we are not considering changing or adding new requirements in the final rule.  We briefly discuss each of the remaining IFR provisions below.

2.1.1  Deck Coaming
Deck spills may be contained by installing coamings along the perimeter of the vessel, and installing coamings, fixed containers, or other enclosures (e.g., containment troughs) around cargo hatches, loading manifolds, and transfer connection points.  The IFR requires, by January 21, 1997, that oil tankers and offshore oil barges with a cargo capacity of 250 or more barrels have peripheral coamings, including port and starboard coamings and forward and aft athwartships coamings, that completely enclose the cargo deck area, cargo hatches, manifolds, transfer connection points, and any other openings where cargo may overflow or leak.  Within each coaming, the IFR requires a fixed or portable container that holds at least one-half barrel under each oil loading manifold and each oil transfer connection, a mechanical means of closing each drain and scupper, and a means of draining or removing discharged oil from the fixed or portable container and from within the coamings without discharging the oil into the water.  For inland oil barges with a cargo capacity of 250 or more barrels, the IFR provides the option to choose between:  1) a new requirement for coaming around cargo hatches, loading manifolds, and transfer connections, or 2) the pre-existing requirement for fixed containers and deck enclosures around the same areas.
As shown in Table 2-1, the 1993 RIA assumed that all oil tankers and large offshore oil barges (vessels equal to or greater than 400 feet in length) already comply with this requirement, whereas 50 percent of small offshore oil barges (vessels less than 400 feet in length) and inland oil barges already comply.  This requirement does not apply to secondary vessels.  While the 1993 RIA also assumed that inland oil barges carrying "clean product" (i.e., non-persistent, more volatile petroleum products) are exempt due to safety concerns, the actual IFR did not exempt them as discussed above.  We correct that analytical error herein.  Under the IFR, these vessels are not exempt.

2.1.2  Deck Spill Equipment
The oil retained on deck by the coamings could then be piped to a slop or other tank via deck drains or portable pumps.  Sufficient cleanup equipment and materials must be provided to the crew to remove the oil or oil residue that remains on the deck.  The IFR required oil tankers, offshore and inland oil barges, and secondary vessels to carry the appropriate equipment and supplies for the containment and removal of on-deck oil cargo spills by June 20, 1994.  The equipment and supplies must include sorbents; non-sparking hand scoops, shovels and buckets; containers suitable for holding recovered waste; emulsifiers for deck cleaning; and protective clothing.  For oil tankers and offshore oil barges, additional equipment required by the IFR includes a minimum of one non-sparking portable pump with hoses and scupper plugs.  The equipment and supplies must be ready for immediate use during cargo transfer operations.
The spill containment and equipment capacity varies by vessel type and length:  12 barrels for oil tankers and offshore oil barges 400 feet or greater in length, 7 barrels for oil tankers and offshore oil barges less than 400 feet in length, one barrel for inland oil barges, and one-half barrel for secondary vessels.
As shown in Table 2-1, the 1993 RIA assumed that all oil tankers and large offshore oil barges (vessels equal to or greater than 400 feet in length) already comply with this requirement, whereas 50 percent of small offshore oil barges (vessels less than 400 feet in length), inland oil barges, and secondary vessels already comply.

2.1.3  Internal Cargo Transfer Capability
This IFR requirement provides the capability to move cargo from a ruptured or breached tank to an intact cargo or segregated ballast tank on board or to a lightering vessel alongside.  More specifically, the IFR requires oil tankers and offshore oil barges to carry suitable hoses and reducers for internal transfer of cargo to tanks or other spaces within the cargo block by June 20, 1994, unless the vessel's installed cargo piping system is capable of performing this function.
As shown in Table 2-1, the 1993 RIA assumed that none of the affected oil tankers and offshore oil barges already carried the required equipment prior to implementation of the IFR.  The RIA also evaluated an alternative where oil tankers would also be required to carry hydraulically powered submersible pump kits; however, in the IFR, the USCG determined that requiring such equipment was not economically feasible and may be incompatible with safe vessel operation if the pumps are used before adequate stability information is available.

2.1.4  Damage Stability Information
This requirement provides for quick damage stability, loading, and residual structural strength calculation capability to facilitate safe, non-polluting salvage and cargo transfer operations.  For oil tankers and offshore oil barges, the IFR required owners or operators to have prearranged, prompt access to computerized, shore-based damage stability and residual strength calculation programs for their vessels no later than January 21, 1995.  These shore-based calculation programs must be available for access 24 hours a day and have vessel baseline strength and stability characteristic data pre-entered.  For inland oil barges, the IFR requires owners and operators to maintain 24-hour access to vessel plans at a shore-based location for necessary salvage, stability, and residual hull strength assessments.
As shown in Table 2-1, the 1993 RIA assumed that none of the affected oil tankers, offshore oil barges, and inland oil barges already engaged in these capabilities prior to implementation of the IFR.

2.2  Summary of 1993 RIA Methodology, Data, and Results
The 1993 RIA estimated the direct costs to vessel owners and operators to comply with the rule's requirements on the basis of the projected number of affected vessels over a 23-year period, 1994 through 2016, and available equipment unit cost information.  Certain assumptions were made with respect to the length of coaming and transfer hose required for a given vessel size, the frequency at which deck spill equipment and transfer hoses would have to be replaced, and as discussed in Section 2.1, the proportion of the affected vessel population that was already complying with the requirements.  The costs were calculated on a present value basis using a discount rate of 7 percent.
The 1993 RIA estimated the benefits of the rule on the basis of the volume of spilled oil that would be prevented from entering the water by DRE.  The volume of oil that would be prevented from entering the water was based on projections of historical spill data that reflected: (1) oil shipment forecast information; and (2) analysis of representative spill incidents to estimate the effectiveness of DRE.  The benefits were quantified in terms of barrels of oil not lost to the environment, on a present value basis assuming a discount rate of 7 percent.
For reference, Table 2-2 summarizes the costs and benefits estimated by the 1993 RIA.



Table 2-2.  Summary of Costs and Benefits Estimated by the 1993 RIA, 1993 dollars
                               IFR KEY PROVISION
                                 (58 FR 67988)
                                ESTIMATED COSTS
                              (PRESENT VALUE, 7%)
                              ESTIMATED BENEFITS
                              (PRESENT VALUE, 7%)
                             NOTES AND ASSUMPTIONS
Deck coaming and spill equipment (1)
Offshore oil barges:  $1.65 million
Inland oil barges:  $4.51 million
Secondary vessels:  $4.84 million

Total:  $11.0 million

Annualized:  $0.11 million (was calculated only for offshore oil barges)
Offshore oil barges:  149.4 barrels
Inland barges:  11.8 barrels
Secondary vessels:  236.4 barrels

Total:  397 barrels




Assumed inland barges were exempt from the coaming requirement.
Internal cargo transfer capability  -  hoses and couplings
Tankers:  $91.33 million
Offshore oil barges:  $8.92 million

Total:  $100.25 million

Annualized:  $7.37 million (tankers), $0.72 million (offshore oil barges)
Tankers:  6,700 barrels
Offshore oil barges:  840 barrels

Total:  7,544 barrels




If submersible pump kits are also required for tankers, the estimated tanker cost and benefit increases to $449.31 million and 28,346 barrels, respectively
Damage stability information (2)
Tankers:  $6.89 million
Offshore oil barges:  $0.79 million
Inland oil barges:  NA
Total:  $7.68 million
Annualized:  $0.56 million (tankers), $0.07 million (offshore oil barges), NA (inland oil barges)
Not quantifiable
The 1993 RIA reported that "no data exists to quantify the gains from rapid salvage planning services."
Sources:  Interim final rule (58 FR 67988, December 22, 1993), 1993 RIA

Notes:
(1) The costs and benefits for deck coaming and deck spill equipment were not reported separately.  Costs and benefits to tankers for deck coaming and spill equipment were not estimated because the 1993 RIA assumed that these vessels were already compliant.
(2) The 1993 RIA did not estimate costs to inland oil barges for the damage stability information requirement.
                                       

3.0  Affected Population
In this chapter, we estimate the number of oil carrying vessels with the final rule in effect based on the 1993 RIA expectations.  As discussed in Chapter 1, these vessel estimates do not change in the absence of the rule (baseline scenario) and are therefore appropriate to use in Chapter 5 to estimate the compliance costs associated with each of the rule's requirements.  USCG provided data that specifically identified the vessels that are likely to have been affected since the interim rule was issued.  We conduct additional screening and analysis on these data to categorize these vessels based on type (e.g., oil tanker or oil barge), operating location (e.g., offshore oil barge or inland oil barge), and size (e.g., large or small offshore oil barge).  

3.1  Updated Period of Analysis
We estimate the number of vessels as an update, by each of the vessel types affected by the final rule (oil tankers, offshore oil barges, inland barges, and secondary vessels), from 1994, when the IFR became in effect, through the year 2016.  For the years 1994 through 2012, we use data from USCG data bases (e.g. MISLE and various consolidated NPFC pollution data bases) to estimate, retrospectively, the number of vessels that were likely to have been affected since the interim rule was issued.  For the years 2013 through 2016, we research available forecast data and information relating to the marine transport of oil for insight into how the number of affected vessels may be estimated.

3.1.1  Estimating the Number of Vessels Likely Affected by the Final Rule from 1994 through 2012 (Update) 
To estimate the number of vessels that are likely to have been affected from the time the IFR was in effect (1994 through the end of 2012).  We use vessel data recorded by our databases.  We provided the following two vessel data sets:
   1. A data set that lists 7,371 unique domestic vessels (U.S.-flag) known to have carried oil on U.S.  waters, with known build dates ranging from 1896 through 2012; and
   2. A data set that lists 3,716 unique foreign vessels known to have carried oil on U.S. waters, with known build dates ranging from 1942 through 2012.
These data sets contain data and information for each vessel listed, including vessel ID and name; flag (e.g., "US" or some other country); managing owner; route type (e.g., "Oceans," "Coastwise," "Great Lakes," "Rivers"); classification society; cargo authorization type; inspection subchapter type (in accordance with the 46 CFR); vessel class, type, subtype, and service; tonnage, length, breadth, and depth; and build year.  We reviewed these data sets and found, however, that they included vessels that are likely not affected by the rule and vessels that are likely no longer active or operational.  In addition, some vessels are missing data elements that are important to our analysis (e.g., vessel width or breadth to estimate the amount of deck coaming required by the rule).  As a result, we conducted additional screening and analysis to estimate the number of vessels affected by the rule as of its effective date (January 1994), by vessel type, and assign data in instances where data are missing.  Table 3-1 summarizes the steps we implemented.

Table 3-1.  Summary of Steps Taken to Screen and Analyze USCG vessel Data
                                     STEP
                               DOMESTIC VESSELS
                                FOREIGN VESSELS
Original data
7,371 unique vessels with known build dates ranging from 1896 through 2012
3,716 unique vessels with known build dates ranging from 1942 through 2012
   1. Remove vessels that likely do not carry oil or petroleum product
168
458
   2. Remove vessels that likely ceased operation prior to 1994 (assumes 30-year maximum lifespan)
4,296
2,131
Estimated number of active vessels as of January 1, 1994 (or at year-end 1993).
2,907
1,127
   3. Group active vessels by vessel type and length
   
   Estimate missing width/breadth values
Oil tankers:  57
Large offshore oil barges, length > 400 ft:  39
Small offshore oil barges, length < 400 ft:  179
Inland oil barges:  2,419
Secondary vessels:  213
Oil tankers:  1,058
Large offshore oil barges, length > 400 ft:  18
Small offshore oil barges, length < 400 ft:  51
Inland oil barges:  0
Secondary vessels:  0
   4.    Estimate the number of affected, actively-operating vessels for each of the years 1994 through 2012 (at year-end) using the build dates provided in the data sets and assuming a 30-year maximum lifespan for vessels built in 1964 and beyond
By adding 492 new vessels, the total  active vessels as of year-end 2012  is 3,399
By adding 1,522new vessels, the total   active vessels as of year-end 2012, is 2,649
Source: USCG Analysis

   1.    We first identify and remove from further consideration those vessels that are likely not affected by the rule.  These vessels include 168 domestic and 458 foreign vessels that are listed as carrying liquid chemical or gas (e.g., liquefied petroleum gas, liquefied natural gas, or anhydrous ammonia) cargo, as opposed to oil or petroleum product.
   2.    We next identify and remove from further consideration those vessels that are likely no longer active or operational.  Although the domestic vessel data set contained a data field indicating whether vessels are active or not (`vessel_status_type_id'), many of these reportedly active vessels had been built in the early 20[th] century and are likely no longer active.   The domestic and foreign vessel data sets contain vessels that were built as early as 1896 and 1942, respectively.  To determine which of the listed vessels are likely no longer active, we conducted a literature search and review to research information and data about the typical lifespan of vessels.  We found three information sources that suggest that the maximum lifespan of tanker and tank barges is approximately 30 years:
   * A 2004 thesis from the Massachusetts Institute of Technology on the dynamics of the oil tanker industry presented the age profile of the 1996, 1999, 2001, and 2003 tanker fleet, which shows that the maximum lifespan of tankers has consistently been around 30 years.  
   * Data provided by the USDOT MARAD shows the years in which tankers and tank barges in the U.S. domestic petroleum trades were built and subsequently removed from or retrofitted for service due to regulations prompted by the Oil Pollution Act of 1990 (OPA 1990) (e.g., double-hull requirements).  Our analysis shows that these vessels were removed or retrofitted after about 30 years of operation, on average, with little variation among the vessel types; and
   * Finally, a 2011 USDOT MARAD report on the coastal tank vessel market presented the age profile for the 2011 tanker and tank barge fleets, which shows that a very small number of vessels (less than 5) had been built prior to 1981 and most vessels had been built from 2002 through 2010.  In addition, the report states that in 2010, product tankers less than 10 years old accounted for 75 percent of fleet capacity and 86 percent of fleet ton-miles and tank barges less than 10 years old accounted for 67 percent of fleet capacity and 72 percent of fleet ton-miles. 
   Based on the literature discussed above, we assume a maximum vessel lifespan of 30 years (e.g., those vessels built in 1960 are retired in 1990).  By applying this assumption to the build dates provided for each of the vessels listed in the domestic and foreign vessel data sets, we estimate, retrospectively, 2,907 domestic and 1,127 foreign vessels that were active or operational as of January 1994, when the IFR was made effective.
   3.    Based on MISLE data, we researched active vessels by size, and type, based on ITC and route type, to obtain a population of foreign oil tankers and offshore oil barges.  Type would categorize vessels by their operating location (e.g., offshore oil barge or inland oil barge).  All of the listed foreign vessels are either offshore oil tankers or offshore oil barges.
   We also assigned estimated widths or breadths to those vessels that are missing such data, especially for those vessels that were active as of the effective date of the IFR, January 21, 1994.  Since length data is provided for each listed vessel, we correlate vessel width and length to approximate the widths for those vessels missing width data.  For the small offshore barges (less than 400 feet in length), we assign width values to two domestic vessels and all foreign vessels based on a correlation between vessel width and length for the remaining domestic vessels.   For the domestic inland barges, however, width data are not well populated and the correlation between vessel width and length is not as strong as the offshore barges.  As a result, we apply the average width per vessel calculated for those vessels with width data (average of 42.9 feet wide).
   4.    Finally, we continue to estimate, as an update, the number of actively-operating, affected vessels for each of the years 1994 through 2012 (at year-end).  For each of these years, we add "new" vessels that are being built as reported by the USCG data sets, and "retire" older vessels assuming a 30-year maximum lifespan (e.g., for the year 1994, those vessels built in 1964 are retired).  Table 3-2 presents our estimated number of affected vessels for each year, by vessel type and size (length).  For each year, we present the estimated numbers of newly built vessels, retired vessels, and actively operating vessels (by year-end).  For a given year, the numbers of newly built vessels and retired vessels are added and subtracted, respectively, from the number of active vessels estimated in the preceding year to estimate the number of active vessels by year-end.
   AS SHOWN IN TABLE 3-2A, we estimated that the number of the smallest oil tankers (less than 400 feet in length) decreased from about 300 active vessels in the 1990s to about 240 active vessels by 2012.  On the other hand, we estimated that the number of the larger oil tankers (equal to or greater than 400 feet in length) is about three times greater by 2012 than in 1993.  For a given year, the estimated number of active oil barges fluctuates between 180 and 240 small offshore oil barges (less than 400 feet in length), 60 and 70 large offshore oil barges (equal to or greater than 400 feet in length), and 2,300 and 2,500 inland barges (See Table 3-2C).  Finally, we estimate about three times as many secondary vessels operating in 2012 than in 1993.  

Table 3-2A	Estimated Updated Number of Oil Tankers Affected by the Final Rule, and Size (length), 1994 - 2012
YEAR
                           OIL TANKERS, L<400 FT
                          OIL TANKERS, 400 TO 700 FT
                           OIL TANKERS, L>700 FT
                                       
                                    NEW (1)
                                  RETIRED (2)
                                  ACTIVE (3)
                                    NEW (1)
                                  RETIRED (2)
                                  ACTIVE (3)
                                    NEW (1)
                                  RETIRED (2)
                                  ACTIVE (3)
1994
                                                                            10 
                                                                           -   
                                                                           288 
                                                                            11 
                                                                             3 
                                                                           446 
                                                                            22 
                                                                             2 
                                                                           419 
1995
                                                                             8 
                                                                             1 
                                                                           295 
                                                                            21 
                                                                             1 
                                                                           466 
                                                                            25 
                                                                             1 
                                                                           443 
1996
                                                                             7 
                                                                             3 
                                                                           299 
                                                                            37 
                                                                             1 
                                                                           502 
                                                                            25 
                                                                           -   
                                                                           468 
1997
                                                                             7 
                                                                             1 
                                                                           305 
                                                                            21 
                                                                           -   
                                                                           523 
                                                                            25 
                                                                           -   
                                                                           493 
1998
                                                                             5 
                                                                             1 
                                                                           309 
                                                                            37 
                                                                             7 
                                                                           553 
                                                                            51 
                                                                           -   
                                                                           544 
1999
                                                                             3 
                                                                             3 
                                                                           309 
                                                                            47 
                                                                             1 
                                                                           599 
                                                                            54 
                                                                           -   
                                                                           598 
2000
                                                                             3 
                                                                             3 
                                                                           309 
                                                                            42 
                                                                             4 
                                                                           637 
                                                                            55 
                                                                             2 
                                                                           651 
2001
                                                                             4 
                                                                             9 
                                                                           304 
                                                                            37 
                                                                             5 
                                                                           669 
                                                                            38 
                                                                             3 
                                                                           686 
2002
                                                                             4 
                                                                             8 
                                                                           300 
                                                                            54 
                                                                             5 
                                                                           718 
                                                                            68 
                                                                             7 
                                                                           747 
2003
                                                                             5 
                                                                             7 
                                                                           298 
                                                                            78 
                                                                            13 
                                                                           783 
                                                                           105 
                                                                             9 
                                                                           843 
2004
                                                                             6 
                                                                            12 
                                                                           292 
                                                                           100 
                                                                            17 
                                                                           866 
                                                                            93 
                                                                            17 
                                                                           919 
2005
                                                                             6 
                                                                            11 
                                                                           287 
                                                                            92 
                                                                            14 
                                                                           944 
                                                                            82 
                                                                            28 
                                                                           973 
2006
                                                                             7 
                                                                            10 
                                                                           284 
                                                                           103 
                                                                            15 
                                                                         1,032 
                                                                            68 
                                                                            18 
                                                                         1,023 
2007
                                                                             9 
                                                                            11 
                                                                           282 
                                                                            86 
                                                                            12 
                                                                         1,106 
                                                                            77 
                                                                            12 
                                                                         1,088 
2008
                                                                             6 
                                                                            16 
                                                                           272 
                                                                           101 
                                                                            10 
                                                                         1,197 
                                                                            59 
                                                                            13 
                                                                         1,134 
2009
                                                                             4 
                                                                            10 
                                                                           266 
                                                                            74 
                                                                             8 
                                                                         1,263 
                                                                            67 
                                                                            18 
                                                                         1,183 
2010
                                                                             4 
                                                                            18 
                                                                           252 
                                                                            46 
                                                                            18 
                                                                         1,291 
                                                                            28 
                                                                            12 
                                                                         1,199 
2011
                                                                             2 
                                                                            11 
                                                                           243 
                                                                            17 
                                                                            27 
                                                                         1,281 
                                                                            29 
                                                                            23 
                                                                         1,205 
2012
                                                                             2 
                                                                             8 
                                                                           237 
                                                                             4 
                                                                            31 
                                                                         1,254 
                                                                             7 
                                                                            12 
                                                                         1,200 
Sources:  USCG
Notes:
(1) The estimated number of new vessels is based on build date data provided in USCG vessel data sets.
(2) The estimated number of retired vessels is based on assuming a maximum vessel lifespan of 30 years.
(3) For each year, the numbers of newly built vessels and retired vessels are added and subtracted, respectively, from the number of active vessels estimated in the preceding year to estimate the number of active vessels by year-end.
3-2a, 2b5, 
Table 3-2B.  Estimated Updated Number of Offshore Barges Affected by the Rule, and Size (length), 1994 - 2012
YEAR
                       OFFSHORE OIL BARGES, L<400 FT
                        OFFSHORE OIL BARGES, L> 400 
                                       
                                    NEW (1)
                                  RETIRED (2)
                                  ACTIVE (3)
                                    NEW (1)
                                  RETIRED (2)
                                  ACTIVE (3)
1994
                                                                             3 
                                                                             4 
                                                                           229 
                                                                           -   
                                                                           -   
                                                                            57 
1995
                                                                             2 
                                                                             5 
                                                                           226 
                                                                             3 
                                                                           -   
                                                                            60 
1996
                                                                             3 
                                                                            15 
                                                                           214 
                                                                             1 
                                                                           -   
                                                                            61 
1997
                                                                           -   
                                                                             6 
                                                                           208 
                                                                             2 
                                                                           -   
                                                                            63 
1998
                                                                           -   
                                                                             6 
                                                                           202 
                                                                             1 
                                                                           -   
                                                                            64 
1999
                                                                             2 
                                                                            12 
                                                                           192 
                                                                             2 
                                                                             3 
                                                                            63 
2000
                                                                             3 
                                                                            14 
                                                                           181 
                                                                           -   
                                                                             4 
                                                                            59 
2001
                                                                             4 
                                                                             8 
                                                                           177 
                                                                           -   
                                                                             4 
                                                                            55 
2002
                                                                             8 
                                                                             4 
                                                                           181 
                                                                             6 
                                                                             2 
                                                                            59 
2003
                                                                             9 
                                                                             5 
                                                                           185 
                                                                             3 
                                                                             1 
                                                                            61 
2004
                                                                            10 
                                                                             4 
                                                                           191 
                                                                             4 
                                                                             2 
                                                                            63 
2005
                                                                            13 
                                                                             6 
                                                                           198 
                                                                             3 
                                                                             3 
                                                                            63 
2006
                                                                            16 
                                                                             8 
                                                                           206 
                                                                             4 
                                                                             4 
                                                                            63 
2007
                                                                            18 
                                                                             6 
                                                                           218 
                                                                             6 
                                                                           -   
                                                                            69 
2008
                                                                            20 
                                                                             7 
                                                                           231 
                                                                             4 
                                                                             2 
                                                                            71 
2009
                                                                            19 
                                                                             6 
                                                                           244 
                                                                             4 
                                                                             6 
                                                                            69 
2010
                                                                            16 
                                                                            18 
                                                                           242 
                                                                             4 
                                                                             3 
                                                                            70 
2011
                                                                            12 
                                                                            15 
                                                                           239 
                                                                             3 
                                                                            10 
                                                                            63 
2012
                                                                           -   
                                                                            12 
                                                                           227 
                                                                           -   
                                                                             6 
                                                                            57 
Sources:  USCG 
Notes:
(1) The estimated number of new vessels is based on build date data provided in USCG vessel data sets.
(2) The estimated number of retired vessels is based on assuming a maximum vessel lifespan of 30 years.
(3) For each year, the numbers of newly built vessels and retired vessels are added and subtracted, respectively, from the number of active vessels estimated in the preceding year to estimate the number of active vessels by year-end.


Table 3-2C.  Estimated Updated Number of Inland Barges and Secondary Vessels Affected by the Rule by Vessel Type 1994 - 2012
YEAR
                               INLAND OIL BARGES
                               SECONDARY VESSELS
                                       
                                    NEW (1)
                                  RETIRED (2)
                                  ACTIVE (3)
                                    NEW (1)
                                  RETIRED (2)
                                  ACTIVE (3)
1994
                                                                            59 
                                                                            87 
                                                                         2,391 
                                                                             1 
                                                                             1 
                                                                           213 
1995
                                                                           105 
                                                                            80 
                                                                         2,416 
                                                                             1 
                                                                             2 
                                                                           212 
1996
                                                                           128 
                                                                           105 
                                                                         2,439 
                                                                             1 
                                                                             6 
                                                                           207 
1997
                                                                            87 
                                                                           134 
                                                                         2,392 
                                                                            17 
                                                                             8 
                                                                           216 
1998
                                                                            81 
                                                                           152 
                                                                         2,321 
                                                                            41 
                                                                             8 
                                                                           249 
1999
                                                                            94 
                                                                           124 
                                                                         2,291 
                                                                            45 
                                                                             1 
                                                                           293 
2000
                                                                            86 
                                                                           107 
                                                                         2,270 
                                                                            21 
                                                                             6 
                                                                           308 
2001
                                                                           103 
                                                                            95 
                                                                         2,278 
                                                                            24 
                                                                             3 
                                                                           329 
2002
                                                                            82 
                                                                            73 
                                                                         2,287 
                                                                            31 
                                                                           -   
                                                                           360 
2003
                                                                            89 
                                                                            97 
                                                                         2,279 
                                                                            20 
                                                                             7 
                                                                           373 
2004
                                                                           112 
                                                                           122 
                                                                         2,269 
                                                                            28 
                                                                             3 
                                                                           398 
2005
                                                                           154 
                                                                           119 
                                                                         2,304 
                                                                            22 
                                                                             4 
                                                                           416 
2006
                                                                           105 
                                                                            97 
                                                                         2,312 
                                                                            24 
                                                                             3 
                                                                           437 
2007
                                                                           157 
                                                                            83 
                                                                         2,386 
                                                                            46 
                                                                             5 
                                                                           478 
2008
                                                                           220 
                                                                            94 
                                                                         2,512 
                                                                            44 
                                                                             4 
                                                                           518 
2009
                                                                           165 
                                                                           100 
                                                                         2,577 
                                                                            46 
                                                                             7 
                                                                           557 
2010
                                                                           121 
                                                                           208 
                                                                         2,490 
                                                                            30 
                                                                             4 
                                                                           583 
2011
                                                                           161 
                                                                           151 
                                                                         2,500 
                                                                            14 
                                                                            10 
                                                                           587 
2012
                                                                            45 
                                                                            49 
                                                                         2,496 
                                                                             3 
                                                                            13 
                                                                           577 
Sources:  USCG
Notes:
(1) The estimated number of new vessels is based on build date data provided in USCG vessel data sets.
(2) The estimated number of retired vessels is based on assuming a maximum vessel lifespan of 30 years.
(3) For each year, the numbers of newly built vessels and retired vessels are added and subtracted, respectively, from the number of active vessels estimated in the preceding year to estimate the number of active vessels by year-end.


   
We compare our estimates with those from the 1993 RIA.  The 1993 RIA estimated the number of affected vessels based on the amount of oil moved.  More specifically, the 1993 RIA presented its estimates of the number of affected vessels and oil moved in an appendix table "Tonnage and Spill Forecast."  In this table, oil moved internationally increased from 489,189,000 tons in 1990 to 999,467,000 tons in 2015; decreased coastally from 288,422,000 tons in 1990 to 236,832,000 tons in 2015; and remained the same inland at 100,000,000 tons from 1990 through 2015.  However, the 1993 RIA does not cite the source(s) of its oil movement data or describe how they were used to project vessel numbers.
As shown in Table 3-3, our updated estimates are generally higher than was estimated in the 1993 RIA for tankers and offshore barges, but lower for inland barges and secondary vessels.  By 2010, we estimate almost twice as many tankers and more than 40 percent more offshore barges than was estimated in the 1993 RIA.  Our updated estimates for inland barges and secondary vessels are much lower but may be more indicative of actual vessel activity.

Table 3-3.  Comparison of Vessel Population Estimates Between the 1993 RIA and this Updated Analysis
VESSEL TYPE
                                     1995
                                     2000
                                     2005
                                     2010
2013 CG
                                   1993 RIA
                                    2013 CG
                                   1993 RIA
                                    2013 CG
                                   1993 RIA
                                    2013 CG
                                   1993 RIA
Tankers
                                                                          1,204
                                                                          1,263
                                                                          1,597
                                                                          1,317
                                                                          2,204
                                                                          1,372
                                                                          2,742
                                                                          1,432
Offshore Barges
                                                                            286
                                                                            206
                                                                            240
                                                                            209
                                                                            261
                                                                            212
                                                                            312
                                                                            219
Inland Barges
                                                                          2,416
                                                                          3,461
                                                                          2,270
                                                                          3,461
                                                                          2,304
                                                                          3,461
                                                                          2,490
                                                                          3,461
Secondary Vessels
                                                                            212
                                                                            823
                                                                            308
                                                                            823
                                                                            416
                                                                            823
                                                                            583
                                                                            823
=Sources:  USCG MISLE data sheet

Moreover, given other oil shipping statistics and data that report an overall decline in oil shipping activity, it is likely that the 1993 RIA overstated the overall number of oil carrying vessels.  U.S. oil demand and oil transported domestically by vessel unexpectedly declined since the IFR went in effect in 1994.  USDOT MARAD reported that the domestic tank vessel trades had declined from 2002 through 2011 because of a four-percent decline in U.S. consumption of petroleum products, a 40 percent decline in Alaska crude oil production which was driving domestic crude oil traffic amongst west coast ports, and greater use of petroleum transport alternatives including pipelines and international tankers.  Over the same period, however, the number of new offshore tank vessels had surged as a result of replacing or rebuilding single-hull vessels that had been built during the 1978 to 1983 boom period to meet the OPA 1990 requirement for double-hulling.  This surge may explain why our estimated numbers are significantly higher than the 1993 RIA for tankers and offshore barges, but not for inland barges and secondary vessels.  To further exemplify the decline in oil transported, Table 3-4 presents a summary of the available oil transport statistics since 1990.
TABLE 3-4.  Summary of Data Relevant to Oil and Petroleum Product Transported in the United States, 1990 - 2009
                               SUMMARY STATISTIC
                                     1990
                                     1995
                                     2000
                                     2005
                                     2009
By Transportation Mode (billion ton-miles) (1)
Pipelines
Water Carriers /Vessel (% of total)
Motor Carriers
Railroads
Total
                                                                               
                                                                               
                                                                          584.1
                                                                  449.0 (41.7%)
                                                                           29.7
                                                                           14.0
                                                                        1,076.8
                                                                               
                                                                               
                                                                          601.1
                                                                  400.9 (38.4%)
                                                                           26.3
                                                                           16.7
                                                                        1,044.9
                                                                               
                                                                               
                                                                          577.3
                                                                  244.4 (28.0%)
                                                                           31.3
                                                                           20.3
                                                                          873.3
                                                                               
                                                                               
                                                                          607.5
                                                                  240.5 (26.5%)
                                                                           34.8
                                                                           23.2
                                                                          906.0
                                                                               
                                                                               
                                                                          568.4
                                                                  186.8 (23.1%)
                                                                           33.9
                                                                           20.9
                                                                          810.0
Vessel, by commodity type (billion ton-miles) (1)
Crude Oil
Refined Petroleum Products
Total
                                                                               
                                                                          291.2
                                                                          157.8
                                                                          449.0
                                                                               
                                                                          247.7
                                                                          153.2
                                                                          400.9
                                                                               
                                                                           91.0
                                                                          153.4
                                                                          244.4
                                                                               
                                                                           81.1
                                                                          159.4
                                                                          240.5
                                                                               
                                                                           65.1
                                                                          121.7
                                                                          186.8
Coastal Vessel only, by commodity type (million metric tons) (2)
 Crude oil
 Petroleum product
 Total
                                                                               
                                                                             NA
                                                                             NA
                                                                             NA
                                                                               
                                                                             NA
                                                                             NA
                                                                             NA
                                                                               
                                                                             NA
                                                                             NA
                                                                             NA
                                                                               
                                                                           40.7
                                                                          101.6
                                                                          142.3
                                                                               
                                                                           32.0
                                                                           80.4
                                                                          112.4
U.S. Petroleum Demand (million barrels) (2)

Alaska Crude Oil production (million barrels) (2)
                                                                             NA
                                                                               
                                                                               
                                                                             NA
                                                                             NA
                                                                               
                                                                               
                                                                             NA
                                                                             NA
                                                                               
                                                                               
                                                                             NA
                                                                        7,592.8
                                                                               
                                                                               
                                                                          315.4
                                                                        6,851.6
                                                                               
                                                                               
                                                                          235.5
Table sources:
(1) USDOT Bureau of Transportation Statistics, National Transportation Statistics, "Table 1-61  -  Crude Oil and Petroleum Products Transported in the United States by Mode (billions)," updated July 2012.
(2) USDOT MARAD, "U.S. Coastwise Petroleum Trades, 2004-2009," U.S. Water Transportation Statistical Snapshot, February 2011, p. 6.

As shown in Table 3-5, transport of oil and petroleum across all modes (pipelines, vessel, motor carriers, and rail) decreased from 1,077 billion ton-miles in 1990 to 810 billion ton-miles in 2009.  By vessel, the transport of oil and petroleum decreased from 449 billion ton-miles to 187 billion ton-miles, or by about 58 percent.  The proportion of oil that was moved by vessel decreased from 41.7 percent to 23.1 percent of all transport modes.  For the period 2005 through 2009, the decline in the movement of oil and petroleum specifically by coastal vessels from 142 million metric tons to 112 million metric tons reflects the overall decline in U.S. petroleum demand (from approximately 7,600 million barrels to 6,900 million barrels).

3.1.2  Estimating the Number of Vessels Likely Affected by the Rule from 2013 through 2016
In order to estimate the number of affected vessels for that part of the RIA 1993 projections beyond available data, we have to estimate the population of vessels from 2013 to 2016.  In this period, we continue to phase-out or retire older vessels by applying our 30-year maximum lifespan assumption.  However, we also need to develop assumptions about the number of new vessels that will be built in this period.  We anticipate that the number of vessels built in the period generally reflects forecasted oil market conditions, or more specifically, the amount of oil and petroleum product that is forecasted to be transported in the United States.  
We first conducted literature and on-line searches to research available data and information on the number of oil carrying vessels forecasted to operate on U.S. waters.  We found some sources that may provide insight into the future international and domestic oil tanker market, however they are only available to industry subscribers or are expensive to obtain.  In addition, they cover only one segment of the vessel population affected by the rule (oil tankers).
Consequently, we conducted another literature and on-line search to research available data and information on the amount of oil and petroleum product that is forecasted to be transported on U.S. waters.  As discussed previously, the 1993 RIA appears to have projected the number of affected vessels on the basis of the forecasted amount of oil moved.  We also reviewed available literature for any insight into how forecasted oil transport data can be related to vessel growth.
Our search, however, did not find anything definitive on the state or future trend of oil transported by vessel in the United States.  Estimating future vessel growth based on oil transport forecast data is fraught with challenges and ambiguity.  In particular, the tanker industry is very dynamic and is governed largely by supply, which has considerable lags and delays in responding to market conditions and fleet orders.  Tanker orders are usually placed only after the demand for crude oil and corresponding freight rates for transporting crude oil remain high.  However, by the time these ships are eventually placed into service several years later, adverse changes in the economy and the demand for oil can result in an abrupt, long-term oversupply of tankers and a considerable period of time before equilibrium is reached and new tankers are ordered again.  Most recently, The Wall Street Journal reported that oil tanker operators are now struggling with accumulated losses of more than $26 billion since 2009 as freight rates have fallen below operating costs.  Tankers that had been ordered during the period of peak demand and freight rates prior to the onset of the global recession in 2007-2008 are only being delivered now.  Their entry into the fleet is exacerbating an already oversaturated supply of ships caused by a rapid decline in demand due to a weaker global economy and fewer import shipments to the United States as crude oil production from U.S. and Canadian shale formations has surged.  The charter rate for a very large crude carrier (up to 2 million barrels of oil) between the Middle East and Japan has declined from a peak of $309,601 a day in 2007 to $7,100 a day in 2013.
Our search identified a number of factors which make forecasting oil transport at this time particularly difficult:
   * U.S. consumption of oil is expected to largely remain the same:  In its Annual Energy Outlook 2013 (Early Release), the EIA projects that the total U.S. consumption of liquid fuels will decrease slightly from 37.0 quadrillion British thermal units (Btu) (18.9 million barrels per day (bpd)) in 2011 to 36.9 quadrillion Btu in 2025.  The transportation sector, and more specifically light-duty vehicles (LDV), dominates the demand for liquid fuels.  Energy consumption by LDVs is expected to decline from 15.6 quadrillion Btu (8.5 million bpd) in 2011 to 13.5 quadrillion Btu (7.4 million bpd) in 2025, due primarily to the implementation of the model year 2017 to 2025 Greenhouse Gas (GHG) and Corporate Average Fuel Economy (CAFE) standards (increase from 32.6 miles per gallon (mpg) in 2011 to 47.3 mpg in 2025).  However, expected increases in energy consumption by freight trucks (from 5.0 quadrillion Btu (2.4 million bpd) in 2011 to 6.2 quadrillion Btu (3.0 million bpd) in 2025) and the industrial sector (from 8.6 quadrillion Btu in 2011 to 9.3 quadrillion Btu in 2025) partially offset this expected decline in liquid fuels consumption by LDVs.
   * The demand for oil shipments from abroad is expected to decline as domestic oil production surges:  In 2012 alone, U.S. crude-oil production grew by more than one million barrels a day, the largest increase in the world and the largest in U.S. history.  The EIA projects that the continuing advancement of crude oil production technologies will lift domestic supply on average by about 234,000 bpd annually through 2019, when production reaches 7.5 million bpd.  This growth results largely from a significant increase in onshore crude oil production, particularly from shale and other tight formations.  In particular, the EIA expects North Dakota oil production alone to reach 1.1 million bpd in 2014, up from 770,000 bpd in December 2012.  
      As a result, EIA projects that U.S. dependence on imported liquid fuels will continue to decline from 45 percent of total U.S. liquid fuel use to 34 percent in 2019.  Net imports of crude oil (gross imports less exports) are expected to decrease from 8.9 million bpd in 2011 to 7.1 million bpd in 2025.  Earnings for the largest crude tankers are expected to be 25 percent lower in 2013 than previously estimated due to the large expected increase in domestic crude production (from shale oil).
   * This shift in supply from imported oil to domestic oil may result in an increase in oil transport by vessel domestically:  As a result of the projected decrease in demand for foreign oil, we anticipate that the shipping activity associated with importing oil would likewise decrease.  Offsetting this decrease to some extent, however, may be increases in shipping activity domestically between domestic oil production areas, petroleum processing facilities, and consumer markets (e.g., by mostly inland barges).  However, we could not find any data or information forecasting this anticipated level of activity domestically.
   * Transport of oil within the United States has been shifting away from vessels to pipeline and rail:  Although we anticipate oil transport by vessel may increase domestically somewhat, pipeline and rail shipping have become the preferred methods for transporting crude oil, particularly oil produced from new production areas (e.g., shale oil and oil sands) in Canada and North Dakota.  In 2011, for example, pipelines moved 917 million barrels in the U.S. Gulf/East Coast petroleum product trades, or roughly the capacity of 97 average size product tankers.   The Wall Street Journal reports that the first of at least seven pipeline projects that could send as much as two million bpd from Oklahoma and Texas to Gulf Coast refineries began operation.
      Plans for developing even more new pipeline (e.g., TransCanada Keystone XL) are evolving, but have been stymied by regulatory constraints (e.g., permitting, rights of way acquisition) and environmental concerns stemming from the risk of pipeline leaks and the inherently carbon- and energy-intensive nature of extracting oil from shale and oil sands.  In the meantime, the volume of oil transported by U.S. rail has surged to 233,811 carloads in 2012 from only 9,500 as recently as 2008.  In addition, because of the shortage of pipeline capacity, U.S. refiners are building small refineries closer to production areas in North Dakota.
   * In addition, vessels that are being built tend to be fewer in number but larger in size as compared to those they replace:  A 2012 U.S. Army Corps of Engineers report U.S. Port and Inland Waterways Modernization:  Preparing for Post-Panamax Vessels reported that new bulk vessels are trending to larger sizes (e.g., greater than 80,000 deadweight tons) to maximize the capacity and efficiency of the expanded Panama canal scheduled for completion in 2014, with total capacity of the world bulk vessel fleet expected to increase by 62.7 percent (an additional 3,187 vessels with 287.9 million deadweight tons on order as of 2010).
In consideration of these factors which make forecasting oil transport at this time particularly challenging, as well as the continuing recovery of the U.S. economy, weassume a steady-state condition for projecting the number of vessels in the years 2013 and beyond.  In other words, we assume no or zero growth in the number of vessels that are active as of year-end 2012.  Each vessel that we assume will be retired (i.e., will reach 30 years of age after 2012) will be replaced with a new vessel.  Table 3-5 presents our estimated number of affected vessels for each year, by vessel type and size (length).  As discussed in Chapter 1, these numbers do not change with or without the rule and are appropriate to use as the basis for estimating the future costs of the rule (Chapter 5).



Table 3-5A.  Estimated Updated Number of Oil Tankers Affected by the Final Rule, by Vessel Type and Size (length), 2013 - 2016
YEAR
                           OIL TANKERS, L<400 FT
                          OIL TANKERS, 400 TO 700 FT
                           OIL TANKERS, L>700 FT
                                       
                                      NEW
                                    RETIRED
                                    ACTIVE
                                      NEW
                                    RETIRED
                                    ACTIVE
                                      NEW
                                    RETIRED
                                    ACTIVE
2013
                                                                           -   
                                                                           -   
                                                                           237 
                                                                             1 
                                                                             1 
                                                                         1,254 
                                                                           -   
                                                                           -   
                                                                         1,200 
2014
                                                                           -   
                                                                           -   
                                                                           237 
                                                                             2 
                                                                             2 
                                                                         1,254 
                                                                           -   
                                                                           -   
                                                                         1,200 
2015
                                                                              1
                                                                              1
                                                                            237
                                                                              1
                                                                              1
                                                                          1,254
                                                                              -
                                                                              -
                                                                          1,200
2016
                                                                               
                                                                               
                                                                           237 
                                                                               
                                                                               
                                                                          1,254
                                                                               
                                                                               
                                                                         1,200 
Total


                 237


               1,254


              1,200
Sources:  2012 year-end active vessel counts from Exhibit 3-2.
Notes: Assumes no or zero growth in the number of vessels that are active as of year-end 2012.  Each vessel that we assume will be retired (i.e., will reach 30 years of age after 2012) is assumed to be replaced with a new vessel.


Table 3-5B.  Estimated Updated Number of Offshore Oil Barges Affected by the Final Rule, by Vessel Type and Size (length), 2013 - 2016
YEAR
                       OFFSHORE OIL BARGES, L<400 FT
                      OFFSHORE OIL BARGES, 400 TO 700 FT
                       OFFSHORE OIL BARGES, L>700 FT
                                       
                                      NEW
                                    RETIRED
                                    ACTIVE
                                      NEW
                                    RETIRED
                                    ACTIVE
                                      NEW
                                    RETIRED
                                    ACTIVE
2013
                                                                             1 
                                                                             1 
                                                                           227 
                                                                           -   
                                                                           -   
                                                                            57 
                                                                           -   
                                                                           -   
                                                                           -   
2014
                                                                           -   
                                                                           -   
                                                                           227 
                                                                             2 
                                                                             2 
                                                                            57 
                                                                           -   
                                                                           -   
                                                                           -   
2015
                                                                              1
                                                                              1
                                                                            227
                                                                              -
                                                                              -
                                                                             57
                                                                              -
                                                                              -
                                                                              -
2016
                                                                               
                                                                               
                                                                            227
                                                                               
                                                                               
                                                                             57
                                                                               
                                                                               
                                                                               
Total
                                                                               
                                                                               
                                                                          227  
                                                                               
                                                                               
                                                                           57  
                                                                               
                                                                               
                                                                               
Sources:  2012 year-end active vessel counts from Exhibit 3-2.
Notes:  Assumes no or zero growth in the number of vessels that are active as of year-end 2012.  Each vessel that we assume will be retired (i.e., will reach 30 years of age after 2012) is assumed to be replaced with a new vessel.

Table 3-5C.  Estimated Updated Number of Inland barges and Secondary Vessels Affected by the Final Rule by Vessel Type, 2013-2016 (cont'd)
YEAR
                               INLAND OIL BARGES
                               SECONDARY VESSELS
                                       
                                      NEW
                                    RETIRED
                                    ACTIVE
                                      NEW
                                    RETIRED
                                    ACTIVE
2013
                                                                            31 
                                                                            31 
                                                                         2,496 
                                                                             4 
                                                                             4 
                                                                           577 
2014
                                                                             4 
                                                                             4 
                                                                         2,496 
                                                                             1 
                                                                             1 
                                                                           577 
2015
                                                                              8
                                                                              8
                                                                          2,496
                                                                              1
                                                                              1
                                                                            577
2016
                                                                               
                                                                               
                                                                          2,496
                                                                               
                                                                               
                                                                            577
Average
                                                                               
                                                                               
                                                                         2,496 
                                                                               
                                                                               
                                                                           577 
Sources:  2012 year-end active vessel counts from Exhibit 3-2.
Notes:  Assumes no or zero growth in the number of vessels that are active as of year-end 2012.  Each vessel that we assume will be retired (i.e., will reach 30 years of age after 2012) is assumed to be replaced with a new vessel.



4.0  Updated Analysis of Affected Spill Incident Data (with the IFR in effect)
In this chapter, we estimate and project the level of oil spill activity with the rule in effect.  As discussed in Chapter 2, we can appropriately apply the estimated number of affected oil spills to estimate the rule's costs in Chapter 5 (e.g., the frequency at which deck spill kits are used and replaced); however, as presented in Chapter 6, we back-calculate the baseline volume (in the absence of the rule) and incremental reduction in the volume of oil spilled to estimate the rule's benefits. 

4.1  Spill Incident Analysis
We estimate retrospectively the level of oil spill activity with the rule in effect.  We estimate the number of spills and their corresponding amounts or volumes, released by each of the vessel types affected by the rule (oil tankers, offshore oil barges, inland barges, and secondary vessels), from 1994, when the IFR became in effect, through the year 2016.  For the years 1994 through 2012, we use data provided in MISLE estimate the actual number and volume of spills that occurred on vessels regulated by the interim rule.  Additionally, because we do not have data that reliably forecast the level of oil spill activity in the future, we apply historic data to project oil spill activity for the years 2013 through 2016.
As discussed in Chapter 1, because the rule is intended to reduce the volume of oil spilled into the environment once a spill occurs (and not the absolute number of spills) and the costs of the rule are based for the most part on the number (not the volume) of spills, we can apply the estimated number of actual spills (with the rule in effect) to estimate the rule's incremental costs in Chapter 5.  The realized benefits of the rule, however, are based on the incremental reduction in the volume of oil spilled into the environment from the baseline scenario (without the rule).  As a result, in Chapter 6 we estimate the baseline and incremental scenario spill volumes by applying the assumptions developed in the 1993 RIA (e.g., the rule's effectiveness in reducing oil spill volume and the rates at which affected vessels already comply) to the actual spill data. 
As discussed in Chapter 2, the various provisions of the rule affect different vessel groups based on their type (e.g., oil tanker or oil barge), operating location (e.g., offshore or inland oil barge), size (offshore oil barge less than or greater than 400 feet), spill cause, and whether they already comply.  In summary, we are most interested in the following oil spill statistics to assess the costs and benefits of the rule:
   * Oil Tankers:  the volume of spills caused by grounding and collision to assess the benefits associated with the rule's requirement for internal cargo transfer capability (hoses and couplings);
   * Large offshore barges (length equal to or greater than 400 feet):  the volume of spills caused by grounding and collision to assess the benefits associated with the rule's requirement for internal cargo transfer capability (hoses and couplings);
   * Small offshore barges (length less than 400 feet):  the number and volume of spills less than or equal to seven barrels (all causes) to assess the costs and benefits associated with the rule's requirements for deck coamings and deck spill equipment.  In addition, the volume of spills caused by grounding and collision (all spill sizes) to assess the benefits associated with the rule's requirement for internal cargo transfer capability (hoses and couplings);
   * Inland barges:  the number and volume of spills less than or equal to one barrel (all causes) to assess the costs and benefits associated with the rule's requirements for deck coamings and deck spill equipment; and
   * Secondary vessels:  the number and volume of spills less than or equal to one-half barrel (all causes) to assess the costs and benefits associated with the rule's requirement for deck spill equipment.
      
4.1.1  Estimating the Number and Volumes of Spills from 1994 through 2012

To estimate  the actual number and volume of spills that are likely to have occurred from the time the IFR was in effect (1994) through present day (at year end 2012), we use the following spill data recorded and reported by USCG databases:  
   1. A data set that contains 3,654 records of oil spills released by oil tankers and barges from 1993 through 2001 (extracted from USCG's Marine Safety Information System (MSIS));
   2. A data set that contains 9,556 records of oil spills released by oil tankers and barges from 2002 through 2012 [extracted from USCG's Marine Information for Safety and Law Enforcement (MISLE) information system]; and
   3. A 2012 USCG compendium report that provides summary annual statistics of spills and releases for calendar years 1969 through 2011.
The first data set (1994-2001) contains data on each spill incident recorded by the Marine Investigations Module (MINMOD) of the Marine Safety Information System, Marine Pollution (MSIS-MP) information system (date, substance, and volume) and the vessels involved (ID#; name; service, class, type, and subtype; tonnage; build year; flag; route).
The second data set (2002-2012) contains data on each oil spill incident recorded by MISLE (date, location, cause, substance, volume, and event description) and the vessels involved (ID#; name; service, class, type, and subtype; tonnage; build year; flag; route).  In addition, the 2002-2012 data set contains data that provide some information on the volume of oil that may have been prevented or mitigated specifically by the DRE rule and other regulations, including data fields reporting the quantity of oil potentially spilled, the volume of oil contained, and the containment method.  However, these data fields are not well populated.  We use this information to discuss the potential benefits of the rule in Chapter 6.
The 2012 USCG compendium report provides summary annual statistics of spills and releases for calendar years 1969 through 2011.  More specifically, it reports the number of oil, chemical, and other spills by one of many parameters including spill size (e.g., one to 100 gallons, 101 to 1,000 gallons, etc.), waterbody (e.g., Atlantic Ocean, rivers and canals), location (e.g., internal/headlands, coastal, ocean), major source (tankship, tankbarge, all other vessels, facilities, pipelines), detailed source (e.g., tankship, tankbarge, fishing boat, freight ship, passenger vessel, recreational vessel, tow/tugboat, waterfront facility, fixed platform), oil type (e.g., crude oils, intermediate fuel oils, gasoline products), month, USCG district, or state.
We reviewed each of these data sets in terms of their quality, quantity, and applicability and utility towards estimating and characterizing the number and volume of spills.  We found that each data set has its limitations, and if warranted, required consolidation or processing prior to counting or computing the estimated number and volume of spills affected by the rule.  Below we discuss the steps we undertook to process and analyze these data.

4.1.2  Spill Data 1994 through 2001

The following procedures were used to estimate the spill data sets used in this analysis for 1994-2001.
Number and volume of spills by spill size:  We use the following steps to estimate and characterize the number and volume of spills of certain sizes or number and volume of spills below the threshold (e.g., less than or equal to 1 barrel for inland barges and less than or equal to 7 barrels for small offshore barges) from 1994 through 2001:
   1. We first start with the number and volume of barge oil spills that the 1993 RIA projected for calendar year 1994 (the year the IFR went into effect).  For example, for small offshore barges, the 1993 RIA projected 130 spill incidents totaling 105.5 barrels in 1994;
   2. We then adjust or scale these values to the subsequent years based on the actual total number of barge spill incidents and volumes reported in the 2012 USCG compendium report.  For example,
      the 1993 RIA projected 130 spill incidents totaling 105.5 barrels are scaled in proportion to the 393 spills totaling 22,752 barrels in 1994 as well as to the 353 spills totaling 26,237 barrels in 1995, as reported in the 2012 USCG compendium report.  Using this scaling method assumes that the distribution of oil spills by barge type, size (length), and spill size remains constant.  For example, for 1994, the 130 spills estimated in the 1993 RIA make up 33.08 percent of the 393 spill in the compendium report.  That 33.08 percent was then multiplied to each subsequent year spill number in the compendium report (1995-2001) in order to estimate the number of spills below the threshold for each year.  For spill volume, each year was multiplied by 0.46 percent (105.5 barrels/22,752 barrels for 1994) to estimate the volume of spills below the threshold for each year.  
        
Number and volume of spills by spill cause:  However, neither the 1993 RIA nor the 2012 USCG compendium report provides sufficient detail to estimate the volume of oil spills from offshore oil barges caused specifically by grounding or collision.  We therefore had to rely on the subset of the 1993-2001 spill data set that could be matched with corresponding barge vessel data to approximate the proportion of the total number and volume of reported barge spills by large offshore barge and small offshore barge, regardless of spill size and cause.  The results of our analysis of the data subset indicate that approximately four percent of the total number of barge spills and 31 percent of the total volume of barge spills are attributable to large offshore barges, and 11 percent of the total number of barge spills and three percent of the total volume of barge spills are attributable to small offshore barges.  We then apply these percentages to the total number and volume of barge spills reported annually in the 2012 USCG compendium report.  Again, this method assumes that the distribution of oil spills by barge type and size (length) remains constant.  For oil tankers, we can use the reported annual volume of oil spills directly from the 2012 USCG compendium report because no further breakdown is necessary (e.g., by tanker size (length)).  However, for both oil tankers and oil barges, neither the 2012 USCG compendium report nor the 1994-2001 data set provides information on spill cause.  As a result, we apply the following assumptions used in the 1993 RIA:
   * 61 percent of the oil volume spilled is caused by grounding;
   * 9 percent of the oil volume spilled is caused by collision or ramming; and
   * 30 percent of the oil volume spilled to miscellaneous causes such as fire/explosions, structural and operational failures.
Finally, neither the 2012 USCG compendium report nor the 1994-2001 data set provides information on spills from secondary vessels less than or equal to one-half barrel.  We therefore present the total number of spills (regardless of spill size) reported in the 2012 USCG compendium report.  Exhibit 4-1 presents the results of our updated spill data analysis for 1994 through 2001.  Detailed tables of our estimates of the number and volume of oil spills by cause are provided in Appendix A.
As shown in Exhibit 4-1, the updated estimated number and volume of spills affected by the rule are generally declining from 1994 through 2001.  Given that these estimates are primarily derived from the summary spill data provided in the 2012 USCG compendium report, we further examine the historical trend of these data later in this chapter.



Table 4-1A.  Updated Estimate of Volume of Spills Affected by the Final Rule, by Vessel Type, Size (length), and Cause (BBLs), 1994- 2001 
YEAR
                                OIL TANKERS (1)
                  LARGE OFFSHORE OIL BARGES, L>400 FT (2)
                  SMALL OFFSHORE OIL BARGES, L<400 FT (2)
                                       
                            VOLUME DUE TO GROUNDING
                                       
                            VOLUME DUE TO COLLISION
                                       
                            VOLUME DUE TO GROUNDING
                                       
                            VOLUME DUE TO COLLISION
                                       
                            VOLUME DUE TO GROUNDING
                                       
                            VOLUME DUE TO COLLISION
                                    (BBLS)
1994
                                                                       1,012.2 
                                                                         149.3 
                                                                          85.6 
                                                                          12.6 
                                                                         962.4 
                                                                         142.0 
1995
                                                                       1,822.6 
                                                                         268.9 
                                                                           1.3 
                                                                           0.2 
                                                                         125.2 
                                                                          18.5 
1996
                                                                       3,185.2 
                                                                         470.0 
                                                                          63.1 
                                                                           9.3 
                                                                         812.6 
                                                                         119.9 
1997
                                                                         325.8 
                                                                          48.1 
                                                                           5.5 
                                                                           0.8 
                                                                         373.4 
                                                                          55.1 
1998
                                                                         823.1 
                                                                         121.4 
                                                                       2,719.0 
                                                                         401.2 
                                                                         132.9 
                                                                          19.6 
1999
                                                                         122.2 
                                                                          18.0 
                                                                           0.9 
                                                                           0.1 
                                                                         186.1 
                                                                          27.5 
2000
                                                                       8,833.0 
                                                                       1,303.2 
                                                                           0.6 
                                                                           0.1 
                                                                           1.7 
                                                                           0.2 
2001
                                                                       1,818.6 
                                                                         268.3 
                                                                           1.3 
                                                                           0.2 
                                                                         209.2 
                                                                          30.9 
 Sources:  2012 USCG compendium report, 1993 RIA, and analysis of 1994-2001 oil spill data 
 Notes:
 Assumes 61% and 9% of the total volume reported is due to grounding and collision, respectively (from 1993 RIA).
 (1) Spill volume for tankers obtained from 2012 USCG compendium report.
 (2) Spill volume for barges obtained from 2012 USCG compendium report and apportioned amongst large and small offshore barges based on distribution calculated from subset of 1993-2001 oil spill data set with available barge vessel length and route data.
Appendix A provides further detail on these estimates.

Table 4-1B.  Updated Estimate of Number and Volume of Spills Affected by the Rule, by Vessel Type, Size (length) (BBLs), 1994 - 2001
YEAR
                  SMALL OFFSHORE OIL BARGES, L<400 FT (1)
                             INLAND OIL BARGES (1)
                             SECONDARY VESSELS (2)
                                       
NUMBER<7 BBLS
VOLUME<7 BBLS
(BBLS)
NUMBER<1 BBL
VOLUME<1 BBL
(BBLS)
NUMBER<1/2 BBL
VOLUME<1/2 BBL
(BBLS)
1994
                                                                           130 
                                                                         105.5 
                                                                           146 
                                                                          39.7 
                                                                         4,681 
                                                                            NA 
1995
                                                                           117 
                                                                         121.7 
                                                                           131 
                                                                          45.8 
                                                                         4,977 
                                                                            NA 
1996
                                                                           104 
                                                                         128.4 
                                                                           116 
                                                                          48.3 
                                                                         5,151 
                                                                            NA 
1997
                                                                            83 
                                                                          18.3 
                                                                            94 
                                                                           6.9 
                                                                         4,971 
                                                                            NA 
1998
                                                                            73 
                                                                          27.4 
                                                                            82 
                                                                          10.3 
                                                                         4,848 
                                                                            NA 
1999
                                                                            75 
                                                                          23.2 
                                                                            85 
                                                                           8.7 
                                                                         5,360 
                                                                            NA 
2000
                                                                            76 
                                                                          14.7 
                                                                            85 
                                                                           5.5 
                                                                         5,220 
                                                                            NA 
2001
                                                                             81
                                                                          23.4 
                                                                             91
                                                                           8.8 
                                                                         4,680 
                                                                            NA 
Sources:  1993 RIA and 2012 USCG compendium report.
Notes:
(1) Because the 1993-2001 oil spill data set is insufficient to estimate and characterize the number and volume of spills of certain sizes (e.g., less than or equal to 1 barrel for inland barges and less than or equal to 7 barrels for small offshore barges), we scale the estimated number and volume of these spills for 1994 from the 1993 RIA to the actual total number of barge spill incidents and volumes reported in the 2012 USCG compendium report.
(2) Neither the 2012 USCG compendium report nor the 1993-2001 data set provides information on spills from secondary vessels less than or equal to one-half barrel.  We therefore present the total number of spills (regardless of spill size) reported in the 2012 USCG compendium report.  In addition, the spill incidents reported for secondary vessels by the 2012 USCG compendium report likely includes spills from vessels that are not subject to the rule such as passenger, recreational, research, and school vessels.



4.1.3  Spill Data 2002 through 2012

In the 2002-2012 data set, we found that many of the records are duplicates and essentially represent the same spill incident.  The data set also does not contain spill records from secondary vessels and length data of the involved vessels.  In addition, some spill records are missing data that are important to our analysis such as the units used to measure the quantity or amount of oil spilled.  As a result, we conduct additional consolidation and analysis to estimate the number and amount of unique spills likely affected by the rule by vessel type and size (e.g., oil tanker or oil barge, large or small offshore oil barge), and remove or assign data in instances where data are missing.  In addition, we further categorize these spills by their cause and spill volume.  Exhibit 4-2 summarizes the steps we implemented.
Table 4-2.  Summary Steps Taken To Consolidate And Analyze USCG Spill Incident Data
                                     STEP
                                  2002 - 2012
Original data
9,556 records
   1.    Consolidate duplicate records
Less 7,432 records
Estimated number of unique spill incidents
2,124
   2. Remove records having missing or ambiguous units for reporting volume or amount spilled
Less 326 records
   3. Group spills by the type and size (length) of the vessel(s) involved

   Estimate missing length values
Oil tankers:  456
Large offshore oil barges, length > 400 ft:  48
Small offshore oil barges, length < 400 ft:  172
Inland oil barges:  1,070
Barges (unknown type):  52
Secondary vessels:  NA
   4. Estimate the subset number and volume of spills of less than 7 barrels for small offshore barges and less than 1 barrel for inland barges
Small offshore oil barges, < 7 barrels:  161 spills totaling 63.3 barrels
Inland oil barges, < 1 barrel:  927 spills totaling 117.1 barrels
Secondary vessels, < (1/2) barrel:  NA
   5.    Estimate the subset number of spills caused by grounding, collision, or allision for tankers and offshore barges
Oil tankers:  9
Large offshore oil barges, length > 400 ft:  2
Small offshore oil barges, length < 400 ft:  5
Source: IEc analysis of 2002-2012 oil spill data set provided by USCG on March 20, 2013.

We first consolidate the duplicate spill records.  In general, the exact same information are being reported in all of the data fields entered across multiple records for a given spill incident (as readily identified by a unique set of a Vessel ID number and an Activity number), with the exception of the data field that reports the cause of the incident (`Nature_Casualty').  In choosing which of the duplicate records to retain for our analysis, we select those records where the incident cause is reported as a grounding, collision, or allision (i.e., a collision with a fixed object such as a bridge) because these causes are specifically addressed by the rule's requirements for internal cargo transfer capability (hoses and couplings) on board tankers and offshore barges.  In the rare instances when multiple records indicate multiple spill volumes, we retain the record with the largest reported spill volume.
To check the results of this first step, we compare our estimated number of consolidated, unique spill incidents to the summary statistics provided in the 2012 USCG compendium report.  For the period 2002 through 2012, we estimate 456 and 1,342 unique spill incidents by oil tankers and oil barges, respectively, whereas the USCG compendium  reports 356 and 1,142 spills. 
Finally, because the oil spill data set does not contain spill data for secondary vessels, we use the summary statistics provided in the 2012 compendium report.
We then estimate the subset number and volume of spill incidents that are equal to or less than seven barrels for small offshore oil barges, one barrel for inland barges, and one-half barrel for secondary. The 2012 USCG compendium report, however, does not provide sufficient data to estimate the subset number and volume of spills that are less than one-half barrel for secondary vessels.
   
Table 4-3 presents the results of our spill data updated analysis for the period 2002 through 2012.

Table 4-3A.  Updated Estimate of Volume of Spills Affected by the Final Rule, by Vessel Type, Size (length), and Cause (BBLs), 2002 - 2012
YEAR
                                  OIL TANKERS
                    LARGE OFFSHORE OIL BARGES, L>400 FT
                    SMALL OFFSHORE OIL BARGES, L<400 FT
                                       
                            VOLUME DUE TO GROUNDING
                                    (BBLS)
                            VOLUME DUE TO COLLISION
                                    (BBLS)
                            VOLUME DUE TO GROUNDING
                                    (BBLS)
                            VOLUME DUE TO COLLISION
                                    (BBLS)
                            VOLUME DUE TO GROUNDING
                                    (BBLS)
                            VOLUME DUE TO COLLISION
                                    (BBLS)
2002
                                                                           83.0
                                                                           12.2
                                                                           35.2
                                                                            5.2
                                                                           63.1
                                                                            9.3
2003
                                                                          130.4
                                                                           19.2
                                                                            3.6
                                                                            0.5
                                                                          707.4
                                                                          104.4
2004
                                                                        4,529.5
                                                                          668.3
                                                                            2.0
                                                                            0.3
                                                                           22.7
                                                                            3.3
2005
                                                                           42.1
                                                                            6.2
                                                                           40.5
                                                                            6.0
                                                                          456.1
                                                                           67.3
2006
                                                                           43.8
                                                                            6.5
                                                                           16.2
                                                                            2.4
                                                                            1.7
                                                                            0.3
2007
                                                                           61.3
                                                                            9.0
                                                                            0.2
                                                                            0.0
                                                                            3.3
                                                                            0.5
2008
                                                                        6,119.3
                                                                          902.9
                                                                            0.2
                                                                            0.0
                                                                            2.1
                                                                            0.3
2009
                                                                          216.7
                                                                           32.0
                                                                            0.3
                                                                            0.0
                                                                            6.0
                                                                            0.9
2010
                                                                           27.5
                                                                            4.1
                                                                            0.0
                                                                            0.0
                                                                            6.9
                                                                            1.0
2011
                                                                          278.4
                                                                           41.1
                                                                            0.0
                                                                            0.0
                                                                            0.4
                                                                            0.1
2012
                                                                           57.5
                                                                            8.5
                                                                            0.0
                                                                            0.0
                                                                           10.2
                                                                            1.5
Total
                                                                       11,589.6
                                                                          1,710
                                                                           98.2
                                                                           14.4
                                                                        1,279.9
                                                                          188.8
Sources:  USCG updated analysis of 2002-2012 oil spill data set 
Notes:     Assumes 61% and 9% of the total volume reported is due to grounding and collision, respectively (from 1993 RIA).




Table 4-3B.  Updated Estimate of Number and Volume of Spills Affected by the Rule, by Vessel Type, Size (length) (BBLs), 2002  -  2012
YEAR
                    SMALL OFFSHORE OIL BARGES, L<400 FT
                               INLAND OIL BARGES
                             SECONDARY VESSELS (1)
                                       
                               NUMBER<7 BBLS
                               VOLUME<7 BBLS
                                    (BBLS)
                                NUMBER<1 BBL
                                VOLUME<1 BBL
                                    (BBLS)
                               NUMBER<1/2 BBL
                               VOLUME<1/2 BBL
                                    (BBLS)
2002
                                                                             28
                                                                            5.8
                                                                            295
                                                                           29.7
                                                                         1,635 
                                                                            NA 
2003
                                                                             15
                                                                            2.3
                                                                             89
                                                                           10.1
                                                                         1,521 
                                                                            NA 
2004
                                                                             18
                                                                           15.2
                                                                             78
                                                                           14.9
                                                                         1,527 
                                                                            NA 
2005
                                                                             10
                                                                            4.2
                                                                             64
                                                                            7.7
                                                                         1,672 
                                                                            NA 
2006
                                                                             17
                                                                            2.8
                                                                             68
                                                                           12.3
                                                                         1,821 
                                                                            NA 
2007
                                                                             12
                                                                            5.3
                                                                             63
                                                                            8.2
                                                                         1,773 
                                                                            NA 
2008
                                                                             16
                                                                            3.5
                                                                             65
                                                                            8.0
                                                                         1,504 
                                                                            NA 
2009
                                                                             15
                                                                            9.8
                                                                             53
                                                                            8.2
                                                                          1,519
                                                                             NA
2010
                                                                             12
                                                                           11.2
                                                                             50
                                                                            4.6
                                                                          1,412
                                                                             NA
2011
                                                                              7
                                                                            0.7
                                                                             48
                                                                            5.8
                                                                          1,438
                                                                             NA
2012

                                                                             11
                                                                            2.4
                                                                             54
                                                                            7.5
                                                                         1,456 
                                                                            NA 
Total
                                                                            161
                                                                           63.2
                                                                            927
                                                                            117
                                                                         17,278
                                                                             NA
Sources: USCG updated analysis of 2002-2012 oil spill data 
Notes:
(1) Neither the 2012 USCG compendium report nor the 2002-2012 data set provides information on spills from secondary vessels less than or equal to one-half barrel.  We therefore present the total number of spills (regardless of spill size) reported in the 2012 USCG compendium report.  In addition, the spill incidents reported for secondary vessels by the 2012 USCG compendium report likely includes spills from vessels that are not subject to the rule such as passenger, recreational, research, and school vessels.



As shown in Table 4-1 and 4-3, the estimated updated volume of oil tanker and small offshore oil barge spills caused by groundings and collision is generally much lower in the 2002-2012 period than the 1994-2001 period, except in a couple of years when there was an abrupt increase in spill volume (2004 and 2008 for oil tankers and 2003 and 2005 for small offshore oil barges).  The estimated volume of large offshore oil barge spills caused by groundings and collision continues to be very low, and we estimate zero spill volume from 2010 through 2012.  Likewise, the estimated number and volume of small offshore oil barge spills less than or equal to seven barrels are generally much lower in the 2002-2012 period than the 1993-2001 period.  In addition, the estimated number and volume of inland oil barge spills less than or equal to one barrel continues to decline from the 1993-2001 period, except for an abrupt increase in 2002.  Finally, the number of secondary vessel spills is also much lower in the 2002-2012 period of the updated analysis.
Table 4-4 presents a comparison of our spill estimates with those from the 1993 RIA.  Because the 1993 RIA provides insufficient detail to ascertain the number and volume of spills across all of the affected vessel types, the only direct comparison (due to data limitations and information from 1993 RIA) we can make are the estimated number and volume of small offshore oil barge spills of less than or equal to seven barrels and inland oil barge spills of less than or equal to one barrel for inland barges.  In addition, this comparison is imperfect because our estimates are based on the actual spill activity as recorded by USCG (with the rule in effect), as opposed to the 1993 RIA's baseline estimates which reflect forecasted spill activity in the absence of the rule.  However, as discussed previously and in Chapter 1, the rule is intended to reduce the volume of oil spilled into the environment and not the absolute number of spills.  
Table 4-4A.  Comparison of Spill Estimates for Small Offshore Oil Barges and Inland Oil Barges 
Small Offshore Oil Barges, L<400 ft (BBLs)
YEAR
                             USCG UPDATED ESTIMATE
                        (WITH THE FINAL RULE IN EFFECT)
                               1993 RIA ESTIMATE
                               (ABSENT THE IFR)
                                       
                               NUMBER<7 BBLS
                               VOLUME<7 BBLS
                                    (BBLS)
                               NUMBER<7 BBLS
                               VOLUME<7 BBLS
                                    (BBLS)
1995
                                                                            117
                                                                          121.7
                                                                           131 
                                                                         106.3 
2000
                                                                             76
                                                                           14.7
                                                                       oo  134 
                                                                     oo  108.9 
2005
                                                                             10
                                                                            4.2
                                                                           138 
                                                                           112 
2010
                                                                             12
                                                                           11.2
                                                                           144 
                                                                         116.5 
Sources:  1993 RIA and Exhibits 4-1 and 4-3.
Notes:  USCG's updated estimates are based on the actual spill activity as recorded by USCG (with the rule in effect), whereas the 1993 RIA's baseline estimates reflect forecasted spill activity in the absence of the rule.


Table 4-4B.  Comparison of Spill Estimates for Small Offshore Oil Barges and Inland Oil Barges Inland Oil Barges (cont'd) (BBLs)
YEAR
                             USCG UPDATED ESTIMATE
                        (WITH THE FINAL RULE IN EFFECT)
                               1993 RIA ESTIMATE
                               (ABSENT THE IFR)
                                       
                                NUMBER<1 BBL
                                VOLUME<1 BBL
                                    (BBLS)
                                NUMBER<1 BBL
                                VOLUME<1 BBL
                                    (BBLS)
1995
                                                                            131
                                                                           45.8
                                                                           146 
                                                                          39.7 
2000
                                                                             85
                                                                            5.5
                                                                           146 
                                                                          39.7 
2005
                                                                             64
                                                                            7.7
                                                                           146 
                                                                          39.7 
2010
                                                                             50
                                                                            4.6
                                                                           146 
                                                                          39.7 
Sources:  1993 RIA and Tables 4-1 and 4-3.
Notes:  USCG's updated estimates are based on the actual spill activity as recorded by USCG (with the rule in effect), whereas the 1993 RIA's baseline estimates reflect forecasted spill activity in the absence of the rule.

As shown in Table 4-4, after 1995, we estimate much lower numbers of these smaller size spills by small offshore and inland barges than was estimated in the 1993 RIA.  To examine whether our estimates are consistent with the actual trend in oil spills, Exhibit 4-5 presents the number and volume of spills reported by the 2012 USCG compendium report from 1990 through 2011.
As shown in Table 4-5 and the accompanying figures, the number of spills across the three main vessel types has declined since 1990, and most notably from 2001 to 2002.  In general, the volume of oil has also declined except for those years when there were significant oil spills.  The Congressional Research Service attributes the decline in spill incidents, at least in part, to the regular adoption of international oil pollution standards since the 1980s.  The Exxon Valdez spill of 1989 and the resulting OPA 1990 rules played key roles in the spill volume reduction.  OPA 1990 made comprehensive changes to U.S. oil pollution law by expanding federal response authority and increasing spill liability.  Our spill estimates appear to be consistent with this generally declining trend in the reported number and volume of oil spills from vessels. 
Table 4-5.  Number and Volume of Spills Reported by the 2012 USCG Compendium Report



                                     Year
                                  OIL TANKERS
                                  OIL BARGES
                               ALL OTHER VESSELS
                                       
                               Number of Spills
                                    Volume
                                    (gals)
                               Number of Spills
                                    Volume
                                    (gals)
                               Number of Spills
                                    Volume
                                    (gals)
                                     1990
                                      249
                                   4,977,251
                                      457
                                    992,025
                                     1,779
                                    417,882
                                     1991
                                      220
                                    92,334
                                      428
                                    241,346
                                     1,780
                                    362,809
                                     1992
                                      193
                                    118,075
                                      322
                                    149,212
                                     4,795
                                    398,145
                                     1993
                                      172
                                    69,541
                                      314
                                    697,653
                                     4,944
                                    409,963
                                     1994
                                      172
                                    69,694
                                      393
                                    955,582
                                     4,681
                                    308,343
                                     1995
                                      148
                                    125,491
                                      353
                                   1,101,938
                                     4,977
                                    396,724
                                     1996
                                      122
                                    219,311
                                      313
                                   1,163,258
                                     5,151
                                    298,451
                                     1997
                                      124
                                    22,429
                                      252
                                    165,649
                                     4,971
                                    192,801
                                     1998
                                      104
                                    56,673
                                      220
                                    248,089
                                     4,848
                                    316,473
                                     1999
                                      92
                                     8,414
                                      228
                                    210,383
                                     5,360
                                    357,678
                                     2000
                                      111
                                    608,176
                                      229
                                    133,540
                                     5,220
                                    291,927
                                     2001
                                      95
                                    125,217
                                      246
                                    212,298
                                     4,680
                                    232,341
                                     2002
                                      55
                                     4,753
                                      126
                                    30,219
                                     1,635
                                    212,410
                                     2003
                                      38
                                     4,450
                                      156
                                    102,874
                                     1,521
                                    103,481
                                     2004
                                      35
                                    636,834
                                      143
                                    215,822
                                     1,527
                                    453,901
                                     2005
                                      37
                                     2,976
                                      126
                                   2,006,774
                                     1,672
                                    115,058
                                     2006
                                      38
                                     4,292
                                      134
                                    287,343
                                     1,821
                                    125,352
                                     2007
                                      42
                                    46,731
                                      113
                                     4,516
                                     1,773
                                    184,093
                                     2008
                                      34
                                     1,337
                                      106
                                    286,637
                                     1,504
                                    248,167
                                     2009
                                      28
                                    14,417
                                      98
                                     4,424
                                     1,519
                                    107,816
                                     2010
                                      23
                                    421,583
                                      73
                                      965
                                     1,412
                                    472,386
                                     2011
                                      26
                                     1,702
                                      67
                                    15,852
                                     1,438
                                    90,109
Source:  USCG Office of Investigations & Compliance Analysis (CG-INV), Cumulative Data & Graphics for Oil Spills:  "Numbers of Spills by Source" and "Volume of Spills by Source," Polluting Incidents In and Around U.S. Waters, A Spill/Release Compendium:  1969-2011 (December 2012), pp. 22-23.
Notes:
All other vessels include fishing boat, freight barge, freight ship, industrial vessel, oil recovery, passenger, unclassified public, recreational, research, school ship, tow/tugboat, unclassified, mobile oil drilling unit, and offshore supply vessels.





*For presentation and scaling purposes, 1990 data excluded for Oil Tanker Volume.

4.1.4  Estimating The Number Of Spills Likely Affected By The Final Rule From 2013 Through 2016
We next project the level of spill activity affected by the rule in the future, with the final rule in effect.  However, we do not have data that reliably forecasts the level of oil spill activity.  As discussed previously, but for some significant spills that had occurred, the number and volume of oil spills from vessels has generally been declining.  But given that we have no information to reliably predict if and to what extent this decline will continue in the future, we apply the historic spill data for calendar years 2002-2012 to project oil spill activity for the years 2013 through 2016.  More specifically, we compute the average per-vessel number and volume of spills over the period 2002-2012 for each vessel type, and apply these averages to our projected vessel numbers estimated in Section 3.1.2.  Because we are assuming no growth in the number of affected vessels as of 2012, the absolute number and volume of spills affected by the rule remains constant from 2012 forward.  Table 4-6 presents these estimates.


Table 4-6A.  Projection of Estimated Volume of Spills Affected by the Final Rule, by Vessel Type, Size (length), and Cause, 2013-2016
YEAR
                                  OIL TANKERS
                    LARGE OFFSHORE OIL BARGES, L>400 FT
                    SMALL OFFSHORE OIL BARGES, L<400 FT
                                       
VOLUME DUE TO GROUNDING
(BBLS)
VOLUME DUE TO COLLISION
(BBLS)
VOLUME DUE TO GROUNDING
(BBLS)
VOLUME DUE TO COLLISION
(BBLS)
VOLUME DUE TO GROUNDING
(BBLS)
VOLUME DUE TO COLLISION
(BBLS)
2013
                                                                       1,187.6 
                                                                         175.2 
                                                                           7.9 
                                                                           1.2 
                                                                         123.0 
                                                                          18.1 
2014
                                                                       1,187.6 
                                                                         175.2 
                                                                           7.9 
                                                                           1.2 
                                                                         123.0 
                                                                          18.1 
2015
                                                                       1,187.6 
                                                                         175.2 
                                                                           7.9 
                                                                           1.2 
                                                                         123.0 
                                                                          18.1 
2016
                                                                       1,187.6 
                                                                         175.2 
                                                                           7.9 
                                                                           1.2 
                                                                         123.0 
                                                                          18.1 
Sources: USCG Calculations
Notes: Based on average per-vessel spill activity calculated from the 2002-2012 historical spill data that are then applied to vessel projections.


Table 4-6B.  Projection of Estimated Number and Volume of Spills Affected by the Rule, by Vessel Type, Size (length), 2013-2016
YEAR
                    SMALL OFFSHORE OIL BARGES, L<400 FT
                               INLAND OIL BARGES
                             SECONDARY VESSELS (1)
                                       
NUMBER<7 BBLS
VOLUME<7 BBLS
(BBLS)
NUMBER<1 BBL
VOLUME<1 BBL
(BBLS)
NUMBER<1/2 BBL
VOLUME<1/2 BBL
(BBLS)
2013
                                                                            15 
                                                                           6.1 
                                                                            88 
                                                                          11.1 
                                                                         1,940 
                                                                            NA 
2014
                                                                            15 
                                                                           6.1 
                                                                            88 
                                                                          11.1 
                                                                         1,940 
                                                                            NA 
2015
                                                                            15 
                                                                           6.1 
                                                                            88 
                                                                          11.1 
                                                                         1,940 
                                                                            NA 
2016
                                                                            15 
                                                                           6.1 
                                                                            88 
                                                                          11.1 
                                                                         1,940 
                                                                            NA 
Sources:  USCG Calculations Notes: Based on average per-vessel spill activity calculated from the 2002-2012 historical spill data that are then applied to vessel projections (2002-2011 for secondary vessels, as reported in the 2012 USCG compendium).

5.0  Updated Cost Analysis
In this chapter, we analyze and estimate the costs, as an update, of the 1993 DRE IFR using the most up-to-date data and information available relating to the rulemaking costs incurred by the affected entities.  We review and update the costs originally estimated in the 1993 RIA using more current cost information provided by commercial vendors, suppliers, and providers of DRE equipment, coamings, and damage stability programs. Our revised estimates also reflect new data on the actual number of affected vessels and oil spills (see Chapters 3 and 4).
The 1993 RIA estimated the impacts of five requirements from the IFR on oil carrying vessels.  Since that time, one requirement has been phased out due to a subsequent rulemaking and another was found to be less of a requirement because industry was already implementing a majority of it.   Over the past 20 years, industry has complied with all of the remaining requirements.  Costs incurred were made more than twenty years ago and requirements are now a regular part of new ship construction as they replace retired vessels.  Furthermore, the comments of the 2013 Notice of Intent (NOI) required no changes to the final rule.  We are not changing or adding new requirements to the final rule.  Therefore, the actual net costs of this Final Rule are zero.  As previously stated, our cost analysis estimates presented in this chapter are only if industry had not complied with the IFR and are presented as an update.  
As discussed in Chapter 1, given that the rule was published on an interim basis in 1993 and has been in effect since January 21, 1994, we estimate the costs starting in calendar year 1994 (Year 1).  We estimate the costs on an annual basis to 2015 to duplicate the 1993 RIA:
      Duplication for purposes of comparing the costs and benefits estimated by the 1993 RIA over the same period of time (23 years from the time the IFR was issued, 1994-2016).  Costs are estimated in 1993 dollars and present value costs and benefits are calculated assuming that Year 1 (1994) is the base year.
Depending on the data source, we estimate our annual costs on an undiscounted basis in 1993 dollars.   In accordance with OMB Circular A-4, we calculate the present value of the estimated costs using real discount rates of three percent and seven percent.  Tables detailing our cost calculations are provided in Appendix B.
We analyze and estimate the costs associated with each of the four remaining major provisions (those not phased out by subsequent rules) or requirements of the rule that are to be finalized in the final rule.  As discussed in Chapter 1, our cost estimates are based on the actual number of affected vessels and spills (with the IFR in effect) estimated and projected in Chapters 3 and 4.  These numbers do not differ with or without the rule and are therefore appropriate to use for estimating the past and future costs of the rule.

5.1  Deck Coaming
As discussed in Chapter 2, the 1993 RIA assumed that all oil tankers and large offshore oil barges (vessels equal to or greater than 400 feet in length) already comply with the rule's requirement for deck coaming, whereas 50 percent of small offshore oil barges (vessels less than 400 feet in length) and inland oil barges already comply.  However, the 1993 RIA assumed that inland oil barges would be exempt from this requirement.  Under the IFR, inland oil barges are not exempt.  This requirement does not apply to secondary vessels.
The 1993 RIA calculated the coaming length required for barges as twice the sum of the breadth and the length of their cargo tanks.  It also assumed a unit cost of $25 per linear foot (LF), assuming a coaming height of 4 inches and the inclusion of scuppers, scupper plugs or covers, expansion joints, and special details (e.g., mooring fittings and other deck edge equipment) that may also be necessary.  The costs for installing coaming on the existing small offshore fleet (50 percent of the fleet) were applied over the first two years of the analysis period (1993 and 1994).  The 1993 RIA did not estimate any operating or maintenance costs associated with this requirement.
To acquire more current cost information related to deck coamings, we contacted via email several shipbuilding companies engaged in the construction of oil barges.  However, none of the companies returned our inquiry.  Consequently, we use the unit cost for deck coaming originally estimated in the 1993 RIA ($25 per LF in 1993 dollars).  Adjusted for inflation, this unit cost is $37 per LF in 2013 dollars.  We calculate the total length of coaming required for small offshore and inland oil barges using the vessel breadth (width) and length information available in the vessel data sets provided by USCG's MISLE data base.  We include inland oil barges, although they should already comply with the rule's option of meeting the pre-existing requirement for fixed containers and deck enclosures around cargo hatches, loading manifolds, and transfer connections.  As discussed in Chapter 3, for those vessels missing width or breadth data, we assign estimated widths or breadth based either on a correlation of vessel length to width (for small offshore barges) or by calculating and applying an average width per vessel (for domestic inland barges).
We calculate the deck coaming installation costs for those affected vessels that were actively operating as of the effective date of the IFR, January 21, 1994 (or year-end 1993).  Because the IFR requires that the coamings be installed by January 21, 1997, we assume that those affected vessels planned for retirement in 1994, 1995, and 1996 would not have installed coamings; and the remaining vessels existing from the 1994 fleet would have installed coamings over a three-year period 1994 through 1996 (i.e., would have to be retrofitted with deck coamings).  In addition, we assume that newly built vessels completed in 1994, 1995, and 1996 would have had to undergo an unexpected design and reconfiguration change to install coamings and would have incurred costs as a result of the rule, because they likely were still undergoing construction when the coaming requirement became known after the IFR was issued in December 1993.  For vessels built after the required installation date (i.e., years 1997 and after), we assume that they did not incur any costs associated with this requirement because the incremental costs for installing coaming relative to the total costs of building new vessels are relatively small.  We maintain this assumption for vessels built after the final rule is expected to be finalized as well because we do not anticipate changing this requirement.
Table 5-1 presents our estimates of the deck coaming costs for the small offshore barges and inland barges (50 percent of the fleet).  The costs are based on the total linear feet of coaming required for 214 small offshore barges and 2,439 inland barges at a 50% compliance rate and a $25 unit cost (1993 dollars). 
Table 5-1.  Estimated Updated Deck Coaming Costs (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars), 1994-2016
                                 UPDATED COST
                             SMALL OFFSHORE BARGES
                              (L < 400 FT) (1)
                               INLAND BARGES (2)
                                   TOTAL (3)
RIA Duplication
Total Undiscounted
$1.4
$15.4
$16.7
Present Value Total (3%)
$1.3
$14.5
$16.2
Present Value Total (7%)
$1.3
$14.4
$15.7
Annualized Total (3%)
$0.1
$0.9
$1.0
Annualized Total (7%)
$0.1
$1.3
$1.4
Sources:  USCG updated analysis and 1993 RIA.
Notes:
(1) Assumes active vessels as of year-end 1993 plus vessels built 1994-1996 less vessels retired 1994-1996 (214).  Estimated total perimeter of affected vessels is 109,394 ft.  Assumes a baseline compliance rate of 50 percent.  Total coaming length of affected vessels is 54,697 ft.  Estimate coaming unit cost of $37 per ft. or $25 in 1993 dollars.
(2) Assumes active vessels as of year-end 1993 plus vessels built 1994-1996 less vessels retired 1994-1996 (2,439).  Estimated total perimeter of affected vessels is 1,228,639 ft.  Assumes a baseline compliance rate` of 50 percent.  Total coaming length of affected vessels is 614,320 ft.  Estimate coaming unit cost of $37 per ft. or $25 in 1993 dollars.
(3) Totals may not sum due to rounding.

As shown in Table 5-1, we estimate for years 1-23 a total present value cost (in 1993 dollars assuming a base year of 1994) of $16.2 million assuming a discount rate of three percent and $15.7 million assuming a discount rate of seven percent.  The total costs for inland barges are much higher than the costs estimated for the small offshore barges because the number and total perimeter of inland barges are more than 11 times that of the small offshore barges.  We estimate the annualized cost to be about $1.0 million using a discount rate of three percent and $1.4 million using a discount rate of seven percent.

5.2  Deck Spill Equipment
As discussed in Chapter 3, the 1993 RIA assumed that all oil tankers and large offshore oil barges (vessels equal to or greater than 400 feet in length) already comply with this requirement, whereas 50 percent of small offshore oil barges (vessels less than 400 feet in length), inland oil barges, and secondary vessels already comply.  The 1993 RIA estimated the initial, replacement, and disposal costs associated with deck spill equipment.  The initial costs were based on procuring the required deck spill equipment, which vary by vessel type and length:  seven-barrel spill capacity for oil tankers and small offshore oil barges less than 400 feet in length, one-barrel spill capacity for inland oil barges, and one-half barrel spill capacity for secondary vessels.  The replacement costs for protective clothing and cleaning equipment were based on an assumed five-year and two-year replacement frequency, respectively.  The replacement and disposal costs for sorbents were based on historical spill data to estimate how frequently the sorbents would be used.  However, the data available to us from the 1993 RIA do not provide sufficient information and detail on how the historical spill data were analyzed and used to estimate the sorbent replacement and disposal costs.  In addition, the data from the 1993 RIA do not provide sufficient detail on the unit costs used to estimate the initial and replacement costs.
To acquire more current cost information related to deck spill equipment, we contacted via email and telephone six commercial vendors and suppliers that provide such equipment to industry.  We found that these vendors, in response to the IFR, had developed and are supplying complete spill kits that include all of the required DRE materials.  The cost information provided by these vendors is summarized below:
   * The average spill kit cost ranges from $320 (2013 dollars) for a one-half barrel kit to $3,020 (2013 dollars) for a seven-barrel kit.
         o For a one-half barrel kit, one vendor provided an estimate of $320;
         o For a one-barrel kit, two vendors provided estimates of $2,995 and $2,115; and
         o For the higher capacity seven-barrel kit, six vendors provided estimates ranging from $1,595 to $5,845.  The upper end of this range reflects the use of proprietary sorbent material that is supposed to more effectively absorb oil and reduce waste volume.
   * Finally, based on information provided by one vendor, the associated freight shipping costs are approximately $100 to $200 per kit.
Including freight, the estimated updated unit costs for a spill kit are $420 (one-half barrel), $2,700 (one-barrel), and $3,200 (seven-barrel). Because the IFR requires vessels to carry these spill kits by June 20, 1994, we assume that all of the affected vessels that were operational as of year-end 1994 would have purchased them in 1994.  Subsequently, we assume that a new spill kit will be purchased for each vessel built after 1994.
The vendors we contacted could not provide information about how frequently these kits are typically being replaced.  In addition, they generally could not readily provide the replacement costs (e.g., the cost for replacing just the used sorbent material and protective clothing provided in the kits).  Some vendors estimate that the maximum shelf life of their kits, provided they had not been used to cleanup deck spills, is approximately five years, given their exposure to sun and weather and the incidental, improper use by crews for routine maintenance activities.  
Although the 1993 RIA assumed that the spill kits would be replaced at the respective spill frequency rate for each affected vessel type (e.g., the annual number of spills of less than or equal to seven barrels from small offshore barges and one barrel from inland oil barges), we do not have enough accurate information to do this.  Our assumption is a simple replacement process of once every five years.  We reason as follows:  it would be difficult to identify the specific vessels that had used a kit and ascertain the age of the kit at the time it was used; we also assume that every kit on board an actively operating vessel would be replaced every five years.  This assumption is used, regardless of whether they may have been used in the previous five years for spill cleanup.  This assumption possibly understates the costs associated with this requirement.  For the unit costs for kit replacement, we use one vendor's estimate of approximately 60 percent of the original one-half barrel or one-barrel kit cost and 75 percent of the original seven-barrel kit cost.
For the used sorbent disposal costs, we reviewed the estimates from the 1993 RIA, which are $100, $200, $300 and $520 (1993 dollars) for a one-half barrel, one-barrel, seven-barrel, and 12-barrel spill, respectively.  
We apply the sorbent and replacement costs using the number of spills per year for each affected vessel type.  We then add these costs to the initial spill kit cost for each affected vessel.  Table 5-2 presents our estimates of the deck spill equipment costs for the small offshore barges, inland barges, and secondary vessels (50 percent of the fleet).

Table 5-2.  Estimated Updated Deck Spill Equipment Costs (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars), 1994-2016
                                     COST
                             SMALL OFFSHORE BARGES
                                (L < 400 FT)
                                 INLAND BARGES
                               SECONDARY VESSELS
                                   TOTAL (4)
RIA Duplication 1993$
Total Undiscounted
                                                                           $2.9
                                                                          $11.4
                                                                           $1.4
                                                                          $15.7
Present Value Total (3%)
                                                                           $2.4
                                                                           $8.8
                                                                           $1.0
                                                                          $12.2
Present Value Total (7%)
                                                                           $1.9
                                                                           $6.8
                                                                           $0.7
                                                                           $9.4
Annualized Total (3%)
                                                                           $0.1
                                                                           $0.5
                                                                           $0.1
                                                                           $0.7
Annualized Total (7%)
                                                                           $0.2
                                                                           $0.6
                                                                           $0.1
                                                                           $0.8
Sources:  USCG updated analysis; 1993 RIA; and equipment vendors.
Totals may not add due to rounding
Notes:
(1) Assumes that all vessels that were operational as of year-end 1994 purchased equipment in 1994, and each new vessel built after 1994 purchases equipment.  Assumes a baseline compliance rate of 50 percent.  Assumes equipment unit costs of $3,200 (seven-barrel capacity for small offshore barges), $2,700 (one-barrel capacity for inland barges), and $420 (one-half barrel capacity for secondary vessels).
(2) Assumes equipment is replaced at the frequency rate for < 7 bbl spills (small offshore barges) or < 1 bbl spills (inland barges) as well as every 5 years.  For secondary vessels, assumes replacement in each year of operation.  Assumes replacement cost is 60 or 75 percent of the original unit cost.
(3) Assumes $450 (small offshore barge), $300 (inland barge), and $150 (secondary vessel) per spill.
(4) Totals may not sum due to rounding.

For years 1-23 of our updated analysis (1994-2016), we estimate a total present value cost (in 1993 dollars assuming a base year of 1994) of $12.2 million assuming a discount rate of three percent and $9.4 million assuming a discount rate of seven percent.  On an annualized basis, the estimated costs are $0.7 million assuming a discount rate of three percent and $0.8 million assuming a discount rate of seven percent.

5.3  Internal Cargo Transfer Capability
As discussed in Chapter 3, the 1993 RIA assumed that none of the affected oil tankers and offshore oil barges already carried suitable hoses and reducers for internal transfer of cargo to tanks or other spaces within the cargo block at the time the rule was promulgated.  The 1993 RIA estimated the initial costs and replacement costs for hoses and couplings, assuming that the associated maintenance, training, and storage costs are insignificant.  For the initial costs, the 1993 RIA assumed that four, six, and eight 50-foot sections of 6-inch diameter hose with associated couplings (at a cost of $3,625 per section in 1993 dollars) would be placed on tankers and barges of less than 400 feet, between 400 and 700 feet, and greater than 700 feet in length, respectively.  These hoses would be replaced every five years.
In our updated analysis, USCG reviewed and investigated the 1993 RIA assumption that none of the affected vessels was already complying with the requirement.  This review determined that most tankers and barges carrying petroleum-based products (cargo types A, B, and C) already had internal piping systems to transfer cargo and would therefore not have to incur additional costs to comply with the requirement.  The USCG estimates that only a relatively small proportion, approximately 14 percent, of the affected vessels do not already have this capability and would have to comply with the requirement (cargo types D and E). For purposes of comparison with the 1993 RIA estimates, we maintain the assumption of zero percent baseline compliance for years 1-23 in order to do a comparative analysis.
To acquire more current cost information related to the hose requirements, we contacted via email one major supplier that provides such equipment to industry.  This supplier provided an estimated cost of $7,500 per 50-foot section with associated couplings.  Using the same assumption regarding the number of 50-foot sections for a given vessel, we estimate a cost of $30,000, $45,000, and $60,000 for tankers and barges of less than 400 feet, between 400 and 700 feet, and greater than 700 feet in length, respectively, in 2013 dollars.  Because the IFR requires vessels to carry this equipment by June 20, 1994, we assume that all of the affected vessels that were operational as of year-end 1994 would have purchased them in 1994.  Subsequently, we assume that this equipment will be purchased for each vessel built after 1994.  As in the 1993 RIA and affirmed by our supplier contact, we assume a replacement frequency of five years.
Table 5-3 presents our estimates of the internal cargo transfer equipment costs for the oil tankers and offshore oil barges (100 percent of the fleet).  Costs include the initial installment cost as well as replacement cost for each affected vessel.

Table 5-3.  Estimated Updated Internal Cargo Transfer Equipment Costs (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars), 1994-2016
                                     COST
                                    TANKERS
                             LARGE OFFSHORE BARGES
                                (L > 400 FT)
                             SMALL OFFSHORE BARGES
                                (L < 400 FT)
                                   TOTAL (3)
RIA Duplication assumes a baseline compliance rate of 0%
Total Undiscounted
                                                                         $363.3
                                                                           $9.9
                                                                          $23.3
                                                                         $396.4
Present Value Total (3%)
                                                                         $259.5
                                                                           $7.5
                                                                          $17.5
                                                                         $284.5
Present Value Total (7%)
                                                                         $178.1
                                                                           $5.6
                                                                          $13.0
                                                                         $196.6
Annualized Total (3%)
                                                                          $15.8
                                                                           $0.5
                                                                           $1.1
                                                                          $17.3
Annualized Total (7%)
                                                                          $15.8
                                                                           $0.5
                                                                           $1.1
                                                                          $17.4
Sources:  USCG updated analysis; 1993 RIA; and equipment vendors.
Totals may not add due to rounding
Notes:
(1) Assumes an equipment unit cost of $30,000, $45,000, and $60,000 for vessels of less than 400 feet, between 400 and 700 feet, and greater than 700 feet in length, respectively.  Assumes that all vessels that were operational as of year-end 1994 purchased equipment in 1994, and each new vessel built after 1994 purchases equipment.  Assumes 100 percent of vessels are affected (Years 1-23).
(2) Assumes equipment is replaced every five years.
(3) Totals may not sum due to rounding.

For the updated analysis, years 1-23 (or 1994-2016), we estimate a total present value cost (in 1993 dollars assuming a base year of 1994) of $284.5 million assuming a discount rate of three percent and $196.6 million assuming a discount rate of seven percent.  On an annualized basis, the estimated costs are $17.3 million assuming a discount rate of three percent and $17.4 million assuming a discount rate of seven percent.

5.4  Damage Stability Information
As discussed in Chapter 3, the 1993 RIA assumed that none of the affected oil tankers, offshore oil barges, and inland oil barges already undertook the actions required by the damage stability requirement prior to implementation of the IFR.  As a result of the IFR, owners or operators must have prearranged, prompt 24-hour access to computerized, shore-based damage stability and residual strength calculation programs for their oil tankers and offshore oil barges, or 24-hour access to vessel plans at a shore-based location for their inland oil barges.  The 1993 RIA estimated a - cost of $4,000 per tanker, $2,500 per barge, and a $3,000 annual service fee for each vessel (1993 dollars), based on prices quoted from vessel classification societies.  The cost is for the classification society to input into hydrostatics and structural analysis software the vessel's hull form, structure, piping, lightship weight distribution and compartmentation information.  The annual service fee is to revise (as needed) the vessel information, as well as the analysis software.  
To acquire more current cost information related to the damage stability information requirement, we contacted via email and phone six classification societies that offer programs that provide 24-hour damage stability services to their subscribers who typically own or operate vessels in their classification.  Three of the six classification societies provided cost information for these services provided to approximately 4,500 vessels.  The initial costs for enrollment and vessel stability modeling from these three cost societies are  $5,000, $5,400, and $9,750 per vessel, with an average cost of approximately $6,720 (2013 dollars).  These classification societies offer discounted rates to sister vessels, or vessels that have the same configuration as an originally-designed vessel (i.e., are replicas).  These discounted initial rates for sister vessels range from $1,100 to $1,400 per sister vessel, with an average cost of approximately $1,270.  Using information obtained from the three classification societies about the number or percentage of enrolled vessels that are sister vessels (ranges between 50 and 58 percent), we calculate a weighted average initial cost of approximately $3,700 per vessel.  The annual service fee provided by the three classification societies are $400, $700, and $1,300 per year, with an average cost of approximately $800 per year.
For inland oil barges, owners and operators are only required to maintain 24-hour access to vessel plans at a shore-based location.  Only one of the vessel classification societies we contacted offered this service, at an initial enrollment cost of approximately $780 and annual subscription cost of $520.
Since the IFR required vessels to comply with this requirement by January 21, 1995, we assume that all of the affected vessels that were operational as of year-end 1994 would have incurred the initial enrollment and modeling costs in 1994.  Subsequently, we assume that each vessel built after 1994 will incur these initial costs.  For every year thereafter until the vessel is scheduled for retirement, the estimated annual subscription cost is incurred.
Table 5-4 presents our estimates of the damage stability information costs for the oil tankers, offshore oil barges, and inland barges (100 percent of the fleet).  Total costs for each vessel include the initial and annual stability modeling cost per year (approximately $3700 for tankers and offshore barges and $780 for inland barges) and an annual service fee of $800 per year for tankers and offshore barges and $520 for inland barges.
Table 5-4.  Estimated Updated Damage Stability Information Costs (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars), 1994-2016
                                     COST
                                    TANKERS
                             LARGE OFFSHORE BARGES
                                (L > 400 FT)
                             SMALL OFFSHORE BARGES
                                (L < 400 FT)
                                 INLAND BARGES
                                   TOTAL (3)
RIA Duplication 
Total Undiscounted
                                                                          $32.1
                                                                           $1.0
                                                                           $3.4
                                                                          $20.1
                                                                          $56.6
Present Value Total (3%)
                                                                          $23.3
                                                                           $0.7
                                                                           $2.6
                                                                          $14.8
                                                                          $41.5
Present Value Total (7%)
                                                                          $16.3
                                                                           $0.6
                                                                           $1.9
                                                                          $10.6
                                                                          $29.5
Annualized Total (3%)
                                                                           $1.4
                                                                           $0.0
                                                                           $0.2
                                                                           $0.9
                                                                           $2.5
Annualized Total (7%)
                                                                           $1.4
                                                                           $0.0
                                                                           $0.2
                                                                           $0.9
                                                                           $2.5
Sources:  USGC updated analysis and vessel classification societies.
Totals may not add due to rounding
Notes:
(1) Assumes an initial cost of $3,700 per tanker and offshore barge and $780 per inland barge.  Assumes that all vessels that were operational as of year-end 1994 enrolled in 1994, and each new vessel built after 1994 enrolls.  Assumes 100 percent of vessels are affected.
(2) Assumes an annual subscription cost of $800 per tanker and offshore barge and $520 per inland barge.
(3) Totals may not sum due to rounding.

For years 1-23, we retrospectively estimate a total present value cost (in 1993 dollars assuming a base year of 1994) of $41.5 million assuming a discount rate of three percent and $29.5 million assuming a discount rate of seven percent.  On an annualized basis, the estimated costs are $2.5 million assuming a discount rate of three percent and $2.5 million assuming a discount rate of seven percent.

5.5  Summary of Costs
The 1993 RIA estimated a total cost of $118.9 million assuming a discount rate of seven percent (1994-2016), which is less than half of our estimate -The USCG reproduction of the 1993 estimate is based upon observed data and not projected data.  Observed data resulted in more vessels for example. In addition, our present value updated cost estimates (in 1993 dollars assuming a base year of 1994) are not directly comparable to those from the 1993 RIA because the 1993 RIA assumed that inland barges would be exempt from the coaming requirement, and did not estimate damage stability information costs for inland barges.  We summarize the cost estimate differences below, and provide possible explanations of these differences later in this chapter in our comparison of the annualized cost estimates.
   * For both deck coaming and deck spill equipment, the 1993 RIA estimated a total cost of $11.0 million (assuming a discount rate of seven percent), $1.7 million for small offshore barges, $4.5 million for inland barges, and $4.8 million for secondary vessels.  The 1993 RIA had assumed that inland barges would be exempt from the coaming requirement.  We estimate a cost of $25.1 million for deck coaming and deck spill equipment, $3.2 million for small offshore barges, $21.2 million for inland barges, and $0.7 million for secondary vessels.
   * For internal cargo transfer capability, the 1993 RIA estimated a total cost of $100.3 million (assuming a discount rate of seven percent, in 1993 dollars), $91.3 million for tankers and $8.9 million for barges.  We estimate a cost of $196.6 million, $178.1 million for tankers and $18.6 million for barges.
   * For the damage stability information requirement, the 1993 RIA estimated a total cost of $7.7 million (assuming a discount rate of seven percent, in 1993 dollars), $6.9 million for tankers and $0.8 million for offshore barges.  However, the 1993 RIA did not estimate the costs for inland oil barges.  We estimate a cost of $29.5 million, $16.3 million for tankers, $2.5 million for offshore barges, and $10.6 million for inland barges.
For the updated period, the annualized cost of the rule is $21.6 million assuming a discount rate of three percent and $22.3 million assuming a discount rate of seven percent.
For both deck coaming and deck spill equipment, we could not readily compare our estimates to the 1993 RIA because the 1993 RIA did not calculate annualized costs for tankers and secondary vessels.  In addition, the 1993 RIA assumed that inland barges would be exempt from the coaming requirement.
For the internal cargo transfer capability requirement, our annualized cost estimate is more than twice that of the 1993 RIA for tankers and offshore barges.  As discussed in Chapter 3, we estimate much higher numbers of affected tankers and offshore barges than the 1993 RIA based on the historic vessel data recorded by USCG.  By 2010, we estimate almost twice as many tankers and more than 40 percent more offshore barges than the 1993 RIA.  In addition, our equipment unit cost assumption (An average of $30,000 in 1993 dollars) is moderately higher than that of the 1993 RIA ($14,500 to $29,000 per vessel in 1993 dollars).
Finally, our annualized cost estimate for the damage stability information requirement is more than twice that of the 1993 RIA for tankers.  Again, we estimate higher tanker numbers, which more than offsets the generally lower unit costs we assume ($2,500 initial and $540 annually per tanker adjusted in 1993 dollars, versus the 1993 RIA's $4,000 initial and $3,000 annually per tanker).
Tables 5-5 and 5-6 summarize our estimated costs for the final rule, as an update, on a present value basis for years 1-23 (in 1993 dollars assuming a base year of 1994).)
TABLE 5-5.  Updated Summary and Comparison of Estimated Costs to the 1993 RIA (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars), 1994-2016
                               IFR KEY PROVISION
                                  OIL TANKERS
                           LARGE OFFSHORE OIL BARGES
                             (LENGTH > 400 FT)
                           SMALL OFFSHORE OIL BARGES
                             (LENGTH < 400 FT)
                               INLAND OIL BARGES
                               SECONDARY VESSELS
                                   TOTAL (5)
USCG Replication
Deck coaming (1)
(Section 5.1)
                                                                           $0.0
                                                                           $0.0
                                                                      $1.3 (3%)
                                                                      $1.3 (7%)
                                                                     $14.9 (3%)
                                                                     $14.4 (7%)
                                                                           $0.0
                                                                     $16.2 (3%)
                                                                     $15.7 (7%)
Deck spill equipment (2)
(Section 5.2)
                                                                           $0.0
                                                                           $0.0
                                                                      $2.4 (3%)
                                                                      $1.9 (7%)
                                                                      $8.8 (3%)
                                                                      $6.8 (7%)
                                                                      $1.0 (3%)
                                                                      $0.7 (7%)
                                                                     $12.2 (3%)
                                                                      $9.4 (7%)
Internal cargo transfer capability  -  hoses and couplings (3)
(Section 5.3)
                                                                    $259.5 (3%)
                                                                    $178.1 (7%)
                                                                      $7.5 (3%)
                                                                      $5.6 (7%)
                                                                     $17.5 (3%)
                                                                     $13.0 (7%)
                                                                           $0.0
                                                                           $0.0
                                                                    $284.5 (3%)
                                                                    $196.6 (7%)
Damage stability information (4)
(Section 5.4)
                                                                     $23.3 (3%)
                                                                     $16.3 (7%)
                                                                      $0.7 (3%)
                                                                      $0.6 (7%)
                                                                      $2.6 (3%)
                                                                      $1.9 (7%)
                                                                     $14.8 (3%)
                                                                     $10.6 (7%)
                                                                           $0.0
                                                                     $41.5 (3%)
                                                                     $29.5 (7%)
TOTAL (5)
                                                                    $282.8 (3%)
                                                                    $194.4 (7%)
                                                                      $8.3 (3%)
                                                                      $6.1 (7%)
                                                                     $23.8 (3%)
                                                                     $18.1 (7%)
                                                                     $38.6 (3%)
                                                                     $31.8 (7%)
                                                                      $1.0 (3%)
                                                                      $0.7 (7%)
                                                                    $354.4 (3%)
                                                                    $251.2 (7%)
1993 RIA ESTIMATE 
Deck coaming (1) and spill equipment (2)
                                                                           $0.0
                                                                           $0.0
                                                                      $1.7 (7%)
                                                                      $4.5 (7%)
                                                                      $4.8 (7%)
                                                                     $11.0 (7%)
Internal cargo transfer capability  -  hoses and couplings (3)
                                                                     $91.3 (7%)
                                                                      $8.9 (7%)
                                                                           $0.0
                                                                           $0.0
                                                                    $100.3 (7%)
Damage stability information (4)
                                                                      $6.9 (7%)
                                                                      $0.8 (7%)
                                                                             NA
                                                                           $0.0
                                                                      $7.7 (7%)
TOTAL (5)
                                                                     $98.2 (7%)
                                                                     $11.4 (7%)
                                                                      $4.5 (7%)
                                                                      $4.8 (7%)
                                                                    $118.9 (7%)
                                                                               
Sources:  USCG analysis and 1993 RIA.
(1) Assumes a baseline compliance rate of 100 percent for oil tankers and large offshore oil barges.  Assumes a baseline compliance rate of 50 percent for small offshore and inland barges.  Deck coaming not required for secondary vessels.  1993 RIA assumed that inland barges would be exempt from coaming requirement.
(2) Assumes a baseline compliance rate of 100 percent for oil tankers and large offshore oil barges.  Assumes a baseline compliance rate of 50 percent for small offshore barges, inland barges, and secondary vessels.
(3) Assumes a baseline compliance rate of zero percent for oil tankers and offshore oil barges.  Internal cargo transfer capability not required for inland oil barges and secondary vessels.
(4) Damage stability information not required for secondary vessels.  1993 RIA did not estimate costs for inland barges. 
(5) Totals may not sum due to rounding.


Table 5-6.  Summary of Updated and 1993 RIA Annualized Costs (7 and 3 Percent Discount Rates) ($ Millions, 1993 Dollars) 1994-2016
                               IFR KEY PROVISION
                                  OIL TANKERS
                           LARGE OFFSHORE OIL BARGES
                             (LENGTH > 400 FT)
                           SMALL OFFSHORE OIL BARGES
                             (LENGTH < 400 FT)
                               INLAND OIL BARGES
                               SECONDARY VESSELS
                                   TOTAL (5)
USCG Replication
Deck coaming (1)
(Section 5.1)
                                                                           $0.0
                                                                           $0.0
                                                                      $0.1 (3%)
                                                                      $0.1 (7%)
                                                                      $0.9 (3%)
                                                                      $1.3 (7%)
                                                                           $0.0
                                                                      $1.0 (3%)
                                                                      $1.4 (7%)
Deck spill equipment (2)
(Section 5.2)
                                                                           $0.0
                                                                           $0.0
                                                                      $0.1 (3%)
                                                                      $0.2 (7%)
                                                                      $0.5 (3%)
                                                                      $0.6 (7%)
                                                                      $0.1 (3%)
                                                                      $0.1 (7%)
                                                                      $0.7 (3%)
                                                                      $0.8 (7%)
Internal cargo transfer capability  -  hoses and couplings (3)
(Section 5.3)
                                                                     $15.8 (3%)
                                                                     $15.8 (7%)
                                                                      $0.5 (3%)
                                                                      $0.5 (7%)
                                                                      $1.1 (3%)
                                                                      $1.1 (7%)
                                                                           $0.0
                                                                           $0.0
                                                                     $17.3 (3%)
                                                                     $17.4 (7%)
Damage stability information (4)
(Section 5.4)
                                                                      $1.4 (3%)
                                                                      $1.4 (7%)
                                                                      $0.0 (3%)
                                                                      $0.0 (7%)
                                                                      $0.2 (3%)
                                                                      $0.2 (7%)
                                                                      $0.9 (3%)
                                                                      $0.9 (7%)
                                                                           $0.0
                                                                      $2.5 (3%)
                                                                      $2.6 (7%)
TOTAL (5)
                                                                     $17.2 (3%)
                                                                     $17.2 (7%)
                                                                      $0.5 (3%)
                                                                      $0.5 (7%)
                                                                      $1.4 (3%)
                                                                      $1.6 (7%)
                                                                      $2.3 (3%)
                                                                      $2.8 (7%)
                                                                      $0.1 (3%)
                                                                      $0.1 (7%)
                                                                     $21.6 (3%)
                                                                     $22.3 (7%)
1993 RIA ESTIMATE 
Deck coaming (1) and spill equipment (2)
                                                                             NA
                                                                           $0.0
                                                                      $0.1 (7%)
                                                                             NA
                                                                             NA
                                                                               
Internal cargo transfer capability  -  hoses and couplings (3)
                                                                      $7.4 (7%)
                                                                      $0.7 (7%)
                                                                           $0.0
                                                                           $0.0
                                                                               
Damage stability information (4)
                                                                      $0.6 (7%)
                                                                      $0.1 (7%)
                                                                             NA
                                                                           $0.0
                                                                               
Sources:  USCG updated analysis and 1993 RIA.
(1) Assumes a baseline compliance rate of 100 percent for oil tankers and large offshore oil barges.  Assumes a baseline compliance rate of 50 percent for small offshore and inland barges.  Deck coaming not required for secondary vessels.  1993 RIA did not calculate the annualized costs for tankers, inland oil barges, and secondary vessels.  1993 RIA assumed that inland barges would be exempt from coaming requirement.
(2) Assumes a baseline compliance rate of 100 percent for affected oil tankers and large offshore oil barges.  Assumes a baseline compliance rate of 50 percent for small offshore barges, inland barges, and secondary vessels.
(3) Assumes a baseline compliance rate of zero percent for oil tankers and offshore oil barges.  Internal cargo transfer capability not required for inland oil barges and secondary vessels.
(4) Damage stability information not required for secondary vessels.  1993 RIA did not estimate costs for inland barges.
(5) Totals may not sum due to rounding.

6.0  Benefits
In this chapter, we estimate the benefits as an update of the DRE IFR using the most up-to-date data and information available relating to the amount or volume of oil that is potentially averted from entering the water.  This volume of oil reflects the incremental reduction in the volume of oil spilled into the environment due to the rule's implementation, as measured against the baseline level of spill volume (without the rule in effect).  As discussed in Chapters 1 and 4, our estimates of the volume of spills affected by the rule are drawn from historic spill incident data recorded by USCG that reflects actual spill activity with the rule in effect and DRE measures in place.  Our spill volume estimates from Chapter 4 therefore represent the "with the rule" scenario and require further analysis to estimate the higher, baseline volumes of oil that would have been spilled in the absence of the rule.  The difference between the two scenarios represents the incremental reduction in the volume of oil spilled into the environment because of the rule.
We first develop a methodology to estimate the baseline volume of affected oil spills from the actual data using the assumptions developed in the 1993 RIA such as the effectiveness of DRE equipment in reducing oil spill volume and the rates at which affected vessels already comply.  The change represents our estimate of the incremental volume of oil that is averted from entering the environment because of the rule.  This volume is the basis of the quantified estimate of the rule's benefits.  We estimate the benefits associated with three of the four major provisions or requirements of the rule that are to be finalized in the final rule.  We quantify the benefits in terms of barrels of oil not lost to the environment, on a present value basis at discount rates of three and seven percent, for the 23-year period 1994 through 2016.  As for the costs, we summarize and present our present value estimates separately for years 1-23 (1994-2016) assuming a base year of 1994.
Since we cannot quantify the benefits associated with the damage stability information requirement, we qualitatively discuss the information provided by classification societies that describes how their programs reduce the potential severity or calamity of spill incidents.  Finally, we qualitatively discuss the small proportion of spill incident data that provide some information on the volume of oil that may have been prevented by the DRE rule specifically.


6.1  Methodology for Calculating the Oil Volumes Mitigated by the Rule
Our estimates of the actual volume of affected spills (V) presented in Chapter 4 reflect spill activity with the rule in effect and DRE measures in place.  We assume that these actual spill estimates reflect 100 percent compliance by vessels affected by the rule.  Using this assumption, we calculate the baseline volume of oil that would have been spilled into the environment, in the absence of the use of any of the required equipment (i.e., if none of the affected vessels complied with the rule), as:
	(1)  V(1-E)V(1-E), where E is the DRE equipment-specific effectiveness factor developed in the 1993 RIA, expressed as the percentage of oil spilled from the vessel that is averted from entering the environment by DRE.
However, the baseline condition is not a state of zero percent compliance in the absence of the rule, but rather a state of some pre-existing compliance with the rule's requirements, as assumed originally by the 1993 RIA and continued in this analysis (e.g., the 1993 RIA and our analysis assume that 50 percent of the affected small offshore barges already comply with the requirement for deck spill equipment).  As a result, we calculate our baseline volume (with partial, pre-existing compliance) as:
	(2) V(1-E)-V1-E*c*E, where c is the DRE equipment-specific pre-existing compliance rate in the absence of the rule
In other words, we adjust (decrease) the baseline volume assuming no compliance in the absence of the rule (1) by the estimated volume of oil that is averted from entering the environment by those vessels that already comply with the rule's requirements.
Finally, we calculate the rule's benefit as the incremental reduction in the volume of oil entering the environment by the remaining proportion of affected vessels that become compliant with the rule (1-c) when it takes effect as:
	(3) V(1-E)*1-c*El
We calculate these incremental reductions in spill volume by rule provision, affected vessel type, and spill cause.  Table 6-1 presents the values used for the compliance (c) and effectiveness (E) factors.  The remainder of this chapter presents the results of these calculations for each provision.  In Appendix C, we provide detailed tables of our estimated benefit calculations.


Table 6-1.  Summary of Assumptions Used to Estimate the Benefits of the DRE Rule
                               IFR KEY PROVISION
                                  OIL TANKERS
                           LARGE OFFSHORE OIL BARGES
                             (LENGTH > 400 FT)
                           SMALL OFFSHORE OIL BARGES
                             (LENGTH < 400 FT)
                               INLAND OIL BARGES
                               SECONDARY VESSELS
Deck coaming
(Section 6.2)
                                 Not estimated
                             (100% already comply)
                                 Not estimated
                             (100% already comply)
                              50% already comply
                                       
 50% effectiveness factor (spills less than or equal to 7 barrels, all causes)
                              50% already comply
                                       
 50% effectiveness factor (spills less than or equal to 1 barrel, all causes)
                                 Not estimated
                                (Not required)
Deck spill equipment
(Section 6.3)
                                 Not estimated
                             (100% already comply)
                                 Not estimated
                             (100% already comply)
                              50% already comply
                                       
 5% effectiveness factor (spills less than or equal to 7 barrels, all causes)
                              50% already comply
                                       
  5% effectiveness factor (spills less than or equal to 1 barrel, all causes)
                              50% already comply
                                       
                 Effectiveness of 1 gallon per vessel per year
Internal cargo transfer capability  -  hoses and couplings
(Section 6.4)
                               0% already comply
                                       
Effectiveness factors of 1.67% for all spills caused by grounding, and 0.33% for all spills caused by collision
                               0% already comply
                                       
Effectiveness factors of 1.67% for all spills caused by grounding, and 0.33% for all spills caused by collision
                               0% already comply
                                       
Effectiveness factors of 1.67% for all spills caused by grounding, and 0.33% for all spills caused by collision
                                 Not estimated
                                (Not required)
                                 Not estimated
                                (Not required)
Damage stability information
(Section 6.5)
                            Discussed qualitatively
                            Discussed qualitatively
                            Discussed qualitatively
                            Discussed qualitatively
                                 Not estimated
                                (Not required)
Sources:  1993 RIA, pp. 4-3, 4-4, 6-5, 6-7, and 7-3.


6.2  Deck Coaming
The 1993 RIA assumed that 50 percent of affected small offshore and inland barges already comply with the deck coaming requirement.  In addition, the 1993 RIA assumed that deck coaming would reduce the volume of oil spilled into the environment by 50 percent for spills of less than or equal to seven barrels by small offshore barges and spills of less than or equal to one barrel by inland barges (all causes).
Using these assumptions, Table 6-2 presents our estimates of the observed spill volume (from Chapter 4), baseline spill volume (in the absence of the rule assuming 50 percent compliance), and averted spill volumes as a result of the rule's requirement for deck coaming.
Table 6-2.  Estimated Updated Deck Coaming Benefits, in Bbls Mitigated
                               ESTIMATED VOLUMES
                             SMALL OFFSHORE BARGES
                              (L < 400 FT) (1)
                              SPILLS < 7 BBLS
                               INLAND BARGES (2)
                               SPILLS < 1 BBL
                                   TOTAL (3)
BARRELS, YEARS 1-23
Actual Spill Volume
                                                                         194.7 
                                                                         201.6 
                                                                         396.3 
Baseline Volume
                                                                         292.1 
                                                                         302.4 
                                                                         594.5 
Averted Volume
                                                                          97.4 
                                                                         100.8 
                                                                         198.2 
AVERTED VOLUMES, YEARS 1-23 (BARRELS)
Present Value Total (3%)
                                                                          74.8 
                                                                          71.2 
                                                                         146.0 
Present Value Total (7%)
                                                                          55.2 
                                                                          47.3 
                                                                         102.5 
Annualized Total (3%)
                                                                           4.5 
                                                                           4.3 
                                                                           8.9 
Annualized Total (7%)
                                                                           4.9 
                                                                           4.2 
                                                                           9.1 
Sources:  USCG updated analysis and 1993 RIA.

Notes:
(1) Assumes a pre-existing compliance rate of 50 percent and an effectiveness factor of 50 percent (1993 RIA, p. 4-3).
(2) Assumes a pre-existing compliance rate of 50 percent and an effectiveness factor of 50 percent (1993 RIA, p. 4-3).
(3) Totals may not sum due to rounding.
For the updated analysis period, 1994-2016, we estimate 198.2 barrels of averted oil.  On a present value basis, we estimate 146.0 barrels of averted oil assuming a discount rate of three percent and 102.5 barrels of averted oil assuming a discount rate of seven percent.  On an annualized basis, we estimate 8.9 to 9.1 barrels of averted oil.

6.3  Deck Spill Equipment
The 1993 RIA assumed that 50 percent of affected small offshore and inland barges and secondary vessels already comply with the deck spill equipment requirement.  In addition, the 1993 RIA assumed that deck spill equipment would reduce the volume of oil spilled into the environment by five percent for spills of less than or equal to seven barrels by small offshore barges and spills of less than or equal to one barrel by inland barges (all causes), and one gallon per vessel per year for secondary vessels.
Using these assumptions, Table 6-3 presents our estimates of the actual spill volume (from Chapter 4), baseline spill volume (in the absence of the rule assuming 50 percent compliance), and averted spill volumes as a result of the rule's requirement for deck spill equipment.

Table 6-3.  Estimated Updated Deck Spill Equipment Benefits, in Bbls Mitigated 
                               ESTIMATED VOLUMES
                             SMALL OFFSHORE BARGES
                              (L < 400 FT) (1)
                              SPILLS < 7 BBLS
                               INLAND BARGES (2)
                               SPILLS < 1 BBL
                             SECONDARY VESSELS (3)
                              SPILLS < 1/2 BBL
                                   TOTAL (4)
BARRELS, YEARS 1-23
Actual Spill Volume
                                                                         550.3 
                                                                         335.4 
                                                                             NA
                                                                         885.7 
Baseline Volume
                                                                         564.8 
                                                                         344.3 
                                                                             NA
                                                                         909.0 
Averted Volume
                                                                          14.5 
                                                                           8.8 
                                                                          229.0
                                                                         252.3 
AVERTED VOLUMES, YEARS 1-23 (BARRELS)
Present Value Total (3%)
                                                                          13.0 
                                                                           7.2 
                                                                         157.8 
                                                                         178.0 
Present Value Total (7%)
                                                                          11.6 
                                                                           5.8 
                                                                         102.8 
                                                                         120.2 
Annualized Total (3%)
                                                                           0.8 
                                                                           0.4 
                                                                           9.6 
                                                                          10.8 
Annualized Total (7%)
                                                                           1.0 
                                                                           0.5 
                                                                           9.1 
                                                                          10.7 
Sources:  USCG updated analysis and 1993 RIA.
Notes:
(1) Assumes a pre-existing compliance rate of 50 percent and an effectiveness factor of 5 percent (1993 RIA, pp. 4-3 and 4-4).
(2) Assumes a pre-existing compliance rate of 50 percent and an effectiveness factor of 5 percent (1993 RIA, pp. 4-3 and 4-4).
(3) Assumes one gallon averted per vessel per year (1993 RIA, pp. 4-3 and 4-4).
(4) Totals may not sum due to rounding.

For years 1-23, we estimate 252.3 barrels of averted oil.  On a present value basis, we estimate 178.0 barrels of averted oil assuming a discount rate of three percent and 120.2 barrels of averted oil assuming a discount rate of seven percent.  On an annualized basis, we estimate 10.7 to 10.8 barrels of averted oil.
The estimated volume of averted oil for secondary vessels is significantly higher than those we estimated for small offshore and inland barges.  This is because the secondary vessel volume is influenced by the number of secondary vessels (577 operating vessels as of 2012, as shown in Table 3-6) rather than the estimated volume of small-size spills from small offshore and inland barges.

6.4  Internal Cargo Transfer Equipment
The 1993 RIA assumed that none of the affected tankers and offshore barges already comply with the internal cargo transfer equipment requirement.  In addition, the 1993 RIA assumed that internal cargo transfer equipment would reduce the volume of oil spilled into the environment by 1.67 percent for spills caused by grounding and 0.33 percent for spills caused by collision.  As discussed in Chapter 5, however, USCG estimates that a majority of the affected vessels already comply with the requirement.  But for purposes of comparison with the 1993 RIA estimates, we maintain the original assumption of zero percent compliance for years 1-23. 
Using these assumptions, Table 6-4 presents our estimates of the actual spill volume (from Chapter 4), baseline spill volume (in the absence of the rule assuming zero percent compliance), and averted spill volumes as a result of the rule's requirement for internal cargo transfer equipment.
Table 6-4.  Estimated Updated Internal Cargo Transfer Equipment Benefits, in Bbls Mitigated 
        ESTIMATED VOLUMES FROM SPILLS CAUSED BY GROUNDING AND COLLISION
                                    TANKERS
                                      (1)
                             LARGE OFFSHORE BARGES
                              (L > 400 FT) (2)
                             SMALL OFFSHORE BARGES
                              (L < 400 FT) (2)
                                   TOTAL (3)
BARRELS, YEARS 1-23 (ASSUMES A PRE-EXISTING COMPLIANCE RATE OF 0%)
Actual Spill Volume
                                                                      39,340.7 
                                                                       3,450.8 
                                                                       5,250.4 
                                                                      48,041.9 
Baseline Volume
                                                                      39,938.7 
                                                                       3,503.2 
                                                                       5,330.2 
                                                                      48,772.1 
Averted Volume
                                                                         598.0 
                                                                          52.5 
                                                                          79.8 
                                                                         730.2 
AVERTED VOLUMES, YEARS 1-23 (BARRELS) (ASSUMES A PRE-EXISTING COMPLIANCE RATE OF 0%)
Present Value Total (3%)
                                                                         461.0 
                                                                          46.4 
                                                                          67.5 
                                                                         574.9 
Present Value Total (7%)
                                                                         344.3 
                                                                          39.8 
                                                                          56.6 
                                                                         440.7 
Annualized Total (3%) (4)
                                                                          28.0 
                                                                           2.8 
                                                                           4.1 
                                                                          35.0 
Annualized Total (7%) (4)
                                                                          30.5 
                                                                           3.5 
                                                                           5.0 
                                                                          39.1 
Sources:  USCG updated analysis; 1993 RIA; and equipment vendors.

Notes:
(1) (Years 1-23), an effectiveness factor of 1.67 percent for grounding, and an effectiveness factor of 0.33 percent for collision (1993 RIA, pp. 6-5 and 6-7).
(2) (Years 1-23), an effectiveness factor of 1.67 percent for grounding, and an effectiveness factor of 0.33 percent for collision (1993 RIA, pp. 6-5 and 6-7).
(3) Totals may not sum due to rounding.

As shown in Table 6-4 for years 1-23 (assuming a pre-existing compliance rate of zero percent), we estimate 730.2 barrels of averted oil.  On a present value basis, we estimate 574.9 barrels of averted oil assuming a discount rate of three percent and 440.7 barrels of averted oil assuming a discount rate of seven percent.  On an annualized basis, we estimate 35.0 to 39.1 barrels of averted oil.
The estimated volume of averted oil for tankers is significantly higher than those we estimated for small offshore and large offshore barges.  This is because the estimated baseline volume of spills caused by grounding and collision for tankers is much greater than the baseline volumes we estimated for small offshore and large offshore barges.

6.5  Damage Stability Information
The 1993 RIA did not estimate benefits for this requirement because "no data exists to quantify the gains from rapid planning services.  However, naval architecture software has recently and greatly enhanced the ability of naval architects and salvors in this area.  Fast, accurate salvage analysis benefits owners and operators as well as the environment."  The 1993 RIA did not provide further detail or discussion on the potential benefits of this requirement.
For this updated analysis, we did not find data that would allow us to quantify the benefits associated with the rule's requirement for damage stability information.  Neither the USCG oil spill incident data sets discussed in Chapter 4 nor USCG's other data sources provide information on the use or effectiveness of damage stability information to reduce the volume of oil spilled into the environment.
Since we cannot quantify the benefits associated with the damage stability information requirement, we qualitatively discuss the information provided by classification societies that describes how their programs reduce the potential severity or calamity of spill incidents.  In general, the classification societies widely advertise and promote their damage assessment programs as providing ship owners and operators the essential and immediate technical support (e.g., structural and stability calculations) needed in the critical hours after an accident (e.g., grounding, collision, or explosion) to prevent or minimize vessel and cargo loss and environmental pollution.  These programs include the American Bureau of Shipping's (ABS) Rapid Response Damage Assessment, ClassNK's Emergency Technical Assistance Service, Germanischer Lloyd's (GL) Emergency Response Service, Lloyd's Register's Ship Emergency Response Service, Bureau Veritas' Emergency Response Service, and Det Norske Veritas' (DNV) Emergency Response Service programs.
When called upon in the event of a vessel incident, these programs activate their emergency response teams to use the incident information reported by the vessel owner or operator (e.g., incident type, vessel damage and condition, interim or emergency actions taken, weather) and the vessel data they had previously registered and modeled to perform the necessary damage stability and residual strength computations.  Technical advice is then provided concerning transfer or off-loading of cargo, fuel or ballast, as well as necessary temporary repairs to ensure vessel safety and prevent or minimize marine pollution.
In particular, three classification societies provided some information on how their programs reduced the potential severity of specific vessel incidents.  We note, however, that this information includes vessels not affected by the rule (e.g., container vessels, oil-carrying vessels operating outside of U.S. waters).  ABS' review of its case files indicate that in the years 2010 through 2012, its program contributed to reducing the severity of between 11 and 14 vessel incidents annually.  In 2012, GL activated its emergency response team 11 times worldwide for incidents involving container, multi-purpose, and bulk vessels.  Finally, DNV provides a detailed account of how its program had contributed to the prevention of a catastrophic spill of more than 88,000 metric tons of crude oil from a tanker en route from Brazil to Chile that had grounded.  In this incident, DNV had developed and evaluated more than 200 discharging sequences for safely offloading the crude and determined which shipyard (in China or Europe) to take the damaged vessel for repair (considering the potential wave impact on the vessel) to prevent further vessel damage and the release of any oil.

6.6  Note on 2002 -2012 Spill Data
As discussed in Chapter 4, the 2002-2012 oil spill incident data set contains data providing some information on the volume of oil that may have been averted from entering the environment by the DRE rule, including data fields reporting the quantity of oil potentially spilled, the volume of oil contained, and the containment method.  Although these data fields are not well populated and their entries are not standardized across the spill incident records, we analyzed these data qualitatively to determine whether they provide information on the actual effectiveness of DRE equipment.
We then calculated the total number of the reported volumes of oil potentially spilled and contained associated with these records.  Table 6-5 presents our results by vessel type.
Table 6-5.  Reported Spill Volumes in the 2002-2012 Oil Spill Incident Data Set that are Likely Associated with Spill Incidents Involving the Use of DRE Equipment
                               IFR KEY PROVISION
                                  OIL TANKERS
                           LARGE OFFSHORE OIL BARGES
                             (LENGTH > 400 FT)
                           SMALL OFFSHORE OIL BARGES
                             (LENGTH < 400 FT)
                               INLAND OIL BARGES
No. of records containing key words likely associated with the use of DRE equipment (1)
                                                                             69
                                                                             13
                                                                             38
                                                                            220
Potential volume of oil spill (barrels)
                                                                         24,725
                                                                              4
                                                                            892
                                                                        367,318
Volume contained (barrels)
                                                                         20,381
                                                                              4
                                                                            892
                                                                        369,769
Volume spilled (barrels)
                                                                          1,134
                                                                              4
                                                                            892
                                                                          2,358
Sources:  USCG analysis of USCG 2002-2012 oil spill incident data set
Notes:
(1) These key words (or parts of word) recorded in the `Contained_Method' data field include "(ab)sorbent," "sorbant" [sic], "pad," "deck," "coaming," "contain(ed)(ment)," or "retain."

As shown in Table 6-5, the relatively high proportion of the potential spill volume that is contained suggests that DRE equipment is highly effective.  For example, of an estimated 24,725 barrels of oil potentially spilled from oil tankers, an estimated 20,381 barrels of oil were contained.  

6.7  Summary of Benefits
Table 6-6 summarize our estimated benefits for the rule on a present value basis for the years 1-23.  In addition, Tables 6-6 presents the benefits estimated by the 1993 RIA (seven percent discount rate).


Table 6-6.  Summary of Estimated Updated Benefits and 1993 RIA Estimates in bbls Mitigated (7 and 3 Percent Discount Rates), 1994-2016
                               IFR KEY PROVISION
                                  OIL TANKERS
                           LARGE OFFSHORE OIL BARGES
                             (LENGTH > 400 FT)
                           SMALL OFFSHORE OIL BARGES
                             (LENGTH < 400 FT)
                               INLAND OIL BARGES
                               SECONDARY VESSELS
                                   TOTAL (5)
PRESENT VALUE ASSUMING A BASE YEAR OF YEAR 1 IN BARRELS
Deck coaming (1)
(Section 6.2)
                                                                            0.0
                                                                            0.0
                                                                      74.8 (3%)
                                                                      55.2 (7%)
                                                                      71.2 (3%)
                                                                      47.3 (7%)
                                                                            0.0
                                                                     146.0 (3%)
                                                                     102.5 (7%)
Deck spill equipment (2)
(Section 6.3)
                                                                            0.0
                                                                            0.0
                                                                      13.0 (3%)
                                                                      11.6 (7%)
                                                                       7.2 (3%)
                                                                       5.8 (7%)
                                                                     157.8 (3%)
                                                                     102.8 (7%)
                                                                     178.0 (3%)
                                                                     120.2 (7%)
Internal cargo transfer capability  -  hoses and couplings (3)
(Section 6.4)
                                                                     461.0 (3%)
                                                                     344.3 (7%)
                                                                      46.4 (3%)
                                                                      39.8 (7%)
                                                                      67.5 (3%)
                                                                      56.6 (7%)
                                                                            0.0
                                                                            0.0
                                                                     574.9 (3%)
                                                                     440.7 (7%)
Damage stability information (4)
(Section 6.5)
                                                                             NA
                                                                             NA
                                                                             NA
                                                                             NA
                                                                             NA
                                                                             NA
TOTAL (5)
                                                                     461.0 (3%)
                                                                     344.3 (7%)
                                                                      46.4 (3%)
                                                                      39.8 (7%)
                                                                     155.3 (3%)
                                                                     123.4 (7%)
                                                                      78.4 (3%)
                                                                      53.1 (7%)
                                                                     157.8 (3%)
                                                                     102.8 (7%)
                                                                     898.9 (3%)
                                                                     663.4 (7%)
1993 RIA ESTIMATE 
Deck coaming (1) and spill equipment (2)
                                                                            0.0
                                                                            0.0
                                                                     149.4 (7%)
                                                                      11.8 (7%)
                                                                     236.4 (7%)
                                                                     397.6 (7%)
Internal cargo transfer capability  -  hoses and couplings (3)
                                                                   6,700.0 (7%)
                                                                     840.0 (7%)
                                                                            0.0
                                                                            0.0
                                                                   7,540.0 (7%)
Damage stability information (4)
                                                                             NA
                                                                             NA
                                                                             NA
                                                                             NA
                                                                             NA
TOTAL (5)
                                                                   6,700.0 (7%)
                                                                     989.4 (7%)
                                                                      11.8 (7%)
                                                                     236.4 (7%)
                                                                   7,937.6 (7%)

Sources:  USCG updated analysis and 1993 RIA.
Notes:
(1) Assumes a pre-existing compliance rate of 100 percent for affected oil tankers and large offshore oil barges.  Assumes a pre-existing compliance rate of 50 percent for small offshore and inland barges.  Deck coaming not required for secondary vessels.  1993 RIA assumed that inland barges would be exempt from coaming requirement.
(2) Assumes a pre-existing compliance rate of 100 percent for affected oil tankers and large offshore oil barges.  Assumes a pre-existing compliance rate of 50 percent for small offshore barges, inland barges, and secondary vessels.
(3) Assumes a pre-existing compliance rate of zero percent for affected oil tankers and offshore oil barges.  Internal cargo transfer capability not required for inland oil barges and secondary vessels.
(4) Benefits not estimated for the damage stability information requirement.
(5) Totals may not sum due to rounding.

As shown in Table 6-6, for years 1-23 (1994-2016), we estimate a total present value benefit of 899 barrels assuming a discount rate of three percent and 663 barrels assuming a discount rate of seven percent.
The 1993 RIA estimated at total benefit of 7,938 barrels assuming a discount rate of seven percent, which is almost 12 times our estimate.  Our present value updated benefits estimates are not directly comparable to those from the 1993 RIA because the 1993 RIA assumed that inland barges would be exempt from the coaming requirement.  We summarize the benefit estimate differences below.
   * For both deck coaming and deck spill equipment, the 1993 RIA estimated a total benefit of 397.6 barrels (assuming a discount rate of seven percent), 149.4 barrels for small offshore barges, 11.8 barrels for inland barges, and 236.4 barrels for secondary vessels.  The 1993 RIA had erroneously assumed that inland barges would be exempt from the coaming requirement.  We estimate, as an update, a total benefit of 222.7 barrels for deck coaming and deck spill equipment, 66.8 barrels for small offshore barges, 53.1 barrels for inland barges, and 102.8 barrels for secondary vessels.
   * For internal cargo transfer capability, the 1993 RIA estimated a total benefit of 7,540 barrels (assuming a discount rate of seven percent), 6,700 barrels for tankers and 840 barrels for barges.  We estimate a benefit of 440.7 barrels, 344.3 barrels for tankers and 96.4 barrels for barges.  The 1993 RIA does not provide sufficient detail to analyze why its estimate for tankers is so high, but likely it is because the 1993 RIA had forecasted much higher spill volumes for tankers.
Table 6-7 summarizes our annualized updated benefits for the rule.  The 1993 RIA did not calculate the estimated benefits on an annualized basis.



Table 6-7.  Summary of Annualized Benefits in Bbls Mitigated, 1994-2016
                               IFR KEY PROVISION
                                  OIL TANKERS
                           LARGE OFFSHORE OIL BARGES
                             (LENGTH > 400 FT)
                           SMALL OFFSHORE OIL BARGES
                             (LENGTH < 400 FT)
                               INLAND OIL BARGES
                               SECONDARY VESSELS
                                   TOTAL (5)
ANNUALIZED IN BARRELS, YEARS 1-23
Deck coaming (1)
(Section 6.2)
                                                                            0.0
                                                                            0.0
                                                                       4.5 (3%)
                                                                       4.9 (7%)
                                                                       4.3 (3%)
                                                                       4.2 (7%)
                                                                            0.0
                                                                       8.9 (3%)
                                                                       9.1 (7%)
Deck spill equipment (2)
(Section 6.3)
                                                                             00
                                                                            0.0
                                                                       0.8 (3%)
                                                                       1.0 (7%)
                                                                       0.4 (3%)
                                                                       0.5 (7%)
                                                                       9.6 (3%)
                                                                       9.1 (7%)
                                                                      10.8 (3%)
                                                                      10.7 (7%)
Internal cargo transfer capability  -  hoses and couplings (3)
(Section 6.4)
                                                                      28.0 (3%)
                                                                      30.5 (7%)
                                                                       2.8 (3%)
                                                                       3.5 (7%)
                                                                       4.1 (3%)
                                                                       5.0 (7%)
                                                                            0.0
                                                                            0.0
                                                                      35.0 (3%)
                                                                      39.1 (7%)
Damage stability information (4)
(Section 6.5)
                                                                             NA
                                                                             NA
                                                                             NA
                                                                             NA
                                                                             NA
                                                                             NA
TOTAL (5)
                                                                      28.0 (3%)
                                                                      30.5 (7%)
                                                                       2.8 (3%)
                                                                       3.5 (7%)
                                                                       9.4 (3%)
                                                                      10.9 (7%)
                                                                       4.7 (3%)
                                                                       4.7 (7%)
                                                                       9.6 (3%)
                                                                       9.1 (7%)
                                                                      54.7 (3%)
                                                                      58.7 (7%)
Sources:  USCG updated analysis and 1993 RIA.
Notes:
(1) Assumes a pre-existing compliance rate of 100 percent for affected oil tankers and large offshore oil barges.  Assumes a pre-existing compliance rate of 50 percent for small offshore and inland barges.  Deck coaming not required for secondary vessels.  1993 RIA assumed that inland barges would be exempt from coaming requirement.
(2) Assumes a pre-existing compliance rate of 100 percent for affected oil tankers and large offshore oil barges.  Assumes a pre-existing compliance rate of 50 percent for small offshore barges, inland barges, and secondary vessels.
(3) Assumes a zero percent (Years 1-23) for affected oil tankers and offshore oil barges.  Internal cargo transfer capability not required for inland oil barges and secondary vessels.
(4) Benefits not estimated for the damage stability information requirement.
(5) Totals may not sum due to rounding.

For years 1-23, the annualized benefit of the rule is 54.7 barrels assuming a discount rate of three percent and 58.7 barrels assuming a discount rate of seven percent.  

7.  References
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Beckmann, Michelle Wiese, "Oil-Tanker Forecasts Cut by DNB as U.S. Shale Boom Curbs Imports," Bloomberg, October 1, 2012.
Det Norske Veritas AS, "How DNV prevented another Exxon Valdez," July 8, 2010, available at http://www.dnv.com/industry/maritime/publicationsanddownloads/publications/updates/tanker/2010/1_2010/howdnvpreventedanotherexxonvaldez.asp.
Drewry Shipping Consultants.  "Tanker Forecaster," available at http://www.drewry.co.uk/publications/view_publication.php?id=324). 
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Volpe National Transportation Systems Center, Research and Special Programs Administration, U.S. Department of Transportation, Discharge Removal Equipment Regulatory Evaluation, May 1993.  Referenced in this report as the "1993 RIA."
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