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About Spill Response Funding


 

Whether from a breach in a vessel’s hull or a leak from an onshore storage tank, an enormous amount of oil can be released into the environment, causing catastrophic damage and triggering millions of dollars of cleanup costs and related damages.

Title 1 of the Oil Pollution Act (OPA) established the Oil Spill Liability Trust Fund (OSLTF) to pay for these removal costs and damages. A core mission of the National Pollution Funds Center (NPFC) is to administer the disbursement of the OSLTF, 24 hours a day, every day, for Federal On-Scene Coordinators (FOSCs), who must immediately respond to a spill or the threat of a spill, or to monitor prompt and effective cleanup activities by the responsible party.

Through OPA and other environmental statutes, Congress made it clear that polluters should bear the costs when oil spills happen. The NPFC not only provides ready access to the OSLTF for emergency response funding, it also takes aggressive actions to recover the costs expended. Timely and efficient cost recovery not only ensures that the polluter is held accountable, but also encourages potential polluters to act more carefully in the future.

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NPFC Case Teams

The NPFC Case Management Division is responsible for providing access to the OSLTF and for accurately documenting costs to support cost recovery. The NPFC also operates through a matrix organization centered around four regional case teams. Each team works with responsible parties and first responders to manage the funding aspects of any incident, from initial funds access to cost recovery. A case officer, assigned to each federal project (case), is the central point of contact for all interested parties regarding the case.

NPFC case teams are typically composed of:

  • Regional Manager/Case Officer
  • Financial Manager
  • Insurance Examiner
  • Attorney
  • Claims Specialist
  • NRD Claims Manager
  • Other specialists as needed

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Emergency Funding

When a spill occurs, the NPFC provides 24-hour-a-day access to the Emergency Fund of the OSLTF to ensure that the FOSC can act promptly. The NPFC first ensures that an OPA incident has occurred (i.e., that there has been an actual or substantial threat of oil discharge into U.S. navigable waters or adjoining shorelines). The OSLTF can be used by FOSCs to cover expenses associated with mitigating the threat of an oil spill, as well as the costs of oil spill containment, countermeasures, cleanup, and disposal activities.

While the use of the OSLTF is most closely associated with spills from ships, it has increasingly been used for releases at onshore oil storage, production, and industrial facilities. Releases at such facilities can easily pollute nearby rivers, creeks, and streams.

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Cost Recovery

Through OPA and other environmental statutes, Congress made it clear that polluters should bear the costs when pollution occurs. NPFC takes aggressive action to recover OSLTF costs from the liable responsible party (RP). The overall response and cleanup process can be complex and costly. It is important that the costs are accurately identified and documented for each phase of the response. Responsible parties are typically not billed for costs associated with discovery of the spill and initial assessment to determine whether further action is needed. They are, however, usually billed for all costs associated with the actual removal and cleanup. Such costs can include travel expenses, salaries for federal responders, cleanup equipment, and response mobilization and demobilization. Other costs may include obtaining specialized services (such as commercial entities or other government agencies that clean oiled wildlife).

The NPFC provides detailed guidance and support to federal responders to ensure that all expenditures are carefully tracked and documented. The FOSC provides the NPFC with a report of all costs associated with the incident. The NPFC ensures that all the appropriate documentation is available to support the charges and then bills the responsible party. This bill includes what has been spent from the OSLTF for emergency response and other salary and equipment costs. It may also include claims that were paid by the NPFC to other parties for uncompensated removal costs, damages to natural resources or property, and other economic losses attributable to the spill.

Payments made by the responsible party are deposited into the Principal Fund of the OSLTF. Costs that cannot be collected from the RP may be referred to the Department of Treasury's Debt Management Service for collection or to the Department of Justice to pursue litigation against the RP.

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Last Modified 10/22/2013