On 1 July 2009 the US Coast Guard published an Interim Rule adjusting the limits of liability for vessels and deepwater ports under the Oil Pollution Act of 1990 (OPA-90) to reflect increases in the Consumer Price Index (CPI).
In 2006, following a major oil spill from the tank vessel Athos I in the Delaware River (where the vessel’s limit of liability amounted to only about 20 percent of the total cleanup costs and damages), Congress enacted the Delaware River Protection Act (DRPA) to increase OPA-90 liability limits to levels that would reflect a proper apportionment between responsible parties and the National Pollution Fund. These limits were USD3000 per gross registered ton (grt) for single-hull tank vessels (previously USD1200); USD1900 per grt for double-hull tank vessels (previously USD1200); and USD950 per grt for non-tank vessels (previously USD650).
However, Congress was also concerned that inflation would further erode responsible party liability and shift the economic risk of oil spills to the public. The DRPA therefore also required that OPA-90 limits of liability be adjusted not less than every three years to reflect significant increases in the CPI in order to preserve the “polluter pays” principle embodied by OPA-90. According to the Interim Rule, any cumulative increase in the CPI of 3 percent or greater over a three year period will be considered “significant” and will trigger new adjustments to the OPA-90 limits. The Coast Guard also has discretion to adjust the limits before three years if necessary.
The new OPA-90 limits of liability, which average about 6.8% and will take effect as of 31 July 2009, are as follows:
Source category |
Previous limit of liability |
New limit of liability |
| (a) Vessels: | ||
| (1) For an oil cargo tank vessel greater than 3,000 gross tons with a single hull, including a single-hull tank vessel fitted with double sides only or a double bottom only. | The greater of $3,000 per gross ton or $22,000,000. | The greater of $3,200 per gross ton or $23,496,000. |
| (2) For a tank vessel greater than 3,000 gross tons, other than a vessel referred to in (a)(1). | The greater of $1,900 per gross ton or $16,000,000. | The greater of $2,000 per gross ton or $17,088,000. |
| (3) For an oil cargo tank vessel less than or equal to 3,000 gross tons with a single hull, including a single-hull tank vessel fitted with double sides only or a double bottom only. | The greater of $3,000 per gross ton or $6,000,000. | The greater of $3,200 per gross ton or $6,408,000. |
| (4) For a tank vessel less than or equal to 3,000 gross tons, other than a vessel referred to in (3). | The greater of $1,900 per gross ton or $4,000,000. | The greater of $2,000 per gross ton or $4,272,000. |
| (5) For any other vessel | The greater of $950 per gross ton or $800,000. | The greater of $1,000 per gross ton or $854,400. |
| (b) Deepwater Ports: | ||
| (1) For a Deepwater Port, other than a Deepwater Port with a limit of liability established by regulation under 33 U.S.C. 2704(d)(2). | $350,000,000 | $373,800,000. |
| (2) For the Louisiana Offshore Oil Port (LOOP). | $62,000,000 | $87,606,000. |
The Interim Rule also clarifies an ambiguity regarding the definition of “single-hull” for purposes of applying the new limits. A single-hull tank vessel means a vessel that is “constructed or adapted to carry, or that carries, oil in bulk as cargo or cargo residue, that is not a double hull” as defined by Coast Guard regulations. The new single-hull limits of liability do not apply to tank vessels carrying hazardous materials, rather than oil, as cargo.
Members using ARVAK or Shoreline as their COFR guarantors do not need to take any action with respect to the new limits of liability since these providers will take the necessary steps to update existing COFRs to reflect the new limits. Members using other COFR guarantors should check with their providers to ensure their vessels will be in compliance with the new OPA-90 limits as of 31 July 2009.
Members who have questions regarding the new COFR limits should contact Charles Anderson for further information.