About Claims Adjudication
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If an individual or organization suffers loss of damage due to an oil spill, the Oil Pollution Act (OPA) entitles them to seek compensation. Indeed, fair compensation is an important aspect of final recovery from the spill. The National Pollution Funds Center (NPFC) has the authority to use the Oil Spill Liability Trust Fund (the OSLTF, or the Fund) to pay for uncompensated removal costs and damages. Claims not paid by the responsible party (RP) or resulting from mystery spills (for which an RP cannot be identified) may then be submitted to the NPFC for payment.
The primary mission of the NPFC’s Claims Division is to compensate those who have suffered certain damages or incurred removal costs because of a discharge of a substantial threat of a discharge of oil to U.S. navigable waters. Without the Fund, parties whose claims are not paid by the RP would have no recourse but costly and time-consuming litigation, and those who suffer damages in a mystery spill would have no recourse at all.
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Oil Spill Claims
A claim is a request submitted to NPFC to pay for uncompensated removal costs or certain damages that result from a specific oil pollution incident. The Oil Pollution Act requires the Fund to be used only in claims caused by a discharge of oil or the substantial threat of an oil discharge into U.S. navigable waters. Costs and damages covered by the Fund include:
- Uncompensated removal costs
- Damages to natural resources
- Damages to real or personal property
- Loss of subsistence use of natural resources
- Loss of profits or earning capacity
- Loss of government revenues, and
- Increased cost of public services.
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Claimants
Any person or organization that has incurred removal costs or suffered damages due to an oil spill may submit a claim. Claimants may include:
- Federal, state, and local government entities,
- Cleanup contractors,
- Corporations and businesses, and
- Members of the general public.
RPs may also submit claims to NPFC if they pay or incur removal costs and damages in excess of the applicable OPA liability limit and can establish entitlement to the limit. RPs can also present claims to the NPFC if they can establish a defense to liability under OPA when a discharge is solely caused by an act of war, an Act of God, or certain acts of third parties. These defenses are narrowly construed.
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Claims Submission
Submit Claim to RP First
All claims, except state government claims for uncompensated removal costs, must first be submitted to the RP. If the RP denies or fails to settle the claim within 90 days, the claimant may submit a claim to NPFC. Claims may also be submitted to the OSLTF if the responsible party cannot be identified. State claims for removal costs, as well as claims for mystery spills, can be submitted immediately to the NPFC.
Timelines
Damage claims must be submitted within three years from the date the claimant reasonably should have discovered the damage and realized that it resulted from the incident.
Removal cost claims must be submitted within six years from the day of completion of all cleanup activities related to the incident.
Submission Package
The NPFC does not have a required form for OSLTF claims submission, but has developed a model claim form to assist claimants with theirs submission. In all cases, the claimant bears the burden to prove the claim and should provide all of the information deemed necessary to support the claim. The Oil Spill Claims page includes guidance on the types of information needed by NPFC to process a claim.
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Adjudication
When NPFC receives a claim, a Claims Manager first reviews it to ensure that the claim meets the statutory and regulatory requirements for compensation. The Claims Manager may request additional information, including documentation of costs, activities, and damages.
Once the NPFC makes a determination, it notifies the claimant is notified in writing. The claimant has 60 days to accept or reject the determination.
After accepting an offer of compensation, the claimant must turn over (subrogate) its claimant rights to the OSLTF; this enables the NPFC to seek restitution from the RP. If the claimant rejects a compensation offer, or if the claim is denied, the claimant may then submit one request for reconsideration within 60 days of the determination. The Claimant’s Information Guide provides details of the claim settlement process.