April 12, 1978
Page 9805
By Mr. MUSKIE (for himself, Mr. STAFFORD, and Mr. CHAFEE) :
S. 2900. A bill to provide for compensation for damages and clean-up costs caused by discharges of oil and hazardous substances, to establish a liability fund, and for other purposes; to the Committee on Environment and Public Works.
OIL SPILL LIABILITY FUND AND COMPENSATION ACT OF 1978
Mr. MUSKIE. Mr. President, the Subcommittee on Environmental Pollution has scheduled hearings on April 17 and 18 to consider pending legislation to establish a comprehensive oil spill liability regime. The House of Representatives and the Senate Commerce Committee, with whom we share some jurisdiction on this matter, have already completed action on this legislation. It is the intent of the Environment and Public Works Committee now to complete the process so that final action can be taken.
In reviewing the "superfund" legislation, we want to take a concentrated look at four questions.
First, should Federal law preempt tougher State laws? Second, should the legislation address the problem of hazardous spills in a way similar to our approach in the Clean Water Act? Third, what is the appropriate level of liability for oil spills, and what defenses should be available to the party responsible for the spill? And fourth, what incentives does the bill contain for tanker and oil handling facility operators to adopt tough measures to guard against oil spills?
The Amoco Cadiz disaster off the coast of Brittany has brought home to the world the frightening dangers of oil spills, especially from huge oil-carrying vessels. In addition, the Law of the Sea Conference has a mandate to address ocean pollution at its conference now underway in Geneva.
So it is an especially appropriate time for the Congress to review our sometimes confusing oil spill legislation, to establish a consistent policy which offers real protection for the American coastline and the people who live along it.
In order to have the full range of issues associated with the "superfund" legislation before us, I am today introducing a bill which is in some respects similar to the bills already pending before the Senate Environment and Public Works Committee. However, there are a few areas of significant difference which I would like to touch on briefly.
This bill is a major streamlining of other pending legislation in that it builds around an existing body of law, section 311 of the Clean Water Act which has been tested in the courts. It does not propose any radical changes in the existing statutory structures. Instead, it fills the gaps, makes uniform the liability structure, and streamlines procedures.
This bill includes spills of hazardous substances in addition to oil as part of the comprehensive liability schemes. Some will argue that it is not appropriate to include hazardous substances in the "superfund" structure since there will be no fee imposed for contribution to the fund.
However, more than half the designated hazardous substances are petroleum-based products, thereby making the oil fee-based fund a legitimate source for liability coverage for hazardous materials. Further, the penalties assessed for spills of nonremovable hazardous substances will be deposited in the fund and will more than cover any costs associated with hazardous materials spills.
Certainly spills of chemical substances can be as damaging, if not more so, than spills of oil. And because, in most cases, such spills are impossible to clean up, the potential for damages is significantly increased. It is essential that this aspect of pollution be included within this comprehensive scheme to assure full protection of our natural resources.
This bill restricts the available defenses to liability to assure that only spills caused solely by an act of God, act of war, third party negligence, or U.S. Government negligence would relieve the spiller of liability. In the other measures pending before the committee, the spiller can avoid liability by showing that the spill was caused primarily by these other actions, thereby opening up a gaping and litigable loophole.
In the area of relationship to State law, this bill deals with the preemption issue in what I believe is a defensible way. Certain States rights are preserved while the multiplicity of State funds is reduced.
In most other areas, this bill is substantially similar to those already reviewed by the House and Senate.
Mr. President, I ask unanimous consent that an outline and the text of this bill be included in the RECORD.
There being no objection, the bill and analysis were ordered to be printed in the RECORD, as follows:
S. 2900
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this bill may be cited as the "Oil Spill Liability Fund and Compensation Act of 1978".
DEFINITIONS
SEC. 2. For the purposes of this Act
(1) the terms "oil", "discharge", "vessel", "public vessel", "United States", "owner or operator", "remove" or "removal", "contiguous zone", "onshore facility", "offshore facility", "barrel", and "hazardous substance" shall have the meaning provided in section 311(a) of the Federal Water Pollution Control Act;
(2) the terms "State", "person", "navigable waters", and "territorial seas" shall have the meaning provided in section 502 of the Federal Water Pollution Control Act;
(3) the term "act of God" means an unanticipated grave natural disaster or other natural phenomenon of an exceptional, inevitable, and irresistible character the effects of which could not have been prevented or avoided by the exercise of due care or foresight;
(4) the term "claim" means a request, made in writing for a sum certain, for compensation for damages or removal costs resulting from a discharge of oil or a hazardous substance;
(5) the term "claimant" means any person who presents a claim for compensation under this Act;
(6) the term "damages" means damages for economic loss or the loss of natural resources as specified in section 3(a) (2) of this Act;
(7) the term "Fund" means the Oil Spill Liability Fund established under section 4.
(8) the term "guarantor" means any person, other than the owner or operator, who provides evidence of financial responsibility for an owner or operator under this Act or section 311(p) of the Federal Water Pollution Control Act;
(9) the term "refinery" means a terminal which receives oil for the purpose of refinement; and
(10) the term "terminal"means any permanently situated onshore or offshore facility which receives oil in bulk directly from any vessel, offshore production facility, offshore port facility, or any pipeline including the pipeline constructed under the Trans-Alaska pipeline Authorization Act.
LIABILITY FOR DAMAGES AND REMOVAL COSTS
SEC. 3. (a) Except where an owner or operator of a vessel or an onshore or offshore facility can prove that a discharge was caused solely by (i) an act of God, (ii) an act of war, (iii) negligence on the part of the United States Government, or (iv) an act or omission of a third party without regard to whether any such act or omission was or was not negligent, and notwithstanding any other provision or rule of law, such owner or operator of a vessel or an onshore or offshore facility from which oil or a hazardous substance is discharged in violation of section 311(b) (3) of the Federal Water Pollution Control Act shall be jointly, severally, and strictly liable for
(1) (A) all costs of removal incurred by the United States Government or a State under subsections (c), (d), (e), (b) (2) (B) (v), or (f) (4) of section 311 of the Federal Water Pollution Control Act or under the Intervention on the High Seas Act or section 18 of the Deepwater Port Act of 1974, and
(B) any other costs or expenses incurred by any person to remove oil or a hazardous substance as the terms "remove" or "removal" are defined in section 311(a) (8) of the Federal Water Pollution Control Act; and
(2) all damages for economic loss or loss of natural resources resulting from such a discharge, including:
(A) any injury to, destruction of, or loss of any real or personal property;
(B) any loss of use of real or personal property;
(C) any injury to, destruction of, or loss of natural resources;
(D) any loss of use of any natural resources, without regard to the ownership or management of such resources;
(E) any loss of income or profits or impairment of earning capacity resulting from injury to or destruction of real or personal property or natural resources, without regard to the ownership of such property or resources; and
(F) any direct or indirect loss of tax, royalty, rental, or net profits share revenue by the Federal Government or any State or political subdivision thereof, for a period of not to exceed one year.
(b) In the case of an injury to, destruction of, or loss of natural resources under subsection (a) (2) (C) of this section, liability shall be to the United States Government and to any State for natural resources within the State or belonging to, managed by, controlled by, or appertaining to such State. The President, or the authorized representative of any State, shall act on behalf of the public as trustee of such natural resources to recover for such damages. Sums shall be available for use to restore, rehabilitate, or acquire the equivalent of such natural resources by the appropriate agencies of the Federal Government or the State government, but the measure of such damages shall not be limited by the sums which can be used to restore or replace such resources.
(c) (1) The liability of an owner or operator of a vessel or an onshore or offshore facility for damages and removal costs under this section, and inclusive of the limits of liability established under section 311(a) of the Federal Water Pollution Control Act, for each discharge or incident shall not exceed—
(A) $300 per gross ton or $500,000, whichever is greater, of any vessel carrying oil or hazardous substances in bulk as cargo;
(B) $300 per gross ton of any other vessel;
(C) the total of all costs of removal under subsection (a) (1) of this section plus $50,000.000 for any offshore facility operated under the authority of or subject to the Outer Continental Shelf Lands Act;
(D) $50,000,000 for any deepwater port subject to the Deepwater Port Act of 1974 (including any vessel moored at such port, in any case where $50,000,000 exceeds $300 per gross ton of such vessel); or
(E) $50,000,000 for any other onshore or offshore facility.
(2) Notwithstanding the limitations of paragraph (1) of this subsection, the liability of the owner or operator of a vessel or an onshore or offshore facility under subsection (a) of this section shall be the full and total damages and removal costs not offset by any removal costs incurred on behalf of such owner or operator, if (A) the discharge of oil or a hazardous substance was the result of willful misconduct or gross negligence within the privity and knowledge of the owner or operator or of a gross or willful violation (within the privity and knowledge of the owner or operator) of applicable safety, construction, or operating standards or regulations; or (B) the owner or operator fails or refuses to provide all reasonable cooperation and assistance requested by a responsible official in connection with removal activities under the contingency plan established under section 311(c) of the Federal Water Pollution Control Act.
(d) In any case where the owner or operator of a vessel or an onshore or offshore facility can prove that a discharge was caused solely by an act or omission of a third party (or solely by such an act or omission in combination with an act of God, an act of war, or negligence on the part of the United States Government), such third party shall be liable under this section as if such third party were the owner or operator of the vessel or onshore or offshore facility from which the discharge actually occurred.
(e) The President is authorized to establish by regulation, with respect to any class or category of onshore or offshore facility subject to subsection (c) (1) (E) of this section, a maximum limit of liability under this section of less than $50,000,000 but not less than $8,000,000.
LIABILITY FUND ESTABLISHMENT
SEC. 4. (a) There is hereby established in the Treasury of the United States an Oil Spill Liability Fund, not to exceed $200,000,000, except that such limitation shall be increased to the extent necessary to permit any moneys recovered or collected which are referred to in subsection (b) (2) and (3) of this section being paid into such Fund. The fund shall be administered by the President and the Secretary of the Treasury, as specified in this section. The Fund may sue and be sued in its own name.
(b) The Fund shall be constituted from—
(1) all fees collected pursuant to subsection (c);
(2) all moneys recovered on behalf of the Fund under section 5;
(3) all moneys recovered or collected under section 311(b) (2) (B) of the Federal Water Pollution Control Act.
(c) (1) The Secretary of the Treasury shall collect from the owners of refineries receiving crude oil, and from the owners of terminals receiving any oil for export from or entry into the United States whether for import or transfer to a foreign country, a fee, not to exceed three cents per barrel of oil received. Oil upon which a fee has been levied under this paragraph shall not be subject to subsequent levy hereunder.
(2) The Secretary of the Treasury, after consulting with appropriate Federal agencies, may promulgate rules and regulations relating to the collection of the fees authorized by paragraph (1) and, from time to time, the modification thereof. Modifications shall become effective on the date specified therein, but no earlier than the ninetieth day following the date the modifying regulation is published in the Federal Register. Any modification of the fee shall be designed to assure that the Fund is maintained at a level not less than $150,000,000 and not more than $200,000,000. No regulation that modifies fees, nor any modification of such a regulation, whether or not in effect, may be stayed by any court pending completion of judicial review of that regulation or modification.
(3) (A) Any person who fails to collect or pay fees as required by the regulations promulgated under paragraph (2) shall be liable for a civil penalty not to exceed $10,000, to be assessed by the Secretary of the Treasury, in addition to the fees required to be collected or paid and the interest on those fees at the rate the fees would have earned if collected or paid when due and invested in special obligations of the United States in accordance with subsection (d)(2). Upon the failure of any person so liable to pay any penalty, fee, or interest upon demand, the Attorney General shall, at the request of the Secretary of the Treasury, bring an action in the name of the fund against that person for such amount. (B) Any person who falsifies records or documents required to be maintained under any regulation promulgated under this subsection shall be subject to prosecution for a violation of section 1001of title 18, United States Code.
(4) The Secretary of the Treasury may, by regulation, designate the reasonably necessary records and documents to be kept by persons from whom fees are to be collected pursuant to paragraph (1) of this subsection, and the Secretary of the Treasury and the Comptroller General of the United States shall have access to such required material for the purpose of audit and examination.
(d) (1) The President shall determine the level of funding required for immediate access in order to meet potential obligations of the Fund.
(2) The Secretary of the Treasury may invest any excess in the Fund, above the level determined under paragraph (1) , in interest-bearing special obligations of the United States. Such special obligations may be redeemed at any time in accordance with the terms of the special issue and pursuant to regulations promulgated by the Secretary of the Treasury. The interest on, and the proceeds from the sale of, any obligations held in the Fund shall be credited to and form a part of the Fund.
(e) If at any time the moneys available in the Fund are insufficient to meet the obligations of the Fund, the President shall issue to the Secretary of the Treasury notes or other obligations in the forms and denominations, bearing the interest rates and maturities and subject to such terms and conditions as may be prescribed by the Secretary of the Treasury. Redemption of these notes or obligations shall be made by the President from moneys in the Fund. These notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the average market yield on outstanding marketable obligations of comparable maturity. The Secretary of the Treasury shall purchase any notes or other obligations issued hereunder and, for that purpose, is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under the Second Liberty Bond Act. The purpose for which securities may be issued under that Act are extended to include any purchase of these notes or obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by him under this subsection. All redemptions, purchases, and sales by the Secretary of the Treasury of these notes or other obligations shall be treated as public debt transactions of the United States.
USE OF LIABILITY FUND
SEC. 5. (a) The President shall use the money in the Fund for the following purposes:
(1) payment of any claim for costs of removal or damages in excess of the amount for which the owner or operator of the vessel or onshore or offshore facility from which oil or a hazardous substance is discharged is liable under section 3 (c) of this Act;
(2) payment of any claim for costs of removal or damages where the source of the discharge of oil or a hazardous substance is not known or cannot be identified;
(3) payment of any claim for costs of removal or damages in any case where the claim has not been satisfied in accordance with subsection (b) of this section;
(4) all removal costs or expenses or other costs of carrying out the National Contingency Plan established under section 311(c) of the Federal Water Pollution Control Act, including removal costs incurred by any person and approved under such National Contingency Plan;
(5) the costs of providing equipment and similar overhead, including research related to the purposes of this Act and section 311 or, if appropriate, section 504 of the Federal Water Pollution Control Act, for any Federal agency involved in strike forces, emergency task forces, or other response teams under such National Contingency Plan;
(6) the costs of assessing both short-term and long-term injury to, destruction of, or loss of any natural resources resulting from a discharge of oil or a hazardous substance;
(7) the costs of Federal or State efforts in the restoration, rehabilitation, or replacement or acquiring the equivalent of any natural resources injured, destroyed, or lost as a result of any discharge of oil or a hazardous substance;
(8) reimbursement to any State for the payment of any claims for costs of removal or damages payable under this Act which such State has paid with funds under the control of such State; and
(9) subject to such amounts as are provided in appropriation Acts, the administrative and personnel costs of administering the Fund and this Act;
(b) (1) The President is authorized to promulgate regulations designating one or more Federal officials who may obligate money in the Fund in accordance with subsection (a) of this section or portions thereof.
(2) The President is authorized to delegate the administration of his duties and authorities under this Act to the heads of those Federal departments, agencies, and instrumentalities which the President determines appropriate.
(3) (A) The President shall promulgate, and may from time to time amend regulations for the presentation, filing, processing,settlement, and adjudication of claims for costs of removal or damages resulting from the discharge of oil or a hazardous substance under this Act.
(B) Whenever the President receives information from any person alleging they have incurred costs of removal or damages resulting from the discharge of oil or a hazardous substance for which the owner or operator of a vessel or onshore or offshore facility is liable under section 3 of this Act, he shall notify the owner, operator, and guarantor of such vessel or onshore or offshore facility of such allegation. Such owner or operator or guarantor, may, within five days after receiving such notification or presentation of any claim by a claimant, deny such allegations, or deny liability for damages for any of the reasons set forth in subsection (a) of section 3 of this Act.
(C) (1) Payment of any claim by the Fund under this section shall be subject to the United States Government acquiring by subrogation all rights of the claimant to recover the costs of removal or damages from the person responsible for such discharge.
(2) Any person, including the Fund, who pays compensation pursuant to this Act to any claimant for damages or costs of removal resulting from a discharge of oil or a hazardous substance shall be subrogated to all rights, claims, and causes of action for such damages and costs of removal such claimant has under this Act or any other law.
(3) Upon request of the President, the Attorney General shall commence an action on behalf of the Fund to recover any compensation paid by the fund to any claimant pursuant to this Act, and, without regard to the limitation of liability provided for in section 3(c), all costs incurred by the Fund by reason of the claim, including interest, administrative and adjudicative costs, and attorney's fees. Such an action may be commenced against any owner, operator, or guarantor, or against any other person who is liable, pursuant to any law, to the compensated claimant or to the Fund, for the damages or costs of removal for which the compensation was paid.
(d) The Fund shall not be available to pay any claim for costs of removal or damages to the extent the discharge or the damages had been caused by the gross negligence or willful misconduct of the particular claimant.
(e) No indemnification, hold harmless, or similar agreement shall be effective to transfer from the owner or operator of a vessel or onshore or offshore facility, to any other person, the liability provided for under this Act, other than as specified under the provisions of this Act.
FINANCIAL RESPONSIBILITY
SEC. 6. (a) (1) The owner or operator of any vessel over three hundred gross tons (except a non-self-propelled barge that does not carry oil or hazardous substances as cargo) using any port or place in the United States or the navigable waters or any offshore facility shall establish and maintain in accordance with section 311(p) of the Federal Water Pollution Control Act evidence of financial responsibility sufficient to meet the liability to which the owner or operator of such vessel could be subjected under section 3 of this Act. The provisions of paragraphs (3), (4), (5), and (6) of such section 311 (p) shall apply to any vessel, or the owner or operator thereof, subject to this section. This subsection shall take effect October 1, 1978.
(2) Any vessel subject to the requirements of this subsection which is found in the navigable waters without the necessary evidence of financial responsibility shall be subject to seizure by the United States of any oil or hazardous substances carried as cargo.
(b) (1) The owner or operator of any onshore or offshore facility (except a storage or transportation facility of less than 1,000 barrels of oil or equivalent capacity at any one time) shall establish and maintain evidence of financial responsibility sufficient to meet the liability to which the owner or operator of such facility could be subjected under section 3 of this Act. Such evidence of financial responsibility shall be established according to regulations prescribed by the President and comparable to that required under section 311(p) of the Federal Water Pollution Control Act. This subsection shall take effect 180 days after enactment of this Act.
(2) The owner or operator of any onshore or offshore facility subject to this subsection who fails to comply with this subsection or the regulations prescribed thereunder shall be subject to a fine of not more than $10,000.
STATE LAWS AND PROGRAMS
SEC. 7. (a) Nothing in this Act shall be construed or interpreted as preempting any State from imposing any additional liability or requirements with respect to the dischargeof oil or hazardous substances within such State.
(b) (1) Except as provided in this Act, no person may be required to contribute to any public fund, the purpose of which is to pay compensation for loss or damages resulting from discharge of oil or hazardous substances.
(2) State programs for supporting—
(A) The purchase and pre-positioning of cleanup and removal equipment, and training of personnel;
(B) Removal costs and cleanup costs caused by discharges of oil or hazardous substances;
(C) Payment of claims for damage and losses resulting from discharge of oil or hazardous substances;
(D) Research into the problems and effects of oil pollution and methods and techniques for control and cleanup of oil pollution; and
(E) Administrative costs for such programs which are in effect on the date of enactment of this subsection shall be permitted to continue in effect and operating under the same terms and conditions under which they have operated in the year immediately preceding enactment of this subsection.
(3) Such state programs may be reimbursed from the Fund for all costs arising after the date of enactment of this Act and incident to operation of such programs, including expenditures for—
(A) The purchase and prepositioning of cleanup and removal equipment;
(B) The training of personnel in cleanup and removal techniques;
(C) The payment of cleanup costs and removal costs arising from discharges of oil and hazardous substances; and
(D) The payment of claims for cost of removal, damages or losses resulting from such discharges, to the same extent and under the same terms and conditions as such claims could be paid under state law as it existed immediately prior to enactment of this subsection.
CONFORMING AMENDMENTS
SEC. 8. (a) TRANS-ALASKA PIPELINE ACT. — (1) Section 204(b) of the Trans-Alaska Pipeline Authorization Act (87 Stat. 586) is amended, in the first sentence—
(A) by inserting after the words "any area" the words "in the State of Alaska";
(B) by inserting after the words "any activities" the words "related to the Trans-Alaska Oil Pipeline"; and
(C) by inserting at the end of the subsection the following new sentence: "This subsection shall not apply to removal costs covered by the Oil Spill Liability Fund and Compensation Act of 1978".
(2) (A) Section 204(c) of the Trans-Alaska Pipeline Authorization Act (43 U.S.C. 1653(c)) is hereby repealed. The Trans-Alaska Pipeline Liability Fund is hereby abolished. All assets of that fund, as of the effective date of this section, shall be transferred to the Oil Spill Liability Fund established by section 4 of this Act. The Oil Spill Liability Fund shall assume any and all liability incurred by the Trans-Alaska Pipeline Liability Fund under the terms of section 204(c) of the Trans-Alaska Pipeline Authorization Act (43 U.S.C. 1653(c)).
(B) The Secretary of the Interior shall certify to the Secretary of the Treasury the total amount of the claims outstanding against the Trans-Alaska Pipeline Liability Fund at the time the transfer of assets required under paragraph (A) is made. If the Secretary finds that—
(i) the total amount of the assets so transferred is greater than the total amount of the outstanding claims so certified, the Secretary shall distribute any such excess funds to those persons who paid fees into that fund in the proportion that their representative payments bear to the total payments into the fund; or
(ii) the total amount of the assets so transferred is less than the total amount of the outstanding claims so certified, the Secretary of the Treasury shall increase by 2 cents per barrel the fee imposed under section 4 on barrels of oil until such time as the total amount of the 2-cent-per- barrel increase so collected equals the difference between the amount of the certified outstanding claims and the amount of the transferred assets.
(C) In the event that the total amount of the actual claims settled is less than the total amount of the outstanding claims certified, the difference between these amounts shall be rebated by the Secretary of the Treasury directly to the operator of the trans-Alaska oil pipeline for payment, on a pro rata basis, to the owners of the oil at the time it was loaded on the vessel.
(D) For purposes of paragraph (A), the term "barrels of oil" means only barrels of oil which would, but for the repeal made by paragraph (1), be subject to the fee imposed under section 204 (c) (5) of the Trans-Alaska Pipeline Authorization Act. The term "Secretary" means the Secretary of the Treasury.
(b) INTERVENTION OF THE HIGH SEAS ACT.— Section 17 of the Intervention on the High Seas Act (88 Stet. 10) is amended to read as follows:
"Sec. 17. The fund established under section 4 of the Oil Spill Liability Fund and Compensation Act of 1978 shall be available to the Secretary for actions taken under section 5 of this Act".
(C) FEDERAL WATER POLLUTION CONTROL ACT.— Section 311 of the Federal Water Pollution Control Act is amended as follows:
(1) Clause (H) of paragraph (2) of subsection (c) is amended by inserting after the words "of this section" the words "or the fund established under section 4 of the Oil Spill Liability Fund and Compensation Act of 1978, as appropriate,".
(2) Subsection (f) is amended, in the last sentence of paragraph (1), by inserting a comma after the word "vessel" and by adding immediately thereafter "or against any guarantor of an owner's or operator's liability under the Oil Spill Liability and Compensation Fund Act of 1978,".
(3) Subsection (g) is amended, by inserting in the last sentence, after the word "party" the words "or against any guarantor of an owner's or operator's liability under the Oil Spill Liability and Compensation Fund Act of 1978".
(4) Any sums appropriated prior to the enactment of this Act under subsection (k) of such section 311 shall be transferred to the Fund established under section 4 of this Act.
(d) DEEPWATER PORT ACT.— The Deepwater Port Act of 1974 (88 Stat. 2126) is amended as follows:
(1) In section 4(c) (1) strike "section 18 (1) of this Act;"; and insert in lieu thereof "section 5 of the Oil Spill Liability and Compensation Fund Act of 1978.".
(2) Subsections (b), (d), (e), (f), (g), (h), (i), (j), (1), (n), and clause (1) of subsection (m) of section 18 are deleted.
(3) Clause (3) of subsection (c) of section 18 is amended by striking "Deepwater Port Liability Fund established pursuant to subsection (f) of this section.", and inserting in lieu thereof "fund established under section 4 of the Oil Spill Liability and Compensation Fund Act of 1978".' .
(4) Subsections (c), (k), and (m) of section 18 are redesignated (b), (c), and (d), respectively, and clauses (2), (3), and (4) of subsection (m) are redesignated (1), (2), and (3), respectively.
OIL SPILL LIABILITY FUND AND COMPENSATION ACT OF 1978
I. Basic approach:
A. Leave section 311 of the Clean Water Act in place as basic law providing clean-up authority, penalties for spills and failure to notify, and liability of discharge for clean-up costs for discharges of oil and hazardous substances.
B. Establish liability of discharger for compensation for economic loss and create fund with oil revenues to assure payment without limit of both clean-up costs and compensation for economic loss.
II. The Act would cover all waters and resources covered by section 311, that is, all discharges:
(1) Into or on the navigable waters of the contiguous zone,
(2) In connection with activities under the Outer Continental Shelf Lands Act or Deepwater Port Act of 1974, or
(3) Which may affect natural resources belonging to, appertaining to, or under the exclusive management authority of the United States (including resources under the Fishery Conservation and Management Act of 1976);
plus certain discharges into the territorial sea of a foreign country such as Canada when reciprocal rights to recover damages have been established.
III. The standard for discharge would be that under section 311, that is discharges of harmful quantities of oil or hazardous substances would be prohibited, except that the discharge standard for vessels beyond the territorial seas of the United States would be that provided under the International Convention for the Prevention of Pollution of the Sea by Oil, 1954, as amended.
IV. Terms would be defined by reference to the definitions in section 311, plus definitions derived from H.R. 6803 for certain new terms.
V. The Act would establish strict liability by the owner or operator of any vessel or facility discharging oil or a hazardous substance for:
A. all clean-up and mitigation costs or expenses incurred under section 311(c), (d) or (e) of the Clean Water Act or the Intervention of the High Seas Act, and any other costs or expenses incurred by any person to remove oil or hazardous substances as "removal" is defined in section 311(a) (8) of the Clean Water Act.
B. damages for economic loss resulting from a discharge, of the following types:
(1) Injury to, or destruction of, real or personal property;
(2) Loss of use of real or personal property;
(3) Injury to, or destruction of, natural resources;
(4) Loss of use of natural resources;
(5) Loss of profits or income or impairment of earning capacity due to injury or destruction of real or personal property or natural resources;
(6) Loss of tax royalty, rental or net profits revenue by Federal, State or local government for a period of one year due to injury to real or personal property.
VI. Defenses to a discharger's liability would be those under section 311, that is, there is no liability where an owner or operator can prove a discharge was caused solely by an act of war, an act of God, or an act or omission of a third party.
VII. The liability of an owner or operator would be limited, for any one discharge or incident, as follows:
A. $300 per gross ton or $500,000 whichever is greater, for vessels carrying oil or hazardous substances in bulk as cargo;
B. $300 per gross ton for other vessels;
C. all removal costs plus $50,000,000 for facilities under OSC Act:
D. $50,000,0000 for deepwater ports (including discharges from vessels moored at such ports) ;
E. $50,000,000 for other facilities unless a lower limit is established by the President for a particular class or category of facility.
This bill includes the existing limits of liability for clean-up costs under section 311, without actually changing those recently established limits.
Liability is unlimited if caused by willful misconduct or gross negligence within the privity or knowledge of the owner or operator, or by a gross or willful violation of applicable safety, construction, or operating standards or regulations. Failure or refusal to cooperate in clean-up activities also invokes unlimited liability.
VIII. The Act would direct the Secretary of the Treasury to establish a liability fund with fees of up to $.03 per barrel of crude oil received by refineries or terminals. This would include all offshore, domestic, and imported oil. The fund would be maintained at level of $200,000,000 with levy reinstated when fund depleted below that level, and authority to borrow from U.S. Treasury to cover claims whenever amount in fund is exceeded.Also deposited in the Fund would be sums recovered from dischargers and penalties. This fund would replace those funds created under the Trans-Alaska Pipeline Act and the Deepwater Port Act of 1974 and that proposed under the pending Outer Continental Shelf Lands Act amendments. It would also supersede the contingency fund established under section 311.
IX. The Fund would be available to be disbursed, according to regulations issued by the President, for—
A. Any claim for clean-up costs or damages in excess of the limits of liability of the discharger;
B. Any such claim where the discharger cannot be identified;
C. Any such claim where there is delay in satisfying the claim. (Claimants must first assert claims for clean-up costs or damages against the discharger, if known, unless certain defenses or denials of liability are raised. If the claims are not satisfied within 60 days, they may he presented to the Fund for payment. When paid, the Fund is subrogated to all rights against the discharge source.);
D. Clean-up costs and expenses incurred by Federal or State governments or any other party under the National Contingency Plan;
E. Overhead and equipment costs including research of Federal agencies involved in response teams;
F. Costs of assessing injury to or destruction of natural resources;
G. Costs of restoration or replacement by the Federal Government or a State of natural resources damaged or destroyed as a result of a discharge (or acquisition of resources to offset loss of irreplaceable resources);
H. Reimbursement of States for payments of claims made with State liability funds; and
I. Administrative costs of the Fund, subject to such amounts as are appropriated in appropriation Acts.
The Fund would be liable without limit for all clean-up costs and compensable damages, except to the extent caused by gross negligence or wilful misconduct of a claimant. The bill would establish a simplified claims procedure based on that in H.R. 6803, leaving it to the President to specify the claims procedure through regulation.
X:
A. The penalties for unlawful discharge, for failure to notify and for discharge of non-renewable hazardous substances under section 311 would continue to apply.
B. Vessels and facilities would be required to provide evidence of financial responsibility under section 311(p) at least in the amount of potential liability under this new Act. Facilities under the Act (except storage or transportation facilities of less than 1000 barrels capacity) would have to provide such evidence within 6 months after enactment. Vessels using the navigable waters would be required to have evidence of increased financial responsibility by October 1, 1978 (the date provided in the 1977 amendments to section 311).
C. These requirements may be enforced through denial of entry or clearance of ports, or by confiscation of cargo of any vessel found in the navigable waters without adequate evidence of financial responsibility. Facilities would be subject to substantial penalties for violations of these requirements.
XI:
A. The Act would substantially modify, with conforming amendments, the Trans-Alaska Pipeline Authorization Act and the Deepwater Port Act of 1974. Amendments to section 311, the Clean Water Act, would be minimal.
B. The Act would expressly allow States to impose more stringent requirements or liability on discharges of oil or hazardous substances. States would be prohibited from collecting further revenues on oil for compensation, but could continue funds for clean-up. States would be allowed to pay clean-up liaibility and compensation claims out of existing funds and to receive reimbursement for those payments from Federal fund.