August 18, 2010

Standards for Living Organisms in Ships' Ballast Water Discharged in U.S. Waters

Proposed Rule
Summary

Score: 40 / 60

Additional details
Agency
Department of Homeland Security
Regulatory Identification Number
1625-AA32
Agency Name
Department of Homeland Security
Rule Publication Date
08/29/2009
Comment Closing Date
11/27/2009

RULE SUMMARY

This rulemaking would propose to add a performance standard to 33 CFR part 151, subpart D, for all ballast water management methods being used as alternatives to mid-ocean ballast water exchange. It supports the Coast Guard's strategic goals of marine safety and protection of natural resources. This project is significant due to high interest from Congress and several Federal and State agencies, as well as costs imposed on industry.  

 

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion Score

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
1625–AA32 can be found on regulations.gov using the RIN and a keyword search. It is difficult to find on the Department of Homeland Security's website, but they direct the searcher to regulations.gov. Click on U.S. Coast Guard and follow the link to regulations. At the bottom of the page, the site lists regulations.gov.
4/5
2. How verifiable are the data used in the analysis?
Data on ships are from Coast Guard databases which are named, but not linked. Manufacturers of treatment systems supplied cost information; raw data are not provided and high/low estimates are simply sourced to the Herbert Engineering Corp. An appendix provides some data and more explanation of sources, but they are rarely linked.
3/5
3. How verifiable are the models and assumptions used in the analysis?
The RIA includes an extensive list of references, most of which are either peer-reviewed scholarly articles or government reports. Complete bibliographical references are provided, but links are only occasionally provided.
4/5
4. Was the analysis comprehensible to an informed layperson?
The RIA is generally well-written and clear. Assumptions and theories of causation are explained well for non-specialists. The actual presentation of benefit/cost results is a bit confusing.
4/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
4/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
Reduce environmental harms associated with introduction of invasive species. This general concept is linked to citizens' quality of life via a discussion of effects on water-dependent infrastructure, subsistence, recreation, tourism, commercial fishing, and sport fishing. "The standard’s main goal is the prevention of future NIS invasions. Prevention of future NIS invasions will also prevent the negative impacts of such invasions, including loss of biodiversity, damage to water-dependent infrastructure, and impacts on commercial fishing, recreational fishing, water-dependent tourism, public health, and subsistence populations" (section 5.3).
5/5
Does the analysis identify how these outcomes are to be measured?
Costs of controlling invasive species, damage to tourism, damage to infrastructure, and damage to fishing are monetized based on prior studies. Effects on ecology, public health and subsistence populations are not.
4/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
Setting standards for concentrations of organisms in discharged ballast water will reduce the incidence of invasive species introduction by reducing the number of organisms introduced: "The BWDS in Alternatives 2 through 5 are intended to decrease the probability of NIS establishment by reducing the number of individual organisms that are introduced via BWD . . . A mathematical model was developed based on the premise that a decrease in the number of living organisms initially introduced through ballast water discharges into a waterway reduces the probability that a population becomes successfully established" (section 5.7).
5/5
Does the analysis present credible empirical support for the theory?
The RIA cites several examples of significant, costly invasive species introduced via ballast water discharge. It also cites research finding that discharging a larger number of organisims increases the risk of an infestation.
4/5
Does the analysis adequately assess uncertainty about the outcomes?
It acknowledges a range of possible costs from invasions and a range of effectiveness rates for the chosen alternative. A table lists effects of possible uncertainties on the benefits estimates, but the analysis calculates ranges to reflect only two of the uncertainties. "As discussed earlier, no comprehensive estimate is available on the costs from past invasions. Most studies focus on one species and often only consider certain types of costs or costs in certain regions, resulting in a wide variability of estimates. For this reason, we do not try to develop a composite cost estimate for all invasions, but instead select a low and high estimate for fish, aquatic plants and invertebrates based on representative species. We then calculate a mid-point for the range and calculate costs for future invasions using all three values" (section 5.6).
4/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?
4/5
Does the analysis identify a market failure or other systemic problem?
The analysis states that risk of harms from discharge of untreated ballast water is not borne by the vessel owner and hence is an externality. This is not elaborated to any great extent. "Vessels that release untreated ballast water increase risks to aquatic life and possibly human health and cause other environmental and economic harm without accounting for the consequences of these actions on other parties . . . who do not directly participate in the business transactions of the business entities. These costs are not borne by the responsible entities and are therefore external to the business decisions of the responsible entity. The goal of environmental legislation and implementing regulations, including the proposed BWDS, is to correct these environmental externalities by requiring vessels to treat their ballast water releases in order to reduce the environmental harm that results from the introduction of some non-indigenous invasive species" (section 1.1).
5/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
The analysis simply asserts that costs of ballast water discharge are an externality because they are not considered by the business owner. The analysis notes that interconnectedness of waterways may make it difficult for states to contain the problem.
3/5
Does the analysis present credible empirical support for the theory?
The section on benefits cites a large number of studies on the costs of invasive species. The analysis cites studies showing that vessels account for a large portion of invasive species and ballast water accounts for a minority but still significant percentage of invasions. This helps demonstrate that vessels are a source of the problem, though it does not directly show why this is an externality.
3/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
It acknowledges a range of possible costs from invasions, but there is no discussion of uncertainty about existence of the problem. "Reporting on the costs in NIS invasions is almost an industry in itself. Despite the difficulty of obtaining economic estimates of the costs of aquatic introductions . . . such figures are widely published. The importance of these estimates is that they establish the scale of the costs in comparison with the costs of meeting a BWDS" (section 5.2).
4/5
7. How well does the analysis assess the effectiveness of alternative approaches?
4/5
Does the analysis enumerate other alternatives to address the problem?
No action plus several alternative standards of varying stringency.
4/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
It considers no action, three alternative discharge standards that differ by orders of magnitude, and sterilization. "No action" means ships would have to continue current practice of exchanging ballast water outside U.S. waters or retain ballast water. All alternatives except no action are essentially standards of varying stringency, but a wide range. The regulation is a performance standard; the Coast Guard does not mandate any particular technology for meeting it, and in fact discusses multiple technologies.
4/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
The analysis estimates how alternatives would reduce the percentage of successful invasions, but does not carry this through to estimate the number of invasions or monetized costs avoided for each alternative. "The alternatives differ in the degree to which they would prevent introduction of individual organisms in different size classes and hence, the degree to which they increase extinction probability of NIS" (section 5.7; see section D for further explanation).
3/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?
The cost baseline includes projections of additions and retirements from the fleet. The benefit baseline starts with projected invasions based on extrapolation of historical trend from 1790–2000. There is no consideration of any changes that might naturally occur that could create deviation from this trend; the baseline simply assumes problem will continue in the absence of a new regulation.
3/5
8. How well does the analysis assess costs and benefits?
3/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
The analysis considers compliance costs associated with installing equipment. It suggests some ships may comply by continuing to exchange ballast water, which suggests costs might be lower. Social opportunity costs are not calculated. Costs are clearly calculated for option 2, the chosen alternative, but only rough estimates are considered for the other alternatives (section 3.5–Meeting Stricter Standards); "The costs associated with the higher standards of Alternatives 3 and 4 (one-tenth and one-hundredth of Alternative 2, respectively) are more speculative. Capital and operational costs could certainly increase. We estimate the costs for Alternative 3 would be double those for Alternative 2, and that the costs for Alternative 4 would be quadruple those for Alternative 2" (executive summary).
3/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
The analysis quantifies compliance costs associated with installing equipment. This does not include enforcement costs.
4/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
The analysis concludes that the effect on consumers will be small because the cost is a small percentage of shipping costs, measured by charter rates. The percentages are calculated, but pass-through to consumers is not.
4/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
Overall social costs are not considered. There is a brief mention of a few relevant issues in section 5.8, which considers whether some of the benefits might actually be transfers.
1/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
Several sources of cost uncertainty are discussed and a range of costs is calculated. Low, high, and middle estimates are presented.
4/5
Does the analysis identify the alternative that maximizes net benefits?
The analysis compares costs and benefits of the chosen alternative, but not for the other alternatives. This could have been done using the data in the RIA. There is one broad reference to possible net benefits of other alternatives: "The range of potential benefits for Alternatives 3 and 4 (Table 5.12) are in general less than two to three times higher than Alternative 2, possibly indicating that the cost to benefit comparisons would be less favorable for these Alternatives. However, the range of uncertainty in both the cost and effectiveness assessments for these standards makes it difficult to conclusively draw comparisons" (section 6.1).
3/5
Does the analysis identify the cost-effectiveness of each alternative considered?
The analysis does not calculate cost-effectiveness, but this could have been done. The rough cost figures for several alternatives, combined with the effectiveness estimates from the environmental impact statement, provide a starting point.
1/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
Costs are calculated for individual types of ships and for small businesses. The analysis asserts that the effect on consumers will not be noticeable because the cost is a small percentage of total shipping costs and shipping costs are a small percentage of the retail price.
4/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
Section 5.1, "Resources at Risk," lists various costs associated with invasive species, and these specific costs usually imply specific parties who bear costs of invasions and therefore receive benefits from the regulation.
2/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
The environmental analysis calculates that the proposed Phase I standard would be more effective than ballast water exchange. The chosen alternative was apparently picked because it is practicable and will reduce invasions. Cost factors do not appear to have affected this decision, though the regulatory analysis suggests that costs and benefits roughly balance.
3/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
The analysis compares costs and benefits only for the chosen alternative. It appears net benefits could have been calculated for at least some of the other alternatives, but the Coast Guard chose not to do so. The agency chose the least stringent alternative (other than no action). This appears to be because the practicability of technology to meet the stricter standards is uncertain, but this is not completely clear.
2/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
The Coast Guard will reconsider whether the Phase II standard is practicable by 2015. After Phase II is implemented, the Coast Guard will review the standard every three years to ensure it is preventing invasions to the maximum extent practicable. The Coast Guard will conduct research on the relationship between the size and frequency or inroduction of new species and the probablility of successful establishment. These are all good things to do and highly relevant to future decisions, but none of them constitutes setting goals or measures for the results of this regulation.
2/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?
The regulatory analysis section of the preamble explicitly solicits data and comments that would help the Coast Guard assess the costs of implementing the more stringent, Phase II regulations. Ships also log data on ballast water; however, there's no plan to really track the results of the regulation.
3/5
 
Total 40 / 60