Introduction
Oil is a dominant source of energy in the United States, accounting for approximately 36% of total energy consumption in 2014.1 Its use is widespread, providing fuel for the transportation, industrial, and residential sectors. Vast quantities of oil continuously enter the country via vessel or pipeline. Vast quantities continually move throughout the country to various destinations. With such widespread use and nonstop movement, it is inevitable that some number of spills will occur.
Over the past few decades, two major U.S. oil spills have had lasting repercussions that transcended local environmental and economic effects:
- 1. 2010 Deepwater Horizon oil spill: On April 20, 2010, an explosion occurred at the Deepwater Horizon drilling platform in the Gulf of Mexico, resulting in 11 fatalities. The platform had been attached to the Macondo oil well approximately 5,000 feet below sea level. Two days later the platform sank into the Gulf, and responders discovered that the well was releasing oil at a significant rate. The well released approximately 206 million gallons of oil (4.9 million barrels) before it was contained 87 days later.2
- 2. 1989 Exxon Valdez oil spill: On March 24, 1989, the Exxon Valdez oil tanker ran aground on Bligh Reef in Prince William Sound Alaska, releasing approximately 11 million gallons of crude oil.3 Cleanup efforts lasted for six months in 1989 until the U.S. Coast Guard suspended operations due to weather and climatic conditions. Cleanup efforts resumed during the warmer months of 1990 and 1991. The Exxon Valdez spill produced extensive consequences beyond Alaska. According to the National Academies, the Exxon Valdez disaster caused "fundamental changes in the way the U.S. public thought about oil, the oil industry, and the transport of petroleum products by tankers.... 'Big oil' was suddenly seen as a necessary evil, something to be feared and mistrusted."4
This report provides background information regarding oil spills5 and identifies the legal authorities and processes for oil spill prevention, response, liability, and compensation. The first section highlights background issues, including oil spill statistics and potential environmental impacts. The second section discusses the legal and regulatory framework that governs oil spill prevention and response.
Background
Oil spills occur from a wide variety of sources. Some sources release relatively minor amounts per individual release but, in aggregate, contribute a significant annual volume (e.g., recreational vessels). Other sources, such oil tankers or offshore oil wells, release oil on a less frequent basis but have the potential to release a significant volume in one incident. These variances in frequency and volume of oil releases create different environmental impacts as well as different challenges for responders and policymakers.
For example, major oil well blowouts are relatively uncommon but have accounted for the largest unintentional oil spills in world history. In particular, the 2010 Deepwater Horizon incident released approximately 206 million gallons of oil before it was contained.6 In 1979, the IXTOC I oil well blowout released an estimated 140 million gallons in Mexican Gulf Coast waters.7 By comparison, the largest oil tanker spill in world history—the Atlantic Empress off the coast of Tobago in 1979—was estimated at approximately 84 million gallons.8
Oil Spill Data: Recent Trends
No single agency or organization collects oil spill data from all of the major sources for all locations. Although the National Response Center collects and provides details about a wide spectrum of incidents, the data are raw, and the spill volume data in particular are generally unreliable, because they are often initial, unverified estimates.
A national assessment of oil spills necessitates data collection from several sources, including the U.S. Coast Guard and the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA). Combining the data from these sources may be problematic, because (1) some incidents may be included in both sources of data; and (2) the data collection processes and scopes may vary. Therefore, data from these sources are presented separately below.
Coast Guard Data
The Coast Guard maintains an Oil Spill Compendium with spill data for various sources within its jurisdiction for responding to oil spills.9 Pursuant to the National Contingency Plan (discussed below), the Coast Guard's oil spill response jurisdiction is the "coastal zone," defined in regulations to include
all United States waters subject to the tide, United States waters of the Great Lakes, specified ports and harbors on inland rivers, waters of the contiguous zone, other waters of the high seas subject to the NCP, and the land surface or land substrata, ground waters, and ambient air proximal to those waters.10
Figure 1 illustrates the number of oil spill incidents and spill volume from the Coast Guard's Oil Spill Compendium between 2002 and 2011, the most recent year of available data. The spill data include incidents from vessels, facilities, and pipelines. However, the 2010 Deepwater Horizon oil spill is not included in the figure, because the magnitude of its spill volume—estimated at 206 million gallons11—makes it difficult to compare annual spill volumes. The figure does include an estimate of oil released on the surface (approximately 400,000 gallons) from the Deepwater Horizon mobile offshore drilling unit.
The figure indicates that the number of incidents has decreased over time. Except for several large incidents in 2005 and 2006 (and the Deepwater Horizon incident in 2010), the volume of spilled oil has remained relatively consistent. In 2005, approximately 8 million gallons of oil were released from Louisiana facilities damaged during Hurricane Katrina; in 2006, approximately 2 million gallons spilled from a refinery in Louisiana.12
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Figure 1. Oil Spills from All Sources in U.S. Coast Guard's Jurisdiction: 2002-2011 Does not include the volume from the 2010 uncontrolled Macondo well |
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Source: Prepared by CRS with data from the USCG Oil Spill Compendium, at https://homeport.uscg.mil (click on "Investigations"). Accessed in April 2015. Notes: The Coast Guard states that its Oil Spill Compendium includes spills that have been "investigated" by the Coast Guard. Further, "this data is provided 'as reported,' with no interpretation or filtering. For example, incidents that fall within the jurisdiction of other agencies, or that are not required to be reported under existing Coast Guard regulations, may be included in the compendium." The spill volume from the 2010 uncontrolled Macondo well is not included in the above figure: the magnitude of its spill volume makes it difficult to compare annual spill volumes. In 2010, an interagency team estimated the spill volume at 206 million gallons (Federal Interagency Solutions Group, Oil Budget Calculator Science and Engineering Team, Oil Budget Calculator: Deepwater Horizon-Technical Documentation, November 2010). The figure does include an estimate of oil released (approximately 400,000 gallons) from the Deepwater Horizon mobile offshore drilling unit. |
Figure 2 compares the volume of spills over a longer time period from the same selected sources identified in Figure 1. As Figure 2 illustrates, the annual oil spill volumes from all sources—particularly tankers and barges—declined dramatically in the 1990s compared to previous decades. This historical decline is likely related, at least in part, to the Oil Pollution Act of 1990 (OPA), which was enacted after the 1989 Exxon Valdez oil spill.13 The 1990 act (discussed below) made comprehensive changes to U.S. oil pollution law by expanding federal response authority and increasing spill liability. The high costs associated with the Exxon Valdez spill,14 and the threat of broad liability imposed by OPA (in some scenarios, unlimited liability), were likely significant drivers for the spill volume decline seen in the 1990s.
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Figure 2. Volume of Oil Spills by Source in the Coast Guard's Jurisdiction: 1973-2011 Does not include the volume from 2010 uncontrolled Macondo well in the Gulf of Mexico |
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Source: Prepared by CRS with data from the USCG Oil Spill Compendium. Accessed in April 2015. Notes: The Coast Guard states that its Oil Spill Compendium includes spills that have been "investigated" by the Coast Guard. Further, "this data is provided 'as reported,' with no interpretation or filtering. For example, incidents that fall within the jurisdiction of other agencies, or that are not required to be reported under existing Coast Guard regulations, may be included in the compendium." "Other" sources include non-tanker vessels, such as cargo ships, passenger vessels, fishing vessels, and recreational vessels. For a complete list see the USCG Oil Spill Compendium at https://homeport.uscg.mil (click on "Investigations"). The spill volume from the 2010 uncontrolled Macondo well is not included in the above figure: the magnitude of its spill volume makes it difficult to compare annual spill volumes. In 2010, an interagency team estimated the spill volume at 206 million gallons (Federal Interagency Solutions Group, Oil Budget Calculator Science and Engineering Team, Oil Budget Calculator: Deepwater Horizon-Technical Documentation, November 2010). The figure does include an estimate of oil released (approximately 400,000 gallons) from the Deepwater Horizon mobile offshore drilling unit. |
PHMSA Data
PHMSA collects oil spill data for pipelines and rail transportation—two modes of oil transportation that have received attention in recent years. Figure 3 illustrates the number of crude oil incidents and spill volume by mode of transportation between 2002 and 2014. As the figure indicates, spills from rail transportation were infrequent between 2002 and 2009. However, the volume of crude oil carried by rail has increased dramatically in recent years: from approximately 8 million barrels in 2009 to approximately 290 million barrels in 2013, a 36-fold increase.15 The increase in crude oil transport by rail corresponds to the increase in the number of incidents illustrated in the figure. The increased spill volume by rail in 2008 resulted from a large oil spill (over 80,000 gallons) in Luther, Oklahoma. The increased volume in 2013 is the result of two major incidents: train derailments in Aliceville, Alabama, and Casselton, North Dakota, which each released over 420,000 gallons of crude oil.
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Figure 3. Crude Oil Spills from Pipeline and Rail Transportation: 2002-2014 Spill Volume and Incident Number |
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Source: Prepared by CRS; data from PHMSA Incidents Report Database, at http://www.phmsa.dot.gov/hazmat/library/data-stats/incidents Notes: The pipeline and rail data include all incidents in the PHMSA database. The increased spill volume by rail in 2008 resulted from a large oil spill (over 80,000 gallons) in Luther, Oklahoma; the increased volume in 2013 is the result of two major incidents: train derailments in Aliceville, Alabama, and Casselton, North Dakota, which each released over 420,000 gallons of crude oil. |
The recent increase in crude oil transport by rail and the corresponding increase in rail incidents have generated considerable interest from policymakers.16 Some have linked the increased rail transportation to the debate over the Keystone XL pipeline.17 The two figures below provide a comparison between pipeline and rail transportation.
Figure 4 illustrates the number of oil spill incidents per barrel of oil transported. The figure indicates that incidents from rail (per gallon transported) have exceeded pipeline incidents between 2005 and 2013. Note that many of these incidents have involved relatively small volumes of spilled oil.
Figure 5 compares the volume of oil spilled per gallon of oil transported. In contrast to the previous results, this figure indicates that for most years (2008 and 2013 being exceptions), the volume of oil spilled for pipelines (per gallon transported) has exceeded that of rail transport.
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Figure 4. Crude Oil Spill Incidents per Million Gallons Transported Pipeline vs. Rail |
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Source: Prepared by CRS; oil spill data from PHMSA Incidents Report Database, http://www.phmsa.dot.gov/hazmat/library/data-stats/incidents; pipeline transport data from Energy Information Administration, "Refinery Receipts of Crude Oil by Method of Transportation," http://www.eia.gov; rail transportation data from Association of American Railroads, "Moving Crude Oil by Rail," September 2014, https://www.aar.org. The pipeline and rail data include all incidents in the PHMSA database. |
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Figure 5. Crude Oil Spill Volume per Million Gallons Transported Pipeline vs. Rail |
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Source: Prepared by CRS; oil spill data from PHMSA Incidents Report Database, http://www.phmsa.dot.gov/hazmat/library/data-stats/incidents; pipeline transport data from Energy Information Administration, "Refinery Receipts of Crude Oil by Method of Transportation," http://www.eia.gov; rail transportation data from Association of American Railroads, "Moving Crude Oil by Rail," September 2014, https://www.aar.org. The pipeline and rail data include all incidents in the PHMSA database. |
In its Final EIS for Keystone XL, the State Department reached similar conclusions.18 Using Pipeline and Hazardous Material Safety Administration as well as Coast Guard data to compare oil spill frequency and volume by mode of transportation, the State Department found that between 2002 and 2009
pipeline transport has the highest number of barrels released per ton-mile compared to rail; and
rail transport has the highest number of reported releases per ton-mile compared to pipelines.19
Impacts of Oil Spills in Aquatic Environments
The impacts of an oil spill depend on the size of the spill, the rate of the spill, the type of oil spilled, and the location of the spill. Depending on timing and location, even a relatively minor spill can cause significant harm to individual organisms and entire populations.20 Oil spills can cause impacts over a range of time scales, from days to years, or even decades for certain spills. Impacts are typically divided into acute (short-term) and chronic (long-term) effects. Both types are part of a complicated and often controversial equation that is addressed after an oil spill: ecosystem recovery.
Acute Impacts
Depending on the toxicity and concentration of the spill, acute exposure to oil spills can kill various organisms and cause the following debilitating (but not necessarily lethal) effects:21
- reduced reproduction,
- altered development,
- impaired feeding mechanisms, and
- decreased defense from disease.
Birds, marine mammals, bottom-dwelling and intertidal species, and organisms in their developmental stages (e.g., fish eggs and larvae) are particularly vulnerable to oil spills.22
In addition to the impacts to individual organisms, oil spills can lead to a disruption of the structure and function of the ecosystem. Certain habitats—such as coral reefs, mangrove swamps, and salt marshes—are especially vulnerable, because the physical structure of the habitats depends upon living organisms.
These potential acute effects to individual organisms and marine ecosystems have been "unambiguously established" by laboratory studies and well-studied spills.23
Chronic Impacts
Long-term, chronic exposure typically occurs from continuous oil releases—leaking pipelines, offshore production discharges, and non-point sources (e.g., urban runoff). Although spills are normally associated with acute impacts, some oil spills have also demonstrated chronic exposure and effects.24 There is increasing evidence that chronic, low-level exposures to oil contaminants can significantly affect the survival and reproductive success of marine birds and mammals.25 However, because of the complexity of factors, including a longer time period and presence of other pollutants, determining the precise effects on species and ecosystems due to chronic oil exposure in a particular locale is difficult for scientists. As a result, studies involving chronic effects are often met with debate and some controversy.
Ecosystem Recovery
Interested parties may have differing opinions as to what constitutes ecosystem recovery. At one end of the spectrum, local groups may demand that an ecosystem be returned to pre-spill conditions. NOAA regulations (15 C.F.R. §990.30) state that recovery "means the return of injured natural resources and services to baseline"—in other words, a return to conditions as they would have been had the spill not occurred. Baseline conditions may not equate with pre-spill conditions. Multiple variables affect local species and ecosystem services. For example, one species at a spill site could have been on the decline at the time of an incident, because of changing water temperatures. These types of trends are considered during the restoration evaluative process (discussed below). Restoration leaves room for site-specific interpretation, which, in the case of the Exxon Valdez spill and cleanup, continues to generate considerable argument.
Economic Costs of Oil Spills
The economic costs that can result from an oil spill can be broken into three categories: cleanup expenses, natural resource damages, and the various economic losses incurred by the affected community or individuals.
Cleanup Costs
The cleanup costs of an oil spill can vary greatly and are influenced by a mix of factors: location characteristics, oil type, and oil volume.
Location
Location is generally considered the most important factor because it involves multiple variables. Areas with less water movement, such as marshlands, will generally cost more to clean up than open water. Some spill locations may have relatively robust populations of indigenous micro-organisms that help degrade the oil naturally.26
Tourist destinations or sensitive habitats, such as coral reefs, will likely require more stringent cleanup standards, thus increasing the costs. The political and social culture at the spill site plays a part as well. A spill in a high-profile area may receive special attention.27 Major oil spills, especially ones that affect shoreline ecosystems, are often met with extensive media coverage, placing pressure on parties to take action. Coupled with this pressure, authorities (federal, state, or local) at these locations may require extensive oil spill response requirements, which can influence cleanup cost. For instance, spill costs in the United States are considerably higher than in other parts of the world.28
Oil Type
The more persistent and viscous oil types, such as heavy crude oil (e.g., crude oil derived from oil sands) and intermediates known as bunker fuels, are more expensive to clean up. Gasoline and other lighter refined products may require only minimal cleanup action. Generally, these materials will evaporate or disperse relatively quickly, leaving only a small volume of petroleum product in the environment.
Oil Volume
Compared with other factors, spill volume is less important. A major spill away from shore will likely cost considerably less than a minor spill in a sensitive location. Certainly, the amount of oil spilled affects cleanup costs, because, all things being equal, a larger spill will require a larger and more expensive cleanup effort. However, the relationship between cleanup costs and spill volume is not linear. Cleaning up a smaller spill is likely to cost more than a larger spill on a per-gallon basis.29
Natural Resources Damages
This category of costs relates to the environmental impacts caused by an oil spill. Pursuant to OPA, the party responsible for an oil spill is liable for any loss of natural resources (e.g., fish, animals, plants, and their habitats) and the services provided by the resource (e.g., drinking water, recreation).
When a spill occurs, natural resource trustees conduct a natural resource damage assessment to determine the extent of the harm. Trustees may include officials from federal agencies designated by the President, state agencies designated by the relevant governor, and representatives from tribal and foreign governments.30 The various trustees assess damages to natural resources under their respective jurisdictions.31 If multiple trustees are involved, they must select a lead administrative trustee (LAT), who coordinates trustee activities and serves as a liaison between oil spill responders. The LAT need not be from a federal agency; however, only a federal LAT can submit a request to the Oil Spill Liability Trust Fund for the initial assessment funding.32
The Oil Pollution Act (OPA) of 1990 states that the measure of natural resource damages includes
- the cost of restoring, rehabilitating, replacing, or acquiring the equivalent of the damaged natural resources;
- the diminution in value of those natural resources pending restoration; and
- the reasonable cost of assessing those damages.33
Pursuant to OPA, NOAA developed regulations pertaining to natural resource damage assessments in 1996.34 Natural resource damages may include both losses of direct use and passive uses. Direct use value may derive from recreational (e.g., boating), commercial (e.g., fishing), or cultural or historical uses of the resource. In contrast, a passive-use value may derive from preserving the resource for its own sake or for enjoyment by future generations.35
The damages are compensatory, not punitive. Collected damages cannot be placed into the general Treasury revenues of the federal or state government, but must be used to restore or replace lost resources.36 NOAA's regulations focus on the costs of primary restoration—returning the resource to its baseline condition—and compensatory restoration—addressing interim losses of resources and their services.37
Other Economic Costs
Oil spills can generate costs other than response expenses or damages to natural resources. An oil spill can disrupt business activity near the spill, particularly businesses and individuals that count on the resources and reputation of the local environment. For example, the local fishing and tourist industry may be affected. In some cases, a well-publicized oil spill can weaken local or regional industries near the spill site, regardless of the actual threat to human health created by the spill.
Local infrastructure and services can be disrupted by an oil spill. Port and harbor operations may be interrupted, altering the flow of trade goods. Power plants that use cooling water systems may need to temporarily cease operations. For example, the Salem Nuclear Plant—the second-largest nuclear plant in the United States—was forced to halt activity due to a substantial oil spill (more than 250,000 gallons) in the Delaware River in November 2004.
Oil Spill Governance
When the Exxon Valdez ran aground in March 1989, there were multiple federal statutes, state statutes, and international conventions that dealt with oil discharges. The spill highlighted the inadequacies of the existing coverage and generated public outrage.38 Following the spill, Members of Congress faced great pressure to address these issues. (See the Appendix for further information concerning these issues.) The end result was the Oil Pollution Act of 1990 (OPA)39—the first comprehensive law to specifically address oil pollution to waterways and coastlines of the United States.
The governing framework for oil spills in the United States remains a combination of federal, state, and international authorities. Within this framework, several federal agencies have the authority to implement oil spill regulations. The framework and primary federal funding process used to respond to oil spills are described below.
Oil Pollution Act of 1990
With the enactment of OPA on August 18, 1990, Congress consolidated the existing federal oil spill laws under one program (Appendix). The 1990 law expanded the existing liability provisions within the Clean Water Act (CWA)40 and created new free-standing requirements regarding oil spill prevention and response. Key OPA provisions are discussed below.
Spill Response Authority
When responding to a spill, many considered the lines of responsibility under the pre-OPA regime to be unclear,41 with too much reliance on spillers to perform proper cleanup.42 OPA strengthened and clarified the federal government's role in oil spill response and cleanup. OPA Section 4201 amended Section 311(c) of the CWA to provide the President (delegated to the U.S. Coast Guard or EPA) with authority to perform cleanup immediately using federal resources,43 monitor the response efforts of the spiller, or direct the spiller's cleanup activities. The revised response authorities addressed concerns "that precious time would be lost while waiting for the spiller to marshall its cleanup forces."44
The federal government—specifically the On-Scene Coordinator (OSC) for spills in the Coast Guard's jurisdiction—determines the level of cleanup required. Although the federal government must consult with designated trustees of natural resources and the governor of the state affected by the spill, the decision that cleanup is completed and can be ended rests with the federal government. States may require further work, but without the support of federal funding.45
National Contingency Plan
The first National Oil and Hazardous Substances Pollution Contingency Plan (NCP) was administratively prepared in 1968 after observing the British government's response to a 37-million-gallon oil tanker spill (Torrey Canyon) off the coast of England.46 The NCP contains the federal government's procedures for responding to oil spills and hazardous substance releases.47
OPA expanded the role and breadth of the NCP. The 1990 law established a multi-layered planning and response system to improve preparedness and response to spills in marine environments.48 Among other things, the act also required the President to establish procedures and standards (as part of the NCP) for responding to worst-case oil spill scenarios.49
For further details on the NCP, see CRS Report R43251, Oil and Chemical Spills: Federal Emergency Response Framework, by [author name scrubbed] and [author name scrubbed].
Tank Vessel and Facility Response Plans
As a component of the enhanced NCP, OPA amended the CWA to require that U.S. tank vessels, offshore facilities, and certain onshore facilities50 prepare and submit oil spill response plans to the relevant federal agency. In general, vessels and facilities are prohibited from handling, storing, or transporting oil if they do not have a plan approved by (or submitted to) the appropriate agency (discussed below).51
The plans should, among other things, identify how the owner or operator of a vessel or facility would respond to a worst-case scenario spill. Congress did not intend for every vessel to have onboard all the personnel and equipment needed to respond to a worst-case spill, but vessels must have a plan and procedures to call upon—typically through a contractual relationship—the necessary equipment and personnel for responding to a worst-case spill.52
In 2004, Congress enacted an amendment requiring non-tank vessels (i.e., ships carrying oil for their own fuel use) over 400 gross tons to prepare and submit a vessel response plan.53 Congress reasoned that many non-tank vessels have as much oil onboard as small tank vessels, thus presenting a comparable risk from an oil spill. Moreover, the international standards for oil spill prevention54 apply to tanker and non-tanker vessels alike. Thus, the 2004 amendment brought the U.S. law more in line with international provisions.
Double-Hull Design for Vessels
The issue of double hulls received considerable debate for many years prior to OPA, and it was one of the stumbling blocks for unified oil spill legislation. Proponents maintained that double-hull construction provides extra protection if a vessel becomes damaged.55 However, opponents argued that a double-hulled vessel might cause stability problems if an accident occurred, thus negating the benefits.56 Stakeholders also highlighted the impacts that a double-hull requirement would entail for the shipping industry (e.g., cost and time of retrofitting, ship availability).57 The OPA requirements for double hulls reflected some of these concerns.
The act required new vessels carrying oil and operating in U.S. waters to have double hulls.58 However, OPA provided certain exceptions, depending on the size of the vessel (e.g., less than 5,000 gross tons)59 and its particular use (e.g., lightering).60 For older vessels, OPA established a staggered retrofitting schedule, based on vessel age and size. As of January 2010, single-hull vessels (with several exceptions, some of which expire in 2015) cannot operate in U.S. waters.
Liability Issues61
OPA unified the liability provisions of existing oil spill statutes, creating a freestanding liability regime. Section 1002 states that responsible parties are liable for any discharge of oil (or threat of discharge) from a vessel or facility62 to navigable waters, adjoining shorelines, or the exclusive economic zone63 of the United States (i.e., 200 nautical miles beyond the shore).
Regarding the oil spill statutes prior to OPA, Congress recognized that "there is no comprehensive legislation in place that promptly and adequately compensates those who suffer other types of economic loss as a result of an oil pollution incident."64 OPA broadened the scope of damages (i.e., costs) for which an oil spiller would be liable. Under OPA, a responsible party is liable for all cleanup costs incurred, not only by a government entity, but also by a private party.65 In addition to cleanup costs, OPA significantly increased the range of liable damages to include the following:
- injury to natural resources,
- loss of personal property (and resultant economic losses),
- loss of subsistence use of natural resources,
- lost revenues resulting from destruction of property or natural resource injury,
- lost profits and earning capacity resulting from property injury or natural resource injury, and
- costs of providing extra public services during or after spill response.66
OPA provided limited defenses from liability: act of God, act of war, and act or omission of certain third parties. These defenses are similar to those of the Superfund statute,67 established in 1980 for releases of hazardous substances (which does not include oil).
Except for certain behavior, including acts of gross negligence or willful misconduct,68 OPA set liability limits (or caps) for cleanup costs and other damages. Until 2006, liability limits for vessels were based on vessel carrying capacity, generally $1,200 per gross ton. As an example, the liability limit for the 2004 Athos tanker spill in Delaware River was approximately $45 million.69
OPA requires the President to issue regulations to adjust the liability limits at least every three years to take into account changes in the consumer price index (CPI). Despite this requirement, adjustments to liability limits were not made until Congress amended OPA in July 2006. The Coast Guard and Maritime Transportation Act of 2006 (P.L. 109-241) increased limits to $1,900/gross ton for double-hulled vessels and $3,000/gross ton for single-hulled vessels. Furthermore, the Coast Guard made its first CPI adjustment to the liability limits in 2009, increasing the limits to $2,000 and $3,200, respectively.70
Mobile offshore drilling units (MODUs), like the Deepwater Horizon unit involved in the April 2010 incident in the Gulf of Mexico, are first treated as tank vessels for their liability cap. If removal and damage costs exceed this liability cap, a MODU is deemed to be an offshore facility for the excess amount.71
Offshore facility liability is unlimited for removal costs but capped at approximately $134 million for other costs and damages;72 onshore facility and deepwater port liability is limited to $350 million. In contrast to tank vessel liability limits, these liability limits are at the same level as they were in 1990. However, the Coast Guard issued a proposed rulemaking in August 2014 that would increase the liability limits for onshore facilities and deepwater ports to $404 million.73
The Oil Spill Liability Trust Fund
Prior to OPA, federal funding for oil spill response was generally considered inadequate,74 and damages recovery was difficult for private parties.75 To help address these issues, Congress supplemented OPA's expanded range of covered damages with the Oil Spill Liability Trust Fund (OSLTF).
Pursuant to Executive Order (EO) 12777, the Coast Guard created the National Pollution Funds Center (NPFC) to manage the trust fund in 1991. The fund may be used for several purposes:
- prompt payment of costs for responding to and removing oil spills;
- payment of the costs incurred by the federal and state trustees of natural resources for assessing the injuries to natural resources caused by an oil spill, and developing and implementing the plans to restore or replace the injured natural resources;
- payment of parties' claims for uncompensated removal costs, and for uncompensated damages (e.g., financial losses of fishermen, hotels, and beachfront businesses);
- payment for the net loss of government revenue, and for increased public services by a state or its political subdivisions; and
- payment of federal administrative and operational costs, including research and development, and $25 million per year for the Coast Guard's operating expenses.
Although Congress created the OSLTF in 1986,76 Congress did not authorize its use or provide its funding until after the Exxon Valdez incident. In 1990, OPA provided the statutory authorization necessary to put the fund in motion. Through OPA, Congress transferred balances from other federal liability funds77 into the OSLTF. In complementary legislation, Congress imposed a 5-cent-per-barrel tax on the oil industry to support the fund.78 Collection of this fee ceased on December 31, 1994, due to a sunset provision in the law. However, in April 2006, the tax resumed as required by the Energy Policy Act of 2005 (P.L. 109-58). In addition, the Emergency Economic Stabilization Act of 2008 (P.L. 110-343) increased the tax rate to 8 cents through 2016. In 2017, the rate increases to 9 cents. The tax is scheduled to terminate at the end of 2017.79
Figure 6 illustrates the receipts, expenditures, and end-of-year balances for the OSLTF. At the end of FY2016, the projected balance is $4.8 billion.
Financial Responsibility
To preserve the trust fund and ensure that responsible parties can be held accountable for oil spill cleanup and damages, OPA requires that vessels and offshore facilities maintain evidence of financial responsibility (e.g., insurance). The Coast Guard's National Pollution Funds Center (NPFC) implements the financial responsibility provisions for vessels; the Bureau of Ocean Energy Management implements this requirement for offshore facilities.
The current levels of financial responsibility are related to the current liability limits for various sources (e.g., vessels, offshore facilities) of potential oil spills. The liability limits differ by potential source. In the case of vessels, whose liability limits are a single dollar amount encompassing both removal costs and other damages, the financial responsibility levels are directly tied to the corresponding liability caps. Current law requires responsible parties for vessels to demonstrate the "maximum amount of liability to which the responsible party could be subjected under [the liability limits in OPA Section 1004; 33 U.S.C. 2704]."
Because the structure of offshore facility liability limit is different than vessels, the corresponding financial responsibility limit provisions differ. Responsible parties for offshore facilities in federal waters must demonstrate $35 million financial responsibility, unless the President determines a greater amount (not to exceed $150 million) is justified (33 U.S.C. 2716(c)). The federal regulations that are authored by this statutory provision (30 C.F.R. Part 254) base the financial responsibility amount—between $35 million and $150 million—on a facility's worst-case discharge volume (as defined in 30 C.F.R. §253.14). For example, a facility with a worst-case discharge volume over 105,000 barrels80—the highest level of worst-case discharge listed in the regulations—must maintain $150 million in financial responsibility.
Other Federal Laws
Although OPA is the primary domestic legislation for oil spills, other federal laws contain provisions that relate to oil spills. Many of these provisions were in place before OPA. The following list is not all-inclusive, but it highlights the main requirements authorized by laws other than OPA.
Clean Water Act
The Clean Water Act (CWA) was the primary federal statute governing oil spills prior to OPA and many provisions continue to apply. A key provision is found in Section 311(b)(3), which prohibits the discharge of oil or hazardous substances into U.S. navigable waters. In addition, the CWA contains various penalty provisions for noncompliance, including violations of the discharge prohibition of Section 311(b).81
Pursuant to statutory requirements in the CWA,82 the EPA crafted regulations83 for spill prevention control and countermeasure (SPCC) plans in 1973. SPCC plans address the "procedures, methods, and equipment and other requirements for equipment to prevent discharges."84 The EPA's SPCC plans apply only to non-transportation, onshore facilities that exceed a certain oil storage capacity and that, in the event of a spill, can be reasonably expected, because of their location, to produce an oil discharge that would reach navigable waters or adjoining shorelines of the United States.85 Unlike other oil spill preparedness provisions, SPCC plans focus more on prevention than on response activities, requiring, for example, secondary containment (e.g., dikes, berms) for oil-storage equipment.
The agency offered several regulatory amendments after the 1973 rulemaking. Following the passage of the Oil Pollution Act of 1990 (OPA),86 the agency proposed substantial changes and clarifications that were not made final until July 2002. For reasons beyond the scope of this report, the effective date of the 2002 final rule has been extended multiple times; for some parts of the amended rule, the current effective date was January 14, 2009, and for other parts, the effective date was extended to November 10, 2010.87 However, EPA proposed in July 2010 to extend the date an additional year for most facilities.88
Outer Continental Shelf Lands Act
The primary federal law governing oil development and operations in waters in federal jurisdiction is the Outer Continental Shelf Lands Act (OCSLA) of 1953 and its subsequent amendments (43 U.S.C. §§1331-1356). The OCSLA provided the foundation for regulations (30 C.F.R. Parts 250 and 550) that are implemented by the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE).89 Sections of these regulations address oil spill prevention and response issues by requiring that various equipment and procedures be in place at offshore facilities.90
Pipeline Statutes
The U.S. pipeline network is extensive: The Pipeline and Hazardous Materials Safety Administration estimates that there are more than 160,000 miles of hazardous liquid pipelines in the United States.91 Moreover, U.S. inland pipelines are concentrated in coastal areas, particularly in the Gulf states, and these pipelines may have an impact on coastal waters if spills reach waterways that empty into coastal waters.
Several laws govern oil pipelines. The Hazardous Liquid Pipeline Act of 1979 (P.L. 96-129) granted authority to the Department of Transportation (DOT) to regulate various issues regarding oil spills from pipelines. On December 29, 2006, the President signed the Pipeline Safety Improvement Act of 2006 (P.L. 109-468) to improve pipeline safety and security practices, and to reauthorize the federal Office of Pipeline Safety.92 The Office of Pipeline Safety (OPS), which is part of the DOT, implements provisions concerning pipeline design, construction, operation and maintenance, and spill response planning.93
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Recent Pipeline Spills Kalamazoo River, Michigan—2010 On July 26, 2010, a pipeline released approximately 800,000 gallons of crude oil of oil into Michigan's Talmadge Creek, a waterway that flows into the Kalamazoo River. As the federal OSC (for the inland zone), EPA established a Unified Command of federal, state and local agencies, and private parties to respond to the spill. Pursuant to the liability provisions in OPA, Enbridge Energy Partners, LLP is the responsible party for the spill. For more up-to-date information, see EPA's Enbridge oil spill website, at http://www.epa.gov/enbridgespill/index.html. Yellowstone River, Montana—2011 On July 1, 2011, an ExxonMobil pipeline ruptured and released oil into the Yellowstone River near Billings, Montana. EPA leads the federal response activities, coordinating with Montana agencies and other federal agencies. According to the pipeline owner (and cited on EPA's website), the incident discharged an estimated 42,000 gallons. For more up-to-date information, see EPA's Yellowstone River spill website at http://www.epa.gov/yellowstoneriverspill/. Santa Barbara coastline, California—2015 On May 19, 2015, an onshore pipeline operated by Plains All American Pipeline released crude oil that eventually flowed into the Pacific Ocean near Santa Barbara.94 According to PHMSA, "a Unified Command has been established, led by the U.S. Coast Guard and PHMSA is coordinating with other federal, state and local officials at the scene."95 As of May 25, 2015, the spill volume is estimated at approximately 101,000 gallons.96 For more up-to-date information, see the Joint Information Center website at http://www.refugioresponse.com. |
Vessel Statutes
Several federal laws directly or indirectly deal with oil pollution from vessels.97 Laws concerning navigation reduce the possibilities of vessel collision or hull breach by objects in the waterways.98 Other laws call for particular vessel design standards. For example, the Ports and Waterways Safety Act of 1972,99 amended by the Port and Tanker Safety Act of 1978,100 called for specific construction and equipment design requirements for oil tankers. (As noted, OPA subsequently amended this statute in 1990 to establish a phased-in schedule for double-hulled tankers.) Congress enacted the 1970s legislation to coincide with international initiatives. In fact, many of the federal laws concerning vessel standards and pollution control procedures were written to implement international conventions. These are discussed below.
Federal Agencies' Responsibilities
The United States shares jurisdiction over its coastal waters with the coastal states. The 1953 Submerged Lands Act (SLA) gave coastal states jurisdiction over the submerged lands, waters, and natural resources (e.g., oil deposits) located, in most cases, within 3 nautical miles off the coastline.101 The waters, seabed, and natural resources beyond the states' waters are exclusively federal, and extend to the edge of the exclusive economic zone (200 nautical miles from shore). However, the federal government maintains the authority to regulate commerce, navigation, national defense, power production, and international affairs within state waters.
The oil spill legal framework involves implementation by multiple federal agencies. Agency responsibilities can be divided into two categories: (1) oil spill response and cleanup and (2) oil spill prevention/preparedness.
Response
As mentioned above, the National Oil and Hazardous Substances Pollution Contingency Plan (NCP) contains the federal government's framework and operative requirements for responding to an oil spill (and releases of hazardous substances). Although first developed through administrative processes in 1968, subsequent laws have amended the NCP, including the Clean Water Act in 1972; the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund) in 1980; and the Oil Pollution Act (OPA) in 1990. Oil spill response actions required under the regulations of the NCP are binding and enforceable, per these enforcement authorities.
The NCP establishes the National Response System (NRS), a multi-tiered and coordinated national response strategy for addressing oil spills and releases of hazardous substances. The NCP provisions specific to oil spill response are codified in 40 C.F.R. Part 300, Subpart D. Key components of the NRS include the following:
- National Response Team (NRT): composed of representatives from the federal departments and agencies assigned roles in responding to oil spills. The U.S. Coast Guard chairs the NRT when a response is being mounted to a spill in a coastal region.
- Regional Response Teams (RRTs): composed of regional representatives of each NRT member agency, state governments, and local governments. The Coast Guard leads the relevant RRT during responses to oil spills in coastal waters.
- Area Committees (ACs): composed of qualified personnel from federal, state, and local agencies. The primary function of each AC is to prepare an Area Contingency Plan (ACP) for its designated area.
- On-Scene Coordinator (OSC): who directs the response efforts and coordinates all other efforts at the scene.
Oil spill response authority is determined by the location of the spill: the Coast Guard has response authority in the coastal zone, and the EPA covers the inland zone.102 The OSC has the ultimate authority to ensure that an oil spill is effectively removed and actions are taken to prevent further discharge from the source. The OSC is broadly empowered to direct and coordinate all response and recovery activities of federal, state, local, and private entities (including the responsible party), and will draw on resources available through the appropriate ACPs and RRTs.
Although the OSC must consult with designated trustees of natural resources and the governor of the state affected by the spill, the OSC has the authority and responsibility to determine when removal (i.e., cleanup) is complete.
Other agencies, particularly those on the NRT and relevant RRT, may play a role in response activities. As the chair of the NRT (and vice-chair during oil spills in the coastal zone), EPA may provide response support. For example, during the Deepwater Horizon spill response, EPA conducted air and water sampling and provided environmental monitoring support, particularly regarding the use of dispersants.
In addition, NOAA provides scientific analysis and consultation during oil spill response activities.103 Assistance can include oil spill tracking, cleanup alternatives, and knowledge of at-risk natural resources. Moreover, NOAA experts begin to collect data to assess natural resource damages during response operations.
Prevention and Preparedness
Regarding oil spill prevention and preparedness duties, jurisdiction is determined by the potential sources (e.g., vessels, facilities, pipelines) of oil spills. A series of executive orders (EOs), coupled with memoranda of understanding (MOU), have established the various agency responsibilities.104 Table 1 identifies the agencies responsible for implementing prevention and preparedness regulations for the potential sources of oil spills.
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Potential Source of Oil Spill |
Responsible Agency |
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Vessels |
Coast Guard |
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Onshore, non-transportation facilities |
Environmental Protection Agency |
|
|
Onshore, transportation facilities |
Coast Guard and Department of Transportation |
|
|
Deepwater portsa |
Coast Guard and Department of Transportation |
|
|
Offshore facilities (oil/gas extraction) |
Bureau of Ocean Energy Management within the Department of Interior |
|
|
Offshore pipelines directly associated with oil extraction activities (i.e., "production lines")b |
Bureau of Ocean Energy Management within the Department of Interior |
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Offshore pipelines not directly associated with oil extraction activities (i.e., "transmission lines") |
Office of Pipeline Safety within the Department of Transportation |
|
|
Inland pipelines |
Office of Pipeline Safety within the Department of Transportation |
Prevention responsibilities include, among other things, assessing whether facilities or vessels have the necessary equipment in place. As discussed above, vessels may be required to have double hulls; facilities may need secondary containment.
Preparedness duties involve oversight tasks, such as evaluating facility and vessel response plans. Preparedness responsibilities also include developing and maintaining contingency plans at various levels: area, regional, and national. Personnel training is a vital component of sustaining readiness. NOAA oil spill experts help train responders in government service and private business.
In addition, OPA requires agencies to conduct internal examinations to test preparedness.105 As part of this requirement, the Coast Guard conducts Spills of National Significance (SONS) exercises to analyze the Coast Guard's ability to respond to a major oil spill.
International Conventions
The relationship between international and domestic law can be complex. For example, a "self-executing" agreement taking the form of a treaty, signed by the Executive and ratified with the advice and consent of the Senate, stands on equal footing with federal statute. On the other hand, if an international agreement is not self-executing, implementing legislation may be necessary for the agreement's provisions to be given domestic legal effect, including to provide U.S. agencies with the domestic legal authority necessary to carry out functions contemplated under the agreement. Several federal laws governing oil spills were fashioned to implement obligations contained in international agreements.106
International conventions have played an important role in developing consistent standards for oil-carrying vessels from different nations. A primary player in this regard is the International Maritime Organization (IMO), a body of the United Nations, which sets international maritime vessel safety and marine pollution standards. The Coast Guard represents the United States at IMO meetings.
Multiple international conventions concern vessels and their impact on the marine environment. Described below are two selected conventions that contain provisions that are particularly relevant to oil pollution in coastal waters.
MARPOL 73/78
The IMO implements the 1973 International Convention for the Prevention of Pollution from Ships, as modified by the Protocol of 1978 (MARPOL 73/78).107 Vessels whose nations are signatories to MARPOL are subject to its requirements, regardless of where they sail, and member nations are responsible for the vessels registered under their flag.
MARPOL 73/78 includes six annexes, each covering a different pollution type. Annex I (Prevention of Pollution by Oil) entered into force in 1983108 and established requirements for controlling oil discharges to sea. Annex I requires vessels to have equipment that minimizes oil discharge, such as oil-water separators, and shipboard oil pollution emergency plans (SOPEPs). Although the SOPEP applicability is similar to that of the vessel response plan (VRP) required by OPA,109 the purpose of the SOPEP is somewhat different. A SOPEP is intended to provide guidance to the vessel's officers regarding proper onboard emergency procedures when an oil spill occurs,110 whereas the VRP is more focused on responding to the spill itself.
The United States implements Annex I through the Act to Prevent Pollution from Ships (APPS).111 APPS applies to all U.S.-flagged ships, irrespective of location, and to all foreign-flagged vessels in U.S. waters or at ports under U.S. jurisdiction. The Coast Guard issues and enforces regulations necessary to carry out the APPS provisions. The Coast Guard inspection program is a key component of its oil spill prevention effort.
Intervention Convention
The 1967 Torrey Canyon spill off the coast of Great Britain was one of the first major spills to receive worldwide attention.112 The incident raised many questions regarding oil spill response, particularly when dealing with vessels from other nations. For example, the incident prompted debate over responses allowable if a nation's waters and environment are threatened by a spill from another nation's vessel. The 1969 International Convention Relating to Intervention on the High Seas in Cases of Oil Pollution Casualties (the Intervention Convention) sought to address these issues.
To implement this convention in the United States, Congress passed the Intervention on the High Seas Act of 1974.113 Under this act, if the Coast Guard determines there to be a "grave and imminent danger to the coastline or related interests of the United States from pollution or threat of pollution of the sea by convention oil [i.e., as defined in the convention]," the Coast Guard can take action to "prevent, mitigate, or eliminate that danger."
State Laws
As mentioned above, multiple states had oil spill liability laws before the passage of OPA in 1990. During the 15 years prior to OPA's passage, the issue of whether or not to preempt state liability laws was perhaps the primary obstacle to enacting unified oil spill legislation. Proponents of preemption argued that differing state laws—particularly the various levels of liability—frustrate the shipping industry and were contrary to the goal of comprehensive federal legislation. Preemption opponents maintained that states should be allowed (as with most other federal environmental statutes) to set stiffer standards regarding liability, compensation, and cleanup.114 In the aftermath of the Exxon Valdez spill, the scales tipped to the side of anti-preemption. According to OPA Section 1018 (referred to as a "savings clause"), the act will not preempt any state from imposing "additional liability or requirements" with respect to the discharge of oil or related response activity (e.g., cleanup standards). A 2003 study identified 16 states that impose unlimited liability for oil spills.115
There was some concern that the language of OPA's savings clause would allow states to regulate matters typically reserved for the federal government, such as oil tanker construction. To address this issue, the conference report stated that the savings clause would not disturb a 1978 Supreme Court decision that dealt with the intersection of federal and state authority to regulate the shipping industry.116 In that case, the Court determined that a Washington State law was preempted. The state law had attempted to govern oil tanker design, size, and movement in Puget Sound.117
Regardless of the clarification in the conference report, the line between federal and state jurisdiction (i.e., the extent of federal preemption) continues to be tested. In 2000, the Supreme Court struck down (as preempted) a Washington State rule calling for various personnel requirements, such as training, on oil tankers.118 Similarly, in March 2010, a federal district court in Massachusetts ruled against a state law—finding it preempted—that would affect tanker design, personnel qualifications, and navigation.119
Appendix. Federal Authorities Before and After the Exxon Valdez Spill
The following list highlights the primary federal authorities that were in effect when the Exxon Valdez spill occurred in 1989:
- Clean Water Act (1972): The Clean Water Act (CWA) represented the broadest authority for addressing oil spills at the time of the Exxon Valdez spill. Section 311 of the CWA established requirements for oil spill reporting, response, and liability. The act also created a fund (311 Fund), maintained by federal appropriations, that could be used for cleanup and natural resource restoration.
- Deepwater Port Act (1974):120 This statute addressed oil spills and liability issues at deepwater oil ports. The act also set up the Deepwater Port Fund to provide for prompt cleanup and to compensate damages above liability limits. The fund was financed by a per-gallon tax on oil transferred at a deepwater port.
- Trans-Alaska Pipeline Authorization Act (1973):121 This act covered oil spills and liability relating to the Trans-Alaska Pipeline System (TAPS). Although the pipeline is constructed over land, spills from it could reach coastal waters via inland rivers. The act created a trust fund, financed through a lessee fee, that could be used to respond to spills and damages from the pipeline.
- Outer Continental Shelf Lands Act Amendments (1978):122 This act established an oil spill liability structure and rules for oil extraction facilities in federal offshore waters. With this legislation, Congress created the Offshore Pollution Fund, financed by a per-gallon fee on produced oil, that could be used for oil spill cleanup and damages.
- National Oil and Hazardous Substances Pollution Contingency Plan (NCP): The first NCP was administratively prepared in 1968 after observing the British government's response to a 37-million-gallon oil tanker spill (Torrey Canyon) off the coast of England.123 The NCP contains the federal government's procedures for responding to oil spills and hazardous substance releases.124
After the Exxon Valdez spill, many observers125 described the above legal collection as an ineffective patchwork. Arguably, each law had perceived shortcomings (discussed below in the context of post-Exxon Valdez legislation), and none provided comprehensive oil spill coverage.
For more than 15 years prior to the Exxon Valdez incident, Congress made attempts to enact a unified oil pollution law. Several contentious issues produced deadlocks, hindering the passage of legislation. One of the central points of debate, state preemption, dealt with whether a federal oil spill law should limit a state's ability to impose stricter requirements, particularly unlimited liability. Other liability questions also generated debate. For example, if an oil spill occurred, should the owner of the cargo (i.e., oil) be held liable, as was the ship owner/operator? Another point of contention was whether oil-carrying vessels should be required to have double hulls. Although proponents argued that a second hull would help prevent oil spills, the shipping industry raised concern that implementing such a mandate would disrupt oil transportation and potentially affect the national economy. A final issue involved the interaction between domestic legislation (federal and state) and international measures. Some were concerned that if the United States became a party to certain international agreements under consideration in the 1980s,126 the international standards would preempt federal and state laws, especially those establishing liability limits. Proponents argued that these concerns were overstated and stressed that joining the international agreements was especially important for the United States because of the international nature of oil transportation and associated pollution.