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Wednesday, September 15, 2010

The 2010 Oil Spill: Natural Resource Damage Assessment Under the Oil Pollution Act

Kristina Alexander
Legislative Attorney

The 2010 Deepwater Horizon oil spill leaked an estimated 4.1 million barrels of oil into the Gulf of Mexico, damaging the waters, shores, and marshes, and the fish and wildlife that live there. The Oil Pollution Act (OPA) establishes a process for assessing the damages to those natural resources and assigning responsibility for restoration to the parties responsible. BP was named the responsible party for the spill. The Natural Resources Damage Assessment (NRDA) process allows Trustees of affected states and the federal government (and Indian tribes and foreign governments, if applicable) to determine the levels of harm and the appropriate remedies. 

The types of damages that are recoverable include the cost of replacing or restoring the lost resource, the lost value of those resources if or until they are recovered, and any costs incurred in assessing the harm. Claims by individuals or businesses are not allowed, as all injuries are to the resources managed by state, federal, tribal, or foreign governments. OPA allows recovery from the responsible parties for harm resulting from response efforts, which in this case could include in situ burning, use of dispersants, and vehicle traffic on shores and marshes. The $20 billion escrow fund set up by BP in June 2010 is not for government NRDA claims, but it can be used to reimburse individual losses of subsistence use of natural resources, primarily lost fishing opportunities, which are covered by OPA. 

Under NRDA, Trustees design a recovery plan that is paid for or implemented by any responsible parties. If the responsible parties refuse to pay or cannot reach an agreement with the Trustees, the Trustees can sue the responsible party under NRDA for those damages or seek compensation from the Oil Spill Liability Trust Fund, but there is a cap of $500 million for natural resources damage. The federal government can then seek restitution from the responsible parties for the sums taken from that fund. OPA caps liability for offshore drilling units at $75 million for economic damages, but does not limit liability for removal costs. 

Both the caps on the Oil Spill Trust Fund and on OPA have captured Congress's attention, as has Gulf restoration. H.R. 3534 would remove the OPA cap on damages for offshore facilities. It would also establish a task force to create a restoration plan within 12 months of enactment. This plan appears to be separate from the restoration plan under NRDA. However, Title V of H.R. 3534 overlaps parts of the NRDA process.

Date of Report: September 8, 2010
Number of Pages: 18
Order Number: R41396
Price: $29.95

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