Action Item: The U.S. Coast Guard published a Final Rule increasing limits of liability for vessels, deepwater ports, and onshore facilities under the Oil Pollution Act of 1990 ("OPA 90"). The raise in liability limits also increases the amount of financial responsibility that vessels owners/operators are required to maintain and provide evidence of to operate in the United States. Owners/operators of vessels, deepwater ports, and onshore facilities should be aware of the new liability limits applicable to their operations and vessel owners/operators should begin the process of increasing evidence of financial responsibility amounts.
On November 19, 2015, the U.S. Coast Guard published a Final Rule that increases limits of liability for vessels, deepwater ports, and onshore facilities under OPA 90. For vessels, the Final Rule increases limits of liability by about ten percent. The raise in liability limits reflects significant increases in the Consumer Price Index ("CPI"), as required by OPA 90. Owners/operators will need to demonstrate a commensurate increase in financial responsibility by March 21, 2016. The Final Rule also creates a streamlined procedure for future CPI increases to limits of liability and clarifies OPA 90 liability limit applicability to vessels carrying edible oil and oil spill response vessels. The Final Rule is available here.
Under OPA 90, each responsible party for vessels, onshore facilities, deepwater ports, and other offshore facilities is strictly liable, jointly and severally, for removal costs and damages resulting from pollution incidents up to their limits to liability, with certain exceptions. To prevent depreciation of the liability limits due to inflation, OPA 90 mandates increases of the limits of liability to reflect significant increases in the CPI every three years. The limits of liability, however, have not been increased since 2009.
New Limits of Liability
The table below summarizes the previous and increased limits of liability. The new limits of liability will take effect on December 21, 2015. We note that single hull tankers were phased out per OPA 90 on January 1, 2015, so the liability limits published by the Coast Guard are likely a vestige of a rulemaking that began before the phase out date.
|Source Category||Previous Limit||New Limit|
|Single hull tank vessel greater than 3,000 gross tons (not including edible oil tank vessels and oil spill response vessels)||The greater of $3,200 per gross ton or $23,486,000||The greater of $3,500 per gross ton or $25,845,600|
|Tank vessel greater than 3,000 gross tons, other than single hull tank vessels (not including edible oil tank vessels and oil spill response vessels)||The greater of $2,000 per gross ton or $17,088,000||The greater of $2,200 per gross ton or $18,796,800|
|Single hull tank vessel less than or equal to 3,000 gross tons (not including edible oil tank vessels and oil spill response vessels)||The greater of $3,200 per gross ton or $6,408,000||The greater of $3,500 per gross ton or $7,048,800|
|Tank vessel less than or equal to 3,000 gross tons, other than single hull tank vessels (not including edible oil tank vessels and oil spill response vessels)||The greater of $2,000 per gross ton or $4,272,000||The greater of $2,200 per gross ton or $4,699,200|
|All other vessels, including edible oil tank vessels and oil spill response vessels||The greater of $1,000 per gross ton or $854,400||The greater of $1,100 per gross ton or $939,800|
|Any deepwater port, including for any component pipelines, other than a deepwater port with a liability limit established by regulation under OPA 90||$373,800,000||$633,850,000|
|Louisiana Offshore Oil Port ("LOOP")||$87,606,000||$96,366,600|
|Onshore facilities, including, but not limited to, any motor vehicle, rolling stock, or onshore pipeline||$350,000,000||$633,850,000|
Streamlined Procedure for Future CPI Adjustments
The U.S. Coast Guard adopted a simplified procedure for future CPI adjustments that will ensure timely and efficient increases. The new procedure is based on the Federal Energy Regulatory Commission's fee adjustment procedures and calls for an evaluation every three years to determine whether the cumulative percent change in the Annual CPI for all urban consumers published by the U.S. Department of Labor has reached a significance threshold of three percent or greater. If less than three percent over the three-year period, a notice of no inflation adjustment will be published. Once a three-percent change is reached cumulatively since the last inflation adjustment, the limits of liability will be increased in accordance with current procedures.
Edible Oil Tank Vessel and Oil Spill Response Vessel Limits of Liability
Due to confusion about the applicability of tank vessel limits of liability to edible oil tank vessels and oil spill response vessels, the Final Rule alters the language of the regulations to clarify that these vessels are not treated as tank vessels for the purpose of vessel limits of liability as well as for evidence of financial responsibility requirements because these two vessel categories are as a matter of law not "tank vessels" under OPA 90.
Conclusion and Recommendations
Owners and operators of vessels, deepwater ports, and onshore facilities are advised to review the new limits of liability applicable to their operations and make insurance adjustments as necessary. The new limits of liability take effect on December 21, 2015. Vessel owners and operators are required to submit new evidence of financial responsibility by March 21, 2016.)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.