United States Government Accountability Office

GAO Report to Congressional Committees

MARITIME 

TRANSPORTATION 

Major Oil Spills Occur 

Infrequently, but Risks 

to the Federal Oil Spill 

Fund Remain 

September 2007 

 

GAO-07-1085 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

September 2007

MARITIME TRANSPORTATION 

Major Oil Spills Occur Infrequently, but 

Risks to the Federal Oil Spill Fund 

Remain Highlights of GAO-07-1085, a report to 

congressional committees 

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 Recommends

GAO recommends that the Coast

Guard (1) determine whether and

how liability limits should be 

changed, by vessel type, and make

recommendations about these 

changes to the Congress and (2) 

adjust the limits of liability for 

vessels every 3 years to reflect 

changes in inflation, as appropriate. 

DHS officials generally agreed with

the contents and agreed with the 

recommendations in this report. 

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. 

Location and Cost of Major Oil Spills, 1990-2006 

Source: GAO.

$0 $1 $25 $100 $250

Scale (in millions of dollars)

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Susan Fleming 

at (202) 512-4431 or flemings@gao.gov. 

www.gao.gov/cgi-bin/getrpt?GAO-07-1085.
Contents 

Letter 1

Results in Brief 4

Background 6

Oil Spills Costing More than $1 Million Occurred Infrequently Since 

1990, but Estimated Costs Total $860 Million to $1.1 Billion 15 

Key Factors Affect Oil Spill Costs in Unique Ways 20 

Fund Has Been Able to Cover Costs Not Paid by Responsible 

Parties, but Risks Remain 28 

Conclusions 34

Recommendations for Executive Action 35 

Agency Comments and Our Evaluation 35 

Appendix I Scope and Methodology 38 

Overview 38

Our Categorization of Oil Spill Costs 38 

Available Data 39 

Universe of Major Oil Spills 41 

Data Analysis and Case Studies 42 

Appendix II Comments from the Department of Homeland 

Security 44 

Appendix III GAO Contact and Staff Acknowledgments 46 

Tables 

Table 1: Types of OPA-Compensable Removal Costs and Damages 12 

Table 2: Description of Different Oil Types 25 

Table 3: Comparison of Limits of Liability as Established in OPA 

(1990) and the Coast Guard and Maritime Transportation 

Act (2006) 30 

Figures 

Figure 1: Description of Vessel Types and Current Limits of 

Liability 8

Page i GAO-07-1085 Oil Spill Costs
Figure 2: Oil Spill Liability Trust Fund Expenditures, Fiscal Years, 

1990-2006 9

Figure 3: Oil Spill Liability Trust Fund Balance, Fiscal Years 1993-

2006 10

Figure 4: Number of Major Oil Spills, by Year, 1990-2006 17 

Figure 5: Location and Cost of Major Oil Spills, 1990-2006 18 

Figure 6: Average per Spill Costs of Major Oil Spills, by Year, 1990-

2006 20

Figure 7: Average per Spill Cost of Major Oil Spills, by Location, 

1990-2006 23

Figure 8: Average per Spill Costs of Major Oil Spills, by Time of 

Year, 1990-2006 24 

Figure 9: Average per Spill Costs of Major Oil Spills by Type of Oil, 

1990-2006 26

Figure 10: Average Spill Costs and Limits of Liability for Major Oil 

Spill Vessels, 1990-2006 31 

Abbreviations 

Commerce Department of Commerce 

DOI Department of the Interior 

EPA Environmental Protection Agency 

Fund Oil Spill Liability Trust Fund 

FWS U.S. Fish and Wildlife Service 

NPFC National Pollution Funds Center 

NOAA National Oceanographic and Atmospheric Administration 

OPA Oil Pollution Act of 1990 

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page ii GAO-07-1085 Oil Spill Costs
United States Government Accountability Office

Washington, DC 20548 

September 7, 2007 

The Honorable Daniel K. Inouye 

Chairman 

The Honorable Ted Stevens 

Vice Chairman 

Committee on Commerce, Science, 

 and Transportation 

United States Senate 

The Honorable James L. Oberstar 

Chairman 

The Honorable John L. Mica 

Ranking Republican Member 

Committee on Transportation and Infrastructure 

House of Representatives 

The potential for an oil spill exists daily across coastal and inland waters 

of the United States. In 2005, for example, oil tankers transported over half 

of the crude oil that entered the country, and often, barges move 

petroleum products to the markets where they are used. The potential for 

spills also extends well beyond vessels involved in the petroleum industry. 

Cargo, fishing, and other types of vessels also carry substantial fuel 

reserves. Accidents, groundings, or collisions can release this fuel and 

create substantial damage. Spills can be expensive, with considerable 

costs to the federal government and the private sector. The most 

expensive spill in U.S. waters, the 1989 Exxon Valdez spill in Alaska, cost

$2.2 billion to clean up, according to ExxonMobil.1

 Less expensive but still 

significant spills have occurred since then. For example, in 2004, the 

tanker Athos I spilled over 260,000 gallons of crude oil into the Delaware 

River; and, according to the Coast Guard, removal costs and damage 

claims from this spill have cost more than $120 million to date. 

The framework for addressing and paying for maritime oil spills is 

identified in the Oil Pollution Act of 1990 (OPA), which was enacted after 

the Exxon Valdez spill. OPA created a “polluter pays” system that places 

 1

The Exxon Valdez spill ranks as the 35th largest spill by spill volume for all spills since 

1967 on the list of international tanker spills. 

Page 1 GAO-07-1085 Oil Spill Costs
the primary burden of liability and the costs of oil spills on the vessel 

owner or operator who was responsible for the spill—that is, the 

responsible party—in return for financial limitations on that liability. 

Under this system, the responsible party assumes, up to a specified limit,

the burden of paying for spill costs—which can include both removal costs

(cleaning up the spill) and damage claims (restoring the environment and 

payment of compensation to parties that were economically harmed by the 

spill). Above the specified limit, the responsible party is no longer 

financially liable.2

 To pay costs above the limit of liability, as well as to pay 

costs when a responsible party does not pay or cannot be identified, OPA 

authorized the Oil Spill Liability Trust Fund (Fund), which is financed 

primarily from a per-barrel tax on petroleum products either produced in 

the United States or imported from other countries. The Fund is 

administered by the National Pollution Funds Center (NPFC) within the 

U.S. Coast Guard. The balance in the Fund—about $600 million at the end 

of fiscal year 2006—is well below its yearly peak of $1.2 billion in 2000. 

The decline in the Fund’s balance reflects an expiration of the barrel tax 

on petroleum in 1994. The tax was not reinstated until 2005. 

While this system is well understood, the costs involved in responding to 

oil spills are less clear. Costs paid from the Fund are well documented, but 

the party responsible for the spill is not required to report the costs it 

incurs. As a result, private-sector and total costs for cleaning up spills and 

paying damages are largely unknown to the public. The lack of

information about the cost of spills, the declining Fund balance, and 

significant claims made on the Fund—for spills in which the removal costs 

and damage claims have exceeded established OPA liability limits—have 

all raised concerns about the Fund’s long-term viability. 

The Coast Guard and Maritime Transportation Act of 2006 directed us to 

conduct an assessment of the cost of response activities and claims 

related to oil spills from vessels that have occurred since January 1, 1990,

for which the total costs and claims paid was at least $1 million per spill. 

The mandate required that the report summarize the costs and claims for 

oil spills that have occurred since January 1, 1990, that total at least $1 

million per spill, and the source, if known, of each spill for each year. To 

fulfill this requirement, we examined—after consultation with committee 

staff—the following questions: (1) How many major oil spills have 

 2

Responsible parties are liable without limit, however, if the oil discharge is the result of 

gross negligence, or a violation of federal operation, safety, and construction regulations. 

Page 2 GAO-07-1085 Oil Spill Costs
occurred since 1990 and what have been the total costs of these spills? (2) 

What are the factors that affect major oil spill costs? and (3) What are the 

implications of major oil spill costs for the Oil Spill Liability Trust Fund? 

To address these questions, we analyzed oil spill removal cost and claims 

data from NPFC, the National Oceanic and Atmospheric Administration’s 

(NOAA) Damage Assessment, Remediation, and Restoration Program, and 

the Department of the Interior’s (DOI) Natural Resource Damage 

Assessment and Restoration Program and the U.S. Fish and Wildlife 

Service (FWS). We also analyzed cost data obtained from vessel insurers 

and in contract with Environmental Research Consulting.3

 We interviewed 

NPFC, NOAA, and state officials responsible for oil spill response, as well 

as industry experts and representatives from key industry associations and 

a vessel owner. In addition, we selected five oil spills on the basis of the 

spill’s location, oil type, and spill volume for an in-depth review. During 

this review, we interviewed NPFC officials involved in spill response for 

all five spills, as well as representatives of private sector companies 

involved in the spill and spill response; and we conducted a file review of 

NPFC records of the federal oil spill removal activities and costs 

associated with spill cleanup. We also reviewed documentation from the 

NPFC regarding the Fund balance and vessels’ limits of liability. This 

report focuses on oil spills that have occurred since the enactment of 

OPA—August 18, 1990—for which removal costs and damage claims 

exceeded $1 million, and we refer to such spills as major oil spills.4

Because private-sector and total costs for cleaning up spills and paying

damages are not centrally tracked and maintained, we obtained the best 

available cost data from a variety of sources, as previously described. We 

then combined the information that we collected from these various 

sources to develop cost estimates for the oil spills. However, because the 

cost data are somewhat imprecise and the data we collected vary 

somewhat by source, we present the cost estimates in ranges. The lower 

and higher bounds of the range represent the low and high end of cost 

 3

Environmental Research Consulting is a private consulting firm that specializes in data 

analysis, environmental risk assessment, cost analyses, expert witness research and 

testimony, and development of comprehensive databases on oil and chemical spills in 

service to regulatory agencies, nongovernmental organizations, and industry.

4

The National Oil and Hazardous Substances Pollution Contingency Plan states that any oil 

discharge that poses a substantial threat to public health or welfare of the United States or 

the environment or results in significant public concern shall be classified as a major spill. 

For the purposes of this report, however, major spills are defined as spills with total 

removal costs and damage claims that exceed $1 million.

Page 3 GAO-07-1085 Oil Spill Costs
information we obtained. Based on reviews of data documentation, 

interviews with relevant officials, and tests for reasonableness, we 

determined that the data were sufficiently reliable for the purposes of our 

study. We conducted our review from July 2006 through August 2007 in

accordance with generally accepted government auditing standards. More 

details regarding our scope and methodology can be found in appendix I. 

We estimate that since 1990, 51 oil spills have involved removal costs and 

damage claims totaling more than $1 million. Collectively, we estimate that 

responsible parties and the Fund have paid between approximately $860 

million and $1.1 billion to clean up these spills and compensate affected 

parties. Responsible parties paid between about 72 to 78 percent of these 

costs; the Fund has paid the remainder, or $240 million. The overall cost 

for the 51 spills we identified could also increase over time because the 

claims adjudication processes can take many years to resolve. The 51

spills we identified, which constitute about 2 percent of all vessel spills 

since 1990, varied greatly from year to year in number and cost and 

showed no discernible trends in frequency or size. 

Results in Brief 

Three main factors affect the costs of a spill, according to industry experts 

and agency officials and the studies we reviewed: the spill’s location, the 

time of year it occurs, and the type of oil spilled.5

 A remote location, for 

example, can increase the cost of a spill because of the additional expense 

involved in mounting a remote response. Similarly, a spill that occurs close 

to shore rather than further out at sea can become more expensive 

because it may involve the use of manual labor to remove oil from 

sensitive shoreline habitat. Time also has situation-specific effects, in that

a spill that occurs at a particular time of year might involve a much greater 

cost than a spill occurring in the same place, but at a different time of year. 

For example, a spill occurring during fishing or tourist season might carry 

additional economic damage, or a spill occurring during a typically stormy 

season might prove more expensive because it is more difficult to clean up 

than one occurring during a season with generally calmer weather. The 

specific type of oil affects costs because the type of oil can affect the 

amount of cleanup needed and the amount of natural resource damage 

incurred. Light oils naturally dissipate and evaporate quickly—requiring 

 5

Another potential factor is the size of the spill. Although a larger spill will require an 

extensive and expensive cleanup effort, officials reported that compared with the factors 

presented here, spill volume is less important to the costs of oil spill response. 

Page 4 GAO-07-1085 Oil Spill Costs
minimal cleanup—but are highly toxic and create severe environmental 

impacts. Heavy oils do not evaporate, and therefore may require intensive 

structural and shoreline cleanup; and while they are less toxic than light 

oils, heavy oils can harm waterfowl and fur-bearing mammals through 

coating and ingestion. Each spill’s cost reflects the particular mix of these 

factors, and no factor is clearly predictive of the outcome. The 51 major 

spills we identified, for example, occurred on all U.S. coasts, across all 

seasons, and with all major types of oil; but each spill’s particular location, 

time, or product contributed to making it expensive. 

To date, the Fund has been able to cover costs that responsible parties 

have not paid, but risks remain. In particular, the Fund is at risk from 

claims resulting from spills that significantly exceed responsible parties’ 

liability limits. The effect of such spills can be seen among the 51 major oil

spills we identified: 10 of them exceeded the limit of liability, resulting in 

claims of about $252 million on the Fund. In the Coast Guard and Maritime 

Transportation Act of 2006, the Congress increased these liability limits, 

but additional attention to the limits appears warranted. First, the liability 

limits for certain vessel types may be disproportionately low compared 

with their historic spill cost. For example, of the 51 major spills since 1990, 

15 resulted from tank barges. The average cost for these 15 tank barge

spills was about $23 million—more than double the average new liability 

limit ($10.3 million) for these vessels. The Coast Guard is responsible for 

adjusting limits of liability at least every 3 years for significant increases in 

inflation and for making recommendations to the Congress on whether 

adjustments to limits are necessary to help protect the Fund.6

 In its 

January 2007 report examining oil spills that exceeded the limits of 

liability, the Coast Guard had similar findings on the adequacy of some of 

the new limits. However, the Coast Guard did not make explicit 

recommendations to the Congress on how the limits should be adjusted. 

Second, although OPA has required since 1990 that liability limits be 

adjusted every 3 years to account for significant increases in inflation, 

such adjustments have never been made. If such adjustments had been 

made between 1990 and 2006, claims against the Fund for the 51 major 

spills would have been reduced by 16 percent, which could have saved the 

Fund $39 million. 

 6

OPA has required since 1990 that the President—and through several delegations to the 

Secretaries of Transportation and Homeland Security and a redelegation to the Coast 

Guard in 2005—adjust liability limits at least every 3 years to account for significant 

increases in inflation. However, the executive branch has never made such adjustments.

Page 5 GAO-07-1085 Oil Spill Costs
We are recommending that the Commandant of the Coast Guard (1) 

determine whether and how liability limits should be changed, by vessel 

type, and make recommendations about these changes to the Congress 

and (2) adjust the limits of liability for vessels every 3 years to reflect 

changes in inflation, as appropriate. We provided a copy of this draft for 

review and comment to the Departments of Homeland Security (DHS), 

including the Coast Guard; Commerce; the Interior (DOI); and 

Transportation and the Environmental Protection Agency (EPA). In 

commenting on a draft of this report, DHS generally agreed with its 

contents and agreed with the recommendations. The written comments 

from DHS can be found in appendix II. The Departments of Commerce, 

Transportation, DOI, and EPA also provided technical clarifications, which 

we have incorporated in this report, as appropriate. 

The United States is the world’s largest net importer of oil. In 2006, the 

United States had net imports of 12.2 million gallons of oil per day, more 

than twice as much as Japan and over three times as much as China, the 

world’s next largest importers. The transport of oil into the United States 

occurs primarily by sea with ports throughout the United States receiving

over 40,000 shipments of oil in 2005. In addition, vessels not transporting 

oil, such as cargo and freight vessels, fishing vessels, and passenger ships, 

often carry tens of thousands of gallons of fuel oil to power their engines. 

With over 100,000 commercial vessels navigating U.S. waters, oil spills are 

inevitable. Fortunately, however, they are relatively infrequent and are 

decreasing. While oil transport and maritime traffic have continued to 

increase, the total number of reported spills has generally declined each 

year since 1990. 

Background 

OPA forms the foundation of U.S. maritime policy as it pertains to oil 

pollution. OPA was passed in 1990, following the 1989 Exxon Valdez spill 

in Alaska, which highlighted the need for greater federal oversight of 

maritime oil transport. OPA places the primary burden of liability and the 

costs of oil spills on the vessel owner and operator who was responsible 

for the spill.7 This “polluter pays” system provides a deterrent for vessel 

owners and operators who spill oil by requiring that they assume the 

burden of spill response, natural resource restoration, and compensation 

 7

OPA applies to oil discharged from vessels or facilities into navigable waters of the United 

States and adjoining shorelines. OPA also covers substantial threats of discharge, even if an

actual discharge does not occur. 

Page 6 GAO-07-1085 Oil Spill Costs
to those damaged by the spill, up to a specified limit of liability—which is 

the amount above which responsible parties are no longer financially 

liable under certain conditions. 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.8

 Current limits of liability, which vary by type of 

vessel and are determined by a vessel’s gross tonnage, were set by the 

Congress in 2006. The Coast Guard is responsible for adjusting limits for 

significant increases in inflation and for making recommendations to the 

Congress on whether adjustments are necessary to help protect the Fund.

9

OPA also requires that vessel owners and operators must demonstrate 

their ability to pay for oil spill response up to their limit of liability. 

Specifically, by regulation, with few exceptions, owners and operators of 

vessels over 300 gross tons and any vessels that transship or transfer oil in 

the Exclusive Economic Zone are required to have a certificate of financial 

responsibility that demonstrates their ability to pay for oil spill response 

up to their limit of liability.10

 8

When responsible parties’ costs exceed their limit of liability and the limit is upheld—

because there was no gross negligence or violations of federal regulations by the vessel 

owner or operator—the responsible party is entitled to file a claim on the Fund to be 

reimbursed for costs in excess of the limit. NPFC reviews the claim to determine which 

costs are OPA-compensable and the responsible party is reimbursed from the Fund. 

9

Title VI of the Coast Guard and Maritime Transportation Act of 2006. Public Law 109-241, §

603 (c)(3). 

1033 C.F.R. §138. The U.S. Exclusive Economic Zone extends 200 nautical miles offshore. 

Page 7 GAO-07-1085 Oil Spill Costs
Figure 1: Description of Vessel Types and Current Limits of Liability 

OPA consolidated the liability and compensation provisions of four prior 

federal oil pollution initiatives and their respective trust funds into the Oil 

Spill Liability Trust Fund and authorized the collection of revenue and the 

use of the money, with certain limitations, with regards to expenditures.11

The Fund has two major components—the Principal Fund and the 

Emergency Fund. The Emergency Fund consists of $50 million 

apportioned each year to fund spill response and the initiation of natural 

resource damage assessments, which provide the basis for determining the 

natural resource restoration needs that address the public’s loss and use of 

natural resources as a result of a spill. The Principal Fund provides the 

funds for third-party and natural resource damage claims, limit of liability 

claims, reimbursement of government agencies’ removal costs, and 

provides for oil spill related appropriations. A number of agencies—

including the Coast Guard, EPA, and DOI—receive an annual

appropriation from the Fund to cover administrative, operational, 

Vessel type Description Limit of liability

A cargo ship or freighter is a vessel 

that transports non-oil goods and 

materials. 

A fishing vessel is a ship that is

used to catch fish for commercial 

use.

A tank barge is a non-self propelled 

vessel that carries liquid, solid, or 

gaseous cargos in bulk in tanks

primarily through rivers and inland 

waterways.

An oil tanker is a ship designed to 

carry oil in large tanks.

Oil tanker 

Tank barge

Cargo ship or freighter

Fishing vessel

Source: GAO.

Single hull:

• Vessels greater than 3,000 gross tons

 the greater of $3,000 per gross ton or $22 million.

• Vessels less than or equal to 3,000 gross tons

 the greater of $3,000 per gross ton or $6 million.

Double hull:

• Vessels greater than 3,000 gross tons

 the greater of $1,900 per gross ton or $16 million.

• Vessels less than or equal to 3,000 gross tons

 the greater of $1,900 per gross ton or $4 million.

The greater of $950 per gross ton or $800,000.

 11The prior federal laws regarding oil pollution included the Federal Water Pollution 

Control Act, the Deepwater Port Act, the Trans-Alaska Pipeline System Authorization Act, 

and the Outer Continental Shelf Lands Act Amendments of 1978. The Congress created the 

Fund in 1986 but did not authorize collection of revenue or use of the money until it passed 

OPA in 1990. 

Page 8 GAO-07-1085 Oil Spill Costs
personnel, and enforcement costs. From 1990 to 2006, these 

appropriations amounted to the Fund’s largest expense (see fig. 2). 

Figure 2: Oil Spill Liability Trust Fund Expenditures, Fiscal Years, 1990-2006 

61%

29%

10%

Source: GAO analysis of NPFC data.

Claims paid

Response costs

Federal

appropriations

64%

19%

11%

7% Department of the Interior

Federal research and other programs

Environmental Protection Agency

U.S. Coast Guard

Notes: 

Federal research and other programs include appropriations to Department of Transportation, the 

Denali Commission, and the Oil Spill Recovery Institute. The Department of Treasury and the Army

Corps of Engineers have received appropriations, but these account for about 0.10 percent of Fund 

expenditures. 

Percentages do not sum to 100 percent due to rounding. 

The Fund’s balance has generally declined from 1995 through 2006, and

since fiscal year 2003, its balance has been less than the authorized limit 

on federal expenditures for the response to a single spill, which is 

currently set at $1 billion (see fig. 3). The balance has declined, in part, 

because the Fund’s main source of revenue—a $0.05 per barrel tax on U.S. 

produced and imported oil—was not collected for most of the time 

between 1993 and 2006.

12 As a result, the Fund balance was $604.4 million 

 12The tax expired in December 1994. Besides the barrel tax, the Fund also receives revenue 

in the form of interest on the Fund’s principal and fines and penalties.

Page 9 GAO-07-1085 Oil Spill Costs
at the end of fiscal year 2006.13 The Energy Policy Act of 2005 reinstated 

the barrel tax beginning in April 2006.

14 With the barrel tax once again in

place, NPFC anticipates that the Fund will be able to cover its projected 

noncatastrophic liabilities. 

Figure 3: Oil Spill Liability Trust Fund Balance, Fiscal Years 1993-2006

Balance (in millions of dollars)

0

200

400

600

800

1,000

1,200

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Source: GAO analysis of NPFC data.

Year

Note: The Fund balance increase in 2000 was largely due to a transfer of $181.8 million from the 

Trans-Alaska Pipeline Liability Fund. 

OPA also defines the costs for which responsible parties are liable and for 

the costs for which the Fund is made available for compensation in the 

event that the responsible party does not pay or is not identified. These 

costs, or “OPA compensable” costs, are of two main types: 

 13Recent related GAO products include GAO, U.S. Coast Guard National Pollution Funds

Center: Improvements Are Needed in Internal Control Over Disbursements, GAO-04-340R 

(Washington, D.C.: Jan. 13, 2004) and GAO, U.S. Coast Guard National Pollution Funds

Center: Claims Payment Process Was Functioning Effectively, but Additional Controls 

Are Needed to Reduce the Risk of Improper Payments, GAO-04-114R (Washington, D.C.: 

Oct. 3, 2003). 

14The Energy Policy Act of 2005. Public Law 109-58 §1361. The barrel tax is scheduled to be

in place until 2014. 

Page 10 GAO-07-1085 Oil Spill Costs
• Removal costs: Removal costs are incurred by the federal government or 

any other entity taking approved action to respond to, contain, and clean 

up the spill. For example, removal costs include the equipment used in the 

response—skimmers to pull oil from the water, booms to contain the oil,

planes for aerial observation—as well as salaries and travel and lodging 

costs for responders. 

• Damages caused by the oil spill: OPA-compensable damages cover a wide 

range of both actual and potential adverse impacts from an oil spill, for 

which a claim may be made to either the responsible party or the Fund. 

(Table 1 provides a brief definition of OPA-compensable removal costs 

and damages.) Claims include natural resource damage claims filed by 

trustees, claims for uncompensated removal costs and third-party damage

claims for lost or damaged property and lost profits, among other things.15

 15OPA authorizes the United States, states, and Indian tribes to act on behalf of the public 

as natural resource trustees for natural resources under their respective trusteeship. 

Trustees often have information and technical expertise about the biological effects of 

pollution, as well as the location of sensitive species and habitats that can assist the federal 

on-scene coordinator in characterizing the nature and extent of site-related contamination 

and impacts. Federal Trustees include Commerce, DOI, the Departments of Agriculture, 

Defense, Energy, and other agencies authorized to manage or protect natural resources. 

Page 11 GAO-07-1085 Oil Spill Costs
Table 1: Types of OPA-Compensable Removal Costs and Damages 

Removal costs 

Removal of oil Costs for the containment and removal of oil from water and shorelines including contract services 

(such as cleanup contractors and incident management support) and the equipment used for removal. 

Disposal Costs for the proper disposal of recovered oil and oily debris. 

Personnel Costs for government personnel and temporary government employees hired for the duration of the 

spill response, including costs for monitoring the activities of the responsible parties. 

Prevention Costs for the prevention or minimization of a substantial threat of an oil spill.

Damages 

Natural resources Federal, state, foreign, or Indian tribe trustees can claim damages for injury to, or destruction of, and 

loss of, or loss of use of, natural resources, including the reasonable costs of assessing the damage. 

Real or personal property Damages for injury to, or economic losses resulting from destruction of, real or personal property, such 

as boats or docks. 

Subsistence use Damages for loss of subsistence use of natural resources, without regard to the ownership or 

management of the resources.

Government revenues, 

profits, and earning capacity 

The federal, state, or local government can claim damages for the loss of taxes, royalties, rents, fees, 

or profits. Companies can claim damages for loss of profits or impairment of earning capacity. 

Public services States and local governments can recover costs for providing increased public services during or after 

an oil spill response, including protection from fire, safety, or health hazards. 

Source: GAO summary of the Oil Pollution Act of 1990 (33 U.S.C. § 2702 (b)).

The Fund also covers costs when responsible parties cannot be located or

do not pay their liabilities. NPFC encounters cases where the source of the 

spill, and therefore the responsible party is unknown, or where the 

responsible party does not have the ability to pay. In other cases, since the 

cost recovery can take a period of years, the responsible party may be 

bankrupt or dissolved. Based on our analysis of NPFC records, excluding

spills with limit of liability claims, the recovery rate for costs from the 51 

major oil spills since 1990 is 65 percent, which means that responsible 

parties have paid 65 percent of costs. The 35 percent of nonreimbursed 

costs to the Fund for these major spills have amounted to $53.9 million. 

Response to large oil spills is typically a cooperative effort between the 

public and private sector, and there are numerous players who participate

in responding to and paying for oil spills. To manage the response effort, 

the responsible party, the Coast Guard, EPA, and the pertinent state and 

local agencies form the unified command, which implements and manages 

Page 12 GAO-07-1085 Oil Spill Costs
the spill response.16 Beyond the response operations, there are other 

stakeholders, such as accountants who are involved in documenting and

accounting for costs, and receiving and processing claims. In addition, 

insurers and underwriters provide financial backing to the responsible 

party. The players involved in responding to and/or paying for major spill 

response are as follows:17

• Government agencies: The lead federal authority, or Federal On-Scene 

Coordinator, in conducting a spill response is usually the nearest Coast 

Guard Sector and is headed by the Coast Guard Captain of the Port.18 The 

Federal On-Scene Coordinator directs response efforts and coordinates all 

other efforts at the scene of an oil spill. Additionally, the on-scene 

coordinator issues pollution removal funding authorizations—guarantees 

that the agency will receive reimbursement for performing response 

activities—to obtain services and assistance from other government 

agencies. Other federal agencies may also be involved. NOAA provides 

scientific support, monitoring and predicting the movement of oil, and 

conducting environmental assessments of the impacted area. The federal,

state, and tribal trustees join together to perform a natural resource 

damage assessment, if necessary. Within the Coast Guard, the NPFC is 

responsible for disbursing funds to the Federal On-Scene Coordinator for 

oil spill removal activities and seeking reimbursement from responsible 

parties for federal costs. Additionally, regional governmental entities that

are affected by the spill—both state and local—as well as tribal 

government officials or representatives may participate in the unified 

command and contribute to the response effort, which is paid for by the 

 16The Incident Command System (ICS) is a standardized response management system that

is part of the National Interagency Incident Management System. The ICS is 

organizationally flexible so that it can expand and contract to accommodate spill responses

of various sizes. The ICS typically consists of four sections: operations, planning, logistics, 

and finance/administration. 

17For a full description of the organizational structure and procedures for preparing for and

responding to discharges of oil, see The National Oil and Hazardous Substances Pollution 

Contingency Plan, 40 C.F.R. § 300. 

18Although this report focuses on vessels, and most vessel spills are in the Coast Guard 

zone of jurisdiction, EPA is the lead on-scene coordinator in the inland zone, and the Coast 

Guard is lead on-scene coordinator in the coastal zone. 

Page 13 GAO-07-1085 Oil Spill Costs
responsible party or are reimbursed by the responsible party or the Fund.19

• Responsible parties: OPA stipulates that both the vessel owner and 

operator are ultimately liable for the costs of the spill and the cleanup 

effort. The Coast Guard has final determination on what actions must be 

taken in a spill response, and the responsible party may form part of the 

unified command—along with the Federal On-Scene Coordinator and 

pertinent state and local agencies—to manage the spill response. The 

responsible parties rely on other entities to evaluate the spill effects and 

the resulting compensation. Responsible parties hire environmental and 

scientific support staff, specialized claims adjustors to adjudicate thirdparty claims, public relations firms, and legal representation to file and 

defend limit of liability claims on the Fund, as well as serve as counsel 

throughout the spill response. 

• Qualified individuals: Federal regulations require that vessels carrying oil

as cargo have an incident response plan and, as part of the plan, they 

appoint a qualified individual who acts with full authority to obligate funds 

required to carry out response activities. The qualified individual acts as a 

liaison with the Federal On-Scene Coordinator and is responsible for 

activating the incident response plan.

• Oil spill response organizations: These organizations are private 

companies that perform oil spill cleanup, such as skimming and disposal 

of oil. Many of the companies have contractual agreements with 

responsible parties and the Coast Guard. The agreements, called basic 

ordering agreements, provide for prearranged pricing, response personnel, 

and equipment in the event of an oil spill. 

• Insurers: Responsible parties often have multiple layers of primary and 

excess insurance coverage, which pays oil spill costs and claims. Pollution 

liability coverage for large vessels is often underwritten by not-for-profit 

mutual insurance organizations. The organizations act as a collective of 

ship owners, who insure themselves, at-cost. The primary insurers of 

commercial vessels in U.S. waters are the Water Quality Insurance 

Syndicate, an organization providing pollution liability insurance to over 

40,000 vessels, and the International Group of P & I Clubs, 13 protection 

 19State governments can seek reimbursement directly from responsible parties or from the 

Fund. State officials in Alaska, California, New York, Rhode Island, Texas, and Washington

said that state agencies recover almost all of their costs, either directly from responsible 

parties or from the NPFC. Officials in Texas said that the reimbursement rate for oil spill 

costs may be as high as 98 percent. 

Page 14 GAO-07-1085 Oil Spill Costs
and indemnity organizations that provide insurance primarily to foreignflagged large vessels.20

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. In all, the Fund spent $240 million on 

these spills, and the responsible parties themselves spent about $620 

million to $840 million, for a total of $860 million to $1.1 billion. 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 from vessels, since 1990, had removal costs 

and damage claims of $1 million or greater. Each year, there are thousands 

of incident reports called into the National Response Center that claim oil 

or oil-like substances have been spilled from vessels sailing in coastal or 

inland waters in the United States21—-but only a small percentage of these 

reported incidents are oil spills from vessels that received federal 

reimbursement for response efforts. Specifically, there have been 3,389 oil 

spills from vessels that sought reimbursement from the Fund for response 

Oil Spills Costing 

More than $1 Million 

Occurred Infrequently 

Since 1990, but 

Estimated Costs Total 

$860 Million to $1.1 

Billion 

Less Than 2 Percent of Oil 

Spills Occurring Since 1990 

Were Major Spills 

 20These 13 organizations are American Steamship Owners Mutual Protection and Indemnity 

Association, Inc.; Assuranceforeningen Gard; Assuranceforeningen Skuld; the Britannia 

Steam Ship Insurance Association Limited; the Japan Ship Owners’ Mutual Protection & 

Indemnity Association; the London Steam-Ship Owners’ Mutual Insurance Association 

Limited; the North of England Protection and Indemnity Association, Limited; the 

Shipowners’ Mutual Protection and Indemnity Association (Luxembourg); the Standard

Steamship Owners’ Protection and Indemnity Association (Bermuda), Limited; the

Steamship Mutual Underwriting Association (Bermuda), Limited; the Swedish Club; United 

Kingdom Mutual Steam Ship Assurance Association (Bermuda), Limited; and the West of

England Ship Owners Mutual Insurance Association (Luxembourg). 

21The primary function of the National Response Center is to serve as the sole national

point of contact for reporting all oil, chemical, radiological, biological, and etiological 

discharges into the environment anywhere in the United States and its territories. 

Page 15 GAO-07-1085 Oil Spill Costs
efforts. Of these spills, we estimate that 51 were major oil spills.22 As figure 

4 shows, there are no discernable trends in the number of major oil spills 

that occur each year. The highest number of spills was seven in 1996; the 

lowest number was zero in 2006. 

 22We established the universe of major oil spills since 1990, based on available public and 

private sector data in consultation with NPFC, Environmental Research Consulting, and

other industry experts. Additionally, we gathered removal costs and damage claims data 

from federal agencies involved in spill response, claims payments, and conducting natural

resource damage assessments (Coast Guard, NOAA, DOI, and FWS); and to the best of our

ability, we gathered private-sector cost data from vessel insurers, and in contract with 

Environmental Research Consulting. For more information on our scope and methodology,

see appendix I. 

Page 16 GAO-07-1085 Oil Spill Costs
Figure 4: Number of Major Oil Spills, by Year, 1990-2006 

0

1

2

3

4

5

6

7

8

9

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Number of spills

Source: GAO analysis of NPFC data.

Year

0

Note: Because spill costs accrue over time, there may have been vessel spills in 2006 for which costs

will exceed $1 million in the future. 

These 51 spills occurred in a variety of locations. As figure 5 shows, the 

spills occurred on the Atlantic, Gulf, and Pacific coasts and include spills 

both in open coastal waters and more confined waterways. 

Page 17 GAO-07-1085 Oil Spill Costs
Figure 5: Location and Cost of Major Oil Spills, 1990-2006 

$0 $1 $25 $100 $250

Scale (in millions of dollars)

Source: GAO.

Note: Due to space constraints, two major oil spills that occurred in the Pacific are not pictured on this

map. 

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. There is also no legal requirement in place that requires

responsible parties to disclose costs incurred for responding to a spill.23

 23Under regulation S-K, 17 C.F.R. 229, companies that are publicly traded must disclose any 

outstanding liabilities, including liabilities such as oil spill removal costs or claims made 

against the company for natural resource or third-party damages incurred. However, many

vessel owners or operators are not publicly traded companies. 

Page 18 GAO-07-1085 Oil Spill Costs
• The various parties involved in covering these costs do not categorize 

them uniformly: For example, one vessel insurer we spoke with separates

total spill costs by removal costs (for immediate spill cleanup) and loss 

adjustment expenses, which contain all other expenses, including legal 

fees. In contrast, the NPFC tracks removal costs and damage claims in 

terms of the statutory definitions delineated in OPA. 

• Spill costs are somewhat fluid and accrue over time: In particular, the 

natural resource and third-party damage claims adjudication processes 

can take many years to complete. Moreover, it can take many months or 

years to determine the full effect of a spill to natural resources and to 

determine the costs and extent of the natural resource injury and the 

appropriate restoration needed to repair the damage. For example, natural 

resource damage claims were recently paid for a spill that occurred near 

Puerto Rico in 1991, over 16 years ago. 

Because spill cost data are somewhat imprecise and the data we collected

vary somewhat by source, the results described below will be reported in 

ranges, in which various data sources are combined together. The lower 

and higher bounds of the range represent the low and high end of cost 

information we obtained.

Our analysis of these 51 spills shows their total cost was approximately $1 

billion—ranging from $860 million to $1.1 billion. This amount breaks 

down by source as follows: 

• Amount paid out of the Fund: Because the NPFC tracks and reports all 

Fund expenditures, the amount paid from the Fund can be reported as an

actual amount, not an estimate. For these 51 spills, the Fund paid a total of 

$239.5 million. 

• Amount paid by responsible parties: Because of the lack of precise 

information about amounts paid by responsible parties and the differences 

in how they categorize their costs, this portion of the expenditures must 

be presented as an estimate. Based on the data we were able to obtain and 

analyze, responsible parties spent between $620 million and $840 million. 

Even at the low end of the range, this amount is nearly triple the 

expenditure from the Fund. 

Costs of these 51 spills varied widely by spill, and therefore, by year (see 

fig. 6). For example, 1994 and 2004 both had four spills during the year, but 

the average cost per spill in 1994 was about $30 million, while the average 

cost per spill in 2004 was between $71 million and $96 million. Just as 

Costs Vary Widely by Spill 

and Year

Page 19 GAO-07-1085 Oil Spill Costs
there was no discernible trend in the frequency of these major spills, there 

is no discernible trend in their cost. Although the substantial increase in 

2004 may look like an upward trend, 2004 may be an anomaly that reflects

the unique character of two of the four spills that occurred that year. 

These two spills accounted for 98 percent of the year’s costs.

Figure 6: Average per Spill Costs of Major Oil Spills, by Year, 1990-2006 

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Year Number Cost ranges of spills

3

3

1

6

4

3

7

2

3

3

3

2

1

2

4

4

0

Average spill costs (in millions of dollars)

Source: GAO.

0 10 20 30 40 50 60 70 80 90 100

($0)

Lowest estimate

Highest estimate

Single cost estimate (no range)

Note: Because we are reporting costs from multiple sources of data, the data were combined and 

grouped into cost ranges. In some cases, however, there was only one cost estimate. In those cases, 

we present the amount as a single cost estimate. 

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. Data on the 51 major spills show that spills occurred on all U.S. 

coasts, across all seasons, and for all oil types. In ways that are unique to 

each spill, however, each of these factors can affect the breadth and 

Key Factors Affect Oil 

Spill Costs in Unique 

Ways

Page 20 GAO-07-1085 Oil Spill Costs
difficulty of the response effort or the extent of damage that requires 

mitigation. For example, spills that occur in remote areas can make 

response difficult in terms of mobilizing responders and equipment, as 

well as complicating the logistics of removing oil—all of which can 

increase the costs. Officials also identified two other factors that may 

influence oil spill costs to a lesser extent—the effectiveness of the spill 

response and the level of public interest in a spill. 

Location Impacts Costs in 

Different Ways 

The location of a spill can have a large bearing on spill costs because it 

will determine the extent of response needed, as well as the degree of 

damage to the environment and local economies. 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. For example, a 2001 spill in 

Alaska’s Prince William Sound—which occurred approximately 40 miles 

from Valdez, AK—resulted in considerable removal costs after a fishing 

vessel hit a rock and sank to a depth of approximately 1,000 feet. 

Response took many days and several million dollars to contain the oil 

that was still in the vessel, but the effort was eventually abandoned 

because it was too difficult from that depth.24

• Proximity to shore: There are also significant costs associated with spills 

that occur close to shore. Contamination of shoreline areas has a 

considerable bearing on the costs of spills as such spills can require 

manual labor to remove oil from the shoreline and sensitive habitats. The 

extent of damage is also affected by the specific shoreline location. For 

example, spills that occur in marshes and swamps with little water 

movement are likely to incur more severe impacts than flowing water. A 

September 2002 spill from a cargo vessel in the Cooper River near the 

harbor in Charleston, SC, spread oil across 30 miles of a variety of 

shoreline types. The spill resulted in the oiling of a number of shorebirds 

and a temporary disruption to recreational shrimp-baiting in area waters, 

 24Officials from the state of Alaska told us that although costs to mobilize crews and 

equipment to respond to spills in Alaska are generally higher due to its remote nature, in 

this case, response crews were already nearby responding to a previous spill, which 

resulted in mobilization and equipment costs that were lower than would have been 

expected. 

Page 21 GAO-07-1085 Oil Spill Costs
among other things. As of July 2007, a settlement for natural resource 

damages associated with the spill was still pending. 

• Proximity to economic centers: Spills that occur in the proximity of 

economic centers can also result in increased costs when local services 

are disrupted. A spill near a port can interrupt the flow of goods, 

necessitating an expeditious response in order to resume business 

activities, which could increase removal costs. Additionally, spills that 

disrupt economic activities can result in expensive third-party damage 

claims. For example, after approximately 250,000 gallons of oil spilled 

from a tanker in the Delaware River in 2004, a large nuclear plant in the 

vicinity was forced to suspend activity for more than a week. The plant is 

seeking reimbursement for $57 million in lost profits.25

Overall, for the 51 major oil spills, location had the greatest effect on costs

for spills that occurred in the waters of the Caribbean, followed by the 

East Coast, Alaska, and the Gulf states.26 (See fig. 7). The range of average

per spill costs for the spills that occurred in the East Coast locations 

ranged from about $27 million to over $37 million, higher than the average 

costs in any other region besides the two spills in Caribbean. The high spill 

costs in the East Coast locations were caused by several spills in that 

geographic area that had considerably higher costs. Specifically, four of 

the eight most expensive spills occurred on the waters off the East Coast.27

 25CRS: Oil Spills in U.S. Coastal Waters: Background, Governance, and Issues for 

Congress, (Apr. 24, 2007). Testimony of Rear Admiral Thomas Gilmour (U.S. Coast Guard), 

in U.S. Congress, House Committee on Transportation and Infrastructure, Subcommittee 

on Coast Guard and Maritime Transportation, Implementation of the Oil Pollution Act, 

hearings, 109th Cong., 2nd sess., (Apr. 27, 2006). 

26For the purposes of this report, we used the following geographic classifications to group 

the major oil spills. Inland refers to spills that occurred on U.S. navigable waters within the

continental United States; Pacific refers to spills that occurred in or around Hawaii,

American Samoa, and Saipan; West Coast refers to spills that occurred along the coasts of 

California, Oregon, and Washington; East Coast refers to spills that occurred along the east 

coast of the United States, including Florida’s Atlantic Coast; Caribbean refers to spills in 

U.S. territorial waters of the Caribbean Sea; Gulf States refers to spills that occurred along

the coasts of the states bordering the Gulf of Mexico, including the Gulf Coast of Florida; 

and Alaska refers to spills that occurred in Alaskan coastal waters. 

27This does not mean that spills that occur on the East Coast will necessarily be more

expensive. Rather, only among these 51 spills, the particular location of East Coast spills 

had a sizeable effect. 

Page 22 GAO-07-1085 Oil Spill Costs
Figure 7: Average per Spill Cost of Major Oil Spills, by Location, 1990-2006

Inland

Pacific

West Coast

East Coast

Caribbean

Gulf states

Alaska

Region Number Cost ranges of spills

7

2

12

16

2

3

9

Average spill costs (in millions of dollars)

Source: GAO.

0 5 15 25 10 20 30 40 50 35 45

Lowest estimate

Highest estimate

Single cost estimate (no range)

Note: Because we are reporting costs from multiple sources of data, the data were combined and 

grouped into cost ranges. In some cases, however, there was only one cost estimate. In those cases, 

we present the amount as a single cost estimate. 

Time of Year Has Impact 

on Local Economies and 

Response Efforts 

The time of year in which a spill occurs can also affect spill costs—in 

particular, impacting local economies and response efforts. According to

several state and private-sector officials with whom we spoke, spills that 

disrupt seasonal events that are critical for local economies can result in 

considerable expenses. For example, spills in the spring months in areas 

of the country that rely on revenue from tourism may incur additional 

removal costs in order to expedite spill cleanup, or because there are 

stricter standards for cleanup, which increase the costs. This situation 

occurred in March of 1996 when a tank barge spilled approximately 

176,000 gallons of fuel oil along the coast of Texas. Because the spill 

occurred during the annual spring break tourist season, the time frames 

for cleaning up the spill were truncated, and the standards of cleanliness 

were elevated. Both of these factors contributed to higher removal costs, 

according to state officials we interviewed. 

The time of year in which a spill occurs also affects response efforts 

because of possible inclement weather conditions. For example, spills that 

occur during the winter months in areas of the country that experience 

harsh winter conditions can result in higher removal costs because of the 

increased difficulty in mobilizing equipment and personnel to respond to a 

spill in inclement weather. According to a state official knowledgeable 

about a January 1996 spill along the coast of Rhode Island, extremely cold 

and stormy weather made response efforts very difficult. 

Page 23 GAO-07-1085 Oil Spill Costs
Although the 51 spills occurred during all seasons of the year, they were 

most prevalent in the fall and winter months, with 20 spills occurring in 

the fall and 13 spills during the winter, compared with 9 spills in the spring 

and 9 in the summer months.28 On a per-spill basis, the cost range for the 

51 spills was highest in the fall (see fig. 8). 

Figure 8: Average per Spill Costs of Major Oil Spills, by Time of Year, 1990-2006 

Winter

Summer

Fall

Season Number Cost ranges of spills

9

9

20

13

Average spill costs (in millions of dollars)

Source: GAO.

Lowest estimate

Highest estimate

Spring

0 5 15 25 10 20 30 40 50 35 45

Note: Because we are reporting costs from multiple sources of data, the data were combined and 

grouped into cost ranges. In some cases, however, there was only one cost estimate. In those cases, 

we present the amount as a single cost estimate. 

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. The different types of oil can be grouped into four 

categories, each with its own set of impacts on spill response and the 

environment (see table 2). For example, lighter oils such as jet fuels, 

gasoline, and diesel dissipate quickly, but they are highly toxic, whereas 

heavier oils such as crude oils and other heavy petroleum products do not

dissipate much and, while less toxic, can have severe environmental 

impacts. 

 28We categorized the “times of year” as fall: September to November; winter: December to

February; spring: March to May; and summer: June to August. 

Page 24 GAO-07-1085 Oil Spill Costs
Table 2: Description of Different Oil Types 

Oil typea Removal and response Environmental impact 

Very light oils 

(Jet fuels, gasoline) 

Highly volatile (they will evaporate within 1-2 

days). It is rarely possible to clean up the oil 

from such spills. 

Highly toxic: Can cause severe impacts to 

shoreline resources. 

Light oils

(Diesel, No. 2 fuel oil, light crudes) 

Moderately volatile, but will leave a residue 

after a few days. Cleanup can be very 

effective for these spills. 

Moderately toxic: Has the potential to create 

long-term contamination of shoreline resources. 

Medium oils

(Most crude oils) 

Some oil (about one-third) will evaporate in 

24 hours. Cleanup most effective if conducted 

quickly. 

Less toxic: Oil contamination of shoreline can be 

severe and long-term, and can have significant 

impacts to waterfowl and fur-bearing mammals. 

Heavy oils

(Heavy crude oils, No. 6 fuel oil, 

bunker C fuel)

Little or no oil will evaporate. Cleanup is 

difficult. 

Less toxic: Heavy contamination of shoreline

resources is likely, with severe impacts to 

waterfowl and fur-bearing mammals through

coating and ingestion. 

Source: NOAA. 

a

In general, oil types differ from each other in three ways: viscosity—oil’s resistance to flow, 

volatility—how quickly the oil evaporates in the air, and toxicity—how poisonous the oil is to people 

and other organisms. 

Very light and light oils naturally dissipate and evaporate quickly, and as 

such, often require minimal cleanup. However, light oils that are highly 

toxic can result in severe impacts to the environment, particularly if 

conditions for evaporation are unfavorable. For instance, in 1996, a tank 

barge that was carrying home-heating oil grounded in the middle of a 

storm near Point Judith, Rhode Island, spilling approximately 828,000 

gallons of heating oil (light oil). Although this oil might dissipate quickly 

under normal circumstances, heavy wave conditions caused an estimated

80 percent of the release to mix with water, with only about 12 percent 

evaporating and 10 percent staying on the surface of the water.29 The 

natural resource damages alone were estimated at $18 million, due to the 

death of approximately 9 million lobsters, 27 million clams and crabs, and 

over 4 million fish. 

Medium and heavy oils do not evaporate much, even during favorable 

weather conditions, and thus, can result in significant contamination of 

shoreline areas. Medium and heavy oils have a high density and can 

blanket structures they come in contact with—boats and fishing gear, for 

 

29National Research Council of the National Academies, Oil in the Sea III: Inputs, Fates,

and Effects (Washington, D.C.: 2003). Numbers do not add to 100 percent due to rounding.

Page 25 GAO-07-1085 Oil Spill Costs
example—as well as the shoreline, creating severe environmental impacts 

to these areas, and harming waterfowl and fur-bearing mammals through 

coating and ingestion. Additionally, heavy oils can sink, creating prolonged 

contamination of the sea bed and tar balls that sink to the ocean floor and 

scatter along beaches. These spills can require intensive shoreline and 

structural cleanup, which is time consuming and expensive. For example, 

in 1995, a tanker spilled approximately 38,000 gallons of heavy fuel oil into

the Gulf of Mexico when it collided with another tanker as it prepared to 

lighter its oil to another ship.30 Less than 1 percent (210 gallons) of the oil 

was recovered from the sea, and as a result, recovery efforts on the 

beaches of Matagorda and South Padre Islands were labor intensive, as 

hundreds of workers had to manually pick up tar balls with shovels. The 

total removal costs for the spill were estimated at $7 million. 

Spills involving heavy oil were the most prevalent among the 51 spills; 21 

of the 51 major oil spills were from heavy oils. On a per-spill basis, costs 

among the 51 spills, varied by type of oil, but the cost ranges for medium 

and heavy oils were higher than light and very light oils (see fig. 9). 

Figure 9: Average per Spill Costs of Major Oil Spills by Type of Oil, 1990-2006 

Very light oils

Light oils

Medium oils

Heavy oils

Oil type Number Cost ranges of spills

11

11

8

21

Average spill costs (in millions of dollars)

Source: GAO.

Lowest estimate

Highest estimate

0 5 15 25 10 20 30 40 50 35 45

Note: Because we are reporting costs from multiple sources of data, the data were combined and 

grouped into cost ranges. In some cases, however, there was only one cost estimate. In those cases, 

we present the amount as a single cost estimate. 

Other Factors Also Affect 

Spill Costs 

Although available evidence points to location, time of year, and type of oil 

spilled as key factors affecting spill costs, some industry experts reported 

 30Lightering is the process of transferring oil at sea from a very large or ultra-large carrier to

smaller tankers that are capable of entering the port. 

Page 26 GAO-07-1085 Oil Spill Costs
that the effectiveness of the spill response and the level of the public 

interest can also impact the costs incurred during a spill. 

• Effectiveness of spill response: Some private-sector officials stated that 

the effectiveness of spill response can impact the cost of cleanup. The 

longer it takes to assemble and conduct the spill response, the more likely 

it is that the oil will move with changing tides and currents and affect a 

greater area, which can increase costs. Some officials also stated that the

level of experience of those involved in the incident command is critical to

the effectiveness of spill response, and they can greatly affect spill costs. 

For example, poor decision making during a spill response could lead to 

the deployment of unnecessary response equipment, or worse, not enough

equipment to respond to a spill. In particular, several private-sector 

officials with whom we spoke expressed concern that Coast Guard 

officials are increasingly inexperienced in handling spill response, in part

because the Coast Guard’s mission has been increased to include 

homeland security initiatives. Additionally, another noted that response 

companies, in general, have less experience in dealing with spill response 

and less familiarity with the local geography of the area affected by the 

spill, which can be critical to determining which spill response techniques

are most effective in a given area. They attributed the limited experience

to the overall decline in the number of spills in recent years. Further, one 

private-sector official noted that response companies can no longer afford

to specialize in cleaning up spills alone, given the relatively low number of

spills, and thus, the quality, effectiveness, and level of expertise and 

experience diminish over time. 

• Public interest: Several officials with whom we spoke stated that level of

public attention placed on a spill creates pressure on parties to take action 

and can increase costs. They also noted that the level of public interest can 

increase the standards of cleanliness expected, which may increase 

removal costs. For example, several officials noted that a spill along the 

Texas coast in February 1995 resulted in increased public attention 

because it occurred close to peak tourist season. In addition to raising the 

standards of cleanliness at the beaches to a much higher level than normal 

because of tourist season, certain response activities were completed for 

primarily aesthetic reasons, both of which increased the removal costs, 

according to state officials. 

Page 27 GAO-07-1085 Oil Spill Costs
The Fund has been able to cover costs from major spills that responsible 

parties have not paid, but risks remain. Although liability limits were 

increased in 2006, the liability limits for certain vessel types, notably tank

barges, may be disproportionately low relative to costs associated with 

such spills. There is also no assurance that vessel owners and operators 

are able to financially cover these new limits, because the Coast Guard has 

not yet issued regulations for satisfying financial responsibility 

requirements. In addition, although OPA calls for periodic increases in 

liability limits to account for significant increases in inflation, such 

increases have never been made. We estimate that not making such 

adjustments in the past potentially cost the Fund $39 million between 1990 

and 2006. Besides issues related to limits of liability, the Fund faces other 

potential drains on its resources, including ongoing claims from existing 

spills, claims related to already-sunken vessels that may begin to leak oil, 

and the threat of a catastrophic spill such as occurred with the Exxon 

Valdez in 1989. 

Major oil spills that exceed the vessel’s limit of liability are infrequent, but 

their impact on the Fund could be significant. Limits of liability are the 

amount, under certain circumstances, above which responsible parties are 

no longer financially liable for spill removal costs and damage claims. If 

the responsible party’s costs exceed the limit of liability, they can make a 

claim against the Fund for the amount above the limit. Of the 51 major oil

spills that occurred since 1990, 10 spills resulted in limit of liability claims 

on the Fund.31 The limit of liability claims of these 10 spills ranged from 

less than $1 million to over $100 million, and totaled over $252 million in 

claims on the Fund. Limit of liability claims will continue to have a 

pronounced effect on the Fund. NPFC estimates that 74 percent of claims

under adjudication that were outstanding as of January 2007 were for 

spills in which the limit of liability had been exceeded. The amount of 

these claims under adjudication was $217 million.32

Fund Has Been Able 

to Cover Costs Not 

Paid by Responsible 

Parties, but Risks 

Remain 

Further Attention to Limits 

of Liability Is Needed 

 31Additional spills had costs in excess of the vessel’s limit of liability, but either the limit 

was not upheld or no claim was filed by the responsible party.

32This figure is based on all spills with claims on the Fund, currently under adjudication, 

not just the 51 major spills. U.S. Coast Guard, Report on Oil Pollution Act Liability 

Limits, (Jan. 5, 2007). Like our report, the Coast Guard’s report was prepared in response 

to a provision in the Coast Guard and Maritime Transportation Act. 

Page 28 GAO-07-1085 Oil Spill Costs
We identified three areas in which further attention to these liability limits 

appears warranted: the appropriateness of some current liability limits, the 

need to adjust limits periodically in the future to account for significant 

increases in inflation, and the need for updated regulations for ensuring 

vessel owners and operators are able to financially cover their new limits.

The Coast Guard and Maritime Transportation Act of 2006 significantly 

increased the limits of liability from the limits set by OPA in 1990. Both 

laws base the liability on a specified amount per gross ton of vessel 

volume, with different amounts for vessels that transport oil commodities 

(tankers and tank barges) than for vessels that carry oil as a fuel (such as 

cargo vessels, fishing vessels, and passenger ships). The 2006 act raised 

both the per-ton and the required minimum amounts, differentiating 

between vessels with a double hull, which helps prevent oil spills resulting 

from collision or grounding, and vessels without a double hull (see table 3 

for a comparison of amounts by vessel category).33 For example, the 

liability limit for single-hull vessels larger than 3,000 gross tons was 

increased from the greater of $1,200 per gross ton or $10 million to the 

greater of $3,000 per gross ton or $22 million. 

Some Recent Adjustments to 

Liability Limits Do Not Reflect 

the Cost of Major Spills 

 33OPA requires that all tank vessels (greater than 5,000 gross tons) constructed (or that 

undergo major conversions) under contracts awarded after June 30, 1990, operating in U.S.

navigable waters must have double hulls. Of the 51 major oil spills, all 24 major spills from

tank vessels (tankers and tank barges) involved single-hull vessels. 

Page 29 GAO-07-1085 Oil Spill Costs
Table 3: Comparison of Limits of Liability as Established in OPA (1990) and the Coast Guard and Maritime Transportation Act 

(2006) 

Vessel types 1990 Limit of liability 2006 Limit of liability 

Single-hull tankers and tank 

barges 

Vessels greater than 3,000 gross tons: the 

greater of $1,200 per gross ton or $10 million. 

Vessels greater than 3,000 gross tons: the 

greater of $3,000 per gross ton or $22 million.

Vessels less than or equal to 3,000 gross tons: 

the greater of $1,200 per gross ton or $2 million.

Vessels less than or equal to 3,000 gross 

tons: the greater of $3,000 per gross ton or 

$6 million. 

(Single and double-hull tankers and tank 

barges.) 

Double-hull tankers and tank 

barges 

Vessels greater than 3,000 gross tons: the 

greater of $1,200 per gross ton or $10 million. 

Vessels greater than 3,000 gross tons: the 

greater of $1,900 per gross ton or $16 million.

Vessels less than or equal to 3,000 gross tons: 

the greater of $1,200 per gross ton or $2 million.

Vessels less than or equal to 3,000 gross 

tons: the greater of $1,900 per gross ton or 

$4 million. 

(Single and double-hull tankers and tank 

barges.) 

All other vessels: 

Cargo vessels, fishing vessels, 

passenger ships 

The greater of $600 per gross ton or $500,000. The greater of $950 per gross ton or 

$800,000. 

Source: Coast Guard and Maritime Transportation Act of 2006. 

Our analysis of the 51 spills showed that the average spill cost for some 

types of vessels, particularly tank barges, was higher than the limit of 

liability, including the new limits established in 2006. We separated the 

vessels involved in the 51 spills into four types (tankers, tank barges, cargo 

and freight ships, and other vessels such as fishing boats); determined the 

average spill costs for each type of vessel; and compared the costs with 

the average limit of liability for these same vessels under both the 1990 

and 2006 limits. As figure 10 shows, the 15 tank barge spills and the 12 

fishing/other vessel spills had average costs greater than both the 1990 and 

2006 limits of liability. For example, for tank barges, the average cost of 

$23 million was higher than the average limit of liability of $4.1 million 

under the 1990 limits and $10.3 million under the new 2006 limits. The nine 

spills involving tankers, by comparison, had average spill costs of $34 

million, which was considerably lower than the average limit of liability of

$77 million under the 1990 limits and $187 million under the new 2006 

limits.34

 34The average limits of liability for the spills involving tankers are much greater than the

average liability for tank barges because the liability is based on the volume of the vessel, 

and tankers generally have much higher volumes than tank barges. 

Page 30 GAO-07-1085 Oil Spill Costs
Figure 10: Average Spill Costs and Limits of Liability for Major Oil Spill Vessels, 

1990-2006 

0

50

100

150

200

Tanker Cargo/freight Tank barge Fishing/other

Cost (in millions of dollars)

Source: GAO.

Vessel type

Average spill cost

1990 Average limit of liability

2006 Average limit of liability

Number of spills 9 15 15 12

In a January 2007 report examining spills in which the limits of liability 

had been exceeded, the Coast Guard had similar findings on the adequacy

of some of the new limits.35 Based on an analysis of 40 spills in which costs 

had exceeded the responsible party’s liability limit since 1991, the Coast 

Guard found that the Fund’s responsibility would be greatest for spills 

involving tank barges, where the Fund would be responsible for paying 69 

percent of costs. The Coast Guard concluded that increasing liability limits 

for tank barges and nontank vessels—cargo, freight, and fishing vessels—

over 300 gross tons would positively impact the Fund balance. With regard

to making specific adjustments, the Coast Guard said dividing costs 

equally between the responsible parties and the Fund was a reasonable 

 35U.S. Coast Guard, Report on Oil Pollution Act Liability Limits, (Jan. 5, 2007). 

Page 31 GAO-07-1085 Oil Spill Costs
standard to apply in determining the adequacy of liability limits.36

However, the Coast Guard did not recommend explicit changes to achieve 

either that 50/50 standard or some other division of responsibility. 

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. During those years, the Consumer Price 

Index rose approximately 54 percent.

37 OPA requires the President, who 

has delegated responsibility to the Coast Guard, through the Secretary of 

Homeland Security, to issue regulations not less often than every 3 years 

to adjust the limits of liability to reflect significant increases in the 

Consumer Price Index.38 We asked Coast Guard officials why no 

adjustments were made between 1990 and 2006. Coast Guard officials 

stated that they could not speculate on behalf of other agencies as to why 

no adjustments had been made prior to 2005 when the delegation to the 

Coast Guard was made. 

Liability Limits Have Not Been 

Adjusted for Inflation 

The decision to leave limits unchanged had financial implications for the 

Fund. Raising the liability limits to account for inflation would have the 

effect of reducing payments from the Fund, because responsible parties 

would be responsible for paying costs up to the higher liability limit. Not 

making adjustments during this 16-year period thus had the effect of 

increasing the Fund’s financial liability. Our analysis showed that if the 

1990 liability limits had been adjusted for inflation during the 16-year 

period, claims against the Fund for the 51 major oil spills would have been 

reduced 16 percent, from $252 million to $213 million. This would have 

meant a savings of $39 million for the Fund. 

Certificates of Financial Responsibility have not been adjusted to reflect 

the new liability limits. The Coast Guard requires Certificates of Financial

Responsibility, with few exceptions, for vessels over 300 gross tons or any 

Certification of Compliance 

with the New Liability Limits Is 

Not in Place 

 36We did not assess the reasonableness of adopting such a standard in determining liability 

limits.

37The new limits, which increased an average of 125 percent for the 51 vessels involved in 

major oil spills, were substantially higher than the rise in inflation during the period.

38Congress reiterated this requirement in the Coast Guard and Maritime Transportation Act 

by requiring that regulations be issued 3 years after the enactment of the act (July 11, 2006) 

and every 3 years afterward to adjust the limits of liability to reflect significant increases in 

the Consumer Price Index. 

Page 32 GAO-07-1085 Oil Spill Costs
vessels that are lightering or transshipping oil in the Exclusive Economic 

Zone as a legal certification that vessel owners and operators have the 

financial resources to fund spill response up to the vessel’s limit of 

liability. Currently, Certificate of Financial Responsibility requirements are 

consistent with the 1990 limits of liability and, therefore, there is no 

assurance that responsible parties have the financial resources to cover 

their increased liability.39 The Coast Guard is currently making Certificates 

of Financial Responsibility consistent with current limits of liability. The 

Coast Guard plans to initiate a rule making to issue new Certificate of 

Financial Responsibility requirements. Coast Guard officials indicated 

their goal is to publish a Notice of Proposed Rulemaking by the end of 

2007, but the officials said they could not be certain they would meet this

goal. 

Other Challenges Could 

Also Affect the Fund’s 

Condition 

The Fund also faces several other potential challenges that could affect its 

financial condition: 

• Additional claims could be made on spills that have already been cleaned 

up: Natural resource damage claims can be made on the Fund for years 

after a spill has been cleaned up. The official natural resource damage 

assessment conducted by trustees can take years to complete, and once it 

is completed, claims can be submitted to the NPFC for up to 3 years 

thereafter.40 For example, the NPFC recently received and paid a natural 

resource damage claim for a spill in U.S. waters in the Caribbean that 

occurred in 1991. 

• Costs and claims may occur on spills from previously sunken vessels 

that discharge oil in the future: Previously sunken vessels that are 

submerged and in threat of discharging oil represent an ongoing liability to

the Fund. There are over 1,000 sunken vessels that pose a threat of oil 

 39According to the NPFC, while liable parties are not required to establish an ability to pay

at the higher amended limits until the certificate of financial responsibility rule is published 

as required by OPA, those parties are liable for the higher amounts.

40Federal response costs for spills that resulted from hurricanes Katrina and Rita were paid

from the Stafford Act Disaster Relief Funds. However, private parties can seek 

reimbursement from the Fund for cleanup costs and damages in the future. According to

NPFC, it is difficult to estimate future liabilities to the Fund as a result of hurricanes 

Katrina and Rita, but as of July 2007, there are no claims pending in connection with these 

hurricanes.

Page 33 GAO-07-1085 Oil Spill Costs
discharge.41 These potential spills are particularly problematic because, in

many cases, there is no viable responsible party that would be liable for 

removal costs. Therefore, the full cost burden of oil spilled from these 

vessels would likely be paid by the Fund. 

• Spills may occur without an identifiable source and therefore, no 

responsible party: Mystery spills also have a sustained impact on the 

Fund, because costs for spills without an identifiable source—and 

therefore no responsible party—may be paid out of the Fund. Although 

mystery spills are a concern, the total cost to the Fund from mystery spills 

was lower than the costs of known vessel spills in 2001 through 2004. 

Additionally, none of the 51 major oil spills was the result of a discharge 

from an unknown source. 

• A catastrophic spill could strain the Fund’s resources: Since the 1989 

Exxon Valdez spill, which was the impetus for authorizing the Fund’s 

usage, no oil spill has come close to matching its costs.42 Cleanup costs for 

the Exxon Valdez alone totaled about $2.2 billion, according to the vessel’s 

owner. By comparison, the 51 major oil spills since 1990 cost, in total, 

between $860 million and $1.1 billion. The Fund is currently authorized to 

pay out a maximum of $1 billion on a single spill. Although the Fund has

been successful thus far in covering costs that responsible parties did not 

pay, it may not be sufficient to pay such costs for a spill that has 

catastrophic consequences. 

The “polluter pays” system established under OPA has been generally 

effective in ensuring that responsible parties pay the costs of responding 

to spills and compensating those affected. Given that responsible parties’ 

liability is not unlimited, the Fund remains an important source of funding 

for both response and damage compensation, and its viability is important. 

The Fund has been able to meet all of its obligations, helped in part by the 

absence of any spills of catastrophic size. This favorable result, however, 

is no guarantee of similar success in the future. Even moderate spills can 

Conclusions 

 41Michel, J., D. Etkin, T. Gilbert, J. Waldron, C. Blocksidge, and R. Urban; 2005. Potentially

Polluting Wrecks in Marine Waters: An Issue Paper Prepared for the 2005 International

Oil Spill Conference. 

42The ExxonValdez only discharged about 20 percent of the oil it was carrying. A

catastrophic spill from a vessel could result in costs that exceed those of the Exxon Valdez, 

particularly if the entire contents of a tanker were released in a ‘worst-case discharge’ 

scenario. 

Page 34 GAO-07-1085 Oil Spill Costs
be very expensive, especially if they occur in sensitive locations or at 

certain times of the year. 

Increases in some liability limits appear warranted to help ensure that the 

“polluter pays” principle is carried out in practice. For certain vessel types, 

such as tank barges, current liability limits appear disproportionately low 

relative to their historic spill costs. The Coast Guard has reached a similar 

conclusion but so far has stopped short of making explicit

recommendations to the Congress about what the limits should be. Absent

such recommendations, the Fund may continue to pay tens of millions of 

dollars for spills that exceed the responsible parties’ limits of liability. As

the agency responsible for the Fund, it is important that the Coast Guard 

regularly assess whether and how the limits of liability for all vessel types 

should be adjusted—and recommends a course of action to the Congress 

on the adjustments that are warranted. Further, to date, liability limits 

have not been adjusted for significant changes in inflation. Consequently, 

the Fund was exposed to about $39 million in liability claims for the 51 

major spills between 1990 and 2006 that could have been saved if the limits 

had been adjusted for inflation. Authority to make such adjustments was 

specifically designated to the Coast Guard in 2005, and with this clear 

authority, it is important for the Coast Guard to periodically adjust the 

limits of liability for inflation, as well. Without such actions, oil spills with 

costs exceeding the responsible parties’ limits of liability will continue to 

place the Fund at risk. 

To improve and sustain the balance of Oil Spill Liability Trust Fund, we 

recommend that the Commandant of the Coast Guard take the following 

two actions: 

• Determine whether and how liability limits should be changed, by vessel 

type, and make specific recommendations about these changes to the 

Congress 

• Adjust the limits of liability for vessels every 3 years to reflect significant 

changes in inflation, as appropriate.

We provided a draft of this report to the Department of Homeland Security 

(DHS), including the Coast Guard and NPFC, for review and comment. 

DHS provided written comments, which are reprinted in appendix II. In its 

letter, DHS agreed with both recommendations. Regarding our 

recommendation that the Coast Guard review limits of liability by vessel 

type and make recommendations to the Congress, DHS stated that it has 

Recommendations for 

Executive Action 

Agency Comments 

and Our Evaluation 

Page 35 GAO-07-1085 Oil Spill Costs
met the intent of the recommendation by issuing the first of its annual 

reports, in January 2007, on limits of liability. As stated in our report, 

however, our concern is that the current annual report made no specific 

recommendations to the Congress regarding liability limit adjustments. 

Therefore, we continue to recommend that in its next annual report to the 

Congress on limits of liability, the Coast Guard make explicit 

recommendations, by vessel type, on how such limits should be adjusted. 

Regarding our recommendation that the Coast Guard adjust the limits of 

liability for vessels every 3 years to reflect significant changes in inflation, 

DHS stated that the Coast Guard will make adjustments to limits as 

appropriate. In response to other concerns that DHS expressed, we 

modified the report to clarify the Coast Guard’s responsibility for adjusting 

liability limits in response to Consumer Price Index increases, and to deal

with the Coast Guard’s concern that the report not imply that responsible 

parties’ liability is unlimited. 

In addition, we provided a draft report to several other agencies—the 

Departments of Commerce, Transportation, DOI and EPA—for review and 

comment, because some of the information in the report was obtained 

from these agencies and related to their responsibilities. The agencies 

provided technical clarifications, which we have incorporated in this 

report, as appropriate. 

We are sending copies of this report to the Departments of Homeland 

Security, including the Coast Guard; Transportation, Commerce, DOI, and

EPA; and appropriate congressional committees. We will also make copies 

available to others upon request. In addition, the report will be available at 

no charge on the GAO Web site at http://www.gao.gov. 

Page 36 GAO-07-1085 Oil Spill Costs
If you have any questions about this report, please contact me at 

flemings@gao.gov or (202) 512-4431. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. Key contributors to this report are listed in appendix III. 

Susan A. Fleming 

Director, Physical Infrastructure Issues 

Page 37 GAO-07-1085 Oil Spill Costs
Appendix I: Scope and Methodology 

Page 38 GAO-07-1085 

Appendix I: Scope and Methodology 

To address our objectives, we analyzed oil spill removal cost and claims 

data from the National Pollution Funds Center (NPFC); the National 

Oceanic and Atmospheric Administration’s (NOAA) Damage Assessment, 

Remediation, and Restoration Program; and the Department of the 

Interior’s (DOI) Natural Resource Damage Assessment and Restoration 

Program; and the U.S. Fish and Wildlife Service (FWS). We also analyzed 

data obtained from vessel insurers, and in contract with Environmental 

Research Consulting.1

 We interviewed NPFC and NOAA officials and state

officials responsible for oil spill response, as well as industry experts and 

representatives from key industry associations and a vessel operator. In 

addition, we selected five oil spills that represented a variety of factors 

such as geography, oil type, and spill volume for an in-depth review. 

During this review, we interviewed NPFC officials involved in spill 

response for all five spills, as well as representatives of private-sector 

companies involved in the spill and spill response; we also conducted a file 

review of NPFC records of the federal response activities and costs 

associated with spill cleanup. We also reviewed documentation from the 

NPFC regarding the Fund balance and vessels’ limits of liability. Based on

reviews of data documentation, interviews with relevant officials, and 

tests for reasonableness, we determined that the data were sufficiently 

reliable for the purposes of our study. This report focuses on oil spills that 

have occurred since the enactment of OPA—August 18, 1990—for which 

removal costs and damage claims exceeded $1 million, and we refer to 

such spills as major oil spills. We conducted our review from July 2006 

through August 2007 in accordance with generally accepted government 

auditing standards. 

For the purposes of this review, we included removal (or response) costs 

and damage claims that are considered OPA compensable; that is, the 

OPA-stipulated reimbursable costs that are incurred for oil pollution 

removal activities when oil is discharged into the navigable waters, 

adjoining shorelines, and the Exclusive Economic Zone of the United 

States, as well as costs incurred to prevent or mitigate the substantial 

threat of such an oil discharge. OPA compensable removal costs include 

containment and removal oil from water and shorelines; prevention or 

minimization of a substantial threat of discharge; contract services (e.g.,

Overview 

Our Categorization of 

Oil Spill Costs 

 1

Environmental Research Consulting is a private consulting firm that specializes in data 

analysis, environmental risk assessment, cost analyses, expert witness research and 

testimony, and development of comprehensive databases on oil and chemical spills in 

service to regulatory agencies, nongovernmental organizations, and industry.

Oil Spill Costs
Appendix I: Scope and Methodology 

cleanup contractors, incident management support, and wildlife 

rehabilitation); equipment used in removals; chemical testing required to 

identify the type and source of oil; proper disposal of recovered oil and

oily debris; costs for government personnel and temporary government 

employees hired for the duration of the spill response, including costs for 

monitoring the activities of responsible parties; completion of 

documentation; and identification of responsible parties. OPA 

compensable damage claims include uncompensated removal costs, 

damages to natural resources, damages to real or personal property, loss 

of subsistence use of natural resources, loss of profits or earning capacity,

loss of government revenues, and increased cost of public services.2

In order to present the best available data on spill costs, we gathered cost

information from a number of sources, including federal agencies, vessel

insurance companies and other private-sector companies involved in oil

spill response, and Environmental Research Consulting—a private 

consultant. 

Available Data 

• Federal agencies: We gathered federal data on OPA compensable oil spill 

removal costs from the NPFC. Additionally, we gathered federal data on 

OPA compensable third-party damage claims from the NPFC, and natural 

resource damage claims from NOAA’s Damage Assessment, Remediation, 

and Restoration Program, DOI’s Natural Resource Damage Assessment 

and Restoration Program, and FWS.

• Insurers and other private-sector companies: We collected the best 

available data for OPA-compensable removal costs and damage claims 

from private-sector sources, including vessel insurers such as the Water 

Quality Insurance Syndicate and the International Group of Protection and 

Indemnity Clubs; oil spill response organizations, including the Alaska 

Chadux Corporation and Moran Environmental Recovery; and a vessel 

operator. We made many attempts to contact and interview the 

responsible parties involved in the five spills we reviewed in-depth. One 

was willing to speak to GAO directly. 

• Environmental Research Consulting: Environmental Research Consulting 

is a consulting firm that specializes in data analysis, environmental risk 

 2

Additionally, a responsible party may also submit claims to the NPFC if the total of all 

removal cost and damage claims is more than the responsible party’s statutory liability 

limit or if the spill was caused solely by a third party, an act of God, or an act of war.

Page 39 GAO-07-1085 Oil Spill Costs
Appendix I: Scope and Methodology 

assessment, cost analyses, and the development of comprehensive 

databases on oil/chemical spills and spill costs. Environmental Research 

Consulting supplied cost estimates based on reviews of court documents, 

published reports, interviews with responsible parties, and other parties 

involved with major oil spills. In addition, Environmental Research 

Consulting verified its data collection by relying exclusively on known 

documented costs, as opposed to estimated costs. Environmental 

Research Consulting, therefore, did not include general estimates of spill 

costs, which can be inaccurate. 

A complete and accurate accounting of total oil spill costs for all oil spills 

is unknown, primarily because there is no uniform mechanism to track 

responsible party spill costs, and there are no requirements that private 

sector keep or maintain cost records. The NPFC tracks federal costs to the 

Coast Guard and other federal agencies, which are later reimbursed by the 

Fund, but does not oversee costs incurred by the private sector. There is 

also no legal requirement in place that requires responsible parties to 

disclose costs incurred for responding to a spill.3

 We cannot be certain that 

all private-sector cost information we gathered included only OPAcompensable costs. However, we explicitly outline which costs are 

included in our review. Furthermore, private-sector data were obtained 

primarily from insurance companies, and one official told us that 

insurance coverage for pollution liability usually defines compensable 

losses in the same manner as OPA. For instance, while responsible parties 

incur costs ancillary to the spill response, such as public relations and 

legal fees, these costs are not generally paid by oil spill insurance policies. 

In addition, spill costs are somewhat fluid and accrue over time, making it 

sometimes difficult to account for the entire cost of a spill at a given time.

In particular, the natural resource and third-party damage claims 

adjudication processes can take many years to complete. 

Based on consultation with committee staff, we agreed to present the best

available data for major oil spills between 1990 and 2006, and we 

determined that the data gathered were sufficiently reliable for the 

purposes of our study. Because of the imprecise nature of oil spill cost 

data, and the use of multiple sources of data, the data described in this 

report were combined and grouped into cost ranges. Using ranges of costs 

 3

Under regulation S-K, 17 C.F.R. 229, companies that are publicly traded must disclose any 

outstanding liabilities, including liabilities such as oil spill removal costs or claims made 

against the company for natural resource or third-party damages incurred. However, many

vessel owners or operators are not publicly traded companies. 

Page 40 GAO-07-1085 Oil Spill Costs
Appendix I: Scope and Methodology 

to provide upper and lower estimates of total costs and damage claims 

allows us to report data on major oil spills from all reliable sources. 

To establish the universe of vessel spills that have exceeded $1 million in 

total removal costs and damage claims since 1990, we used—in 

consultation with oil spill experts—a combination of readily available data 

and reasoned estimation. Since federal government cost data are available,

we first established an estimate of the probable share of spill costs 

between the federal government and the private sector to determine what 

amount of federal costs might roughly indicate the total costs were over $1 

million. We interviewed Environmental Research Consulting, as well as 

agency officials from the NPFC and NOAA, to determine a reasonable 

estimated share of costs between the private and public sectors. The 

officials with whom we spoke estimated that in general, at least 90 percent 

of all spill costs are typically paid by the private sector. Based on that 

estimation, any spill with at least $100,000 in federal oil spill removal costs 

and damage claims probably cost at least $1 million in total—-that is, 90 

percent of the total costs being paid by the private sector, and the 

remaining 10 percent paid by the public sector. Therefore, we initially 

examined all spills with at least $100,000 in federal oil spill removal costs 

and damage claims. We obtained these data on federal oil spill removal 

costs and damage claim payments from the NPFC. 

Of 3,389 federally managed spills since 1990, there were approximately 184 

spills where the federal costs exceeded $100,000. From this group of spills, 

we limited our review to spills that occurred after the enactment of OPA 

on August 18, 1990. Additionally, we omitted (1) spill events in which costs 

were incurred by the federal government for measures to prevent a spill 

although no oil was actually spilled and (2) spills of fewer than 100 

gallons, where, according to the NPFC, the likelihood of costs exceeding 

$1 million was minimal.4 Lastly, in consultation with Environmental 

Research Consulting, we used estimated spill costs and additional 

research to determine spills that were unlikely to have had total costs and 

claims above $1 million. Through this process, we concluded that since the 

enactment of OPA, 51 spills have had costs and claims that have exceeded

$1 million. 

Universe of Major Oil 

Spills 

 4

The Coast Guard categorizes instances, in which no oil was actually spilled, as an oil spill 

when the Fund is used to pay for actions taken to prevent a spill from occurring. 

Page 41 GAO-07-1085 Oil Spill Costs
Appendix I: Scope and Methodology 

To assess the costs of oil spills based on various factors, we collected data

from federal government, private sector, and a consultant, and combined 

the data into ranges. In addition to collecting data on removal costs and 

damage claims, we collected additional information on major oil spills. We 

categorized and grouped spill costs based on the vessel type, time of year,

location, and oil type to look for discernable trends in costs based on 

these characteristics. 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. In addition, to analyze the effects of inflation on the Fund and

liability limits, using the Consumer Price Index, we calculated what the 

limits of liability would have been at the time of each spill if the OPAstipulated limits had been adjusted for inflation. We used the Consumer 

Price Index as the basis for inflationary measures because OPA states that 

limits should be adjusted for “significant increases in the Consumer Price 

Index.” 

In reporting spill cost data by year and by certain categories, we use 

ranges, including the best available data. For certain statistics, such as the

public-sector/private-sector cost share, where costs are aggregated for all 

spills, we calculated percentages based on the mid-point of the cost 

ranges. To test the reliability of using the mid-point of the ranges, we 

performed a sensitivity test, analyzing the effects of using mid-point versus 

the top and bottom of the cost range. We determined that presenting the 

certain figures based on the mid-point of the ranges is reliable and 

provides the clearest representation of the data. 

To supplement our data analysis and in order to determine the factors that 

affect the costs of major oil spills, we interviewed officials from the NPFC, 

NOAA, and EPA regarding the factors that affect major oil spill costs. We 

also interviewed state officials responsible for oil spill response from 

Alaska, California, New York, Rhode Island, Texas, and Washington to 

determine the types of costs incurred by states when responding to oil 

spills and the factors that affect major oil spills costs. Additionally, we 

interviewed industry experts and a vessel insurer about the factors that 

affect major oil spill costs. To determine the implications of major oil 

spills on the Fund, we interviewed agency officials from the NPFC and the 

Coast Guard as well as vessel insurers and industry experts to get the 

private sector’s perspective on the major oil spills’ impact on the Fund. In

Data Analysis and 

Case Studies 

Page 42 GAO-07-1085 Oil Spill Costs
Appendix I: Scope and Methodology 

addition, we reviewed recent Coast Guard reports to Congress on the 

status of the Fund and limits of liability.5

Lastly, we conducted in-depth reviews of five oil spills. The spills were 

selected to represent a variety of factors that potentially affect the costs of 

spills—geography, oil type, and spill volume. During this review, we 

interviewed the NPFC case officers who were involved with each spill, 

state agency officials; insurance companies; and private-sector companies, 

such as oil spill response organizations that were involved in the spill and 

the spill response. To the best of our ability, we attempted to interview the 

responsible parties involved in each spill. We were able to speak with one 

vessel operator. Our interviews were designed to gain perspectives on the 

response effort for each spill, the factors that contributed to the cost of the 

spill, and what actual costs were incurred by the responsible party. 

Finally, we also conducted a file review of NPFC records of federal 

response activities, removal costs, and damage claims made to the Fund 

for each of the five spills we reviewed in-depth. 

We conducted our review from July 2006 through August 2007 in 

accordance with generally accepted government auditing standards, 

including standards for data reliability. 

 5

U.S. Coast Guard, Report on Oil Pollution Act Liability Limits,( Jan. 5, 2007); U.S. Coast 

Guard, Oil Spill Liability Trust Fund (OSLTF) Funding for Oil Spills, (January 2006);

U.S. Coast Guard, Report on Implementation of the Oil Pollution Act of 1990, (May 2005). 

Page 43 GAO-07-1085 Oil Spill Costs
Appendix II: Comments from the Department Appendix II: Comments from the Department of Homeland Security

of Homeland Security 

Page 44 GAO-07-1085 Oil Spill Costs
Appendix II: Comments from the Department 

of Homeland Security

Page 45 GAO-07-1085 Oil Spill Costs
Appendix III: GAO

A

 Contact and Staff 

cknowledgments 

Page 46 GAO-07-1085 

Appendix III: GAO Contact and Staff 

Acknowledgments 

Susan Fleming, (202) 512-4431 or flemings@gao.gov 

In addition to the contact named above, Nikki Clowers, Assistant Director; 

Michele Fejfar; Simon Galed; H. Brandon Haller; David Hooper; Anne 

Stevens; Stan Stenersen; and Susan Zimmerman made key contributions to 

this report. 

Oil Spill Costs

GAO Contact 

Staff 

Acknowledgments 

(544127) 
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