MARINE UNDERWRITERS OF SAN FRANCSICO, INC.MARINE UNDERWRITERS OF SAN FRANCSICO, INC.Marine SeminarMarine Seminar

Wednesday, April 29, 2009Wednesday, April 29, 2009

Pollution RegulationsPollution RegulationsState of CaliforniaState of California

Office of Spill Prevention and ResponseOffice of Spill Prevention and Response

Presented by:Presented by: Stephen L. SawyerStephen L. SawyerAssistant Chief CounselAssistant Chief CounselCalifornia Department of Fish and GameCalifornia Department of Fish and GameOffice of Spill Prevention and ResponseOffice of Spill Prevention and Response

Office of Spill Prevention and ResponseOffice of Spill Prevention and ResponseCreated by Statute in 1990Created by Statute in 1990

Lempert-Keene-Seastrand

Oil Spill Prevention and Response Act (the “Act”)Enacted 09/24/90

Non-tank vessels (over 300 gross tons)

Added in 1999

Established Regulatory Authority overEstablished Regulatory Authority overtank vessels and marine facilitiestank vessels and marine facilities

Office of Spill Prevention and ResponseOffice of Spill Prevention and Responsewebsitewebsite

http://www.dfg.ca.gov/ospr/spill/index.html

Title 14, California Code of Regulations section 790(r)(8) Title 14, California Code of Regulations section 790(r)(8) Definition of Responsible Party(ies)

• (A) the owner or transporter of oil or a person or entity accepting responsibility for the oil.

• (B) the owner, operator or lessee of, or person who charters by demise, any tanker, barge, nontank vessel or marine facility.

• (C) a person or entity who accepts responsibility for vessel or marine facility.

CERTIFICATE OF FINANCIAL RESPONSIBILITYCERTIFICATE OF FINANCIAL RESPONSIBILITY(COFR)(COFR)

Government Code section 8670.37.53Government Code section 8670.37.53

Tank Vessels Tank Vessels means: Any tanker or barge that carries oil in

commercial quantities as cargo

• Cargo capacity over 150,000 bbls.

• One billion dollars ($1,000,000,000) COFR

COFR (Cont’d)COFR (Cont’d)

Government Code section 8670.37.53 (cont’d)Government Code section 8670.37.53 (cont’d)

Non-Tank VesselsNon-Tank Vessels means: A vessel of 300 gross tons or greater that

carries oil, but does not carry oil as cargo.

• Three hundred million dollars ($300,000,000) with carrying capacity over 6,500 bbls.

• Carrying capacity of 6,500 bbls. or less, COFR amount reduced

(See, Title 14, CCR § 791.7(d)(1)(B) & (C))

Marine FacilitiesMarine Facilities means:

(A) A drill ship, semi submersible drilling platform, jack-up type

drilling rig, or any other floating or temporary drilling platform.

(B) Any facility of any kind, other than a tanker or barge which;1. is or was used for the purposes of exploring for, drilling for,

producing, storing, handling, transferring, processing, refining, or

transporting oil, including pipelines, and2. is located in marine waters, or is located where a discharge

could impact marine waters. 

• $12,500 x reasonable worst case scenario as determined in Contingency Plan

(See, Title 14, CCR § 791.7(e))

COFR (Cont’d)COFR (Cont’d)

Government Code section 8670.37.53 (cont’d)Government Code section 8670.37.53 (cont’d)

LIABILITYLIABILITY

• Unlimited liability for a spill in California waters

• Strict liability for response costs and damages

DAMAGESDAMAGESCreated by the Act Created by the Act

Government Code section 8670.56.5(h)Government Code section 8670.56.5(h)Damages for which responsible parties are liable

when a spill occurs into marine waters of the state.

• (1) All costs of response, containment, cleanup, removal, and treatment, including, but not limited to, monitoring and administration costs incurred pursuant to the California oil spill contingency plan or actions taken pursuant to directions by the administrator.

• (2) Injury to, or economic losses resulting from destruction of or injury to, real or personal property, which shall be recoverable by any claimant who has an ownership or leasehold interest in property.

• (3) Injury to, destruction of or loss of, natural resources, including, but not limited to, the reasonable costs of rehabilitating wildlife, habitat, and other resources and the reasonable costs of assessing that injury, destruction, or loss, in an action brought by the state, a county, city, or district. Damages for the loss of natural resources may be determined by any reasonable method, including, but not limited to, determination according to the costs of restoring the lost resource.

• (4) Loss of subsistence use of natural resources, which shall be recoverable by a claimant who so uses natural resources that have been injured, destroyed, or lost.

• (5) Loss of taxes, royalties, rents, or net profit shares caused by the injury, destruction, loss, or impairment of use of real property, personal property, or natural resources.

• (6) Loss of profits or impairment of earning capacity due to the injury, destruction, or loss of real property, personal property, or natural resources, which shall be recoverable by any claimant who derives at least 25 percent of his or her earnings from the activities that utilize the property or natural resources, or, if those activities are seasonal in nature, 25 percent of his or her earnings during the applicable season.

• (7) Loss of use and enjoyment of natural resources, public beaches, and other public resources or facilities, in an action brought by the state, a county, city, or district.

Government Code section 8670.56.5(h) (cont’d)Government Code section 8670.56.5(h) (cont’d)

Title 14, California Code of Regulations section 795 Title 14, California Code of Regulations section 795

• Requires the execution of the “California Endorsement”.

(See, Handout)

CLAIMSCLAIMS

Government Code section 8670.51.1Government Code section 8670.51.1

• Designation of Responsible Party.

• Requires Responsible Party to widely advertise claims procedure.

• Allows OSPR to pay claims under fifty thousand dollars ($50,000).

• OSPR charges administrative overhead.

EXAMPLES OF FEDERAL LIMITS OF EXAMPLES OF FEDERAL LIMITS OF LIABILITY PROBLEMS IN CALIFORNIA LIABILITY PROBLEMS IN CALIFORNIA

OIL SPILLSOIL SPILLS

Cosco BusanCosco BusanNovember 7, 2007November 7, 2007

Amount spilled: Amount spilled: 53,569 gallons53,569 gallons

Gross tons 65,131 x $600 = $39,078,600

M/V KureM/V KureNovember 5, 1997November 5, 1997Amount spilled: 47 bbls.Amount spilled: 47 bbls.

Gross tons 36,009 x $600 = $21,605,040

M/S StuyvesantM/S StuyvesantSeptember 6, 1999September 6, 1999Amount spilled: 50 bbls.Amount spilled: 50 bbls.

Gross tons 7,110 x $600 = $4,266,000

Natural Resource Damages settled for $6.71 million

QUESTIONS!!