A number of countries have their own domestic legislation for compensating those affected by spills of oil and other substances from ships. The most comprehensive example is the US Oil Pollution Act of 1990, the main provisions of which are summarised below. Canada also has its own Ship-source Oil Pollution Fund (SOPF) which can be used to pay claims arising from spills of both persistent and non-persistent oil from all types of ship. As Canada is party to the 1992 CLC and Fund Convention, the SOPF would only become involved in paying compensation in a case falling within the scope of these conventions if the total value of the valid claims exceeded the 1992 Fund limit.
Other countries have chosen not to ratify the international Conventions and instead rely on laws originally developed for other purposes. This is frequently an unsatisfactory solution for claimants, shipowners and other parties involved in a pollution incident, since the provisions of these laws may be poorly known and of limited relevance to shipping accidents.
Oil Pollution Act of 1990
In the wake of the EXXON VALDEZ oil spill in March 1989, US Congress passed the Oil Pollution Act of 1990 (OPA 90). It is a comprehensive piece of legislation. Only those sections of OPA 90 that relate to liability and compensation for clean-up and damage, and to prevention and preparedness are briefly summarised here. More detailed information, including a complete copy of the Act and associated regulations, can be accessed via the US Coast Guard's website at www.uscg.mil. It should be noted that OPA 90 does not prevent individual States in the USA from implementing their own more stringent oil spill laws and many have done so.
Oil Pollution Liability and Compensation: The owner, operator or bareboat charterer (responsible party) of a vessel from which oil is discharged, or which poses a substantial threat of discharge, into the waters (out to the EEZ) of mainland USA or its overseas territories and possessions, is strictly liable for removal costs and damages.
Removal Costs are the costs incurred in containing and removing oil from water and shorelines, or taking other actions in accordance with the National Contingency Plan, to mitigate damage to public health or welfare, including fish, shellfish, wildlife, and public and private property, shorelines and beaches.
Damages: A wide range of damages are specifically covered by OPA 90. They include:
- real or personal property damage;
- loss of profits or earning capacity;
- loss of subsistence use of natural resources;
- loss of Government revenues from taxes, royalties, rents, fees etc;
- cost of increased public services;
- natural resource damage and the costs of assessing such damage.
Any person or government who incurs an allowable cost, damage or loss as a result of an oil pollution incident may submit claims against the responsible party or its guarantor. In certain circumstances claims may be submitted to the Oil Spill Liability Trust Fund.
Limits: The first layer of liability is placed on the responsible party. In the case of tank vessels of less than 3,000 gross tons, this liability is the greater of US$ 3,000 per gross ton or US$ 6 million for single hull tank vessels and US$ 1,900 per gross ton or US$ 4 million for double hull tank vessels. For tank vessels of over 3,000 gross tons, it is the greater of US$ 3,000 per gross ton or US$ 22 million for single hull tank vessels and US$ 1,900 per gross ton or US$ 16 million for double hull tank vessels. For other types of vessel (eg dry cargo vessels) the limit is the greater of US$ 950 per gross ton or US$ 800,000.
No liability is placed on cargo owners under OPA 90. The owners of ships over 300 gross tons must obtain a Certificate of Financial Responsibility (COFR) as evidence of their financial capability to satisfy the maximum liability under OPA 90.
A responsible party’s right to limitation under OPA 90 can be easily lost. This can happen if the incident was caused by gross negligence or willful misconduct, or if any applicable Federal safety, construction or operating regulation is violated. The right to limit will also be lost through a failure or refusal to report the incident, to provide all reasonable co-operation and assistance requested by a responsible official in connection with removal activities, or to comply with an order under certain sections of other Acts.
Oil Spill Liability Trust Fund: In general, the Oil Spill Liability Trust Fund comes into operation when the responsible party denies a claim or fails to settle it within 90 days, or when the first level of liability is insufficient to satisfy all admissible claims for compensation. In circumstances where the Trust Fund pays claims that the responsible party has denied, it will later seek to recover the costs of settling those claims from the responsible party.
The Trust Fund will consider claims for oil removal costs, third party damages and NRDA costs, although there are a number of conditions which have to be satisfied, as well as restrictions as to who is able to claim from the Trust Fund.
The maximum amount of compensation available from the Trust Fund is $1 billion per incident. It derives its money from a per barrel tax on imported and domestically produced oil. The Trust Fund is administered by the National Pollution Funds Center, which produces a helpful Claimant’s Information Guide. This is available from the Fund, the address of which can be found at www.uscg.mil/hq/npfc.
Prevention: There are a considerable number of sections in OPA 90 that deal with the prevention of oil spills, including provisions relating to the issue of licences to seafarers; manning standards for foreign tank vessels; US vessel traffic service systems; gauging of plating thickness; overfill, tank level and pressure monitoring devices; tanker navigation safety standards and manning; and double hull requirements for tank vessels. This last provision requires the phasing out of single hull vessels by certain dates (depending on the size and age of the tank vessels).
Vessel Response Plans: The owners or operators of vessels over 400 GT are required to have approved plans for responding to a worst case discharge of oil or hazardous substance, or substantial threat thereof. Such Vessel Response Plans (VRP) are required to be consistent with the requirements of the National Contingency Plan and Area Plans and must:
- identify a Qualified Individual having full authority to implement removal actions;
- identify and ensure the availability of private personnel and equipment necessary to respond to a worst case discharge or substantial threat thereof; and
- describe the training, and equipment testing, periodic unannounced drills and response actions of the crew.
VRPs have to be updated periodically and also have to be re-submitted for approval after each significant change.
The full text of OPA 90 (source: United States Coast Guard)