INTERNATIONAL REGULATION OF
INTENTIONAL DISCHARGES OF OIL INTO THE OCEAN:
CASE STUDY
Copyright: Ronald B. Mitchell
University of Oregon
28 June 1995

BACKGROUND: THE SOURCE OF THE PROBLEM

Tankers transport millions of metric tons of oil by sea every year. Until the 1950's, after making a delivery, a tanker would fill some of its cargo tanks with ballast water and would clean out the others with sea water. The oil that remained clinging to the sides and bottoms of the tanks would mix with water in these processes. Captains would discharge the oil/water mixtures at sea prior to arrival in port. While the clingage represents only some about 0.4% of the total cargo, for a single voyage of an average tanker this translates into 400 tons of oil. Given the vast volumes of oil transported by sea, tankers were discharging a million or more metric tons of oil each year, creating a major pollution problem. These intentional discharges account for twice as much oil entering the ocean as from accidents like the Exxon Valdez but represent approximately only 25% of oil pollution from all sources.
Discharges of crude oil can remain afloat over long distances. Therefore, discharges made many miles offshore can later appear on beaches, posing both environmental and aesthetic threats. Their most obvious environmental impact, and the most frequent source of public concern, has been in the deaths of seabirds. Beyond this, however, uncertainty revolves around the extent of environmental harm. Some scientists contend that intentional oil discharges have significant deleterious effects for fish, shellfish, and other forms of marine life. Others argue that no evidence exists that oil spills "have unalterably changed the world's oceans or marine resources." While not as dramatic as a major tanker spill, oil on resort beaches has been a continuing source of public complaints.
One may ask, why do tankers intentionally discharge oil at sea? As with any industrial practice producing an environmental externality, captains discharged oil at sea because it was the cheapest means of disposing of a byproduct of oil transportation. This externality arose not only because the pollution producers did not bear the environmental costs of the pollutant but also because the benefits of altering the production process to recover the waste oil did not outweigh the costs. The international nature of the oil shipping industry made regulation of oil pollution more difficult than it would have been otherwise, with those countries that had strong shipping interests having little interest in regulating the oil transportation industry and those countries with strong environmental interests having little ability to regulate it.
The pressures of environmental non-governmental organizations and of the public at large, especially the NGOs and publics in the United States and the United Kingdom, have led to regulation of the ability of tankers to discharge oil at sea. Since the 1950s, several different strategies have been used to regulate them. The discussion that follows will briefly describe the two major strategies currently in place. As you read through the descriptions, be thinking about which of the two strategies would oil transporters be most likely to comply with. What factors would lead you to expect more compliance with Strategy #1, and what factors would lead you to expect more compliance with Strategy #2?

STRATEGY #1: LIMITS ON DISCHARGES

Under the International Convention for the Prevention of Pollution from Ships (known as MARPOL), any discharges a tanker captain makes must stay within three separate limits. Within 50 mile coastal zones and in specially-protected areas, captains can only discharge "clean ballast," defined as a discharge that "would produce no visible traces of oil on the surface of the water." Outside these zones, captains must ensure they do not discharge more than 60 liters of oil per mile. The final, and most restrictive, limit prohibits captains from discharging more than 1/15,000th of a tanker's cargo capacity on any single ballast voyage. Both of the first two limits are enforced by aerial and naval surveillance programs. In "clean ballast" cases, the courts of the detecting state can prosecute the violation. In 60 liter per mile cases, the courts of the tanker's flag state have prosecution jurisdiction. Violations of the 1/15,000th limit can be detected by inspectors in oil exporting states: any tanker arriving with clean tanks can be safely assumed to have violated the total discharge limit and prosecuted in the detecting or flag state courts. If properly complied with, however, this strategy would essentially completely eliminate all oil pollution from tankers.
Oil companies and independent oil shipping companies have generally supported adoption of these rules as the most economically efficient and appropriate means for reducing oil pollution. Indeed, oil companies played major roles in proposing and supporting these measures to replace earlier regulations which they felt were impossible to comply with. Oil companies, in their role as cargo owners, were especially supportive of the 1/15,000th limit since it forced independent tanker owners to conserve and recycle oil that would otherwise be dumped overboard. Industry also preferred these limits as less costly than compulsory equipment requirements.

STRATEGY #2: REQUIRED INSTALLATION OF EQUIPMENT

MARPOL also specifically requires tankers to install equipment that prevents tankers from using their cargo tanks for ballast, known as segregated ballast tanks or SBT, and that uses crude oil rather than sea-water for washing down tanks, known as crude oil washing or COW. Large tankers built before 1980 must have one or the other of these technologies installed; those built between 1980 and 1982 must have SBT installed; and those built after 1982 must have both technologies installed.
Violations of the equipment standards could be detected by inspection in any port as well as during initial construction. Detecting states could prosecute such violations in court and could also detain ships found in violation until they no longer "posed a threat to the marine environment."
These equipment rules were adopted over the objections of most shipping states who saw them as creating an unwarranted expense since the discharge standards could provide the same protection at less cost. The requirements for SBT on all ships built after 1979 was considered especially onerous since the additional equipment cost of $5 million per tanker provided no economic benefits to the tanker owner; indeed, SBT added $1,500 to the costs of each voyage while careful operational procedures could actually save $17,000 per voyage due to the reduced loss of valuable oil. Agreement to the requirements was reached largely as a way to avert adoption of the U.S. proposal for the even more expensive double-hull technology.

ANALYSIS

Which of these two policy strategies would you expect to be successful? What do you mean by success? Evaluate the two polices with respect to various possible measures of success, such as negotiability, environmental protection, verifiability, compliance, equity, economic efficiency, total costs, cost-effectiveness, distribution of costs, etc. On what other bases should we compare the two policies? Which criteria of success seem most important to you? Why?
Without reading Mitchell's article, develop an argument as to whether tankers would be more likely to comply with the first or the second strategy. In trying to predict the compliance level of these two strategies, consider the following factors as either causes or at least good predictors of whether compliance will be likely:

How do these factors help distinguish between the two strategies and allow you to suggest which is most likely to exhibit a higher compliance rate? Be sensitive to the fact that these factors may cut in different directions and you should try to evaluate the net impact of all of them to make a judgment of which strategy to choose.
Your answer should be no longer than 2 pages.