Oil Spill Liability Trust Fund Information

Published Jan 10, 2011 10:54 AM by The Maritime Executive

U.S. Coast Guard discusses Oil Spill Liability Trust Fund

MarEx attends US Coast Guard briefing on the “Oil Spill Liability Trust Fund of 1990.”

Tom Morrison, Chief of Claims Division and Tim Eastman, Chief of Case Management Division

Tim Eastman, Chief of Case Management Division, National Pollution Funds Center

Comments from Eastman: said the government has $1.6 billion in Oil Spill Liability Trust Fund. Currently, within this Trust Fund is $105 million of the “emergency relief fund,” which was increased by the $100 million advancement. From the $105 million, funds will be provided to the EPA and US Coast Guard Federal on scene commanders, for the oil clean up in US coastal and navigable waters.

Eastman said, these funds are given to Field Operations Commanders (FOC) to hire state local federal agencies and any contracted commercial source to bring to bear all forces required to increase the oil spill response operation.

He stated it is also his responsibility to distribute the money, track it, and recover the cost spent, so the “responsible party”, can be held to pay back all monies spent. This s a basic tenant of the OPA90’ law requiring all polluters be responsible for all costs associated with an oil threat or an actual oil spill. ‘Cost recovery’ is an important facet of what Eastman will do after the cost have been assessed.

Tom Morrison, Chief of Claims Division, National Pollution Funds Center:

Morrison said it is his function to adjudicate and compensate fairly and timely any claims filed under the Oil Pollution Act. He is dealing with people and/or issues facing residents in the Gulf Coast. He said it is one of his primary functions to ensure the responsibility party has been designated and is advertising they will handle at first all claims and state what will be compensated first.

If claimants are not dealt with within 90 days, the claims can be handled by “Oil Spill Liability Trust Fund,” where the USCG will adjudicate them and determine reasonable compensation for each claim. When claims are filed with the ‘responsible party,” the 90 day time table goes into effect, but it should be pointed out that “personal injury” claims are not covered by OPA90’ or the “Oil Spill Liability Trust Fund.”

USCG has designated BP as the responsible party in this matter and the company has setup a toll free phone number (1 -800-440-0858) with phone operators around the clock phone receiving claims and information. Also, the USCG has a website at the “National Pollution Fund Center” (NPFC) as well.

Q & A:

MarEx: The trust fund has about $1.6 billion. You said there is $105 million in the emergency fund today. Exactly what does that mean? And, if this spill is catastrophic, there is no way $105 million is a lot of money.

Tim Eastman: The $1.6 billion comes from a $0.08 per barrel tax of all oil produced in the US. So, overtime we have collected $1.6 billion. Each year from the $1.6 billion, $50 million gets added to the emergency fund to be available to fund emergency pollution response.

Our grand total for the emergency fund is only $105 million. That’s federal funds only. There are a formidable amount of personnel, equipment, and resources being brought to bear to deal with this spill, but the majority of the response operations will be funded by BP.

Tom Morrison: To add to that BP and ? their limited liability on this in the response world, they bare the burden or liability of all response costs. So anything that Tim’s saying he would be paying, that’s automatically going into his to be billed file with the expectation that would be paid, and BP is currently carrying the lions share of all the costs and funding all the costs. On my side, the claims side, directly the principal fund of the 1.6 billion, so we don’t have the lower threshold or lower limit concern at this point. As the RP gets billed and compensation comes in it goes back into the fund.

This is Tim Eastman again I wanted to add one point of clarity; you asked if the $105 million was the drop-dead ceiling. No, right now we are asking to get another advancement for cleanup. So more money has been requested to continue providing operational response support.

MarEx: Exxon spent about $5 billion cleaning up the Valdez spill. And, while spill this is catastrophic; it is not the biggest spill that has taken place in the Gulf. The caveat to OPA90 is that BP is faced with unlimited liability. But, they are already starting to point fingers. What happens if the walk away and say we’ve covered the spill to this amount and now the government has to step up and finish funding the clean up. Or would they do that?

Eastman Lets say in the unlikely circumstance BP walked away and stopped funding, the limit per incident per OPA regulation is $I billion per incident. That $1 billion would be the max the federal government could spend unless that cap was released. There is discussion as to whether (again this is all hypothetical) should more money be needed the mechanism to request more money is already been considered.

KMUD Radio: Please talk about the ground water infiltration systems in the area and how that interacts with the oil spill. Are there any claims about water pollution or is that taken on by the cities who are impacted?

Tom Morrison: I’ll start on the claims side of it. And, Tim should probably tell us about the federal on scene coordinators that are trying to identify if those things are happening. If it were to happen one of the types of claims that is compensable under OPA, and again the responsible party, BP, should be the first one to step up on these things but if a community were to have to truck in drinking water or do something else, even use one of the big water barges, that could be a very easy to reimburse increased public service claim under OPA.

Fox Business: You had spoken about how there were times when BP would need to step up for example in the case of the drinking water. So how is it delineated between what BP is responsible for, where the fund comes into play and what happens if you disagree about something that BP should be paying for that its not?

Tom Morrison: With the division of labor, is it’s a claim that I were to pay, and BP did not pay they were advised of it and they did not pay it, and the claim came to us and we found it compensable. I would pay it out of the fund to take care of the claimant, and as Tim had mentioned before he gets to go and try and collect on anything that I pay.

Tim Eastman: Any claim paid, its recovery takes place at my department. He’ll provide a list of all monies paid to claimants, and all claims paid and adjudicated. I send basically a bill to the RP. And, if the RP doesn’t pay in a timely fashion, the bill is sent to the DOJ litigation system for action.

KMUD: I was wondering if the funds that were talking about in any way shape or form head toward organizations that deal with shore bird rescue, oil spill impacts on marine life, or ornithological interest. Do these funds specifically go just to people or are they also going to organizations that are apart of that rehab effort?

Tim Eastman: Absolutely the variety of, and it varies state to state but a multitude of agencies both for the capture, cleansing, protection of, safeguarding. Various funding streams to a variety of agencies that go directly to what you just described.

Tom Morrison: To add to that, I should have invited my partner who is in charge of the Natural Resource Damage Claims, he works closely with the trustees, federal and state trustees, in these different areas. The assessment of what the injury is and restoration plan to bring whatever species back to where they were before. That’s a bigger longer term claims process., and its called Natural Resource Damage Claims. That’s on our website also. That’s after the fact though, right now is the initial first aid mitigation triage activities that are going on. Tim’s dollars are paying federal and state entities to do that. Then the long terms plans are developed and that comes through the Natural Resource Damage Claims process which the RP is too work with and should be funding also.

Tim Eastman: One point of clarity, there is a specific pot of money pulled from that emergency fund, but its specifically obligated to for what our term is initiate and that’s to initiate the assessment of those damages. So its gathering all the ephemeral data and measurement of species and beach front and all the things that scientists do to collect data on what the condition was prior to the oil impact, so significant amounts of money are spent in that regard.

Lt. Commander O’Neil, from the headquarters of public affairs: I had a point of clarity, the national resource damage assessment, correct me if I’m wrong, that follows under the department of the interiors lead agency for that, is that correct?

On this incident DOI is the main agency. It varies from incident to incident, just based on which resources are most threatened, but yes its DOI.

Congressional Quarterly: When it comes to the short-term recovery response effort, is there any piece of it that is not the responsibility BP, is there any piece of this that is the federal governments responsibility? Or is it all incumbent upon BP?

It is 100% BP, that’s why there is significant federal funding obligated for this in the event that BP was not taking aggressive enough or quick enough, the federal governments money is on line so to speak, if BP were not to take sufficient action.

Fox Business: If the responsibility is 100% BP, if it were to blame one of its contractors for some sort of mistake along the way, would it be BP’s responsibility to sue its contractor or can it shift some of the responsibility to someone that works with them but may not be under its corporate logo.

That’s a question that you really need to ask a BP representative.

Fox Business: Legally speaking under this act you said that BP is 100% responsible. What if they say that the responsibility is someone else’s, you still maintain the position that they that they will have to pay and you will pursue through DOJ to reclaim any money spent. Is that correct?

That’s right, and the burden would be on BP to demonstrate through some defense of law, 3rd party defense, act of God, so on and so forth they would have to prove and have that successfully weighed in front of a judge.