MARINE UNDERWRITERS OF SAN FRANCSICO, INC. Marine Seminar Wednesday, April 29, 2009

Pollution Regulations State of California Office of Spill Prevention and Response Presented by:Stephen L. Sawyer Assistant Chief Counsel California Department of Fish and Game Office of Spill Prevention and Response

Office of Spill Prevention and Response Created by Statute in 1990 Lempert-Keene-Seastrand Oil Spill Prevention and Response Act (the “Act”) Enacted 09/24/90

Non-tank vessels (over 300 gross tons) Added in 1999 Established Regulatory Authority over tank vessels and marine facilities

Office of Spill Prevention and Response website

Title 14, California Code of Regulations section 790(r)(8) Title 14, California Code of Regulations section 790(r)(8) Definition of Responsible Party(ies) (A)the owner or transporter of oil or a person or entity accepting responsibility for the oil. (B)the owner, operator or lessee of, or person who charters by demise, any tanker, barge, nontank vessel or marine facility. (C)a person or entity who accepts responsibility for vessel or marine facility.

CERTIFICATE OF FINANCIAL RESPONSIBILITY (COFR) Government Code section Tank Vessels Tank Vessels means: Any tanker or barge that carries oil in commercial quantities as cargo Cargo capacity over 150,000 bbls. One billion dollars ($1,000,000,000) COFR

COFR (Cont’d) Government Code section (cont’d) Non-Tank Vessels Non-Tank Vessels means: A vessel of 300 gross tons or greater that carries oil, but does not carry oil as cargo. Three hundred million dollars ($300,000,000) with carrying capacity over 6,500 bbls. Carrying capacity of 6,500 bbls. or less, COFR amount reduced (See, Title 14, CCR § 791.7(d)(1)(B) & (C))

Marine Facilities Marine Facilities means: (A) A drill ship, semi submersible drilling platform, jack-up type drilling rig, or any other floating or temporary drilling platform. (B) Any facility of any kind, other than a tanker or barge which; 1. is or was used for the purposes of exploring for, drilling for, producing, storing, handling, transferring, processing, refining, or transporting oil, including pipelines, and 2. is located in marine waters, or is located where a discharge could impact marine waters. $12,500 x reasonable worst case scenario as determined in Contingency Plan (See, Title 14, CCR § 791.7(e)) COFR (Cont’d) Government Code section (cont’d)

LIABILITY Unlimited liability for a spill in California waters Strict liability for response costs and damages

DAMAGES Created by the Act Government Code section (h) DAMAGES Created by the Act Government Code section (h) Damages for which responsible parties are liable when a spill occurs into marine waters of the state. (1) All costs of response, containment, cleanup, removal, and treatment, including, but not limited to, monitoring and administration costs incurred pursuant to the California oil spill contingency plan or actions taken pursuant to directions by the administrator. (2) Injury to, or economic losses resulting from destruction of or injury to, real or personal property, which shall be recoverable by any claimant who has an ownership or leasehold interest in property. (3) Injury to, destruction of or loss of, natural resources, including, but not limited to, the reasonable costs of rehabilitating wildlife, habitat, and other resources and the reasonable costs of assessing that injury, destruction, or loss, in an action brought by the state, a county, city, or district. Damages for the loss of natural resources may be determined by any reasonable method, including, but not limited to, determination according to the costs of restoring the lost resource.

(4) Loss of subsistence use of natural resources, which shall be recoverable by a claimant who so uses natural resources that have been injured, destroyed, or lost. (5) Loss of taxes, royalties, rents, or net profit shares caused by the injury, destruction, loss, or impairment of use of real property, personal property, or natural resources. (6) Loss of profits or impairment of earning capacity due to the injury, destruction, or loss of real property, personal property, or natural resources, which shall be recoverable by any claimant who derives at least 25 percent of his or her earnings from the activities that utilize the property or natural resources, or, if those activities are seasonal in nature, 25 percent of his or her earnings during the applicable season. (7) Loss of use and enjoyment of natural resources, public beaches, and other public resources or facilities, in an action brought by the state, a county, city, or district. Government Code section (h) (cont’d)

Title 14, California Code of Regulations section 795 Requires the execution of the “California Endorsement”. (See, Handout)

CLAIMS Government Code section Designation of Responsible Party. Requires Responsible Party to widely advertise claims procedure. Allows OSPR to pay claims under fifty thousand dollars ($50,000). OSPR charges administrative overhead.

EXAMPLES OF FEDERAL LIMITS OF LIABILITY PROBLEMS IN CALIFORNIA OIL SPILLS

Cosco Busan November 7, 2007 Amount spilled: 53,569 gallons Gross tons 65,131 x $600 = $39,078,600

M/V Kure November 5, 1997 Amount spilled: 47 bbls. Gross tons 36,009 x $600 = $21,605,040

M/S Stuyvesant September 6, 1999 Amount spilled: 50 bbls. Gross tons 7,110 x $600 = $4,266,000 Natural Resource Damages settled for $6.71 million

QUESTIONS!!