News

Alaska Financial Responsibility Requirements for Nontank Vessels

7 August 2000 No.00-009
The State of Alaska, U.S.A. has enacted a new law that requires approved proof of financial responsibility for self-propelled nontank vessels carrying bulk oil operated in Alaska. The law is to take effect on 1 September 2000. Any other provisions of he Alaska Statute concerning fines, sanctions and responsibility arising out of oil spills remain unchanged. The details of the new regulations are as follows:-

1. Outlines of the new law

Vessels to be governed: self-propelled nontank vessels over 400 gross tons operated in the water of Alaska
Effective date: 1 September 2000

Amount of financial responsibility to be required:
a)  for a nontank vessel that carries predominantly persistent product (*) $300 per incident for each barrel of oil storage capacity on the vessel or $5,000,000, whichever is greater
b)  for a nontank vessel that carries predominantly nonpersistent product (*) $100 per incident for each barrel of oil storage capacity on the vessel or $1,000,000, whichever is greater

Acceptable proof of financial responsibility: One of the following will be acceptable.
(1)  Affidavit of self insurance and most recent audited financial statement;
(2)  Insurance certificate and insurance policy;
(3)  Surety bond;
(4)  Financial guarantee, accompanied by guarantor's evidence of self insurance;
(5)  Letter of credit;
(6)  Certificate of entry evidencing coverage by a Protection and IndemnityClub;
(7)  Certificate of deposit with assignment of negotiable interest.
The owners/operators entered with our Association will be able to pick out the method of ( f ) above, i.e., a copy of certificate of entry with our Association.

The requirements of the Certificate of Financial Responsibility (COFR) do not apply to a nontank vessel operating in the waters of the state if the nontank vessel

(1) is engaged in innocent passage;
(2) enters state waters because of imminent danger to the crew, or in an effort to prevent an oil spill or other harm to public safety or the environment; or
(3) enters state waters after the United States Coast Guard has determined that the vessel is in distress

2. Problems left for further deliberation

Although the effective date of the legislature is 1 September 2000, the legislature has some problems which have been pointed out in the public comment including the International P&I Group (International Group) as follows:

(1)  Time for submission of Application: The International Group believes that the 15 day time requirement for submission of an application, which has been determined in the proposed regulations, may be difficult to comply with in certain cases. Therefore, the International Group has suggested that where an applicant is demonstrating the appropriate proof of financial responsibility, a time period of 48 hours be adopted.

(2)  Insurance deductibles: The regulations require separate proof of financial responsibility for insurance deductibles, unless the insurance agreement contains a provision guaranteeing that the insurer will be responsible for payment of all claims on a first dollar basis without waiting for the insured to pay the deductibles. The International Group has suggested to Alaska Department of Environmental Conservation (ADEC) that they should adopt the same practice as California state where no separate financial responsibility is required until a deductible exceeds US$250,000. However, ADEC will temporarily accept your interim application for COFR without separate proof of financial responsibility for insurance deductibles, if it is submitted by 31 August 2000 for the purposes of meeting the 1 September 2000 deadline.


Further details about the above would be advised you as soon as available.


3. Interim application

The detailed regulations of the new financial responsibility law are not expected to be implemented before late September or early October 2000. Therefore, the vessels entering Alaskan water on or after 1 September 2000 will be required to make an interim application for the COFR. A complete application and appropriate documentation evidencing proof of financial responsibility, which is submitted by 31 August 2000, will be deemed approved by ADEC for purposes of meeting the 1 September 2000 deadline.We, therefore, suggest owners/operators whose vessels are scheduled to call in any Alaskan port to apply for the COFR in the appropriate dollar amount soonest possible.

After the detailed regulations become effective, the ADEC will then conduct a review of each interim application to ensure compliance with the new regulations. Following that review, the ADEC will either issue approved certificates to qualifying nontank vessels, or request additional information if necessary. Non-qualifying applicants will be provided 30 days to submit the requested additional information to complete their application.

The interim application is attached hereto for your reference. You can also obtain it through the ADEC's URL, www.state.ak.us/dec/dspar/ipp/ntapplic.pdf. Please send your application and all requested documents to the following address after obtaining notary seal to certify the identity of the signer described in the Section D of the application.

"Financial Responsibility Program"
Alaska Department of Environmental Conservation
Division of Spill Prevention & Response
410 Willoughby Avenue, Suite 105,
Juneau, Alaska 99801-1795,
Tel:(907) 465-5231, Fax:(907) 465-5245
e-mail: Mr. Christopher Pace (cpace@envircon.state.ak.us)

As the ADEC will not send a separate written confirmation of its receipt of an application, we suggest that you take necessary methods to document your application package being submitted in a timely manner, such as sending your application via certified mail or despatching an advisory fax to ADEC upon your mailing the application.

If you need any assistance to complete your application or have questions concerning financial responsibility, please contact Mr. Chris Pace at ADEC Juneau office at (907) 465-5231 or Mr. Ken Rogowski at their Anchorage office at (907) 269-3094.

4. Agency service for applying the COFRs

We have been informed that ECM/Hudson Maritime Services, LLC will apply for Alaskan COFR on your behalf, as they have done in the state of California. They will charge US$100 per vessel to obtain the Alaskan COFR. Any members who require assistance of ECM/Hudson is requested to fax the attached "Alaska Nontank Vessel Questionnaire" after filling in the blanks together with "Delegation of Authority by the applicant" using a writing paper with your own letter head on it. The addressee is as follows:

ECM/Hudson Maritime Services, LLC
64 Danbury Road, Wilton,
CT 06897-4406, U.S.A.
Tel: +1 (203) 761-6030, Fax: +1 (203) 761-6085
E-mail: Headquarters@ecmhudson.com
Person in charge : Mr. Christopher Gregory



5. Contingency Plan

The state is considering to implement the legislature, which requires nontank vessels to hold a state approved oil spill prevention and discharge Contingency Plan. In the earliest case, nontank vessels calling any Alaskan ports may be required to have Contingency Plans at the beginning of 2001. The Association will issue a circular on further developments.

(*) Persistent product and non-persistent product:
33 C.F.R. Sec. 155.1020 defines non-persistent oil as petroleum-based oil that, at the time of shipment, consists of hydrocarbon fractions: (1) at least 50 percent of which by volume, distill at a temperature of 340deg C (645deg F); and (2) at least 95 percent of which by volume, distill at a temperature of 370deg C (700deg F).

Persistent oil means petroleum-based oil that does not meet the distillation criteria for a non-persistent oil.

Encl. a copy of "Financial Responsibility application & checklist" prepared by ADEC a copy of "Alaska nontank vessel COFR questionnaire" prepared by ECM/Hudson


a copy of "Alaska nontank vessel COFR questionnaire" prepared by ECM/Hudson