For example, if a vessel’s limit of liability  is $10 million and a spill resulted in $12 million in costs, the responsible  party only has to pay up to $10 million—the Fund will pay for the  remaining $2 million. 3). Many of the companies have contractual agreements with  responsible parties and the Coast Guard. Oil Spills Costing More than $1 Million Occurred Infrequently Since 1990, but Estimated Costs Total $860 Million to $1.1 Billion

On the basis of information we were able to assemble about responsible  parties’ expenditures and payments from the Fund, we estimate that 51 oil  spills involving removal costs and damage claims totaling $1 million or  more have occurred since 1990. The  number of spills and their costs varied from year to year and showed no  discernable trends in either frequency or cost. Less Than 2 Percent of Oil Spills Occurring Since 1990 Were Major Spills

Less than 2 percent of oil spills from vessels, since 1990, had removal costs  and damage claims of $1 million or greater. These 51 spills occurred in a variety of locations. Total Cost of Major Spills Ranges from $860 Million to $1.1 Billion, and Responsible Parties Pay the Majority of Costs

The total cost of the 51 spills cannot be precisely determined, for several  reasons:    Private-sector expenditures are not tracked: The NPFC tracks federal  removal costs expended by the Fund for Coast Guard and other federal  agencies’ spill response efforts, but it does not oversee costs incurred by  the private sector. Key Factors Affect Oil Spill Costs in Unique Ways

Location, time of year, and type of oil are key factors affecting oil spill  costs, according to industry experts, agency officials, and our analysis of  spills. According to state  officials with whom we spoke and industry experts, there are three  primary characteristics of location that affect costs:    Remoteness: For spills that occur in remote areas, spill response can be  particularly difficult in terms of mobilizing responders and equipment, and  they can complicate the logistics of removing oil from the water—all of  which can increase the costs of a spill. Type of Oil Spilled Impacts the Extent of the Response Effort and the Amount of Damage

The type of oil spilled affects the degree to which oil can be cleaned up  and removed, as well as the nature of the natural resource damage caused  by the spill—both of which can significantly impact the costs associated  with an oil spill. Fund Has Been Able to Cover Costs Not Paid by Responsible Parties, but Risks Remain

The Fund has been able to cover costs from major spills that responsible  parties have not paid, but risks remain. We estimate that not making such  adjustments in the past potentially cost the Fund $39 million between 1990  and 2006. Liability Limits Have Not Been Adjusted for Inflation

Although OPA requires adjusting liability limits to account for significant  increases in inflation, no adjustments to the limits were made between  1990 and 2006, when the Congress raised the limits in the Coast Guard and  Maritime Transportation Act. We collected information on the limits of liability of  the vessels at the time of the spill and the limits of liability for vessels after  changes in liability limits in the Coast Guard and Maritime Transportation  Act of 2006.
Why GAO Did This Study

When oil spills occur in U.S. waters, federal law places primary liability on the vessel owner or operator--that is, the responsible party--up to a statutory limit. As a supplement to this "polluter pays" approach, a federal Oil Spill Liability Trust Fund administered by the Coast Guard pays for costs when a responsible party does not or cannot pay. The Coast Guard and Maritime Transportation Act of 2006 directed GAO to examine spills that cost the responsible party and the Fund at least $1 million. This report answers three questions: (1) How many major spills (i.e., $1 million or more) have occurred since 1990, and what is their total cost? (2) What factors affect the cost of spills? and (3) What are the implications of major oil spills for the Oil Spill Liability Trust Fund? GAO's work to address these objectives included analyzing oil spill costs data, interviewing federal, state, and private-sector officials, and reviewing Coast Guard files from selected spills.

What GAO Found

On the basis of cost information collected from a variety of sources, GAO estimates that 51 spills with costs above $1 million have occurred since 1990 and that responsible parties and the federal Oil Spill Liability Trust Fund (Fund) have spent between about $860 million and $1.1 billion for oil spill removal costs and compensation for damages (e.g., lost profits and natural resource damages). Responsible parties paid between about 72 percent and 78 percent of these costs; the Fund has paid the remainder. Since removal costs and damage claims may stretch out over many years, the costs of the spills could rise. The 51 spills, which constitute about 2 percent of all vessel spills since 1990, varied greatly from year to year in number and cost. Three main factors affect the cost of spills: a spill's location, the time of year, and the type of oil spilled. Spills that occur in remote areas, for example, can increase costs involved in mobilizing responders and equipment. Similarly, a spill occurring during tourist or fishing season might produce substantial compensation claims, while a spill occurring during another time of year may not be as costly. The type of oil affects costs in various ways: fuels like gasoline or diesel fuel may dissipate quickly but are extremely toxic to fish and plants, while crude oil is less toxic but harder to clean up. Each spill's cost reflects a unique mix of these factors. To date, the Fund has been able to cover costs from major spills that responsible parties have not paid, but risks remain. Specifically, the Coast Guard and Maritime Transportation Act of 2006 increased liability limits, but GAO's analysis shows the new limit for tank barges remains low relative to the average cost of such spills. Since 1990, the Oil Pollution Act required that liability limits be adjusted above the limits set forth in statute for significant increases in inflation, but such changes have never been made. Not making such adjustments between 1990 and 2006 potentially shifted an estimated $39 million in costs from responsible parties to the Fund.