COAST GUARD UNVEILS TANKER INSURANCE RULES

The U.S. Coast Guard has proposed rules requiring owners and operators of tankers exceeding 300 gross tons to meet certain insurance requirements. The 1990 Oil Pollution Act (OGJ, Sept. 30, p. 21) and the Comprehensive Environmental Response, Compensation, and Liability Act-the so-called Superfund Act-required the Coast Guard rulemaking, which was detailed in the Sept. 26 Federal Register. The Coast Guard asked for comments on the rule by Nov. 25 and may hold hearings on it later.

Oct. 7, 1991

2 min read

The U.S. Coast Guard has proposed rules requiring owners and operators of tankers exceeding 300 gross tons to meet certain insurance requirements.

The 1990 Oil Pollution Act (OGJ, Sept. 30, p. 21) and the Comprehensive Environmental Response, Compensation, and Liability Act-the so-called Superfund Act-required the Coast Guard rulemaking, which was detailed in the Sept. 26 Federal Register.

The Coast Guard asked for comments on the rule by Nov. 25 and may hold hearings on it later.

It said evidence of insurance, surety bonds, guarantees, and self-insurance will be accepted but not letters of credit. It called letters of credit "of questionable value" for purposes of financial responsibility.

The proposed rule points out that the Superfund Act requires vessels to establish financial insurance of $300/gross ton or $5 million, whichever is greater, if it is carrying hazardous cargo.

But the Coast Guard said, "To assure that adequate financial responsibility has been established and will be maintained for a particular vessel, it is necessary to assume that all vessels subject to the law carry, or might carry, hazardous substances as cargo. For this reason, the formula prescribes a minimum of $5 million for all vessels."

It also said, "The international group of Protection and Indemnity Associations or

"P&I Clubs"-shipowners who band together to indemnify each other-have said they will refuse to issue Coast Guard insurance guarantees for purposes of complying with the new liability requirements."

If insurance guarantees aren't filed, the Coast Guard will detain or seize any such tanker entering U.S. waters.

The Coast Guard believes the rule will not impose new paperwork burdens on vessel operators because it will require reports similar to existing forms.

The Federal Register notice asked operators to respond to a number of questions about costs and availability of insurance, the effect of the rule on small shipper and independent refiners, and the affect on oil supplies going to particular U.S. regions.