March 20th, 2014

National Pollution Funds Center and the

Oil Spill Liability Trust Fund

Update for the

Spill Control Association of America

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NPFC Missions

• Provide funding for oil removal activities– USCG and EPA FOSCs

• Recover costs from responsible parties

• Pay claims for Removal Costs and Damages from oil discharges; in compliance with Regulations and OPA

• Administer the Certificate of Financial Responsibility (COFR) Program

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Oil Spill Liability Trust Fund (OSLTF)

• Established by the Oil Pollution Act of 1990 (OPA 90)

• Pay removal costs and damages from oil spills or threats of spills into/on U.S. navigable waters/EEZ

• Agency appropriations (CG, EPA, DOI, DOT) to carry out OPA programs, ~ $115M in annually

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Taxes - $427.6M

Interest $17.3M

Fines $402.4M

Recovery from RPs $125.3M

Agency Appropriations $81.6M

FOSC Removal Actions

(Emergency Fund) $95.4M

Claims $85.2M

Fund:Emergency

Fund:

OSLTF Claims

• Compensate Claimants when RP doesn’t pay

• Claims must be presented to RP first

• Statute of Limitations for Claims

• Compensate RP that establishes OPA defense or limit to liability

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OSLTF Claims Workload

• Claims (non-NRD) pending at NPFC:– Non-DWH claims portfolio - 80 claims ($141M)

• Claims over the life of the Fund– 14,337 for over $2.7B.– Of that, 2028 for $1.3B were Deepwater

• Currently involved in 4 Active Litigations for $115M

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OSRO Claim Status

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Payment rate: 85%.

Addressing the 15% Denied

• Lack of FOSC coordination:– NCP Consistency– States are not FOSCs– NRC Notification triggers the FOSC– Proper Disposal

• Need manifests

• Need tests if evidence of more than oil

– Keep good notes on direction/requirements from FOSC's & States.

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Addressing the 15% Denied

• Scope of work– Salvage Versus Removal– Removal Versus Remediation– Oil versus Hazardous

• Sample Analysis

– Disaster verses OPA• Discreet oil release & response.

– Not mixed

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Addressing the 15% Denied

• Subrogable Rights-– Claimant must have clear rights and have

uncompensated removal costs.– Stiffed sub-contractors

• Primes don't hold the uncompensated rights

– Mandatory Arbitration Clause • May Preclude Payment

– Litigation to Include Bankruptcy• May Preclude Payment

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Financial Risk Mitigation Strategies

• Call NRC• Get hired by the FOSC• Be careful for arbitration clauses• Think what an FOSC would do?• Think jurisdiction (oil, U.S. waters, discharge

or threat).• Document

Closing Comments

• OSROs are a key component of the U.S. Oil Spill regime and an important NPFC customer.

• FOSCs rely on the services you provide.• Spills and claims are fact specific.• Documentation is the key.• If in doubt about a potential future claim you may call

– Donna Hellberg 703 872 6097– Tom Morrison 703 872 6100

• Questions?

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