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Andrew J. Garger Vice President, Legal & General Counsel Water Quality Insurance Syndicate.

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Presentation on theme: "Andrew J. Garger Vice President, Legal & General Counsel Water Quality Insurance Syndicate."— Presentation transcript:

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3 Andrew J. Garger Vice President, Legal & General Counsel Water Quality Insurance Syndicate

4 Do You Remember?

5 OPAs Predecessors Water Quality Improvement Act Water Quality Improvement Act Federal Water Pollution Control Act Federal Water Pollution Control Act Clean Water Act Clean Water Act Outer Continental Shelf Lands Act Amendments Outer Continental Shelf Lands Act Amendments Trans-Alaska Pipeline Authorization Act Trans-Alaska Pipeline Authorization Act Deep Water Ports Act Deep Water Ports Act

6 THE OIL POLLUTION ACT OF 1990 (OPA) P.L. 101-380 Responsible Party: Owner, Operator or Charterer by demise Nature of Liability: Strict, joint and several

7 Pollutant: Oil of any kind, except if classified as an hazardous substance under CERCLA THE OIL POLLUTION ACT OF 1990 (OPA) P.L. 101-380 Jurisdiction: Navigable waters, adjoining shorelines, or the Exclusive Economic Zone

8 OPA LIABILITY LIMITS Higher for Single Hulled Vessels than for Double Hulled Vessels. Higher for Single Hulled Vessels than for Double Hulled Vessels. Example: 3000 gross ton double hulled vessel has limit of the greater of $2000 per gross ton or $17,800,000 Example: 3000 gross ton double hulled vessel has limit of the greater of $2000 per gross ton or $17,800,000 Single hulled tank vessel same size the greater of $3200 per gross ton or $23,496,000 Single hulled tank vessel same size the greater of $3200 per gross ton or $23,496,000

9 Other Pollution Statutes OPA 90 is not the last word OPA 90 is not the last word – National Marine Sanctuaries Act – Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) Includes Superfund – Over 63 Bills introduced in Congress as a result of the Gulf Spill. – State law not preempted – Different standards than Federal.

10 WHAT IS RECOVERABLE ? Removal Costs Removal Costs Natural Resource Damages Natural Resource Damages Damage to Property Damage to Property Loss of Subsistence Use Loss of Subsistence Use Lost Revenue Lost Revenue Lost Profits Lost Profits Increased Costs of Public Services Increased Costs of Public Services

11 Spill Response Overview Types of Incidents Types of Incidents Types of Spilled Products Types of Spilled Products Responsible Partys (RP) Initial Response Responsible Partys (RP) Initial Response MPRG MPRG

12 Spill Response Overview Continued USCG Involvement USCG Involvement Other Government Agency Involvement Other Government Agency Involvement Response Resource Availability Response Resource Availability Security Issues Under the MTSA Security Issues Under the MTSA

13 Spill Response Overview Continued Third Party Issues and Concerns Third Party Issues and Concerns Things that can Drive the Cost of the Spill Response Things that can Drive the Cost of the Spill Response Natural Resource Damage Assessment (NRDA) Considerations Natural Resource Damage Assessment (NRDA) Considerations

14 Mississippi River Spill Collision July 23 rd – Barge DM-932, TUG MEL OLIVER, M/V TINTOMARA Mile 99 near entrance to Harvey Canal Mile 99 near entrance to Harvey Canal Approximately 9000 bbls of #6 oil (heavy). Approx. half spilled Approximately 9000 bbls of #6 oil (heavy). Approx. half spilled ACL, owner of the DM-932 (double skinned barge) is responsible party ACL, owner of the DM-932 (double skinned barge) is responsible party

15 Mississippi River Spill CASUALTY RESPONSE On scene- spill response managers, spill response contractors, environmental experts, Coast Guard, state officials, 3 rd party claims handlers. On scene- spill response managers, spill response contractors, environmental experts, Coast Guard, state officials, 3 rd party claims handlers. Over 1000 responders at height of cleanup. Over 1000 responders at height of cleanup.

16 Mississippi River Spill SPILL RESPONSE Coast Guard closed 58 miles of the Mississippi River (at least 3 days). Coast Guard closed 58 miles of the Mississippi River (at least 3 days). Down-river water intakes boomed off. Down-river water intakes boomed off.

17 Mississippi River Spill

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22 Aggressive Cleanup Measures

23 Mississippi River Spill Public Commentary (NOLA.COM) Was Joseph Hazlewood piloting the tanker? Was Joseph Hazlewood piloting the tanker? Sounds like someone had too much to drink. Sounds like someone had too much to drink. How in the hell do you not see a 600 foot tanker? Can you say DUI.? How in the hell do you not see a 600 foot tanker? Can you say DUI.? Sounds like Al Qaeda. Sounds like Al Qaeda. I might just call it a day and get on out of work and throw and oil spill party. I might just call it a day and get on out of work and throw and oil spill party. If they were only using Cosmo Kramers bladder system that he invented this could have all been avoided. If they were only using Cosmo Kramers bladder system that he invented this could have all been avoided.

24 Mississippi River Spill Coast Guard Investigation Many hearings held. Many hearings held. Barge Pilot took the 5 th Barge Pilot took the 5 th Preliminary Statement by Coast Guard indicated improper licensure. Preliminary Statement by Coast Guard indicated improper licensure. Ultimately criminal charges were brought against the tug. Ultimately criminal charges were brought against the tug.

25 Natural Resource Damage Assessment Huge potential damages Huge potential damages Passive-Use (loss of enjoyment) Passive-Use (loss of enjoyment) Wildlife habitats Wildlife habitats Bird kills Bird kills

26 Mississippi River Spill Class Action Lawsuits At least six filed naming ACL, DRD, and others. At least six filed naming ACL, DRD, and others. Includes loss of revenue claims. Includes loss of revenue claims. Classes have not been certified. Classes have not been certified.

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28 CERCLA AND OPA 90 DEFINE NATURAL RESOURCES AS LAND, FISH,WILDLIFE, BIOTA, AIR, WATER, GROUNDWATER, DRINKING WATER SUPPLIES, AND OTHER SUCH RESOURCES. CERCLA AND OPA 90 DEFINE NATURAL RESOURCES AS LAND, FISH,WILDLIFE, BIOTA, AIR, WATER, GROUNDWATER, DRINKING WATER SUPPLIES, AND OTHER SUCH RESOURCES. INJURY REFERS TO THE ACTUAL ADVERSE IMPACTOR LOSS OF THE NATURAL RESOURSE RESULTING DIRECTLY OR INDIRECTLY FROM EXPOSURE TO A RELEASE OR THREAT OF RELEASE OF OIL OR A DISCHARGE OR RELEASE OF A HAZARDOUS SUBSTANCE. INJURY REFERS TO THE ACTUAL ADVERSE IMPACTOR LOSS OF THE NATURAL RESOURSE RESULTING DIRECTLY OR INDIRECTLY FROM EXPOSURE TO A RELEASE OR THREAT OF RELEASE OF OIL OR A DISCHARGE OR RELEASE OF A HAZARDOUS SUBSTANCE. DAMAGE IS THE AMOUNT OF MONEY SOUGHT BY THE TRUSTEES TO COMPENSATE FOR THE INJURY THROUGH RESTORATION OR REPLACEMENT PROJECTS. DAMAGE IS THE AMOUNT OF MONEY SOUGHT BY THE TRUSTEES TO COMPENSATE FOR THE INJURY THROUGH RESTORATION OR REPLACEMENT PROJECTS. WHAT IS A NATURAL RESOURCE ?

29 H.E.A.- HABITAT EQUIVALENCY ANALYSIS H.E.A.- HABITAT EQUIVALENCY ANALYSIS R.E.A. – RESOURCE EQUIVALENCY ANALYSIS R.E.A. – RESOURCE EQUIVALENCY ANALYSIS COMPLEX FORMULAE USED TO FIGURE OUT WHAT NEEDS TO BE DONE TO CREATE, RESTORE OR PROTECT THE INJURED RESOURCE. COMPLEX FORMULAE USED TO FIGURE OUT WHAT NEEDS TO BE DONE TO CREATE, RESTORE OR PROTECT THE INJURED RESOURCE. ALPHABET SOUP

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63 THE GULF SPILL LARGEST SPILL IN HISTORY ?? LARGEST SPILL IN HISTORY ?? MASSIVE SPILL RESPONSE MASSIVE SPILL RESPONSE EVERY TYPE OF CLEANUP TECHNOLOGY BEING USED EVERY TYPE OF CLEANUP TECHNOLOGY BEING USED EFFECTS WILL BE FELT FOR YEARS IF NOT DECADES. EFFECTS WILL BE FELT FOR YEARS IF NOT DECADES.

64 LARGEST SPILLS Lakeview Gusher, CA. 9 Mill. Bbls. Lakeview Gusher, CA. 9 Mill. Bbls. Deepwater Horizon 3-8.7 Mill. Bbls. Deepwater Horizon 3-8.7 Mill. Bbls. Gulf War 2-6 Mill BBLS. Gulf War 2-6 Mill BBLS. Ixtoc I - Gulf of Mexico 3.5 Mill Bbls. Ixtoc I - Gulf of Mexico 3.5 Mill Bbls. Exxon Valdez – 257,000 Bbls. Exxon Valdez – 257,000 Bbls. Yet, only 8% of oil in water every year is from tanker /pipeline/well spills. Yet, only 8% of oil in water every year is from tanker /pipeline/well spills.

65 EXAMPLE OF MODU

66 COAST GUARD SEARCH AND RESCUE

67 COAST GUARD RESPONSE

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70 SURVEILLANCE FLIGHTS

71 OVERFLIGHT PHOTO

72 OVERFLIGHT – GULF OF MEXICO

73 OVERFLIGHT PHOTO

74 OVERFLIGHT MAP

75 BP COMMAND CENTER

76 SPILL TRAJECTORY MAP

77 RESPONSE STATUS

78 LOCAL GOVERNMENT INVOLVEMENT

79 VARIOUS RESPONSE ACTIVITIES

80 STAGING AREA - BOOM

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82 SHORELINE PROTECTION - SANDBAGS

83 USE OF MILITARY CRAFT

84 OIL IN WATER

85 OIL SKIMMING

86 100716-G-5030M-007-- GULF OF MEXICO -- Crewmembers monitor the oil skimming set-up aboard CGC Walnut, a 225-foot sea-going buoy tender based in Honolulu while CGC Resolute stands by in the background. The Walnut is skimming oil near the BP oil spill site after transiting the Panama Canal. Coast Guard photo by Petty Officer 1st Class John Masson.

87 MODIFIED FISHING VESSEL

88 OIL SKIMMER

89 SKIMMING OPERATIONS

90 BOOM IN FLORIDA

91 EMULSIFIED OIL GULF OF MEXICO - Vessels of Opportunity participants chase and corral oil near Dauphin Island, Ala. More than 38,000 people are participating in the nation's largest oil spill response in history. U.S. Coast Guard photo.

92 LARGEST OIL SKIMMER EVER

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94 BEACH CLEANUP - SCAT TEAM

95 BEACH CLEANUP

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97 MARSH GRASS CLEANUP

98 SNARE BOOM

99 CONTAINMENT BOOM

100 CONTAINMENT BOOM AND SORBENT BOOM

101 SORBENT AND PROTECTIVE BOOM

102 PROTECTIVE BOOM

103 PROTECTIVE BOOMING

104 IN-SITU BURNING

105 IN SITU BURNING

106 IN – SITU BURNING

107 CHEMICAL DISPERSANTS

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109 DIVER – SEARCHING FOR UNDERWATER POLLUTION

110 SUBSEA DISPERSANTS

111 BRETON NATIONAL WILDLIFE REFUGE

112 BROWN PELICAN AGAIN

113 WILDLIFE

114 SEA TURLE NEST

115 SEA TURTLE NEST

116 SEA TURTLE

117 TOP KILL PROCEDURE

118 TOP HAT

119 ATTEMPT TO CAP THE WELL

120 LOOP CURRENT RESEARCH

121 DECONTAMINATION AT PORTS

122 DECONTAMINATION SITE

123 DECONTAMINATION

124 DECONTAMINATION

125 POLITICAL VISITS

126 MEDIA RESPONSE

127 What Now?

128 Current Situation 94 and 180 million gallons have spilled (2.2- 4.4 million barrels)???? 94 and 180 million gallons have spilled (2.2- 4.4 million barrels)???? Successful Capping of Well (for now) Successful Capping of Well (for now) Need to be removed if leaking Need to be removed if leaking Oil would flow freely again Oil would flow freely again Would then try to use subsea containment systems to capture escaping oil and divert to surface vessels. Would then try to use subsea containment systems to capture escaping oil and divert to surface vessels.

129 RELIEF WELL

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131 Aftermath of Gulf Spill MOST EXPENSIVE SPILL IN HISTORY: 3.5 million in cleanup expenses MOST EXPENSIVE SPILL IN HISTORY: 3.5 million in cleanup expenses DRIVING MASSIVE POLITICAL RESPONSE DRIVING MASSIVE POLITICAL RESPONSE CONGRESSIONAL HEARINGS AND LEGISLATIVE PROPOSALS CONGRESSIONAL HEARINGS AND LEGISLATIVE PROPOSALS ECOLOGICAL FALLOUT ECOLOGICAL FALLOUT CRIMINAL PROBE CRIMINAL PROBE ECONOMIC EFFECTS ECONOMIC EFFECTS CVIL LAWSUITS CVIL LAWSUITS

132 Political Action Congressional Hearings Congressional Hearings Legislative Proposals Legislative Proposals Independent Presidential Commission Independent Presidential Commission Extralegal Pressure Extralegal Pressure Who should be in charge, Dept. of Interior or Coast Guard Who should be in charge, Dept. of Interior or Coast Guard

133 ECOLOGICAL FALLOUT As of July 17, 2010 2,200 dead birds found 2,200 dead birds found 500 dead sea turtles 500 dead sea turtles 590 miles of Gulf shoreline oiled 590 miles of Gulf shoreline oiled 1/3 to ½ fisheries are closed 1/3 to ½ fisheries are closed Fisheries imperiled, including shrimp/crabs Fisheries imperiled, including shrimp/crabs Underwater plumes of oil found Underwater plumes of oil found Oil getting into food chain - crabs Oil getting into food chain - crabs

134 NRDA as a result of Ecological Fallout Assessment of environmental effects to determine what BP must pay to restore the Gulf Environment. Assessment of environmental effects to determine what BP must pay to restore the Gulf Environment. Inexact Science Inexact Science

135 Drilling Moratorium First one overruled in Court, reissued by Administration First one overruled in Court, reissued by Administration 8000 drilling workers and 24,000 people who service the 33 rigs effected have future employment jeopardized 8000 drilling workers and 24,000 people who service the 33 rigs effected have future employment jeopardized $750 million in annual wages $750 million in annual wages

136 Other Economic Effects Tourism down Tourism down Fishing: The fisherman, companies that build and maintain boats, people who process and resell catch, and the restaurants. Fishing: The fisherman, companies that build and maintain boats, people who process and resell catch, and the restaurants. 20 billion compensation fund set up 20 billion compensation fund set up Factors for payment: Proximity to Coast, dependence on resources, industry. Factors for payment: Proximity to Coast, dependence on resources, industry.

137 SEE YOU IN COURT Government Criminal Probe – Low burden of proof, Migratory Bird Treaty Act, Refuse Act, Criminal Negligence. Government Criminal Probe – Low burden of proof, Migratory Bird Treaty Act, Refuse Act, Criminal Negligence. Settlement s to injured and killed Settlement s to injured and killed Hundreds of Economic Claims but mitigated by BP Settlment Fund. Hundreds of Economic Claims but mitigated by BP Settlment Fund.

138 Oil in New York ?? Supercomputer simulations suggest it is likely oil will move up the East Coast Supercomputer simulations suggest it is likely oil will move up the East Coast Within next six months. Within next six months. Factors: wind speed, current patterns, temperatures and past weather patterns. Factors: wind speed, current patterns, temperatures and past weather patterns.

139 Long Term Outlook Move more oil by tanker?? Move more oil by tanker?? Natural gas/ nuclear/Wind Farms Natural gas/ nuclear/Wind Farms Green energy Green energy Resources will bounce back – Exxon Valdez Resources will bounce back – Exxon Valdez – www.evostc.state.ak.us/facts/qanda.cfm

140 Thanks!

141 BREAKING LIABILITY LIMITS Gross negligence, willful misconduct (no privity or knowledge of owner required). Gross negligence, willful misconduct (no privity or knowledge of owner required). Violation of federal safety, construction or operating standard. Violation of federal safety, construction or operating standard. Failure to report spill or cooperate with clean-up. Failure to report spill or cooperate with clean-up.

142 BP Spill Issue BREAKING LIABILITY LIMITS Gross negligence, willful misconduct. (no privity or knowledge of owner required) Gross negligence, willful misconduct. (no privity or knowledge of owner required) Violation of federal safety, construction or operating standard. Violation of federal safety, construction or operating standard. Failure to report spill or cooperate with clean-up. Failure to report spill or cooperate with clean-up.


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