Maritime Industry

Ships and barges are a major link in the country's oil transportation network, both for transporting crude oil to U.S. refineries and for transporting refined oil products to market. The Oil Pollution Act of 1990 mandated extensive changes to make these shipments environmentally safer. One of these changes was to phase out all oil shipments in single-hull vessels in U.S. waters between 1995 and 2015. The oldest and largest vessels would generally be phased out first. The total number of U.S.-built vessels that were subject to the act's requirements is unknown. The Coast Guard's records do not indicate how many single-hull vessels had phase-out dates before October 1999 and had been removed from service. After 2015, however, only double-hull vessels may be used. Double-hull vessels are considered to be environmentally safer because their inner hull helps protect against oil spills if the outer hull is punctured. As of October 1999, 144 U.S.-built single-hull vessels larger than 5,000 gross tons were still certified to carry oil. The U.S. Coast Guard is responsible for ensuring that these vessels do not carry oil after their specific phase-out deadline has passed. This report answers the following questions: How has the Coast Guard implemented the act's phase-out requirements for U.S.-built single-hull vessels larger than 5,000 gross tons? To what extent have owners received extensions or waivers that extend the phase-out deadlines for their single-hull vessels? To what extent are owners replacing or plan to replace or convert their single-hull vessels, and what effect do their plans have on the ability to provide enough oil-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all, 17 vessels extended their original phase-out deadlines by reducing their tonnages; (4) 16 did so before Congress rescinded their ability to extend their scheduled phase-out deadline pursuant to a 1979 regulation; (5) one vessel received a Department of Transportation waiver from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.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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