[Federal Register Volume 79, Number 160 (Tuesday, August 19, 2014)]
[Proposed Rules]
[Pages 49205-49220]
[FR Doc No: 2014-19314]

Vol. 79

Tuesday,

No. 160

August 19, 2014

Part III

 Department of Homeland Security

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Coast Guard

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33 CFR Part 138

 Consumer Price Index Adjustments of Oil Pollution Act of 1990 Limits
of Liability--Vessels, Deepwater Ports and Onshore Facilities; Proposed
Rule

Federal Register / Vol. 79, No. 160 / Tuesday, August 19, 2014 /
Proposed Rules

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Parts 138, Subpart B

[Docket No. USCG-2013-1006]
RIN 1625-AC14

Consumer Price Index Adjustments of Oil Pollution Act of 1990
Limits of Liability--Vessels, Deepwater Ports and Onshore Facilities

AGENCY: Coast Guard, DHS.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Coast Guard proposes to increase the limits of liability
for vessels, deepwater ports, and onshore facilities, under the Oil
Pollution Act of 1990, as amended (OPA 90), to reflect significant
increases in the Consumer Price Index (CPI). We also propose a
simplified regulatory procedure for the Coast Guard to make future
required periodic CPI increases to the OPA 90 limits of liability for
vessels, deepwater ports, and onshore facilities. These regulatory
inflation increases to the limits of liability are required by OPA 90,
and are necessary to preserve the deterrent effect and ``polluter
pays'' principle embodied in OPA 90. Finally, we propose language to
clarify applicability of the OPA 90 vessel limits of liability to two
categories of tank vessels, edible oil cargo tank vessels and tank
vessels designated as oil spill response vessels. This clarification to
the existing regulatory text is needed for consistency with OPA 90.

DATES: Comments and related material must be submitted on or before
October 20, 2014.

ADDRESSES: You may submit comments identified by Docket No. USCG-2013-
1006 using any one of the following methods:
    (1) Online: http://www.regulations.gov.
    (2) Fax:<PHONE_NUMBER>.
    (3) Mail: Docket Management Facility (M-30), U.S. Department of
Transportation, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590-0001.
    (4) Hand delivery: Same as mail address above, between 9 a.m. and 5
p.m., Monday through Friday, except Federal holidays. The telephone
number is<PHONE_NUMBER>.
    To avoid duplication, please use only one of these four methods.
See the ``Public Participation and Request for Comments'' portion of
the SUPPLEMENTARY INFORMATION section below for instructions on
submitting comments.

FOR FURTHER INFORMATION CONTACT: For information about this document
call or email Benjamin White, Coast Guard; telephone<PHONE_NUMBER>,
email<EMAIL_ADDRESS>For information about viewing or
submitting material to the docket, call Cheryl Collins, Program
Manager, Docket Operations, telephone<PHONE_NUMBER>, toll free 1-800-
647-5527.

SUPPLEMENTARY INFORMATION:

Table of Contents for Preamble

I. Public Participation and Request for Comments
    A. Submitting Comments
    B. Viewing Comments and Documents
    C. Privacy Act
    D. Public Meeting
II. Abbreviations
III. Basis and Purpose
IV. Background and Regulatory History
    A. Creation of 33 CFR Part 138, Subpart B
    B. Prior Regulatory Inflation Adjustments to the OPA 90 Limits
of Liability in 33 CFR Part 138, Subpart B
    C. Statutory and Regulatory History Respecting the OPA 90 Edible
Oil Cargo Tank Vessel and Oil Spill Response Vessel Exceptions
V. Discussion of Proposed Rule
    A. Regulatory Inflation Adjustments and Statutory Updates to the
Limits of Liability for Vessels, Deepwater Ports and Onshore
Facilities
    B. Clarifying Amendments Respecting Edible Oil Cargo Tank
Vessels and Oil Spill Response Vessels
    C. Section-by-Section Discussion
VI. Regulatory Analyses
    A. Regulatory Planning and Review
    B. Small Entities
    C. Assistance for Small Entities
    D. Collection of Information
    E. Federalism
    F. Unfunded Mandates Reform Act
    G. Taking of Private Property
    H. Civil Justice Reform
    I. Protection of Children
    J. Indian Tribal Governments
    K. Energy Effects
    L. Technical Standards
    M. Environment

I. Public Participation and Request for Comments

    We encourage you to participate in this rulemaking by submitting
comments and related materials using the instructions below. All
comments received will be posted without change to http://www.regulations.gov and will include any personal information you have
provided.

A. Submitting Comments

    If you submit a comment, please include the docket number for this
rulemaking (USCG-2013-1006), indicate the specific section of this
document to which each comment applies, and provide a reason for each
suggestion or recommendation. You may submit your comments and material
online or by fax, mail, or hand delivery, but please use only one of
these means. We recommend that you include your name and a mailing
address, an email address, or a phone number in the body of your
document so that we can contact you if we have questions regarding your
submission.
    To submit your comment online, go to http://www.regulations.gov,
and follow the instructions of that Web site. If you submit your
comments by mail or hand delivery, submit them in an unbound format, no
larger than 8\1/2\ by 11 inches, suitable for copying and electronic
filing. If you submit comments by mail and would like to know that they
reached the Facility, please enclose a stamped, self-addressed postcard
or envelope.
    We will consider all comments and material received during the
comment period and may change this proposed rule based on your
comments.

B. Viewing Comments and Documents

    To view comments, as well as documents mentioned in this preamble
as being available in the docket, go to http://www.regulations.gov, and
follow the instructions on that Web site. If you do not have access to
the internet, you may view the docket online by visiting the Docket
Management Facility in Room W12-140 on the ground floor of the
Department of Transportation West Building, 1200 New Jersey Avenue SE.,
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal holidays. We have an agreement with the Department of
Transportation to use the Docket Management Facility.

C. Privacy Act

    Anyone can search the electronic form of comments received into any
of our dockets by the name of the individual submitting the comment (or
signing the comment, if submitted on behalf of an association,
business, labor union, etc.). You may review a Privacy Act notice
regarding our public dockets in the January 17, 2008, issue of the
Federal Register (73 FR 3316).

D. Public Meeting

    We do not now plan to hold a public meeting. But, you may submit a
request for one to the docket using one of the methods specified under
ADDRESSES. In your request, explain why you believe a public meeting
would be beneficial. If we decide to hold a public meeting, we

will announce its time and place in a later notice in the Federal
Register.

II. Abbreviations

Annual CPI-U The Annual ``Consumer Price Index--All Urban Consumers,
Not Seasonally Adjusted, U.S. City Average, All Items, 1982-84=100''
CPI-1 Rule The Coast Guard's first rulemaking amending 33 CFR part
138, subpart B, to adjust the OPA 90 limits of liability for vessels
and deepwater ports for inflation as required by 33 U.S.C.
2704(d)(4) and establishing the Coast Guard's procedure for future
required inflation adjustments to the limits of liability (Docket
No. USCG-2008-0007). See 73 FR 54997 (Sep. 24, 2008) [CPI-1 NPRM];
74 FR 31357 (July 1, 2009) [CPI-1 Interim Rule]; 75 FR 750 (January
6, 2010) [CPI-1 Final Rule].
BLS U.S. Department of Labor, Bureau of Labor Statistics
CFR Code of Federal Regulations
COFR Certificate of Financial Responsibility
COFR Rule The Coast Guard rule at 33 CFR part 138, subpart A,
implementing the OPA 90 requirement under 33 U.S.C. 2716 for vessel
responsible parties to establish and maintain evidence of financial
responsibility sufficient to meet their limits of liability as
adjusted over time for inflation
CPI Consumer Price Index
DHS U.S. Department of Homeland Security
DOI U.S. Department of the Interior
DPA Deepwater Port Act of 1974, as amended (33 U.S.C. 1501-1524)
DRPA The Delaware River Protection Act of 2006, Title VI of the
Coast Guard and Maritime Transportation Act of 2006, Public Law 109-
241, July 11, 2006, 120 Stat. 516
E.O. Executive Order
FR Federal Register
Fund The Oil Spill Liability Trust Fund created by 26 U.S.C. 9509
IRFA Initial Regulatory Flexibility Analysis
LNG Liquefied natural gas
LOOP Louisiana Offshore Oil Port
NPFC National Pollution Funds Center
NPRM Notice of proposed rulemaking
OMB U.S. Office of Management and Budget
OPA 90 The Oil Pollution Act of 1990, as amended (33 U.S.C. 2701, et
seq.)
SBA U.S. Small Business Administration
Sec.  Section symbol
U.S. United States
U.S.C. United States Code

III. Basis and Purpose

    In general, under Title I of the Oil Pollution Act of 1990, as
amended (OPA 90) (33 U.S.C. 2701, et seq.), the responsible parties for
any vessel (other than a public vessel) \1\ or facility (including any
deepwater port or onshore facility) from which oil is discharged, or
which poses a substantial threat of discharge of oil, into or upon the
navigable waters or the adjoining shorelines or the exclusive economic
zone of the United States, are strictly liable, jointly and severally,
for the removal costs and damages that result from such incident (``OPA
90 removal costs and damages''), as provided in 33 U.S.C. 2702. Under
33 U.S.C. 2704, however, the responsible parties' OPA 90 liability with
respect to any one incident is limited (with certain exceptions) to a
specified dollar amount.
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    \1\ See 33 U.S.C. 2701(29) and (37) (definitions of public
vessel and vessel) and 33 U.S.C. 2702(c)(2) (public vessel
exclusion).
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    In instances when a limit of liability applies, the responsible
parties may, but are not required to, incur direct removal costs or
reimburse third-party claims for OPA 90 removal costs and damages in
excess of the applicable limit of liability. The responsible parties
may, moreover, seek reimbursement from the Oil Spill Liability Trust
Fund (Fund) of the OPA 90 removal costs and damages they incur in
excess of the applicable limit of liability.\2\ This Fund is managed by
the Coast Guard's National Pollution Funds Center (NPFC).
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    \2\ See 33 U.S.C. 2708. A more comprehensive description of the
Fund can be found in the Coast Guard's May 12, 2005, ``Report on
Implementation of the Oil Pollution Act of 1990'', which is
available in the docket.
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    To prevent the real value of the OPA 90 limits of liability from
depreciating over time as a result of inflation and preserve the
``polluter pays'' principle embodied in OPA 90, 33 U.S.C. 2704(d)(4)
requires that the OPA 90 limits of liability be adjusted ``by
regulations issued not later than 3 years after July 11, 2006, and not
less than every 3 years thereafter,'' to reflect significant increases
in the CPI. The President delegated this regulatory authority to the
Secretary of the department in which the Coast Guard is operating in
respect to the limits of liability for vessels, deepwater ports subject
to the Deepwater Port Act of 1974 (DPA), as amended (33 U.S.C. 1501, et
seq.) (``deepwater ports''), and the limit of liability for onshore
facilities in 33 U.S.C. 2704(a)(4).\3\ The Secretary of Homeland
Security further delegated this authority to the Coast Guard in
Department of Homeland Security (DHS) Delegation 5110, Revision 01.
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    \3\ Executive Order (E.O.) 12777, Sec. 4, 3 CFR, 1991 Comp., p.
351, as amended by E.O. 13638 of March 15, 2013, Sec. 1 (78 FR
17589, Thursday, March 21, 2013). See further discussion of the
delegations below, under Background and Regulatory History.
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    In this notice of proposed rulemaking (NPRM) the Coast Guard
proposes to carry out the statutorily-required inflation adjustments to
the OPA 90 limits of liability. This NPRM also proposes to clarify
applicability of the OPA 90 vessel limits of liability to edible oil
cargo tank vessels and to tank vessels designated in their certificates
of inspection as oil spill response vessels. This clarification to the
existing regulatory text is needed for consistency with OPA 90 (33
U.S.C. 2704(c)(4)).

IV. Background and Regulatory History

A. Creation of 33 CFR Part 138, Subpart B

    In 2008, the Coast Guard promulgated 33 CFR part 138, subpart B,
setting forth the OPA 90 limits of liability for vessels and deepwater
ports. (See Docket No. USCG-2005-21780.) This was done in anticipation
of the Coast Guard implementing the periodic inflation adjustments to
the limits of liability required by 33 U.S.C. 2704(d)(4), and to ensure
that the applicable amounts of financial responsibility that must be
demonstrated by vessel and deepwater port responsible parties as
required by OPA 90 (33 U.S.C. 2716) and 33 CFR part 138, subpart A
(COFR Rule), would always equal the applicable OPA 90 limit of
liability as adjusted over time.

B. Prior Regulatory Inflation Adjustments to the OPA 90 Limits of
Liability in 33 CFR Part 138, Subpart B

    The Coast Guard published an NPRM on September 24, 2008 (73 FR
54997) (CPI-1 NPRM), and an interim rule with request for comments on
July 1, 2009 (74 FR 31357) (CPI-1 Interim Rule), timely adjusting the
vessel and deepwater port limits of liability at 33 CFR part 138,
subpart B, to reflect significant increases in the CPI as required by
OPA 90 (33 U.S.C. 2704(d)(4)). The CPI-1 Interim Rule also established
the Coast Guard's procedures and methodology for adjusting the OPA 90
limits of liability for inflation over time. There were no adverse
public comments on the CPI-1 Interim Rule. On January 6, 2010, the
Coast Guard therefore published a final rule (CPI-1 Final Rule),
adopting the CPI-1 Interim Rule amendments to 33 CFR part 138, subpart
B, without change (75 FR 750).\4\
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    \4\ All Federal Register notices, comments and other materials
related to the CPI-1 Rule are available in the public docket for
that rulemaking (Docket No. USCG-2008-0007).
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    The CPI-1 Rule was the first set of inflation adjustments to the
OPA 90 limits of liability for vessels and deepwater ports. The CPI-1
Rule, however, deferred adjusting the statutory limit of liability in
33 U.S.C. 2704(a)(4) for onshore facilities.

    As explained in the Federal Register notices for the CPI-1 Rule,
the decision to defer adjusting the onshore facility limit of liability
was made because E.O. 12777, Sec. 4, and its implementing re-
delegations vested the President's responsibility to adjust the OPA 90
limits of liability (including the limit of liability for onshore
facilities) in multiple agencies based on the agencies' traditional
regulatory jurisdiction. Specifically, the delegations vested the
President's limit of liability adjustment authorities in the Commandant
of the Coast Guard for vessels, deepwater ports and marine
transportation-related onshore facilities, in the Secretary of the
Department of Transportation for non-marine transportation-related
onshore facilities, in the Administrator of the Environmental
Protection Agency for non-transportation-related onshore facilities,
and in the Secretary of the Department of the Interior (DOI) for
offshore facilities.\5\
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    \5\ E.O. 12777, Sec. 4, also delegated various other liability
limit adjustment and reporting authorities in 33 U.S.C. 2704.
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    This division of responsibilities complicated the CPI adjustment
rulemaking requirement, particularly in respect to the three sub-
categories of onshore facilities. Interagency coordination was,
therefore, needed to avoid inconsistent regulatory treatment.
    The decision to defer adjusting the onshore facility statutory
limit of liability for inflation also permitted the Coast Guard to
complete the required first set of inflation increases to the vessel
and deepwater port limits of liability by the statutory deadline, and
to establish the Coast Guard's CPI increase adjustment procedure at
Sec.  138.240. There were no adverse public comments on the decision to
defer adjusting the onshore facility limit of liability for inflation.
    On March 15, 2013, the President signed E.O. 13638, restating and
simplifying the delegations in E.O. 12777, Sec. 4, and vesting the
authority to make CPI adjustments to the onshore facility statutory
limit of liability (33 U.S.C. 2704(a)(4)) in ``the Secretary of the
Department in which the Coast Guard is operating''. (See E.O. 13638 of
March 15, 2013, Sec. 1, amending E.O. 12777, Sec. 4, at 78 FR 17589,
Thursday, March 21, 2013.) The restated delegations also require
interagency coordination, but otherwise preserve the earlier
delegations, including the delegated authorities to promulgate CPI
adjustments to the limits of liability for vessels and deepwater
ports.\6\
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    \6\ Similarly, the authority to make CPI adjustments to the
limit of liability for offshore facilities in 33 U.S.C. 2704(a)(3)
remains with the Secretary of the Interior (see, e.g., 79 FR 10056,
Monday, February 24, 2014; 79 FR 15275, Wednesday, March 19, 2014).
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    On July 10, 2013, the Secretary of Homeland Security re-delegated
these authorities to the Commandant of the Coast Guard. (See DHS
Delegation Number 5110, Revision 01.) This NPRM, therefore, proposes to
adjust the vessel, deepwater port and onshore facility limits of
liability to reflect significant increases in the CPI.

C. Statutory and Regulatory History Respecting the OPA 90 Edible Oil
Cargo Tank Vessel and Oil Spill Response Vessel Exceptions

    Section 2(d) of the 1995 Edible Oil Regulatory Reform Act, Public
Law 104-55, Nov. 20, 1995, 109 Stat. 546, amended OPA 90 (33 U.S.C.
2704(a)(1) and 33 U.S.C. 2716(a)), excepting tank vessels on which the
only oil carried as cargo is an animal fat or vegetable oil (``edible
oil tank vessels'') from the OPA 90 tank vessel limits of liability in
33 U.S.C. 2704(a)(1). The effect of the exception was to classify
edible oil tank vessels as a matter of law to the ``any other vessel''
limit of liability category in OPA 90 (33 U.S.C. 2704(a)(2)). In
addition, edible oil tank vessels were, as of that date, subject to the
lower OPA 90 (33 U.S.C. 2716) evidence of financial responsibility
requirements applicable to the ``any other vessel'' category.
    The Coast Guard Authorization Act of 1998, Public Law 105-383,
title IV, section 406, Nov. 13, 1998, 112 Stat. 3429, further amended
OPA 90 (33 U.S.C. 2704), moving the edible oil tank vessel exception
from 33 U.S.C. 2704(a)(1) to new 33 U.S.C. 2704(c)(4)(A), and adding an
additional exception at 33 U.S.C. 2704(c)(4)(B) for tank vessels
designated in their certificates of inspection as oil spill response
vessels that are used solely for removal (``oil spill response
vessels'').
    Oil spill response vessels are, therefore, also classified as a
matter of law to the ``any other vessel'' category in 33 U.S.C.
2704(a)(2), and subject to the resulting lower OPA 90 limit of
liability and evidence of financial responsibility requirements.
    The special treatment accorded by OPA 90 to edible oil tank vessels
and oil spill response vessels is not reflected in the current
regulatory text of 33 CFR part 138. The Coast Guard, therefore,
believes that a clarification to the regulatory text would reduce
regulatory uncertainty.

V. Discussion of Proposed Rule

A. Regulatory Inflation Adjustments and Statutory Updates to the Limits
of Liability for Vessels, Deepwater Ports and Onshore Facilities

    In accordance with 33 U.S.C. 2704(d)(4) and 33 CFR part 138,
subpart B, we propose to increase the OPA 90 limits of liability for
vessels and deepwater ports, set forth in Sec.  138.230(a) and (b),
respectively, to reflect significant increases in the CPI since we last
adjusted them for inflation. This would be the second set of inflation
adjustments to the vessel and deepwater port limits of liability.
    We also propose increasing the OPA 90 limit of liability for
onshore facilities in 33 U.S.C. 2704(a)(4) for inflation. This would be
the first inflation increase to the onshore facility limit of
liability. The inflation-adjusted onshore facility limit of liability
would be set forth in Sec.  138.230(c), which was expressly reserved by
the CPI-1 Rule for that purpose.
1. What formula will be used to adjust the vessel, deepwater port and
onshore facility limits of liability for inflation?
    The proposed limit of liability adjustments have been calculated
using the inflation adjustment methodology established by the CPI-1
Rule, set forth in Sec.  138.240.\7\ Specifically, the Director, NPFC,
calculates the cumulative percent change in the Annual CPI-U from the
year the limit of liability was established or last adjusted by statute
or regulation, whichever is later (i.e., the previous period), to the
most recently published Annual CPI-U (i.e., the current period), using
the formula in Sec.  138.240(b). The Director, NPFC, then calculates
inflation adjustments to the limits of liability based on that
cumulative percent change in the Annual CPI-U, as provided in Sec.
138.240(d). Both the cumulative percent change formula and the limit of
liability adjustment formula are based on the U.S. Department of Labor,
Bureau of Labor Statistics (BLS) escalation formula, which can be
viewed at http://www.bls.gov/cpi/cpi1998d.htm.\8\
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    \7\ A detailed discussion of the Coast Guard's inflation
adjustment methodology, and how it was developed, can be found in
the preambles for the CPI-1 NPRM, 73 FR 54997, and the CPI-1 Interim
Rule, 74 FR 31357.
    \8\ See also 33 CFR 138.240(a) (proposed 33 CFR 138.240(b)).

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2. What current period values would be used for this set of inflation
adjustments to the vessel, deepwater port and onshore facility limits
of liability?
    To keep the limits of liability current, the inflation adjustment
methodology established by the CPI-1 Rule, at Sec.  138.240, requires
that we use the Annual CPI-U that has been most recently published by
the BLS as the current period value. For purposes of this NPRM, the
Coast Guard is therefore estimating the inflation adjusted limits of
liability using the 2013 Annual CPI-U, published by BLS on January 16,
2014, as the current period value.\9\ This is the Annual CPI-U that has
been most recently published by the BLS.
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    \9\ See Table 24 on page 68 of the BLS document ``CPI Detailed
Report--Data for March 2014'', which is available at the following
link: http://www.bls.gov/cpi/cpid1403.pdf.
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    In the final rule stage of this rulemaking we will calculate the
adjustments using the most recently published Annual CPI-U available at
that time. Therefore, if the 2014 Annual CPI-U or another more recent
Annual CPI-U is available for calculating the current period value when
we are at the final rule stage of this rulemaking, the limit of
liability values would change marginally from those proposed today.
3. What previous period values would be used for this set of inflation
adjustments to the vessel, deepwater port and onshore facility limits
of liability?
    Applying the inflation adjustment methodology at Sec.  138.240, we
propose adjusting the vessel and deepwater port limits of liability to
reflect significant increases in the Annual CPI-U since those limits
were last adjusted for inflation by the CPI-1 Rule. We, therefore,
propose using the 2008 Annual CPI-U, or 215.3, as the previous period
value for this cycle of adjustments to the vessel and deepwater port
limits of liability. This was the current period value we used for the
CPI-1 Rule inflation adjustments to the vessel and deepwater port
limits of liability.\10\
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    \10\ The 2008 Annual CPI-U was used as the current period value
for the CPI-1 inflation adjustments because of the time lag for BLS
publication of the Annual CPI-U and the time it takes to promulgate
regulations.
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    For onshore facilities, we propose adjusting the OPA 90 statutory
limit of liability in 33 U.S.C. 2704(a)(4) to reflect significant
increases in the Annual CPI-U since 2006. This is the baseline year, or
previous period, established by the CPI-1 Rule for calculating the
first inflation adjustments to the statutory limits of liability in 33
U.S.C. 2704(a), including the statutory limit of liability for onshore
facilities.\11\
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    \11\ See 74 FR at 31361.
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    As explained during the CPI-1 Rule development,\12\ we proposed
using 2006 as the previous period date for the first set of adjustments
to the OPA 90 statutory limits of liability for all source categories.
There were no adverse comments on that approach. We, therefore,
established the 2006 Annual CPI-U value of 201.6 as the previous period
value for adjusting the statutory limits of liability for all source
categories delegated to the Coast Guard (i.e., vessels, deepwater ports
and onshore facilities). We are, therefore, using that baseline for the
adjustments we are proposing today to the statutory limit of liability
for onshore facilities.
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    \12\ See 73 FR at 55000-55001; 74 FR at 31361.
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    We are, however, considering whether to use the 1990 Annual CPI-U
previous period value to adjust the onshore facility limit of
liability, and whether to also recalculate the CPI-1 Rule adjustment to
the deepwater port general limit of liability using a 1990 previous
period value.\13\ This issue is discussed further in subsection 5,
below.
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    \13\ We are not revisiting the CPI-1 Rule adjustments to the
vessel and LOOP limits of liability. This is because the 2006 and
1995 ``Previous Periods'' used, respectively, for those adjustments
were based on the date the vessel statutory limits of liability were
amended by DRPA and the date LOOP's facility-specific limit of
liability was established by regulation under OPA 90 (33 U.S.C.
2704(d)(2)(C)).
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4. What would the adjusted limits of liability be?
    Inserting the estimated percent changes in the Annual CPI-U into
the adjustment formula would result in the following proposed new
limits of liability for vessels and deepwater ports (using the 2008
Annual CPI-U previous period), and onshore facilities (using the 2006
Annual CPI-U previous period), and rounding all limits of liability to
the closest $100:

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                                   Previous limit of  Proposed new limit
         Source category               liability         of liability
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Sec.   138.230 (a) Vessels
    (1) For a single-hull tank    the greater of      the greater of
     vessel greater than 3,000     $3,200 per gross    $3,500 per gross
     gross tons, other than a      ton or              ton or
     vessel excluded under 33      $23,496,000.        $25,422,700.
     U.S.C. 2704(c)(4) (i.e., an
     edible oil tank vessel or
     oil spill response vessel).
    (2) For a tank vessel         the greater of      the greater of
     greater than 3,000 gross      $2,000 per gross    $2,200 per gross
     tons, other than a vessel     ton or              ton or
     referred to in (a)(1) or a    $17,088,000.        $18,489,200.
     vessel excluded under 33
     U.S.C. 2704(c)(4) (i.e., an
     edible oil tank vessel or
     oil spill response vessel).
    (3) For a single-hull tank    the greater of      the greater of
     vessel less than or equal     $3,200 per gross    $3,500 per gross
     to 3,000 gross tons, other    ton or $6,408,000.  ton or
     than a vessel excluded                            $6,933,500.
     under 33 U.S.C. 2704(c)(4)
     (i.e., an edible oil tank
     vessel or oil spill
     response vessel).
    (4) For a tank vessel less    the greater of      the greater of
     than or equal to 3,000        $2,000 per gross    $2,200 per gross
     gross tons, other than a      ton or $4,272,000.  ton or
     vessel referred to in (3)                         $4,622,300.
     or a vessel excluded under
     33 U.S.C. 2704(c)(4) (i.e.,
     an edible oil tank vessel
     or oil spill response
     vessel).
    (5) For any other vessel,     the greater of      the greater of
     including any edible oil      $1,000 per gross    $1,100 per gross
     tank vessel and any oil       ton or $854,400.    ton or $924,500.
     spill response vessel.
Sec.   138.230 (b) Deepwater
 ports that are subject to the
 DPA
    (1) For a deepwater port      $373,800,000......  $404,451,600.
     that is subject to the DPA,
     other than the Louisiana
     Offshore Oil Port (LOOP).
    (2) For LOOP................  $87,606,000.......  $94,789,700.
Sec.   138.230 (c) Onshore        $350,000,000......  $404,600,000.
 facilities.
------------------------------------------------------------------------

    These values would change marginally if the 2014 Annual CPI-U or
another more recent Annual CPI-U is used as the current period value
when we are at the final rule stage of this rulemaking.
5. What would the estimated adjusted limit of liability for onshore
facilities and deepwater ports generally be using a 1990 previous
period?
    As mentioned in subsection 3, above, we are considering whether to
use a 1990 previous period to adjust the onshore facility limit of
liability, and whether to recalculate the CPI-1 Rule adjustment to the
deepwater port general limit of liability using a 1990 previous period
value. There are several reasons why we are considering doing this:
     First, in respect to the onshore facility limit of
liability, Coast Guard data indicate that one onshore facility incident
occurred following publication of the CPI-1 Rule--the 2010 Enbridge
Pipeline spill to the Kalamazoo River--that may result in OPA 90
removal costs and damages in excess of the onshore facility limit of
liability.\14\ This recent experience warrants revisiting whether to
use the 2006 previous period established by the CPI-1 Rule for the
first inflation adjustment to the onshore facility statutory limit of
liability.
---------------------------------------------------------------------------

    \14\ On July 26, 2010, Enbridge Energy Partners LLP (Enbridge)
reported a 30-inch pipeline rupture, near Marshall, Michigan. The
resulting oil discharge, with volume estimates ranging from 843,000
gallons to over a million gallons, entered Talmadge Creek and flowed
into the Kalamazoo River, a Lake Michigan tributary. Heavy rains
caused the river to overtop existing dams and carried oil 35 miles
downstream on the Kalamazoo River. On July 28, 2010, the spill was
contained approximately 80 river miles from Lake Michigan. This
incident involved tar sand oil, which is particularly difficult and
costly to clean up, and is the most expensive onshore facility spill
in U.S. history.
---------------------------------------------------------------------------

     In addition, DOI is proposing a rule that would adjust the
offshore facility limit of liability for inflation since OPA 90 was
enacted, because there have not been intervening adjustments to that
limit of liability (as compared to the vessel limits of liability,
which have been adjusted both by statute and regulation), and because
the damages in the 2010 Deepwater Horizon spill of national
significance have far exceeded the offshore facility limit of
liability.\15\
---------------------------------------------------------------------------

    \15\ 79 FR at 10059. The DOI otherwise plans to adopt a
methodology for future adjustments similar to Sec.  138.240.
---------------------------------------------------------------------------

     Moreover, DRPA did not change or expressly address the
onshore facility and deepwater port statutory limit of liability at 33
U.S.C. 2704(a)(4).\16\
---------------------------------------------------------------------------

    \16\ OPA 90 (33 U.S.C. 2704(a)(4)) sets forth a common statutory
limit of liability for onshore facilities and deepwater ports of
$350,000,000.
---------------------------------------------------------------------------

    Therefore, although onshore facility spills have not historically
(with the one exception previously mentioned) exceeded the statutory
limit of liability in 33 U.S.C. 2704(a)(4) and there currently are no
deepwater ports in operation that are subject to the generally-
applicable limit of liability for deepwater ports, we believe that the
Nation's recent experience with costly oil spills--although
exceptional--warrants revisiting whether to use the 1990 Annual CPI-U
as the previous period (instead of the 2006 previous period established
by the CPI-1 Rule) for the first inflation adjustment to the statutory
limit of liability in 33 U.S.C. 2704(a)(4), which applies to both
onshore facilities and deepwater ports.
    Considering whether to use a different previous period for
adjusting the onshore facility limit of liability is appropriate
because the CPI-1 Rule did not adjust the onshore facility limit of
liability for inflation. In addition, although deepwater ports may pose
a very low risk of discharge as compared to other modes of oil
transportation,\17\ reconsidering our use of the 2006 previous period
for the CPI-1 Rule's deepwater port limit of liability adjustment is
appropriate given our better understanding of the potential costs
arising from oil spill incidents in offshore areas. We, therefore,
invite the public to comment on this issue.
---------------------------------------------------------------------------

    \17\ See 1993 Deepwater Ports Study and Report to Congress under
OPA 90 Section 1004(d)(2), analyzing the relative operational risks
of the principal modes of crude oil transportation to the United
States.
---------------------------------------------------------------------------

    If we were to adopt a 1990 previous period, we would adjust the
onshore facility and deepwater port statutory limit of liability in 33
U.S.C. 2704(a)(4) using the 1990 Annual CPI-U value of 130.7 as the
previous period. This would be instead of the 2006 Annual CPI-U
previous period value of 201.6 and the 2008 Annual CPI-U previous
period value of 215.3, used to calculate, respectively, the adjusted
limit of liability values for onshore facilities and deepwater ports
reflected in the regulatory text of this proposal.
    If, after considering any public comment on this NPRM, we decide to
adjust the onshore facility and deepwater port generally-applicable
limit of liability using the 1990 Annual CPI-U of 130.7 as the previous
period value (i.e., instead of the 2006 Annual CPI-U value of 201.6 for
onshore facilities, and the 2008 Annual CPI-U value of 215.3 for
deepwater ports), the estimated percent change in the Annual CPI-U
would be 78.2 percent. Inserting this estimated percent change in the
Annual CPI-U into the adjustment formula would result in the following
new limits of liability for onshore facilities and deepwater ports
generally, after rounding the limits of liability to the closest $100:

------------------------------------------------------------------------
                                                         Alternative new
                                          Statutory         limit of
           Source category             previous limit    liability (1990
                                        of liability    previous period)
------------------------------------------------------------------------
Sec.   138.230(b)(1) For a deepwater      $350,000,000      $623,700,000
 port that is subject to the DPA,
 other than LOOP....................
Sec.   138.230(c) For onshore              350,000,000       623,700,000
 facilities.........................
------------------------------------------------------------------------

    These values would also change marginally if the 2014 Annual CPI-U
or another more recent Annual CPI-U is used as the current period value
when we are at the final rule stage of this rulemaking.
6. How does the Coast Guard propose to notify the public when the
limits of liability for vessels, deepwater ports and onshore facilities
are adjusted in the future for inflation or if the rule is amended to
reflect amendments to the statute?
    We are proposing a simplified regulatory procedure at proposed new
paragraph Sec.  138.240(a) for making future inflation updates to the
OPA 90 limits of liability for vessels, deepwater ports and onshore
facilities, in Sec.  138.230(a), (b), and (c) respectively. This
simplified regulatory approach is based on a similar procedure used by
the Federal Energy Regulatory Commission to make routine cost
adjustments to its fees (see 18 CFR 381.104(a) and (d)), and would help
ensure regular, timely inflation

adjustments to the limits of liability as required by statute. The
approach is also an appropriate and helpful efficiency measure given
the mandatory and routine nature of the CPI adjustments.
    Under this proposed procedure, the Director, NPFC, would continue
to determine future inflation adjustments to the limits of liability
using the significance threshold and adjustment methodology in Sec.
138.240, and the most current CPI values published by the BLS. The
Director, NPFC, would, however, publish the inflation-adjusted limits
of liability in the Federal Register as final rule amendments to Sec.
138.230.\18\ The new inflation-adjusted limits of liability would
appear in the next publication of the CFR.
---------------------------------------------------------------------------

    \18\ As provided in Sec.  138.240(b) (Sec.  138.240(c) of the
proposed rule), if the significance threshold were not met, the
Director, NPFC, would publish a notice of no inflation adjustment.
---------------------------------------------------------------------------

    Because the adjustment methodology was established by the CPI-1
Rule, and the simplified procedure will be established by this
rulemaking, publication of an NPRM would not be necessary for these
future mandated inflation adjustments. The public would, however, be
able to contact the person listed in the  FOR FURTHER INFORMATION
CONTACT section of the Federal Register notice amending the limits of
liability. Therefore, in the event a member of the public identifies a
mathematical or other technical error in the Coast Guard's application
of the adjustment methodology and contacted the Coast Guard, the Coast
Guard would publish a correction notice in the Federal Register.
    Under this simplified procedure, unless otherwise specified in the
Federal Register, the new CPI-adjusted limits of liability would become
effective on the 90th day after their publication in the Federal
Register, including (as provided in the COFR Rule at Sec.  138.85) for
purposes of the requirement for responsible parties to establish and
maintain the applicable amounts of OPA 90 financial responsibility
required for vessels and deepwater ports under 33 U.S.C. 2716 and Sec.
138.80(f)(1). This will ensure efficient and timely implementation of
this recurring, though routine, regulatory mandate.
    The Director would use this simplified regulatory procedure to
update Sec.  138.230 to reflect statutory changes to the OPA 90 limits
of liability. This will ensure that the limits of liability set forth
in subpart B remain consistent with the statutory limits of liability
if they are amended. Thereafter, as discussed in the CPI-1 Interim
Rule, the new statutory limit of liability would be adjusted by
regulation for inflation on the same inflation-adjustment cycle used
for the other source categories. We note that, as a result, a limit of
liability could change more frequently than once every three years, if
it was changed by statute and then adjusted by regulation for inflation
on the regular inflation-adjustment cycle.
    Because any new statutory limits of liability normally would
supersede the prior regulatory limits of liability, any such new limits
of liability would take effect for purposes of determining a
responsible party's liability in the event of an incident on the date
of enactment unless another effective date is specified in the amending
law. As provided in Sec.  138.85 of the COFR Rule, however, the
deadline for vessel and deepwater port responsible parties to establish
evidence of financial responsibility in the new amounts would be the
90th day after the effective date of the Coast Guard's final rule
amending the CFR to reflect the new statutory limits of liability,
unless another date is required by statute or specified in the Federal
Register notice amending the regulation. (See, 33 U.S.C. 2716 and Sec.
138.80(f)(1).)
    The simplified regulatory procedure described in proposed Sec.
138.240(a) would not be used for other adjustments to the limits of
liability, such as those authorized for classes and categories of
onshore facilities under 33 U.S.C. 2704(d)(1) and for deepwater ports
under 33 U.S.C. 2704(d)(2).

B. Clarifying Amendments Respecting Edible Oil Cargo Tank Vessels and
Oil Spill Response Vessels

    The Coast Guard is also proposing amendments to the vessel limits
of liability in Sec.  138.230(a) for consistency with 33 U.S.C.
2704(c)(4). (See Regulatory History discussion, above at IV.C.)
Specifically, the proposed amendments to Sec.  138.230(a) would clarify
that edible oil cargo tank vessels and oil spill response vessels
(defined as proposed in Sec.  138.220(b)) are subject to the lower
limits of liability set forth in current Sec.  138.230(a)(5) (proposed
new Sec.  138.230(a)(2)) applicable to the ``any other vessel''
category under 33 U.S.C. 2704(a)(2). The Coast Guard believes that
adding clarifying language in the regulatory text will be helpful to
the public.

C. Section-by-Section Discussion 19
---------------------------------------------------------------------------

    \19\ The Coast Guard has included the complete regulatory text
of 33 CFR part 138, subpart B in this NPRM to facilitate the
public's understanding of the changes proposed to the current text
of subpart B. The changes proposed to the existing regulatory text
are, however, limited to those specifically mentioned in this
section-by-section discussion.
---------------------------------------------------------------------------

    Heading. The heading for 33 CFR part 138 would be amended by adding
the words ``ONSHORE FACILITY''.
    Authorities. We propose to update the authorities citations for
part 138 to reflect the amendments to the delegations in E.O. 12777,
Sec. 4, by E.O. 13638 of March 15, 2013, the resulting agency-level re-
delegations, and for editorial purposes.
    Sec.  138.200 Scope. We propose to amend Sec.  138.200 to add that
subpart B sets forth the OPA 90 limit of liability for onshore
facilities, in addition to the OPA 90 limits of liability for vessels
and deepwater ports. We also propose to amend the scope section to
specify that subpart B includes the procedure for making future
inflation adjustments, by regulation, to the limits of liability for
vessels, deepwater ports and onshore facilities, and for updating the
limits when they are amended by statute. Finally, we propose to amend
the scope section to specify that subpart B also cross-references DOI's
proposed regulation at 30 CFR 553.702, setting forth the OPA 90 limit
of liability applicable to offshore facilities, including offshore
pipelines, as adjusted by DOI for inflation under OPA 90 (33 U.S.C.
2704(d)(4)). This cross-reference is being added for the convenience of
the public.
    Sec.  138.210 Applicability. We propose amending Sec.  138.210 to
add that subpart B applies to you if you are a responsible party for an
onshore facility, except (as is the case under the current rule for
vessel and deepwater port responsible parties) to the extent your
liability is unlimited under OPA 90 (33 U.S.C. 2704(c)).
    Sec.  138.220 Definitions. We are proposing to amend Sec.
138.220(a) of the definitions to cross-reference the OPA 90 definitions
of facility, offshore facility and onshore facility. In addition, we
propose to amend Sec.  138.220(b) by revising the definition of
Director, NPFC, in Sec.  138.220(b), to conform to how that term is
defined in other rules implemented by NPFC, and by adding definitions
for current period and previous period as DOI has done in its proposal
to amend the offshore facility limit of liability (79 FR at 10063).
These definitions clarify the CPI escalation formula. Finally, we
propose to add definitions for edible oil tank vessel and oil spill
response vessel to mean,

respectively, a tank vessel referred to in OPA 90 (33 U.S.C.
2704(c)(4)(A) or (B)). These definitions are needed to clarify
applicability of the limits of liability proposed in Sec.  138.230.
    Sec.  138.230 Limits of liability. We propose to increase the
limits of liability for vessels and deepwater ports, including LOOP,
from those set forth in current Sec.  138.230, to reflect significant
increases in the CPI. We also propose to amend Sec.  138.230(a) to
expressly provide and clarify that the ``other vessel'' limits of
liability in Sec.  138.230(a)(2) apply to edible oil tank vessels and
oil spill response vessels. Additionally, we propose adding an
inflation-adjusted limit of liability for onshore facilities in Sec.
138.230(c).
    As discussed in section V.A.2, the limits of liability proposed in
Sec.  138.230 of this NPRM are estimates, calculated using the 2013
Annual CPI-U as the current value. The updated limit of liability
values that will appear in the final rule of this rulemaking will be
calculated using the most recent Annual CPI-U available at the time of
publication of the final rule, and may therefore be marginally
different than the estimates in this NPRM.
    In addition, as discussed above in section V.A.3 and 5, the new
limit of liability for deepwater ports and onshore facilities generally
may differ from the amounts shown in Sec.  138.230(b)(1) and (c) of the
proposed regulatory text if, after considering any public comments on
this NPRM, we decide to calculate the CPI adjustments to the statutory
limit of liability for these two source categories using the 1990
Annual CPI-U value of 130.7 as the previous period. This would be
instead of using the 2006 Annual CPI-U value of 201.6 to adjust the
onshore facility limit of liability and the 2008 Annual CPI-U value of
215.3 to adjust the deepwater port generally-applicable limit of
liability, as we have done for purposes of this proposal.
    Finally, we have added new subsection Sec.  138.230(d). Paragraph
(d) will cross-reference the offshore facility limit of liability,
which DOI has proposed to adjust for inflation and set forth at 30 CFR
553.702 (see 79 FR at 10063). Our proposal reflects DOI's proposal. If
the section numbering of that regulation changes in DOI's final rule,
we will change our regulatory text accordingly.
    Sec.  138.240 Procedure for updating limits of liability to reflect
significant increases in the Consumer Price Index (Annual CPI-U) and
statutory changes. We propose adding new Sec.  138.240(a), and re-
designating the subsections that follow accordingly. Proposed new
subsection (a) would establish the simplified regulatory procedure the
Coast Guard proposes to use to amend the limits of liability contained
in proposed Sec.  138.230 to reflect significant increases in the CPI
and when the limits of liability are amended by statute. As discussed
above in section V.A.6, the wording in proposed Sec.  138.240(a) is
based on a similar procedure used by the Federal Energy Regulatory
Commission to adjust its fees for inflation (see 18 CFR 381.104(a) and
(d)), and would help ensure regular, timely inflation adjustments to
the OPA 90 limits of liability as intended by Congress. The approach is
also an appropriate and helpful efficiency measure given the mandatory
and routine nature of the CPI adjustments.
    We also propose editorial revisions, such as dividing Sec.
138.240(b) into subparagraphs, adding a cross reference to Sec.
138.240(a) in Sec.  138.240(c), and changing the title of Sec.  138.240
to read ``Procedure for updating limits of liability to reflect
significant increases in the Consumer Price Index (Annual CPI-U) and
statutory changes.'' No other changes are being proposed to Sec.
138.240.

VI. Regulatory Analyses

    We developed this proposed rule after considering numerous statutes
and executive orders (E.O.s) related to rulemaking. Below we summarize
our analyses based on these statutes or E.O.s.

A. Regulatory Planning and Review

    Executive Orders 12866 (``Regulatory Planning and Review'') and
13563 (``Improving Regulation and Regulatory Review'') direct agencies
to assess the costs and benefits of available regulatory alternatives
and, if regulation is necessary, to select regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety effects, distributive impacts, and equity).
Executive Order 13563 emphasizes the importance of quantifying both
costs and benefits, of reducing costs, of harmonizing rules, and of
promoting flexibility.
    This proposed rule is not a significant regulatory action under
section 3(f) of E.O. 12866 as supplemented by E.O. 13563, and does not
require an assessment of potential costs and benefits under section
6(a)(3) of E.O. 12866. The Office of Management and Budget (OMB) has
not reviewed it under E.O. 12866. Nonetheless, we developed an analysis
of the costs and benefits of the proposed rule to ascertain its
probable impacts on industry. We consider all estimates and analysis in
this Regulatory Analysis to be subject to change in consideration of
public comments. A draft Regulatory Assessment is available in the
docket and a summary follows.
1. Regulatory Costs
    There are two regulatory costs that are expected from this proposed
rule. Regulatory Cost 1: Increased Cost of Liability. Regulatory Cost
2: Increased cost of establishing vessel evidence of financial
responsibility.\20\
---------------------------------------------------------------------------

    \20\ It should be noted that from an economic perspective, CPI
adjustments are actually neutral in that they maintain the cost and
benefit impacts of the limits of liability constant in real dollar
terms. Not adjusting the limits of liability would, by comparison,
allow inflation to erode the value of the limits of liability in
real terms.
---------------------------------------------------------------------------

a. Discussion of Regulatory Cost
    This proposed rule could increase the dollar amount of OPA 90
removal costs and damages a responsible party of a vessel (other than a
public vessel),\21\ deepwater port, or onshore facility must pay in the
event of a discharge, or substantial threat of discharge, of oil into
or upon the navigable waters or adjoining shorelines or the exclusive
economic zone of the United States (``OPA 90 incident''). This
regulatory cost, however, would only be incurred by a responsible party
if an OPA 90 incident resulted in OPA 90 removal costs and damages that
exceeded the applicable vessel, deepwater port, or onshore facility
previous limit of liability. In any such case, assuming as we do in
this analysis that the responsible party is entitled to a limit of
liability (i.e., none of the exceptions in 33 U.S.C. 2704(c) apply),
the difference between the previous limit of liability amount and the
proposed new limit of liability amount is the maximum increased cost to
the responsible party. Incident costs above this value would not be
borne by the responsible parties, but rather by the Fund.
---------------------------------------------------------------------------

    \21\ See footnote 1. According to Coast Guard's MISLE database,
there are over 200,000 vessels of various types in the vessel
population that are not public vessels or used exclusively for
recreational use. Examples of vessel types include, but are not
limited to: fish processing vessel, freight barge, freight ship,
industrial vessel, mobile offshore drilling unit, offshore supply
vessel, oil recovery vessel, passenger vessel, commercial fishing
vessel, passenger barge, research vessel, school ship, tank barge,
tank ship, and towing vessel.
---------------------------------------------------------------------------

i. Affected Population--Vessels
    Coast Guard data, as of May 2013, indicate that for the years 1991
through 2012, 62 OPA 90 vessel incidents (i.e., an average of
approximately 3 OPA 90 vessel incidents per year) resulted in OPA 90
removal costs and damages in

excess of the previous limits of liability. For the purpose of this
analysis, we have therefore assumed that three OPA 90 vessel incidents
with costs exceeding the previous limits of liability would continue to
occur each year throughout the 10-year analysis period (2014-2023).
ii. Affected Population--Deepwater Ports
    This proposed rule could affect the responsible parties of any port
licensed under the DPA that is subject to OPA 90 (i.e., any such port,
including its associated pipelines, that meets the OPA 90 definition of
``facility'').\22\ Currently there are two ports in operation that are
licensed under the DPA--LOOP and Northeast Gateway. Northeast Gateway,
however, is a liquefied natural gas (LNG) port and, as currently
designed and operated, it does not meet the OPA 90 definition of
``facility''. Therefore--although a vessel visiting or servicing
Northeast Gateway could become the source of a discharge, or
substantial threat of discharge, of oil for which the vessel
responsible parties would be liable under OPA 90--it is highly unlikely
that Northeast Gateway or any similarly-designed and operated LNG port
would be the source of an oil discharge, or substantial threat of
discharge.\23\ We therefore, do not include LNG ports in this analysis.
---------------------------------------------------------------------------

    \22\ 33 U.S.C. 2701(6) defines ``deepwater port'' as ``a
facility licensed under the Deepwater Port Act of 1974 (33 U.S.C.
1501-1524)'' [emphasis added]. 33 U.S.C. 2701(9) defines
``facility'' to mean ``any structure, group of structures,
equipment, or device (other than a vessel) which is used for one or
more of the following purposes: exploring for, drilling for,
producing, storing, handling, transferring, processing, or
transporting oil. This term includes any motor vehicle, rolling
stock, or pipeline used for one or more of these purposes[.]''
    \23\ Several other LNG ports were mentioned in the regulatory
analysis for the CPI-1 Rule. But they have either not become
operational, or are no longer in operation. For example, on July 17,
2013, the Maritime Administrator approved a request by Suez Neptune
LNG, LLC, for a temporary five-year suspension of its deepwater port
license. In addition, on June 28, 2013 the Maritime Administrator
cleared decommissioning of the Gulf Gateway Energy Bridge, and
approved termination of its license. These LNG ports, therefore, are
not included in this analysis. A fifth LNG port licensed under the
DPA, Port Dolphin Energy LLC Deepwater Port (Port Dolphin), is not
yet operational. Port Dolphin, moreover, has the same design as
Northeast Gateway and, therefore, also would not meet the OPA 90
definition of ``facility''. It, therefore, is not included in this
analysis.
---------------------------------------------------------------------------

    To date, LOOP (the only port licensed under the DPA that is in
operation and meets the OPA 90 definitions of ``deepwater port'' and
``facility'') has not had an OPA 90 incident that resulted in removal
costs and damages in excess of LOOP's previous limit of liability of
$87,606,000. However, for the purposes of this analysis, we show the
cost of one OPA 90 incident occurring at LOOP over the 10-year analysis
period (2014-2023), with OPA 90 removal costs and damages in excess of
the previous limit of liability for LOOP, as the potential for such a
spill exists.
iii. Affected Population--Onshore Facilities
    This proposed rule could affect any responsible party for an
onshore facility (including onshore pipelines). The impact would,
however, only occur if the incident resulted in OPA 90 removal costs
and damages in excess of the previous limit of liability.
    Because of the large number and diversity of onshore facilities, it
is not possible to predict which specific types or sizes of onshore
facilities might be affected by this proposed rule. Coast Guard data,
as of May 2013, however, indicate that since the enactment of OPA 90
through May 1, 2013, only one onshore facility incident--the 2010
Enbridge Pipeline spill in Michigan--may have resulted in OPA 90
removal costs and damages that exceeded the onshore facility previous
limit of liability of $350,000,000.\24\
---------------------------------------------------------------------------

    \24\ See footnote 12.
---------------------------------------------------------------------------

    The Enbridge Pipeline incident indicates that the previous limit of
liability for an onshore facility, although high, can still be exceeded
by a low frequency, but high consequence oil spill. Therefore, for the
purposes of this analysis, we assume one onshore facility incident
would occur over the 10-year analysis time period that would result in
OPA 90 removal costs and damages in excess of the onshore facility
previous limit of liability.
iv. Cost Summary Regulatory Cost 1
(a) Vessels
    We estimate the greatest cost to a vessel responsible party
entitled to a limit of liability under OPA 90, for purposes of this
analysis, by assuming that the average annual cost from the historical
incidents analyzed would remain constant throughout the analysis period
(2014-2023). The average annual increased cost of liability for the
analysis time period (2013-2024) is estimated by calculating the
difference between the previous limit of liability and the proposed new
limit of liability for each of the 62 historical incidents. These
values were totaled and then divided by the number of years of data (22
years). The average annual cost resulting from the three estimated
vessel incidents per year is estimated to be $2,544,000 (non-discounted
dollars). Dividing this value by the three hypothetical vessel
incidents per year equals $848,000 for the average annual cost per
vessel.
(b) Deepwater Ports
    We estimate the greatest cost to a deepwater port responsible party
entitled to a limit of liability under OPA 90, for purposes of this
analysis, by assuming that the cost of the incident would be equal to
the proposed new limit of liability. As mentioned above, LOOP has never
had an incident with OPA 90 removal costs and damages in excess of its
limit of liability. Therefore, given the lack of any deepwater port
historical data, we rely on the historical data available for vessel
incidents with costs in excess of LOOP's previous limit of liability of
$87,606,000.
    Specifically, we assume that the LOOP responsible parties would
make OPA 90 removal cost and damage payments for the one hypothetical
incident, over the course of 10 years after the incident date.\25\ In
addition, for the purposes of this analysis, we assume that the
payments would be spread out in equal annual amounts over the 10-year
analysis period (2014-2023). Applying these assumptions, the average
annual cost resulting from the one hypothetical LOOP OPA 90 incident is
estimated to be $718,400 (non-discounted dollars).\26\
---------------------------------------------------------------------------

    \25\ Based on Coast Guard subject matter expert experience, we
have made the assumption that a LOOP incident with costs above its
Previous Limit of Liability of $87,606,000 would be analogous to a
vessel incident with respect to the duration of responsible party
payments until the completion date. The per-incident duration of
payments was determined by comparing the incident date and the
completion date for each vessel incident occurring since enactment
of OPA 90 with incident removal costs and damages (in 2013 dollars)
above LOOP's ``Previous Limit of Liability'' of $87,606,000. There
were 6 incidents fitting this criteria, 3 are ongoing incidents, 3
are completed. The average duration for the 3 completed incidents,
was approximately 10 years.
    \26\ The only deepwater port affected by this rulemaking, LOOP,
has a facility-specific limit of liability first established in 1995
under 33 U.S.C. 2704(d)(2)(C), and adjusted for inflation by the
CPI-1 Rule.
---------------------------------------------------------------------------

    There would be no increase to Regulatory Cost 1 resulting from the
proposed adjustment to the generally-applicable deepwater port limit of
liability adjustment, including if, after considering any public
comment, we decide to re-calculate the CPI adjustment to the deepwater
port statutory limit of liability in 33 U.S.C. 2704(a)(4), using the
1990 Annual CPI-U value of 130.7 as the previous period, instead of the
2008 Annual CPI-U value of 215.3 that we have used for purposes of this
proposal. This is because, as previously mentioned, there are no
deepwater ports in operation that are

subject to the generally-applicable OPA 90 limit of liability for
deepwater ports.
(c) Onshore Facilities
    We estimate the greatest cost to an onshore facility responsible
party entitled to a limit of liability under OPA 90, for purposes of
this analysis, by assuming that the cost of the incident would be equal
to the proposed new limit of liability. Based on NPFC's experience with
onshore facility incidents, we assume that the onshore facility
responsible parties would be making OPA 90 removal cost and damage
payments for the one estimated incident, over the course of 10 years
after the incident date.\27\ We further assume that the payments would
be spread out in equal annual amounts over the 10-year analysis period
(2014-2023).\28\ Applying these assumptions, the average annual cost
resulting from the one estimated onshore facility OPA 90 incident over
10 years is estimated to be $5,460,000 (non-discounted dollars).
---------------------------------------------------------------------------

    \27\ The per-incident duration of payments was determined by
comparing the incident date and the completion date of each onshore
facility incident occurring since enactment of OPA 90 with incident
removal costs and damages (in 2013 dollars) greater than or equal to
$5 million. There were 21 incidents fitting this criteria, 9 are
ongoing incidents, 12 are completed. The average duration for the 12
completed incidents, was approximately 10 years.
    \28\ Based on Coast Guard subject matter expert experience, we
have assumed that the payments would be spread out equally over the
10 year analysis period. This realistically models the long duration
of OPA 90 removal actions (particularly in the case of an onshore
facility incident resulting in OPA 90 removal costs and damages
exceeding the limit of liability), the time lag in billings and
payments and, if applicable, associated claim submissions, claims
payments and litigation.
---------------------------------------------------------------------------

    If, after considering any public comment, we decide to calculate
the CPI adjustments to the onshore facility limit of liability using
the 1990 Annual CPI-U value of 130.7 as the previous period (i.e.,
instead of the 2006 Annual CPI-U value of 201.6, established by the
CPI-1 rule that we have used for purposes of this proposal), the
average annual cost resulting from the one estimated onshore facility
OPA 90 incident over 10 years would be $27,370,000 (non-discounted
dollars).
v. Present Value of Regulatory Cost 1
    The 10-year present value of Regulatory Cost 1, at a 3 percent
discount rate, is estimated to be $74.4 million.\29\ The 10-year
present value of Regulatory Cost 1, at a 7 percent discount rate, is
estimated to be $61.3 million.\30\ The annualized discounted cost of
Regulatory Cost 1, at a 3 percent discount rate, is estimated to be
$8.7 million. The annualized discounted cost of Regulatory Cost 1, at a
7 percent discount rate, is estimated to be $8.7 million.
---------------------------------------------------------------------------

    \29\ The sum of the annual costs for the three source categories
over the ten-year analysis period (i.e., $2.5 million per year for
vessels, $0.7 million per year for deepwater ports, and $5.5 million
per year for onshore facilities), discounted annually at a 7%
discount rate equals $71.4 million.
    \30\ The sum of the annual costs for the three source categories
over the ten-year analysis period (i.e., $2.5 million per year for
vessels, $0.7 million per year for deepwater ports, and $5.5 million
per year for onshore facilities), discounted annually at a 7%
discount rate equals $61.3 million.
---------------------------------------------------------------------------

    If, after considering any public comment, we decide to calculate
the CPI adjustments to the onshore facility limit of liability and the
generally-applicable limit of liability for deepwater ports using the
1990 Annual CPI-U value of 130.7 as the previous period, the present
value estimates would be as follows. The estimated 10-year present
value of Regulatory Cost 1, at a 3 percent discount rate, would be
$261.3 million.\31\ The estimated 10-year present value of Regulatory
Cost 1, at a 7 percent discount rate, would be $215.1 million.\32\ The
estimated annualized discounted cost of Regulatory Cost 1, at a 3
percent discount rate, would be $30.6 million. The estimated annualized
discounted cost of Regulatory Cost 1, at a 7 percent discount rate,
would be $30.6 million.\33\
---------------------------------------------------------------------------

    \31\ The sum of the annual costs for the three source categories
over the ten-year analysis period ($2.5 million per year for
vessels, $0.7 million per year for deepwater ports, and $27.4
million per year for onshore facilities), discounted annually at a
3% discount rate equals $261.3 million.
    \32\ The sum of the annual costs for the three source categories
over the ten-year analysis period ($2.5 million per year for
vessels, $0.7 million per year for deepwater ports, and $27.4
million per year for onshore facilities), discounted annually at a
7% discount rate equals $215.1 million.
    \33\ As previously mentioned, there are no deepwater ports in
operation that are subject to the generally-applicable limit of
liability for deepwater ports. Therefore, re-calculating the CPI
adjustment to the deepwater port statutory limit of liability in 33
U.S.C. 2704(a)(4), using the 1990 Annual CPI-U value of 130.7 as the
previous period, instead of the 2008 Annual CPI-U value of 215.3
used for purposes of this proposal, would not result in any
Regulatory Cost 1 impacts.
---------------------------------------------------------------------------

b. Discussion of Regulatory Cost 2
    OPA 90 (33 U.S.C. 2716) requires that the responsible parties for
deepwater ports and certain types and sizes of vessels establish and
maintain evidence of financial responsibility to ensure that they have
the ability to pay for OPA 90 removal costs and damages, up to the
applicable limits of liability, in the event of an OPA 90 incident.\34\
Therefore, because the regulatory changes contemplated by this proposed
rule would increase those limits of liability, vessel and deepwater
port responsible parties may incur additional costs establishing and
maintaining evidence of financial responsibility as a result of this
rulemaking.
---------------------------------------------------------------------------

    \34\ OPA 90 does not impose evidence of financial responsibility
requirements on onshore facilities.
---------------------------------------------------------------------------

    Specifically, the proposed rule could increase the cost to vessel
and deepwater port responsible parties associated with establishing OPA
90 evidence of financial responsibility in two ways:
    [ssquf] Responsible parties using Insurance as their method of
demonstrating financial responsibility could incur higher Insurance
premiums.
    [ssquf] Some responsible parties currently using the Self-Insurance
or Financial Guaranty methods of demonstrating financial responsibility
might need to acquire Insurance, and would thereby incur new Insurance
premium costs. This would only be the case if the financial conditions
(working capital and net worth) of Self-Insuring responsible parties or
Financial Guarantors no longer qualified them to provide OPA 90
evidence of financial responsibility.
i. Affected Population--Vessels
    Vessel responsible parties may establish evidence of financial
responsibility using any of the following methods: Insurance, Self-
Insurance, Financial Guaranty, Surety Bonds, or any other method
approved by the Director, NPFC.\35\ This proposed rule could affect the
cost to vessel responsible parties of establishing and maintaining
evidence of financial responsibility using the Insurance, Self-
Insurance or Financial Guaranty methods of financial responsibility. As
of 18 October 2011, the NPFC's certificate of financial responsibility
(COFR) database contained 21,077 vessels using Insurance, 957 vessels
using Self-Insurance and 2,530 vessels using Financial Guaranties.
---------------------------------------------------------------------------

    \35\ See 33 CFR 138.80(b). Currently, however, there are no
vessel responsible parties using the Surety Bond method of financial
responsibility, and, based on historical experience, NPFC does not
expect any responsible parties will use this method during the
analysis period (2014-2023). In addition, there currently are no
vessel responsible parties using other methods of demonstrating
financial responsibility approved by Director, NPFC, and, based on
historical experience, NPFC does not expect any responsible parties
will use any other method during the analysis period (2014-2023).
---------------------------------------------------------------------------

ii. Affected Population--Deepwater Ports
    As previously discussed (see Affected Population--Deepwater Ports,
above under Regulatory Cost 1), LOOP is the only operating deepwater
port that would be affected by this proposed rule. Currently LOOP uses
a Director-approved method of establishing

financial responsibility. Specifically, the Director, NPFC, accepts the
following documentation as evidence of financial responsibility for
LOOP:
     LOOP's insurance policy issued by Oil Insurance Limited
(OIL) of Bermuda with coverage up to $150 million per OPA 90 incident
and a $225 million annual aggregate,
     Documentation that LOOP operates with a net worth of at
least $50 million, and
     Documentation that the total value of the OIL policy
aggregate plus LOOP's working capital does not fall below $100 million.
iii. Affected Population--Onshore Facilities
    None. Onshore facilities are not required to establish and maintain
evidence of financial responsibility under 33 U.S.C. 2716.
iv. Cost Summary Regulatory Cost 2
(a) Vessels
    Increases to Vessel Insurance Premiums. The calculation of
Insurance premium rates are dependent on many constantly changing
factors, including: market forces, interest rates and investment
opportunities for the premium income, the terms and conditions of the
policy, and underwriting criteria such as vessel age, loss history,
construction, classification details, and management history. As
calculated above, the proposed percent change in the limits of
liability for vessels is 8.2%. Based on estimates received from
Insurance companies,\36\ it is assumed that an 8.2% increase in the
limits of liability would cause, on average, a 6.0% increase in
Insurance premiums charged across all vessel types.
---------------------------------------------------------------------------

    \36\ Data was requested from 9 of a possible 14 Insurance
companies. Four responded with their current premium rates and their
best estimates of the increase in premium rates resulting from the
proposed regulatory change. These four Insurance companies represent
approximately 93% of vessels that use the Insurance method of
financial responsibility.
---------------------------------------------------------------------------

    Estimated costs were calculated by multiplying the number of
vessels by vessel category for each year of the analysis period (2014-
2023) by the Expected Average Increase in Premium for that particular
vessel type. The annual cost associated with increased Insurance
premiums is estimated to be between $6.6 million and $6.7 million (non-
discounted dollars).
    Migration of vessel responsible parties currently using the Self-
Insurance and Financial Guaranty Methods of Financial Responsibility to
the Insurance Market.
    Based on the financial documentation received from vessel
responsible parties using the Self-Insurance or Financial Guaranty
methods, the Coast Guard estimates that the responsible parties for 2%
of the vessels that have COFRs based on those methods might need to
migrate to the Insurance method of financial responsibility. The cost
estimates for vessel responsible parties migrating to the Insurance
method of financial responsibility were calculated by first multiplying
the number of vessels using Self Insurance or Financial Guaranty by
vessel category for each year of the analysis period (2014-2023) by the
presumed percent of impacted vessels (2%) and then multiplying the
product by the estimated Expected Average Annual Premium for that
particular vessel type. The annual cost associated with vessel
responsible parties migrating to Insurance is estimated to be between
$326,000 and $334,000 (non-discounted dollars).
(b) LOOP
    An increase in the LOOP limit of liability of the magnitude
proposed by this rulemaking is not expected to increase the cost to the
LOOP responsible parties associated with establishing and maintaining
LOOP's evidence of financial responsibility. This is because the LOOP
responsible parties provide evidence of financial responsibility to the
Coast Guard at a level that exceeds both LOOP's previous limit of
liability and the proposed new limit of liability of $93,388,000.
    The Coast Guard, therefore, does not expect this action to change
the terms of the OIL policy, to result in an increased premium for the
OIL policy, or to require LOOP to have higher minimum net worth or
working capital requirements.
v. Present Value of Regulatory Cost 2
    The 10-year present value, at a 3 percent discount rate, is
estimated to be $59.1 million. The 10-year present value, at a 7
percent discount rate, is estimated to be $48.7 million.\37\ The
annualized discounted cost, at a 3 percent discount rate, is estimated
to be $6.9 million.\38\ The annualized discounted cost, at a 7 percent
discount rate, is estimated to be $6.9 million.
---------------------------------------------------------------------------

    \37\ The sum of the annual costs for the two subcategories of
Regulatory Cost 2 over the ten-year analysis period (ranging from
$6.6 million per year to $6.7 million per year for increased vessel
insurance premiums, and from $0.326 million to $0.334 million per
year for migration of some vessels to the Insurance method of
financial responsibility), discounted annually at a 3% discount rate
equals $59.1 million.
    \38\ The sum of the annual costs for the two subcategories of
Regulatory Cost 2 over the ten-year analysis period (ranging from
$6.6 million per year to $6.7 million per year for increased vessel
insurance premiums, and from $0.326 million to $0.334 million per
year for migration of some vessels to the Insurance method of
financial responsibility), discounted annually at a 7% discount rate
equals $48.7 million.

---------------------------------------------------------------------------
Present Value of Total Cost = Regulatory Cost 1 + Regulatory Cost 2

    The 10-year present value, at a 3 percent discount rate, is
estimated to be $133.5 million.\39\ The 10-year present value, at a 7
percent discount rate, is estimated to be $110.0 million.\40\ The
annualized discounted cost, at a 3 percent discount rate, is estimated
to be $14.3 million. The annualized discounted cost, at a 7 percent
discount rate, is estimated to be $14.3 million.
---------------------------------------------------------------------------

    \39\ This is the sum of Regulatory Cost 1 ($74.4 million) and
Regulatory Cost 2 ($59.1 million).
    \40\ This is the sum of Regulatory Cost 1 ($61.3 million) and
Regulatory Cost 2 ($48.7 million).
---------------------------------------------------------------------------

    If, after considering any public comment, we decide to calculate
the CPI adjustments to the onshore facility limit of liability and the
generally-applicable limit of liability for deepwater ports using the
1990 Annual CPI-U value of 130.7 as the previous period, the present
value estimates would be as follows. The estimated 10-year present
value, at a 3 percent discount rate, would be $320.4 million.\41\ The
estimated 10-year present value, at a 7 percent discount rate, would be
$263.8 million.\42\ The estimated annualized discounted cost, at a 3
percent discount rate, would be $37.6 million. The estimated annualized
discounted cost, at a 7 percent discount rate, would be $37.6 million.
---------------------------------------------------------------------------

    \41\ This is the sum of Regulatory Cost 1 ($261 million) and
Regulatory Cost 2 ($59.1 million).
    \42\ This is the sum of Regulatory Cost 1 ($215.1 million) and
Regulatory Cost 2 ($48.7 million). The amounts do not add up due to
rounding.
---------------------------------------------------------------------------

2. Regulatory Benefits
    a. Regulatory Benefit 1: Ensure that the OPA 90 limits of liability
keep pace with inflation.
    OPA 90 (33 U.S.C. 2704(d)(4)) mandates that limits of liability be
updated periodically to reflect significant increases in the CPI to
account for inflation. The intent of this requirement is to ensure that
the real values of the limits of liability do not decline over time.
Absent CPI adjustments, the responsible parties ultimately benefit
because they pay a reduced percentage of the total incident costs they
would be required to pay with inflation incorporated into the
determination of their limit of liability. Requiring responsible
parties to internalize costs by adjusting their limits of liability for
inflation ensures that the appropriate amount of cleanup,

response and damage costs are borne by the responsible party.
    b. Regulatory Benefit 2: Ensure that the responsible party is held
accountable.
    Increasing the limits of liability to account for inflation ensures
that the appropriate amount of removal costs and damages are borne by
the responsible party and that liability risk is not shifted away from
the responsible party to the Fund. This helps preserve the ``polluter
pays'' principle as intended by Congress and preserves the Fund for its
other authorized uses. Failing to adjust the limits of liability for
inflation, by comparison, shifts those costs to the public and the
Fund.
    c. Regulatory Benefit 3: Reduce and deter substandard shipping and
oil handling practices.
    Increasing the limits of liability serves to reduce the number of
substandard ships in U.S. waters and ports because insurers are less
likely to provide Insurance to, and Financial Guarantors are less
likely to guaranty, substandard vessels at the new levels of OPA 90
liability. Maintaining the limits of liability also helps preserve the
deterrent effect of the OPA 90 liability provisions for Self Insurers.
    With respect to oil handling practices, the higher the responsible
parties' limits of liability are, the greater the incentive for them to
operate in the safest and most risk-averse manner possible. Conversely,
the lower the limits of liability, the lower the incentive is for
responsible parties to spend money on capital improvements and
operation and maintenance systems that will protect against oil spills.

B. Small Entities

    Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, we have
considered whether this proposed rule would have a significant economic
impact on a substantial number of small entities. The term ``small
entities'' comprises small businesses, not-for-profit organizations
that are independently owned and operated and are not dominant in their
fields, and governmental jurisdictions with populations of less than
50,000.
    An Initial Regulatory Flexibility Analysis (IRFA) discussing the
impact of this proposed rule on small entities is included in the
Regulatory Analysis that is available in the docket. A summary of the
IRFA follows.
    There are two potential economic impacts to small entities that
would result from this proposed rule:
    Regulatory Cost 1. Increased Cost of Liability
    Regulatory Cost 2. Increased Cost of Establishing Evidence of
Financial Responsibility.
1. Regulatory Cost 1: Increased Cost of Liability
    As explained in Part IV.A. of this preamble and in the Regulatory
Analysis for this proposed rule, Regulatory Cost 1 would only occur if
there was an OPA 90 incident that had removal costs and damages in
excess of the existing limits of liability.
a. Vessels
    This proposed rule could affect the responsible parties of any
vessel, other than a public vessel,\43\ from which oil is discharged,
or which poses the substantial threat of a discharge of oil, into or
upon the navigable waters or adjoining shorelines or the exclusive
economic zone of the United States. Coast Guard data indicate that,
since the enactment of OPA 90 through May 1, 2013, there were 62 OPA 90
vessel incidents (i.e., an average of approximately three OPA 90 vessel
incidents per year) that resulted in OPA 90 removal costs and damages
in excess of the previous limits of liability. For the purpose of this
analysis, we have therefore assumed that three OPA 90 vessel incidents
would continue to occur each year throughout the 10-year analysis
period (2014-2023).
---------------------------------------------------------------------------

    \43\ See 33 U.S.C. 2701(29) and (37) (definitions of public
vessel and vessel) and 33 U.S.C. 2702(c)(2) (public vessel
exclusion). According to Coast Guard's MISLE database, there are
over 200,000 vessels of various types in the vessel population that
are not public vessels or used exclusively for recreational use.
Examples of vessel types include, but are not limited to: fish
processing vessel, freight barge, freight ship, industrial vessel,
mobile offshore drilling unit, offshore supply vessel, oil recovery
vessel, passenger vessel, commercial fishing vessel, passenger
barge, research vessel, school ship, tank barge, tank ship, and
towing vessel.
---------------------------------------------------------------------------

    The vessel population encompasses dozens of North American Industry
Classification System (NAICS) codes. It, therefore, would not be
practical to predict which specific type or size of vessel might be
involved in the three hypothetical incidents assumed to occur per year,
or whether they would involve small entities.
    Incident cost data show that the average cost of an incident that
exceeds the current limit of liability is approximately $848,000.
Therefore, in the event that a small entity had a vessel incident with
OPA 90 removal costs and damages of this magnitude, it would likely
have a significant economic impact.
b. Deepwater Ports
    As discussed in Part IV.A. of this preamble, and in the Regulatory
Analysis for this rulemaking, the only deepwater port affected by this
proposed rule is LOOP. LOOP, however, does not meet the Small Business
Administration (SBA) criteria to be categorized as a small entity.\44\
---------------------------------------------------------------------------

    \44\ LOOP is a limited liability corporation (NAICS Code:
48691001) owned by three major oil companies: Marathon Oil Company,
Murphy Oil Corporation, and Shell Oil Company. None of these
companies are small entities.
---------------------------------------------------------------------------

c. Onshore Facilities
    As discussed in Part IV.A., of this preamble, and in the Regulatory
Analysis for this rulemaking, this proposed rule could affect any
responsible party for an onshore facility.\45\ Since the enactment of
OPA 90, however, the 2010 Enbridge Pipeline spill in Michigan may well
be the only onshore facility incident resulting in removal costs and
damages that exceed the $350 million onshore facility limit of
liability; \46\ and this onshore facility is not a small entity.
Nevertheless, in the Regulatory Analysis for this proposed rule, we
assume that there would be one onshore facility incident occurring over
the 10 year analysis period with OPA 90 removal costs and damages
exceeding the existing limit of liability.
---------------------------------------------------------------------------

    \45\ OPA 90 (33 U.S.C. 2701(9)) defines ``facility'' as ``any
structure, group of structures, equipment, or device (other than a
vessel) which is used for one or more of the following purposes:
exploring for, drilling for, producing, storing, handling,
transferring, processing, or transporting oil. This term includes
any motor vehicle, rolling stock, or pipeline used for one or more
of these purposes''. OPA 90 (33 U.S.C. 2701(24)) defines an
``onshore facility'' as ``any facility (including but not limited
to, motor vehicles and rolling stock) of any kind located in, on, or
under, any land within the United States other than submerged
land.''
    \46\ Reliable supporting estimates of the OPA 90 removal costs
and damages resulting from incident are not currently available.
---------------------------------------------------------------------------

    The onshore facility population encompasses dozens of NAICS codes
representing diverse industries.\47\ It, therefore, would not be
practical to predict which specific type or size of onshore facility
might be involved in the one hypothetical incident assumed to occur
over the 10-year analysis period, or whether it would involve a small
entity. However, in the event a small entity onshore facility was to
have an incident with OPA 90 removal costs and damages of this
magnitude, it

would likely have a significant economic impact.
---------------------------------------------------------------------------

    \47\ Examples of onshore facilities include, but are not limited
to: onshore pipelines; rail; motor carriers; petroleum bulk stations
and terminals; petroleum refineries; government installations; oil
production facilities; electrical utility plants; mobile facilities;
marinas, marine fuel stations and related facilities; farms; fuel
oil dealers; and gasoline stations.
---------------------------------------------------------------------------

2. Regulatory Cost 2--Increased Cost of Establishing Evidence of
Financial Responsibility
i. Vessels
    Regulatory Cost 2 would only apply to vessel responsible parties
required to provide evidence of financial responsibility under OPA 90
(33 U.S.C. 2716) and 33 CFR part 138, subpart A. As of July 3, 2013,
there were 1,744 unique entities in the Coast Guard's COFR database
that could be affected by this proposed rulemaking. Because of the
large number of entities, we determined the statistically significant
sample size necessary to represent the population. The appropriate
statistical sample size for the population, at a 95% confidence level
and a 5% confidence interval, is 315 entities. This means we are 95%
certain that the characteristics of the sample reflect the
characteristics of the entire population within a margin of error of +
or-5%.
    Using a random number generator, we then randomly selected the 315
entities from the population for analysis. Of the sample, 309 were
businesses, 0 were not-for-profit organizations, and 6 were
governmental jurisdictions.
    For each business entity, we next determined the number of
employees, annual revenue, and NAICS Code to the extent possible using
public and proprietary business databases. The SBA's publication ``U.S.
Small Business Administration Table of Small Business Size Standards
Matched to North American Industry Classification System codes
effective January 22, 2014'' \48\ was then used to determine whether an
entity is a small entity. For governmental jurisdictions, we determined
whether they had populations of less than 50,000 as per the criteria in
the Regulatory Flexibility Act.
---------------------------------------------------------------------------

    \48\ http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf.
---------------------------------------------------------------------------

    Of the sampled population, 220 would be considered small entities
using the SBA criteria, 72 would not be small entities, and no data was
found for the remaining 23 entities.\49\ If we assume that the entities
where no revenue or employee data was found are small entities, then
small entities make up 77 percent of the sample.\50\ We can then
extrapolate the entire population of entities from the sample using the
following formula, where ``X'' is the number of small entities within
the total population.
---------------------------------------------------------------------------

    \49\ The 6 governmental jurisdictions were a subset of the 23
entities where no data was found.
    \50\ The data show that small entities are often responsible
parties for multiple vessels.

(X small entities in the total population divided by 1,744 total
entities in the population) = (243 small entities in the sample/315
---------------------------------------------------------------------------
total entities in the sample)

    Solving for X, X equals 1,345 small entities within the total
population.
    As discussed in the Regulatory Analysis, the proposed rule could
increase the cost to vessel responsible parties associated with
establishing OPA 90 evidence of financial responsibility in two ways:
    (1) Responsible parties using the Insurance method of financial
responsibility could incur higher Insurance premiums.
    (2) Some responsible parties currently using the Self-Insurance or
Financial Guaranty method of establishing evidence financial
responsibility might need to acquire Insurance for their vessels. This
would only be the case if the Self-Insuring responsible parties or
financial guarantors' financial condition (working capital and net
worth) no longer qualified them to provide OPA 90 evidence of financial
responsibility.
    As calculated in the Regulatory Analysis, the average annual per
vessel increase in Insurance premium for responsible parties using the
Insurance method of establishing evidence of financial responsibility
is $480. The average annual cost per vessel migrating from the Self-
insurance/Financial Guaranty methods to the Insurance method is $8,240
per vessel.
    Based on review of financial data of entities using the Self-
Insurance or Financial Guaranty method for establishing evidence of
financial responsibility, Coast Guard subject matter experts estimate
that responsible parties for 2% of vessels using those two methods
would not have the requisite working capital and net worth necessary to
qualify for these methods as a result of this proposed rule. In those
cases, they would have to use the Insurance method to establish and
maintain evidence of financial responsibility.
    The increased cost of establishing evidence of financial
responsibility for each small entity is calculated by:
    1. Multiplying the number of vessels using the Insurance Method by
the Average Increase in Premium ($480), and
    2. Adding the product of the number of vessels using the Self-
Insurance and Financial Guaranty methods multiplied by the Average
Annual Premium ($8,240), multiplied by 2%.
    For example, for a hypothetical small entity using the Insurance
Method for three vessels and having to change from the Self-Insurance
or Financial Guaranty Method to the insurance method for two vessels
(i.e., both vessels falling within the 2%), the calculation would be as
follows:
(3 vessels using Insurance Method x $480/year) + (100 vessels using
Self-Insurance or Financial Guaranty Method x 2% of vessels expected to
migrate from Self-Insurance or Financial Guaranty Method to the
Insurance Method x $8,240/year) = $17,950/year

    This calculation was conducted for each small entity and the value
was then divided by the annual revenue for the small entity and then
multiplied by 100 to determine the percent impact of this proposed rule
on the small entities' annual revenue. The figure below shows the
economic impact to vessel small entities of Regulatory Cost 2.

       Economic Impact to Vessel Small Entities--Regulatory Cost 2
------------------------------------------------------------------------
                                           Extrapolated
        Percent of annual revenue            number of      Percent of
                                          small entities  small entities
------------------------------------------------------------------------
1 to 2..................................              54               4
<1......................................           1,291              96
------------------------------------------------------------------------

ii. Deepwater Ports
    Because there are no small entity deepwater ports, there would be
no Regulatory Cost 2 small entity impacts to Deepwater Ports.
iii. Onshore Facilities
    As stated in the Regulatory Analysis for this rulemaking, onshore
facilities are not required to establish and maintain evidence of
financial responsibility under 33 U.S.C. 2716. There would therefore be
no Regulatory Cost 2 small entity impacts to Onshore Facilities.
    If you think your business, organization, or governmental
jurisdiction qualifies as a small entity and that this rule would have
a significant economic impact on it, please submit a comment to the
Docket Management Facility at the address under ADDRESSES. In your
comment, explain why you think it qualifies and how and to what degree
this rule would economically affect it.

C. Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996, Public Law 104-121, we want to assist small
entities in understanding this proposed rule so that they can better
evaluate its effects on them and participate in the rulemaking.

If the proposed rule would affect your small business, organization, or
governmental jurisdiction and you have questions concerning its
provisions or options for compliance, please consult Benjamin White,
National Pollution Funds Center, Coast Guard, telephone<PHONE_NUMBER>.
The Coast Guard will not retaliate against small entities that question
or complain about this rule or any policy or action of the Coast Guard.
    Small businesses may send comments on the actions of Federal
employees who enforce, or otherwise determine compliance with, Federal
regulations to the Small Business and Agriculture Regulatory
Enforcement Ombudsman and the Regional Small Business Regulatory
Fairness Boards. The Ombudsman evaluates these actions annually and
rates each agency's responsiveness to small business. If you wish to
comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR
(1-888-734-3247).

D. Collection of Information

    This proposed rule would call for no new collection of information
under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3520.

E. Federalism

    A rule has implications for federalism under E.O. 13132
(``Federalism'') if it has a substantial direct effect on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government. We have analyzed this proposed rule under that
Order and have determined that it is consistent with the fundamental
federalism principles and preemption requirements described in E.O.
13132. This proposed rule makes necessary adjustments to the OPA 90
limits of liability to reflect significant increases in the CPI,
establishes a framework for such future CPI increases, and clarifies
the OPA 90 limits of liability for certain vessels. Nothing in this
proposed rule would affect the preservation of State authorities under
33 U.S.C. 2718, including the authority of any State to impose
additional liability or financial responsibility requirements with
respect to discharges of oil within such State. Therefore, it has no
implications for federalism.
    The Coast Guard recognizes the key role that State and local
governments may have in making regulatory determinations. Additionally,
for rules with federalism implications and preemptive effect, E.O.
13132 specifically directs agencies to consult with State and local
governments during the rulemaking process. If you believe this rule has
implications for federalism under E.O. 13132, please contact the person
listed in the FOR FURTHER INFORMATION CONTACT section of this preamble.

F. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531-1538,
requires Federal agencies to assess the effects of their discretionary
regulatory actions. In particular, the Act addresses actions that may
result in the expenditure by a State, local, or tribal government, in
the aggregate, or by the private sector of $100,000,000 (adjusted for
inflation) or more in any one year. Though this proposed rule would not
result in such an expenditure, we do discuss the effects of this rule
elsewhere in this preamble.

G. Taking of Private Property

    This proposed rule would not cause a taking of private property or
otherwise have taking implications under Executive Order 12630
(``Governmental Actions and Interference with Constitutionally
Protected Property Rights'').

H. Civil Justice Reform

    This proposed rule meets applicable standards in sections 3(a) and
3(b)(2) of Executive Order 12988 (``Civil Justice Reform''), to
minimize litigation, eliminate ambiguity, and reduce burden.

I. Protection of Children

    We have analyzed this proposed rule under Executive Order 13045
(``Protection of Children from Environmental Health Risks and Safety
Risks''). This rule is not an economically significant rule and would
not create an environmental risk to health or risk to safety that might
disproportionately affect children.

J. Indian Tribal Governments

    This proposed rule does not have tribal implications under
Executive Order 13175 (``Consultation and Coordination with Indian
Tribal Governments''), because it would not have a substantial direct
effect on one or more Indian tribes, on the relationship between the
Federal Government and Indian tribes, or on the distribution of power
and responsibilities between the Federal Government and Indian tribes.

K. Energy Effects

    We have analyzed this proposed rule under Executive Order 13211
(``Actions Concerning Regulations That Significantly Affect Energy
Supply, Distribution, or Use''). We have determined that it is not a
``significant energy action'' under that order because it is not a
``significant regulatory action'' under Executive Order 12866 and is
not likely to have a significant adverse effect on the supply,
distribution, or use of energy.

L. Technical Standards

    The National Technology Transfer and Advancement Act, codified as a
note to 15 U.S.C. 272 directs agencies to use voluntary consensus
standards in their regulatory activities unless the agency provides
Congress, through OMB, with an explanation of why using these standards
would be inconsistent with applicable law or otherwise impractical.
Voluntary consensus standards are technical standards (e.g.,
specifications of materials, performance, design, or operation; test
methods; sampling procedures; and related management systems practices)
that are developed or adopted by voluntary consensus standards bodies.
    This proposed rule does not use technical standards. Therefore, we
did not consider the use of voluntary consensus standards.

M. Environment

    We have analyzed this proposed rule under Department of Homeland
Security Management Directive 023-01 and Commandant Instruction
M16475.lD, which guide the Coast Guard in complying with the National
Environmental Policy Act of 1969, 42 U.S.C. 4321-4370f, and have made a
preliminary determination that this action is one of a category of
actions that do not individually or cumulatively have a significant
effect on the human environment. A preliminary environmental analysis
checklist supporting this determination is available in the docket
where indicated under the ``Public Participation and Request for
Comments'' section of this preamble. This proposed rule would increase
the OPA 90 limits of liability for vessels, deepwater ports, and
onshore facilities to reflect significant increases in the CPI using
the methodology established in the CPI-1 Rule. This proposed rule is
expected to be categorically excluded under paragraph 34(a), of the
current instruction, from further environmental documentation, in
accordance with Section 2.B.2. and Figure 2-1 of the national
Environmental Policy Act Implementing Procedures and Policy for
Considering Environmental Impacts, COMDTINST M16475.1D. We seek any
comments or information that may lead to the discovery of a significant

environmental impact from this proposed rule.

List of Subjects in 33 CFR Part 138

    Hazardous materials transportation, Financial responsibility,
Guarantors, Insurance, Limits of liability, Oil pollution, Reporting
and recordkeeping requirements, Surety bonds, Water pollution control.

    For the reasons discussed in the preamble, the Coast Guard proposes
to amend 33 CFR part 138 as follows:

PART 138--FINANCIAL RESPONSIBILITY FOR WATER POLLUTION (VESSELS)
AND OPA 90 LIMITS OF LIABILITY (VESSELS, DEEPWATER PORTS AND
ONSHORE FACILITIES)

0
1. The authorities citation for part 138 is revised to read as follows:

    Authority: 33 U.S.C. 2704, 2716, 2716a; 42 U.S.C. 9608, 9609; 6
U.S.C. 552; E.O. 12580, Sec. 7(b), 3 CFR, 1987 Comp., p. 193; E.O.
12777, Sec. 4, as amended by E.O. 13638 of March 15, 2013, Sec. 1
(78 FR 17589, Thursday, March 21, 2013); E.O. 12777, Sec. 5, 3 CFR,
1991 Comp., p. 351, as amended by E.O. 13286, Sec. 89, 3 CFR, 2004
Comp., p. 166; Department of Homeland Security Delegation Nos.
0170.1 and 5110, Revision 01. Section 138.30 also issued under the
authority of 46 U.S.C. 2103 and 14302.

0
2. Revise the heading to part 138 to read as set forth above.
0
3. Revise Subpart B to read as follows:
Subpart B--OPA 90 Limits of Liability (Vessels, Deepwater Ports and
Onshore Facilities)
Sec.
138.200 Scope.
138.210 Applicability.
138.220 Definitions.
138.230 Limits of liability.
138.240 Procedure for updating limits of liability to reflect
significant increases in the Consumer Price Index (Annual CPI-U) and
statutory changes.

Sec.  138.200  Scope.

    This subpart sets forth the limits of liability under Title I of
the Oil Pollution Act of 1990, as amended (33 U.S.C. 2701, et seq.)
(OPA 90) for vessels, deepwater ports, and onshore facilities, as
adjusted under OPA 90 (33 U.S.C. 2704(d)). This subpart also sets forth
the method and procedure the Coast Guard uses to periodically adjust
the OPA 90 limits of liability by regulation under OPA 90 (33 U.S.C.
2704(d)(4)), to reflect significant increases in the Consumer Price
Index (CPI), and to update the limits of liability when they are
amended by statute. In addition, this subpart cross-references the U.S.
Department of the Interior regulation setting forth the OPA 90 limit of
liability applicable to offshore facilities, including offshore
pipelines, as adjusted under OPA 90 (33 U.S.C. 2704(d)(4)) to reflect
significant increases in the CPI.

Sec.  138.210  Applicability.

    This subpart applies to you if you are a responsible party for a
vessel, a deepwater port, or an onshore facility, unless your liability
is unlimited under OPA 90 (33 U.S.C. 2704(c)).

Sec.  138.220  Definitions.

    (a) As used in this subpart, the following terms have the meanings
set forth in OPA 90 (33 U.S.C. 2701): deepwater port, facility, gross
ton, liability, oil, offshore facility, onshore facility, responsible
party, tank vessel, and vessel.
    (b) As used in this subpart--
    Annual CPI-U means the annual ``Consumer Price Index--All Urban
Consumers, Not Seasonally Adjusted, U.S. City Average, All items, 1982-
84=100'', published by the U.S. Department of Labor, Bureau of Labor
Statistics.
    Current period means the year in which the Annual CPI-U was most
recently published by the U.S. Department of Labor, Bureau of Labor
Statistics.
    Director, NPFC means the person in charge of the U.S. Coast Guard,
National Pollution Funds Center (NPFC), or that person's authorized
representative.
    Edible oil tank vessel means a tank vessel referred to in OPA 90
(33 U.S.C. 2704(c)(4)(A)).
    Oil spill response vessel means a tank vessel referred to in OPA 90
(33 U.S.C. 2704(c)(4)(B)).
    Previous period means the year in which the previous limit of
liability was established, or last adjusted by statute or regulation,
whichever is later.
    Single-hull means the hull of a tank vessel that is constructed or
adapted to carry, or that carries, oil in bulk as cargo or cargo
residue, that is not a double hull as defined in 33 CFR part 157.
Single-hull includes the hull of any such tank vessel that is fitted
with double sides only or a double bottom only.

Sec.  138.230  Limits of liability.

    (a) Vessels. The OPA 90 limits of liability for vessels are--
    (1) Limits of liability for tank vessels, other than edible oil
tank vessels and oil spill response vessels.
    (i) For a single-hull tank vessel greater than 3,000 gross tons,
the greater of $3,500 per gross ton or $25,422,700;
    (ii) For a tank vessel greater than 3,000 gross tons, other than a
single-hull tank vessel, the greater of $2,200 per gross ton or
$18,489,200.
    (iii) For a single-hull tank vessel less than or equal to 3,000
gross tons, the greater of $3,500 per gross ton or $6,933,500.
    (iv) For a tank vessel less than or equal to 3,000 gross tons,
other than a single-hull tank vessel, the greater of $2,200 per gross
ton or $4,622,300.
    (2) Limits of liability for any other vessels. For any other
vessel, including an edible oil tank vessel or an oil spill response
vessel, the greater of $1,100 per gross ton or $924,500.
    (b) Deepwater ports. The OPA 90 limits of liability for deepwater
ports are--
    (1) For deepwater ports generally, and except as set forth in
paragraph (b)(2) of this section, $404,451,600;
    (2) For deepwater ports with limits of liability established by
regulation under OPA 90 (33 U.S.C. 2704(d)(2)):
    (i) For the Louisiana Offshore Oil Port (LOOP), $94,789,700; and
    (ii) [Reserved].
    (c) Onshore facilities. The OPA 90 limit of liability for onshore
facilities, $404,600,000;
    (d) Offshore facilities. The OPA 90 limit of liability for offshore
facilities, including any offshore pipeline, is set forth at 30 CFR
553.702.

Sec.  138.240  Procedure for updating limits of liability to reflect
significant increases in the Consumer Price Index (Annual CPI-U) and
statutory changes.

    (a) Update and publication. The Director, NPFC, will periodically
adjust the limits of liability set forth in Sec.  138.230(a) through
(c) to reflect significant increases in the Annual CPI-U, according to
the procedure for calculating limit of liability inflation adjustments
set forth in paragraphs (b)-(d) of this section, and will publish the
inflation-adjusted limits of liability and any statutory amendments to
those limits of liability in the Federal Register as amendments to
Sec.  138.230. Updates to the limits of liability under this section
are effective on the 90th day after publication in the Federal Register
of the amendments to Sec.  138.230, unless otherwise specified by
statute (in the event of a statutory amendment to the limits of
liability) or in the Federal Register notice amending Sec.  138.230.
    (b) Formula for calculating a cumulative percent change in the
Annual CPI-U. (1) The Director, NPFC, calculates the cumulative percent
change in the Annual CPI-U from the year the limit of liability was
established, or last adjusted by statute or regulation, whichever is
later (i.e., the previous period), to the most recently published
Annual CPI-U (i.e., the current period), using the following escalation
formula:

Percent change in the Annual CPI-U = [(Annual CPI-U for Current Period
- Annual CPI-U for Previous Period) / Annual CPI-U for Previous Period]
x 100.

    (2) This cumulative percent change value is rounded to one decimal
place.
    (c) Significance threshold. Not later than every three years from
the year the limits of liability were last adjusted for inflation, the
Director, NPFC, will evaluate whether the cumulative percent change in
the Annual CPI-U since that date has reached a significance threshold
of 3 percent or greater. For any three-year period in which the
cumulative percent change in the Annual CPI-U is less than 3 percent,
the Director, NPFC, will publish a notice of no inflation adjustment to
the limits of liability in the Federal Register. If this occurs, the
Director, NPFC, will recalculate the cumulative percent change in the
Annual CPI-U since the year in which the limits of liability were last
adjusted for inflation each year thereafter until the cumulative
percent change equals or exceeds the threshold amount of 3 percent.
Once the 3-percent threshold is reached, the Director, NPFC, will
increase the limits of liability, by regulation using the procedure set
forth in paragraph (a) of this section, for all source categories
(including any new limit of liability established by statute or
regulation since the last time the limits of liability were adjusted
for inflation) by an amount equal to the cumulative percent change in
the Annual CPI-U from the year each limit was established, or last
adjusted by statute or regulation, whichever is later. Nothing in this
paragraph shall prevent the Director, NPFC, in the Director's sole
discretion, from adjusting the limits of liability for inflation by
regulation issued more frequently than every three years.
    (d) Formula for calculating inflation adjustments. The Director,
NPFC, calculates adjustments to the limits of liability in Sec.
138.230 of this part for inflation using the following formula:

New limit of liability = Previous limit of liability + (Previous limit
of liability x percent change in the Annual CPI-U calculated under
paragraph (b) of this section), then rounded to the closest $100.

    Dated: August 11, 2014.
William R. Grawe,
Acting Director, National Pollution Funds Center, United States Coast
Guard.
[FR Doc. 2014-19314 Filed 8-18-14; 8:45 am]
BILLING CODE 9110-04-P