Maritime Industry:

As U.S. Single-Hull Oil Vessels Are Eliminated, Few Double-Hull Vessels May Replace Them

RCED-00-80: Published: Apr 28, 2000. Publicly Released: May 10, 2000.

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Pursuant to a congressional request, GAO reviewed the process for phasing out single-hull oil vessels and replacing them with double-hull vessels, focusing on: (1) how the Coast Guard implemented the Oil Pollution Act's phase-out requirements for U.S.-built single-hull vessels larger than 5,000 gross tons; (2) the extent to which owners have received extensions or waivers that extend the phase-out deadlines for their single-hull vessels; and (3) the extent to which owners are replacing or planning to replace or convert their single-hull vessels, and what effect their plans would have on the ability to provide sufficient oil-carrying shipping capacity in the future.

GAO noted that: (1) the Coast Guard's approach for implementing the Oil Pollution Act's phase-out requirements relies on inspectors at individual ports to identify single-hull vessels subject to the act's requirements, use the act's phase-out schedule to establish a deadline for the vessel, and ensure that vessels are not being used for transporting oil after the deadline has passed; (2) if the Coast Guard were to find that a vessel is still being used to transport oil beyond its phase-out date, it has authority to require the vessel to cease operation, revoke its certificate, and potentially levy a civil penalty against the owner or operator; (3) in all, 17 vessels extended their original phase-out deadlines by reducing their tonnages; (4) 16 did so before Congress rescinded their ability to extend their scheduled phase-out deadline pursuant to a 1979 regulation; (5) one vessel received a Department of Transportation waiver from this congressional prohibition and was granted an extension pursuant to a subsequent law; (6) 5 of these 17 vessels are no longer in service as oil carriers; (7) extensions ranged from 1 year to 12 years, with none taking the phase-out deadline beyond the act's final deadline of 2015; (8) to ensure that vessels with extended phase-out dates are maintained and operated in accordance with established safety standards, the Coast Guard periodically inspects them as part of its ongoing inspection program; (9) the 22 domestic shipping companies GAO contacted that own single-hull oil vessels said that they have only limited plans to replace or convert these vessels; (10) most said they would simply take their vessels out of service when their phase-out deadline occurred and would take a wait-and-see approach to making replacements in the future; (11) the industry has more vessels than needed to meet shipping demand, and vessel owners said the rates they receive for shipping oil products are not high enough to justify investing in replacements for the future; (12) decisions by ship owners to make only limited replacements will probably have little effect on the ability to meet demand over the next few years, because the available supply of U.S.-built vessels is still expected to be greater than the demand for their services; and (13) shipping company officials, along with oil company officials, said that if enough U.S.-built vessels could not be found to move oil between U.S. ports, their most likely alternatives would be to import oil products from foreign ports using non-U.S. ships or to make greater use of domestic pipelines.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: In August 2001, the Maritime Administration completed its first annual assessment of the sufficiency of shipping capacity to meet domestic oil needs, as single-hull vessels are being replaced by double-hull vessels, and a report on the assessment results has been prepared for the relevant House and Senate committees of jurisdiction. This report will be available for general distribution by the end of September 2001.

    Recommendation: To determine whether sufficient shipping capacity exists to meet domestic oil needs, the Secretary of Transportation should direct the Administrator, Maritime Administration, to regularly assess the progress being made to replace single-hull vessels with double-hull vessels and to report the results of these assessments to the relevant House and Senate committees of jurisdiction.

    Agency Affected: Department of Transportation

 

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