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Oil Pollution act of 1990

1. Overview A. Description of OPA. 1. Year established? 2. Who passed OPA? B. What does OPA prohibit? 1. Oil spill prevention measures. 2. Oil spill remediation/clean up plans.

2. Background/History A. What first sparked the need for OPA? B. Discussion of the Exxon Valdez Spill. C. Other cases that led to the need for OPA.

3. Timeline March 16, 1989, the Oil Pollution Act was introduced to in the legislative process for enactment. By June 21st of 1989, a committee reported and recommended that the full chamber should speculated the bill for further consideration. Only about 1 in 4 bills are reported out of committee.On November 9th, 1989, the bill was passed in a vote in the House and was later passed by Senate with changes on November 19th, 1989 and sent it back to the House to approve the following changes to the bill. No record of individual votes was document because the vote was conducted by Voice Vote. On August 2nd of 1990, a conference committee was created including members of both the House and Senate members in order to resolve the process of how chamber passed the bill. The Senate later issued an approval of the committee proposed report of the bills final form for consideration of both chambers. In addition, the conference report must be approved by the House. Ultimately, the Senate agreed to the conference report. Two days later on August 4th of 1990, both chambers passed the bill in its’ identical form and then the House agreed to the conference report. Next step in the assembly line was for the bill to go to the President to either sign or veto. As of august 18th of 1990, the bill was signed by the President and the Oil Pollution act was officially enacted.

4. Concerns and Reactions to OPA enactment: President Bush acknowledged the changes the world would have to endure when signing the Oil Pollution Act and as a result, he pushed the Senate to quickly consider to ratifying the new international protocols. The reactions from industries were negative due to the hinderance that the Oil Pollution Act may cause regarding the free flow in the trade of imported oil in the waters of the united States. Not only does it impose restrictions on trading imported oil overseas, but it also implements the state oil liability and compensation statutes, which are viewed as another hindrance for industries. After OPA was enacted, the shipping industry threatened to boycott the ports of the United States to protest against the new liability the industry must comply with due to the federal and state laws. The issue stemmed from the inconsistency between the Oil Pollution Act and the international, federal and state laws that are impacted. As a result of the OPA enactment, certain insurance companies refused to issue certifications of financial liability under the Oil Pollution Act to avoid potential responsibility and compensation in the case of a disaster.

President Bush also predicted that the enactment of the OPA could lead to larger oil shipping companies to be replaced by the smaller shipping companies to avoid being held liable. The issue with President Bush’s prediction is that more often than not, smaller companies with limited resources would not have the financial backing to pay for the remediation of oil spills disasters. Owners and operators of vessel would also be held liable for an case of an oil spill and faced with a significant increase in financial responsibility. This increase in liability under the OPA for vessel owners has resulted in the uprising of fear and concerns from the vast majority of the shipping industry. More uncertainty for the vessel owners stems from the fact that additional oil spill penalties imposed by the states are not subject to OPA limitations of the Limitation of Liability Act of 1851. Ultimately, the threat of unlimited liability under the OPA and other state statutes has lead countless oil shipping companies to reduce oil trade to and from the ports of the United States.

However, there were positive reactions from the oil industries despite the newly enforced codes and regulations. In 1990, the oil industry united to form the Marine Spill Response Corp. (MRSC), where the expenses of the non-profit corporation would be compensated by the oil producers and transporters. The intention for MRSC is to fulfill the development of new response plans for oil spills cleanups and remediation required by OPA. Major concerns from shipping companies like the Exxon Shipping have reacted positively to the enactment of OPA to implement efforts into reducing their risk of liability for oil spill disasters. To ensure complete compliance with OPA, the Exxon Shipping compiled all state and federal regulations of which they must abide by. Furthermore, several independent and non-U.S. companies and operators, may potentially avoid operations in the United States ports due to OPA liability. The majority of elicited reactions and criticism from the enactment of OPA has been negative, however, it has also lead to the foundation of designing safer requirements for ships and global oil trade.

5. Content of OPA A. Title 1 of OPA. 1. Oil Pollution liability and compensation B. Title 2 of OPA 1. Conforming amendments. C. Title 3 of OPA 1. International oil pollution prevention and removal D. Title 4 of OPA 1. Prevention and Removal a. Subtitle A- Prevention b. Subtitle B- Removal c. subtitle C- Penalties and miscellaneous. E. Title 5 of OPA 1. Prince Williams sound provisions. F. Title 6 of OPA 1. Miscellaneous. G. Title 7 of OPA 1. Oil pollution research and development program. H. Title 8 of OPA 1. Trans-Alaska Pipeline system a. Subtitle A- Improvements to Trans-Alaska pipeline system. b. Subtitle B- Penalties c. Subtitle C- Provisions applicable to Alaska Natives.

6. Enforcement A. Liability and Responsible Parties A responsible party under the Oil Pollution Act is one who is found accountable for the discharge or substantial threat of discharge of oil from a vessel or facility into navigable waters, exclusive economic zones, or the shorelines of such covered waters. Responsible parties are strictly, jointly, and severally liable for the cost of removing the oil in addition to any damages linked to the discharge. Unlike the liability for removal costs which are uncapped, liability for damages is limited as discussed in further detail below. Furthermore the Oil Pollution Act allows for additional liability enacted by other relevant state laws B. Requirements and limitations of OPA. Under the Oil Pollution Act, federal, tribal, state, and any other person can recover removal costs from a responsible party so long as such entity has incurred costs from carrying out oil removal activities in accordance with the Clean Water Act National Contingency Plan. Reimbursement claims must first be made to the responsible party. If the potentially responsible party refutes liability or fails to distribute the reimbursement within 90 days of the claim, the claimant may file suit in court or bring the claim to the the Oil Spill Liability Trust Fund described below. In some instances, claims for removal cost reimbursement can be initially brought to the Oil Spill Liability Trust Fund thus sidestepping the responsible party. For example, claimants advised by the EPA, governors of affected states, and American claimants for incidents involving foreign vessels or facilities may initially present their claims to the Oil Spill Liability Trust Fund. When claims for removal cost reimbursement are brought to the fund, the claimant must prove that removal costs were sustained from activities required to avoid or alleviate effects of the incident and that such actions were approved or directed by the federal on-scene coordinator

In a manner similar to that described above, costs for damages can be recovered from a responsible party. However, the Oil Pollution Act only covers certain categories of damages. These categories include: natural resource damages, damages to real or personal property, loss of subsistence use, loss of government revenues, loss of profits or impaired earning capacity, damaged public services, and damage assessment costs. Additionally, some categories are recoverable for any person impacted by the incident while others are only recoverable by federal, tribal, and state governments. Furthermore, the Oil Pollution Act proscribes limits to liability for damages based on the responsible party, the particular incident, and the type of vessel or facility from which the discharge occurred.

C. Oil Spill Liability Trust Fund: The Oil Spill Liability Trust Fund is a trust fund managed by the federal government and financed by a per-barrel tax on crude oil produced domestically in the United States and on petroleum products imported to the United States for consumption. The fund was created in 1986, but use of the fund was not authorized until the Oil Pollutions Act’s passage in 1990. The funds may be called upon to cover the cost of federal, tribal, state, and claimant oil spill removal actions and damage assessments as well as unpaid liability and damages claims. No more than one billion dollars may be withdrawn from the fund per spill incident. Over two decades of court cases have demonstrated that obtaining funding from the Oil Pollution Spill Liability Fund can be a difficult task.

7. Long term effects of OPA

The Oil Pollution act imposes long term impacts due to the potential for unlimited liability and the statute's that hold insurers to serve as guarantors, which has ultimately resulted in the refusal of insurance companies to issue agreements of financial liability to vessel operators and owners. Thus, the inability to acquire proof of financial liability results in vessels not being able to legally enter waters of the United States. Since OPA does not exempt vessel creditors to enter U.S. waters, there is a disincentive for any lender to finance fleet modernization and or replacement. Lastly, OPA has the ability to directly impact the domestic oil production industry due to the rigorous offshore facility provisions.

A. Financial responsibilities

The U.S. Coast Guard is responsible for the implementation of the vessel provisions mandated by the Oil Pollutions Act. According to OPA, vessel owners need evidence of financial liability that covers complete responsibility of a disaster if their vessel weighs more than 300 gross tons. Vessel owners are required by OPA to apply to the Coast Guard to acquire a “Certificate of Financial Responsibility” that serves as proof of their ability to financially responsible for cleanup and damages of an oil spill. In the case of an uncertified vessel entering the waters of the United States, the vessel will have be forfeited to the United States. This is not a new protocol because vessel owners were always mandated to acquire certificates under the FWPCA 74 and Comprehensive Environmental Response Compensation and Liability Act of 1980 (CERCLA). Since 2011, over 23,000 vessels have obtained the Coast Guard Certificates to allow access to waters of the U.S.

B. Disincentives for fleet replacement and modernization

Since the Oil Pollution Act holds the vessel owners fully liable, it has created a disincentive for oil companies to transport crude oil in their vessels and for charterers to transport their oil on the most suitable vessels. Many financially successful oil companies select the highest quality of ships to transport their products, however, other companies continue to transport their product on the lower quality, older vessels due to the cheaper costs. The majority of charterers refuse to pay more for higher grade vessels despite the liability and compensation regulations enforced by OPA. The new and safer double hull tanker vessels are approximately 15-20% more costly to operate. In 1992, approximately 60% of global vessels was at least fifteen years old or older. The major oil companies are still delaying the fleet replacement requirement of retiring single hull vessels mandated by OPA. For example, Exxon and Texaco have delayed the replacement of their single hull vessels for new double hulled ships. However, companies like Chevron and Mobil have ordered two new double hull tankers. Leading by example, other independent shipping companies to invest in new double hull tankers as well. Despite the change from single to double tanker vessels, it is still not sufficient enough to accommodate the needs of the oil industry. It is expected that over the next decade there will be a serious lack of suitable tonnage to meet the expected demand for newer vessels. It is estimated that the global oil industry must invest approximately 200-350 billion dollars to meet global demands for new and environmentally sound vessels.

C. Domestic production

In the Oil Pollution Act, the U.S. Coast Guard is in charge of screening the application process for vessels, however, the Department of Interior's Mineral Management Service (MMS) implements and enforces all of the Oil Pollution Act’s regulations for offshore oil facilities. Under OPA, the responsible parties are mandated to provide evidence declaring financial responsibility of $150 million for potential liability. If a party is unable to provide evidence declaring financial responsibility of $150 million, they will be subject to pay a penalty of $25,000 per day in violation of OPA and may also be subject to judicial decision of terminating all operations.

Before the Oil Pollution was enacted, offshore facilities were required to provide evidence that declared financial responsibility of $35 million. After OPA, these offshore facilities had to increase their proof of financial responsibility by 4 times and OPA's requirement of financial responsibility expanded to include facilities in state waters as well. Facilities in state waters that are subject to the $150 million requirement includes pipelines, marina fuel docks, tanks, and oil production facilities that are located in, on, or under state coastal waters, and are adjacent to inland channels, lakes, and wetlands. The most evident impact of the enactment of OPA, is on the oil producers within the Gulf of Mexico. Many offshore facilities are located in the Gulf of Mexico and in the marshes and wetlands of Louisiana. Major producers are most likely able to meet OPA's requirement of financial responsibility, however, the major oil companies within the Gulf of Mexico have exponentially withdrawled the operation of their offshore facilities.

Due to environmental pressures and the restrictive governmental regulations enforced by OPA, substantial proposals of exploration and production in the United States have been withdrawn. As a result of major companies withdrawing their plans to drill, many smaller, independent producers had entered to profitize. By October 1993, 93% of all oil and natural gas exploration and drilling were from independents producers. Of these new exploration projects, approximately 85% of drilling operations were in the Gulf of Mexico. The independent oil producers generated nearly 40% of the crude oil in the United states and 60% of domestic natural gas. The Oil Pollution Act imposes major threats to end the production and exploration of domestic crude oil.

8. References

Donaldson, M. P. 1992. The Oil Pollution Act of 1990: reaction and response. Villanova Environmental Law Journal 3:283.

Kiern, L. I. 2011. Liability, Compensation, and Financial Responsibility Under the Oil Pollution Act of 1990: A Review of the Second Decade. Tulane Maritime Law Journal 36(1): 1-64.

Morgan, D. J. 2011. The Oil Pollution Act of 1990. Fordham Environmental Law Review Volume 6:1-27.

Nichols, J. E. 2010. Oil Pollution Act of 1990 (OPA): Liability of Responsible Parties. Congressional Research Service. Report 7-5700 June 2, 2010.

"Oil Pollution Act of 1990 (1990 - H.R. 1465)." GovTrack.us. N.p., n.d. Web. 04 Dec. 2016.

United States Department of Homeland Security, United States Coast Guard. 2004. Report on Implementation of the Oil Pollution Act of 1990.

9. External Links A. https://www.uscg.mil/npfc/About_NPFC/opa.asp B. https://www.epa.gov/laws-regulations/summary-oil-pollution-act C. http://www.epw.senate.gov/opa90.pdf D. https://www.fws.gov/laws/lawsdigest/oilpoll.html E. https://www.govtrack.us/congress/bills/101/hr1465 F. http://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=1376&context=elr G. http://nationalaglawcenter.org/wp-content/uploads/assets/crs/R41266.pdf