33 USC 2716 Financial Responsibility

33 USC 2716. Financial responsibility

(a) Requirement

The responsible party for--

(1) any vessel over 300 gross tons (except a non-self-propelled

vessel that does not carry oil as cargo or fuel) using any place

subject to the jurisdiction of the United States; or

(2) any vessel using the waters of the exclusive economic zone

to transship or lighter oil destined for a place subject to the

jurisdiction of the United States;

shall establish and maintain, in accordance with regulations promulgated

by the Secretary, evidence of financial responsibility sufficient to

meet the maximum amount of liability to which the responsible party

could be subjected under section 2704(a) or (d) of this title, in a case

where the responsible party would be entitled to limit liability under

that section. If the responsible party owns or operates more than one

vessel, evidence of financial responsibility need be established only to

meet the amount of the maximum liability applicable to the vessel having

the greatest maximum liability.

(b) Sanctions

(1) Withholding clearance

The Secretary of the Treasury shall withhold or revoke the

clearance required by section 91 of title 46, Appendix, of any

vessel subject to this section that does not have the evidence of

financial responsibility required for the vessel under this section.

(2) Denying entry to or detaining vessels

The Secretary may--

(A) deny entry to any vessel to any place in the United

States, or to the navigable waters, or

(B) detain at the place,

any vessel that, upon request, does not produce the evidence of

financial responsibility required for the vessel under this section.

(3) Seizure of vessel

Any vessel subject to the requirements of this section which is

found in the navigable waters without the necessary evidence of

financial responsibility for the vessel shall be subject to seizure

by and forfeiture to the United States.

(c) Offshore facilities

(1) In general

(A) Evidence of financial responsibility required

Except as provided in paragraph (2), a responsible party

with respect to an offshore facility that--

(i)(I) is located seaward of the line of ordinary low

water along that portion of the coast that is in direct

contact with the open sea and the line marking the seaward

limit of inland waters; or

(II) is located in coastal inland waters, such as bays

or estuaries, seaward of the line of ordinary low water

along that portion of the coast that is not in direct

contact with the open sea;

(ii) is used for exploring for, drilling for, producing,

or transporting oil from facilities engaged in oil

exploration, drilling, or production; and

(iii) has a worst-case oil spill discharge potential of

more than 1,000 barrels of oil (or a lesser amount if the

President determines that the risks posed by such facility

justify it),

shall establish and maintain evidence of financial

responsibility in the amount required under subparagraph (B) or

(C), as applicable.

(B) Amount required generally

Except as provided in subparagraph (C), the amount of

financial responsibility for offshore facilities that meet the

criteria of subparagraph (A) is--

(i) $35,000,000 for an offshore facility located seaward

of the seaward boundary of a State; or

(ii) $10,000,000 for an offshore facility located

landward of the seaward boundary of a State.

(C) Greater amount

If the President determines that an amount of financial

responsibility for a responsible party greater than the amount

required by subparagraph (B) is justified based on the relative

operational, environmental, human health, and other risks posed

by the quantity or quality of oil that is explored for, drilled

for, produced, or transported by the responsible party, the

evidence of financial responsibility required shall be for an

amount determined by the President not exceeding $150,000,000.

(D) Multiple facilities

In a case in which a person is a responsible party for more

than one facility subject to this subsection, evidence of

financial responsibility need be established only to meet the

amount applicable to the facility having the greatest financial

responsibility requirement under this subsection.

(E) Definition

For the purpose of this paragraph, the seaward boundary of a

State shall be determined in accordance with section 1301(b) of

title 43.

(2) Deepwater ports

Each responsible party with respect to a deepwater port shall

establish and maintain evidence of financial responsibility

sufficient to meet the maximum amount of liability to which the

responsible party could be subjected under section 2704(a) of this

title in a case where the responsible party would be entitled to

limit liability under that section. If the Secretary exercises the

authority under section 2704(d)(2) of this title to lower the limit

of liability for deepwater ports, the responsible party shall

establish and maintain evidence of financial responsibility

sufficient to meet the maximum amount of liability so established.

In a case in which a person is the responsible party for more than

one deepwater port, evidence of financial responsibility need be

established only to meet the maximum liability applicable to the

deepwater port having the greatest maximum liability.

(e) \1\ Methods of financial responsibility

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\1\ So in original. No subsec. (d) has been enacted.

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Financial responsibility under this section may be established by

any one, or by any combination, of the following methods which the

Secretary (in the case of a vessel) or the President (in the case of a

facility) determines to be acceptable: evidence of insurance, surety

bond, guarantee, letter of credit, qualification as a self-insurer, or

other evidence of financial responsibility. Any bond filed shall be

issued by a bonding company authorized to do business in the United

States. In promulgating requirements under this section, the Secretary

or the President, as appropriate, may specify policy or other

contractual terms, conditions, or defenses which are necessary, or which

are unacceptable, in establishing evidence of financial responsibility

to effectuate the purposes of this Act.

(f) Claims against guarantor

(1) In general

Subject to paragraph (2), a claim for which liability may be

established under section 2702 of this title may be asserted

directly against any guarantor providing evidence of financial

responsibility for a responsible party liable under that section for

removal costs and damages to which the claim pertains. In defending

against such a claim, the guarantor may invoke--

(A) all rights and defenses which would be available to the

responsible party under this Act;

(B) any defense authorized under subsection (e) of this

section; and

(C) the defense that the incident was caused by the willful

misconduct of the responsible party.

The guarantor may not invoke any other defense that might be

available in proceedings brought by the responsible party against

the guarantor.

(2) Further requirement

A claim may be asserted pursuant to paragraph (1) directly

against a guarantor providing evidence of financial responsibility

under subsection (c)(1) of this section with respect to an offshore

facility only if--

(A) the responsible party for whom evidence of financial

responsibility has been provided has denied or failed to pay a

claim under this Act on the basis of being insolvent, as defined

under section 101(32) of title 11, and applying generally

accepted accounting principles;

(B) the responsible party for whom evidence of financial

responsibility has been provided has filed a petition for

bankruptcy under title 11; or

(C) the claim is asserted by the United States for removal

costs and damages or for compensation paid by the Fund under

this Act, including costs incurred by the Fund for processing

compensation claims.

(3) Rulemaking authority

Not later than 1 year after October 19, 1996, the President

shall promulgate regulations to establish a process for implementing

paragraph (2) in a manner that will allow for the orderly and

expeditious presentation and resolution of claims and effectuate the

purposes of this Act.

(g) Limitation on guarantor's liability

Nothing in this Act shall impose liability with respect to an

incident on any guarantor for damages or removal costs which exceed, in

the aggregate, the amount of financial responsibility which that

guarantor has provided for a responsible party pursuant to this section.

The total liability of the guarantor on direct action for claims brought

under this Act with respect to an incident shall be limited to that

amount.

(h) Continuation of regulations

Any regulation relating to financial responsibility, which has been

issued pursuant to any provision of law repealed or superseded by this

Act, and which is in effect on the date immediately preceding the

effective date of this Act, is deemed and shall be construed to be a

regulation issued pursuant to this section. Such a regulation shall

remain in full force and effect unless and until superseded by a new

regulation issued under this section.

(i) Unified certificate

The Secretary may issue a single unified certificate of financial

responsibility for purposes of this Act and any other law.

(Pub. L. 101-380, title I, Sec. 1016, Aug. 18, 1990, 104 Stat. 502; Pub.

L. 104-55, Sec. 2(d)(2), Nov. 20, 1995, 109 Stat. 547; Pub. L. 104-324,

title XI, Sec. 1125(a), Oct. 19, 1996, 110 Stat. 3981.)

References in Text

This Act, referred to in subsecs. (e), (f), (g), (h), and (i), is

Pub. L. 101-380, Aug. 18, 1990, 104 Stat. 484, as amended, known as the

Oil Pollution Act of 1990, which is classified principally to this

chapter. For complete classification of this Act to the Code, see Short

Title note set out under section 2701 of this title and Tables.

The effective date of this Act, referred to in subsec. (h), is the

effective date of Pub. L. 101-380 which is applicable to incidents

occurring after Aug. 18, 1990, see section 1020 of Pub. L. 101-380, set

out as an Effective Date note under section 2701 of this title.

Amendments

1996--Subsec. (c)(1). Pub. L. 104-324, Sec. 1125(a)(1), reenacted

heading without change and amended text generally. Prior to amendment,

text read as follows: ``Except as provided in paragraph (2), each

responsible party with respect to an offshore facility shall establish

and maintain evidence of financial responsibility of $150,000,000 to

meet the amount of liability to which the responsible party could be

subjected under section 2704(a) of this title in a case in which the

responsible party would be entitled to limit liability under that

section. In a case in which a person is the responsible party for more

than one facility subject to this subsection, evidence of financial

responsibility need be established only to meet the maximum liability

applicable to the facility having the greatest maximum liability.''

Subsec. (f). Pub. L. 104-324, Sec. 1125(a)(2), reenacted heading

without change and amended text generally. Prior to amendment, text read

as follows: ``Any claim for which liability may be established under

section 2702 of this title may be asserted directly against any

guarantor providing evidence of financial responsibility for a

responsible party liable under that section for removal costs and

damages to which the claim pertains. In defending against such a claim,

the guarantor may invoke (1) all rights and defenses which would be

available to the responsible party under this Act, (2) any defense

authorized under subsection (e) of this section, and (3) the defense

that the incident was caused by the willful misconduct of the

responsible party. The guarantor may not invoke any other defense that

might be available in proceedings brought by the responsible party

against the guarantor.''

Subsec. (g). Pub. L. 104-324, Sec. 1125(a)(3), reenacted heading

without change and amended text generally. Prior to amendment, text read

as follows: ``Nothing in this Act shall impose liability with respect to

an incident on any guarantor for damages or removal costs which exceed,

in the aggregate, the amount of financial responsibility required under

this Act which that guarantor has provided for a responsible party.''

1995--Subsec. (a). Pub. L. 104-55 substituted ``the responsible

party could be subjected under section 2704(a) or (d) of this title''

for ``, in the case of a tank vessel, the responsible party could be

subject under section 2704(a)(1) or (d) of this title, or to which, in

the case of any other vessel, the responsible party could be subjected

under section 2704(a)(2) or (d) of this title''.

Effective Date of 1996 Amendment

Section 1125(b) of Pub. L. 104-324 provided that: ``The amendment

made by subsection (a)(2) [amending this section] shall not apply to any

final rule issued before the date of enactment of this section [Oct. 19,

1996].''

Delegation of Functions

Specific functions of President under subsec. (e) of this section

delegated to Secretary of the Interior and Secretary of the Department

in which the Coast Guard is operating by section 5(a) of Ex. Ord. No.

12777, Oct. 18, 1991, 56 F.R. 54764, as amended, set out as a note under

section 1321 of this title.

Section Referred to in Other Sections

This section is referred to in sections 1503, 2705, 2715, 2716a,

2719 of this title; title 46 section 3715.