CLAIM SUMMARY I RECONSIDERATION DETERMINATION 

5/25/2016 

Claim Number: J05003-001 l 

Claimant: IMC Shipping Co. Pte. Ltd., Ayu Navigation Sdn Bhd, et al. 

Type of Claimant: Responsible Party 

Type of Claim: RP Third Party Claims Management Company charges 

Claim Manager: 

Amount Requested: $285,753.83 

BACKGROUND 

The Incident 

The MN SELENDANG A YU (SELENDANG or vessel) was on a voyage from Seattle to China 

on December 06, 2004. The vessel grounded on December 08, 2004 on a rocky shelf on the north 

shore of Unalaska Island, northeast of Spray Cape. The vessel discharged approximately 330,000 

gallons of bunker oil into the waters of the United States off Unalaska Island. 

The responsible parties for the incident are Ayu Navigation Sdn Bhd (Ayu) and IMC Shipping 

Co. Pte. Ltd. (IMC), respectively the owner and operator of the MN SELENDANG A YU. 

Sveriges Angfartygs Assurans Forening (The Swedish Club) and International Group of 

Protection and Indemnity Clubs (International Group) were the responsible parties' subrogated 

insurers. 

RP Claims to the Fund 

In a letter dated December 6, 2007, the responsible parties (now RP/Claimants), through their 

attorneys Keesal, Young and Logan (KYL), presented a claim for reimbursement of removal 

costs and damages paid, or to be paid, by the responsible parties. 1 The letter, asserting that the 

responsible parties were entitled to their statutory limitation on liability ($23,853,000), focused 

on the facts associated with the incident. It was agreed between the NPFC and the responsible 

parties that the NPFC would first determine if the responsible parties demonstrated entitlement to 

the statutory limit on liability. If the limit was upheld RP/Claimants would submit documentation 

to support its claimed removal costs and damages. 

The letter noted that removal costs and damages to date totaled $148,651,185.13. Specifically, 

removal costs were $117 ,628,386.1 O; natural resource damage assessment costs were 

$5,021,890.42, and third party claims (settled and paid to date) were $26,000,908.61. The 

responsible parties retained MR and Associates (MRA) in part to establish a claims office in 

Dutch Harbor to respond to the third party claims, especially the commercial fishermen. MRA 

adjusted and settled third party claims and assumed responsibility for publication and 

dissemination of claims advertising. MRA travelled to Dutch Harbor to set up the office, which 

1 Keesal Young & Logan dated December 6, 2007. 

2 
was manned through August 2005, at which time the office was moved to Houston, Texas, where 

claims continued to be adjusted and settled. 

Attached to the December 6, 2007 letter was a November 27, 2007, letter to KYL from 

, president of MRA. 2 According to the letter MRA was retained by the responsible 

parties to provide claims management and cost auditing services and the letter detailed these 

services. It noted that MRA published the advertisement of the claims process and established a 

claims office in Dutch Harbor, Alaska. Associated with the claims management activities were 

services that "encompassed claim receipt/review through settlement negotiations and execution 

of Release documents."3 Attached to this letter was a Registered File List, which itemized each 

claim presented to the responsible parties, the claimed damages, a status description and the 

settlement amount. According to this list claims presented to the responsible parties as of 

December 6, 2007 totaled $3,795,011.47; the total settlement amount paid to claimants was 

$419,899.53.4 

The NPFC and the responsible parties agreed that this letter, together with an attached Claims 

Summary, constituted presentment of all claims on the list and was submitted within the threeyear period of limitations for presenting damage claims to the Fund. 

On January 27, 2012, the NPFC determined that the Claimants were entitled to their statutory 

limit of liability, $23,853,000. 

The Instant Claim 

RP/Claimants seek reimbursement for MRA costs to (1) advertise the responsible parties' claims 

process; (2) administer the responsible parties' claims process, and (3) conduct damage 

assessment, settle and pay third party claims. The claimed amount is$ 285,753.83. 

The RP/Claimants, in a March 21, 2012 follow up letter to the NPFC, submitted 17 invoices to 

support the $285,753.83 claimed amount. It included a spreadsheet for each invoice that stated 

the MRA employee name, date, time spent, a brief description of the activities conducted and 

the rate, and daily cost for the listed activities. The activities included participating in 

teleconferences with KYL and some named claimants or potential claimants, attending meetings 

and visiting areas impacted by the oil spill. The invoices include travel costs, i.e., airline fares, 

hotel, meals and laundry expenses incurred by and his employees when they were 

manning the claims office in Dutch Harbor. In support of its assessment costs claim MRA 

submitted a February 29, 2012 letter to KYL that included a document updating the third party 

claims paid to claimants. Entitled "Third Party Claim Detail," it listed 43 fishermen claimants 

whose total claimed amounts were $1,157,259.52 and settled amounts totaling $378,938.62. The 

document listed four fisheries claims totaling $34,562.95 and settled amounts of $31,143.23. 5 

2 MRA coordinated its services to the responsible parties with KYL. 

3 MR & Associates letter to KYL dated November 27, 2007. 4 See Registered File List, dated November 27, 2007. 

s The list identifies each fisherman by name but provides no additional information, i.e., whether the settlement was 

supported by evidence of the loss of profits or the cost of the assessment associated with each claim. Similarly, there 

is no information for the fisheries claims except for the named claimants. 

3 
The NPFC denied the claim on August 22, 2014, on the grounds that general administrative and 

adjudicative costs associated with advertising and the administration of a claims process to 

compensate third parties for their removal costs and damages are not OPA damages that can be 

reimbursed by the Fund. The Claims Division reviewed the 17 invoices, providing a spreadsheet 

that listed each invoice and a line-by-line review of each invoice. According to the spreadsheet 

the MRA invoices did not provide sufficient information to aid the NPFC in understanding the 

activities associated with the costs. This spreadsheet was attached to the determination denying 

the claim. 

RP/Claimants' Reguest for Reconsideration 

The RP/Claimants, in a letter dated October 16, 2014, requested reconsideration of the denial of 

the claim. They requested a 60-day extension of time in which to submit additional and 

supplemental information to answer questions raised by the NPFC in its spreadsheet that listed 

the line-by-line review of the MRA invoices. The NPFC granted the 60-day extension of time 

and on December 15, 2014, RP/Claimants submitted additional information, including Notes 

Related to Invoices and detailed expense categories and charges included in each category. This 

information sought to answer the NPFC queries noted on the spreadsheet. These sheets only 

added "damages assessment language" to each of the line items in the spreadsheet. 6 

The request for reconsideration included the following arguments: (1) the cost of a responsible 

party's efforts to review, assess and pay claims for damages is a recoverable expense under 

OPA; (2) allowing a limitation claimant to recover its third party damage assessment costs is 

consistent with the language of OPA and the claims regulations, and (3) allowing a limitation 

claimant to recover its damage assessment costs is consistent with the intent of Congress. 

In support of its argument that the MRA costs were assessment costs RP/Claimants attached an 

MRA letter to KYL dated February 22, 2005, which described in detail Mr. strategy 

for processing and adjudicating claims. He identified fishermen and processors as potential 

claimants, citing that the claims would be for lost profits and revenues for fishermen in 

Makushin/Scan Bay and Unalaska Bay. He explained that the responsible parties "were 

committed to honoring the monetary value (the fund) of the 171,000 pound quota established for 

the Makushin/Scan Bay areas and compensating the fishermen who would have fished those 

areas had it not been for the spill."7

• 

Along with the additional information RP/Claimants included a Declaration of

. 

8 He asserted that OPA 90 provides that the Fund is available for the payment of 

damages and includes the costs of assessing these damages. He stated that Congress in enacting 

OPA intended that "assessing the damages" included all costs from A-Zand that OPA 90 

6 The language included "conducting damages assessment," "on site conducting damages assessment," "conducting 

damages assessment including attending ICS meetings relative to damages," "meeting/speaking with claimants 

relative to damages and reviewing loss data relative to damages," and "preparing damages assessment documents to 

send to MRA." 7 The incident resulted in the closure of the Makushin/Scan fishing areas. MRA based the monetary value of the 

fund on the 171,000 pound State of Alaska quota established for the Makushin/Scan areas and the $2. 75 per pound 

or a fund value of $470,250. 

8 Declaration of , dated December 12, 2014. 

4 
specifically contemplated that the Fund would be available for payment of all costs (as long as 

they met the requisite provisions of the Act) and included, but was not limited to "travel, living, 

office, and labor expenses for the persons and entities assessing claim damages resulting from 

the spill, adjuster charges, and any and all other costs associated with assessing and paying 

damages." He believed that the term "damage assessment" as it relates to third party claims 

includes obtaining as much information as possible and that damage assessment "is continuous, 

fluid, and subject to changes ... " 10 He attended public meetings, participated in the Unified 

Command and met with response contractors and consultants regarding the impact of the fishing 

industry. 11 He met with claimants to discuss their claimed losses of profit, prepared loss 

calculations, prepared settlement documents and concluded settlements. 

NPFC Analysis 

OPA provides that a responsible party for a vessel or facility from which oil is discharged or 

which poses the substantial threat of a discharge of oil, may assert a claim for removal costs and 

damages only if the responsible party demonstrates that it is entitled to a defense to liability 

under section 2703 of this title or demonstrates that it is entitled to a limitation on liability under 

section 2704 of this title. 33 U.S.C. § 2708(a)(l) and (2). 

"Damages" means damages specified in section 2702(b) of this title, and includes the costs of 

assessing these damages." 33 U.S.C. § 2701(5). Damages specified in section 2702(b) include, 

for purposes of this claim, "damages equal to the loss of profits or impairment of earning 

capacity due lo the injury, destruction, or loss of real property, personal property, or natural 

resources, which shall be recoverable by any claimant." 33 U.S.C. § 2702(b)(2) (E). 12 

Relying on the OPA definition of "damages," which includes the cost of assessing the damages, 

RP/Claimants broadly interpret OPA to mean that all expenses associated with "the costs of 

assessment" are reimbursable from the Fund. In total they seek $285,753.83. This claimed 

amount is based on the 17 invoices and the accompanying spreadsheets that list activities as 

"damages assessment." The OPA definition of "damage assessment" does not include 

administrative costs and is not so broad as to include collective assessment costs for all claims 

presented to the responsible party. For the reasons discussed below this claim is denied on 

reconsideration. 

Administrative costs are not a damage that is payable from the Fund. 

RP/Claimants first argue that a responsible party's efforts to review, assess and pay claims for 

damages is a recoverable expense under OP A. This includes all costs associated with assessment 

of claims. According to Mr. November 27, 2007 letter, he established the claims 

office in Dutch Harbor, advertised the claims process as required by 33 U.S.C. § 2714 and 

reviewed and settled claims. He maintained a Registered File List dated December 8, 2004 with 

the names of all claimants and potential claimants that included their damages claimed, status 

9 ld., Paragraphs 9 and 10. 

10 ld., Paragraphl4e. 

11 ld. Paragraph 14x. 

12 OPA damages also include: natural resources, real or personal property, subsistence use, revenues, and public 

services. 33 U.S.C. §2702(b)(2)(A)-(F). 

5 
description13 and settlement amounts. He identified types of claimants and potential issues. He 

determined that a fund totaling $470,250 (based on the State of Alaska 171,000-pound quota and 

$2.75 per pound for Makushin/Scan Bay fish) would be created and used to reimburse fishermen 

for their claimed lost profits. 14 

Further, according to Mr. , all costs associated with all "assessment" activities are 

reimbursable from the Fund. This is evidenced by the December 14, 2014 Declaration 

in which he states that" ... OPA 90 specifically contemplated that the Fund would be available 

for payment of any and all costs (as long as they meet the requisite provision of the Act) 

associated with assessing of the damages including but not limited to, travel, living, office and 

labor expenses for the person and entities assessing claims for damages resulting from the ~ill, 

adjuster costs, and any and all other costs associated with assessing and paying damages." 1 

Establishing a claims office and a claims process, including advertising for claims and the costs 

associated with the office and the process are administrative costs. Expenses for renting office 

space, setting up telephone and computer lines, maintaining files lists along with travel and 

living expenses for employees to manage the claims process are administrative costs. While 

RP/Claimants depict these as assessment costs they are more correctly defined as costs and 

expenses to support the claims process and therefore are administrative costs. Administrative 

costs or expenses are not an OPA-compensable damage. 33 U.S.C. § 2702(b)(A)-(F). 33 CFR 

136. l 05( d)(8). While these are expenses incurred by the responsible parties when they retained 

MRA for establishing a claims office and a claims process, they are not a damage that is 

reimbursable from the Fund. To the extent that some of the $285,753.83 claimed costs are for 

administrative costs, these costs are denied. 

OPA does not provide that all assessment costs associated with all claims are payable from the 

Fund. 

Second, RP/Claimants argue that allowing a limitation claimant to recover its third party damage 

assessment costs is consistent with the language of OPA, the Claims Regulations and the intent 

of Congress. 16 

While it is clear from the administrative record that MRA assessed and paid some claims there is 

no specific information about each claim and the costs to assess the damages for that claim. To 

evidence that they assessed and paid claims they provided their Third Party Claim Detail that 

listed 43 fishermen claimants, a total claimed amount of approximately $1, 157 ,259 .52 and total 

claims paid amount of $378,938.62. Interestingly, RP/Claimants presented the 43 claims to the 

Fund for review; but they were denied by the NPFC because there was insufficient information 

about each claim paid by the RP. The settled amounts were not supported by evidence, and there 

13 Status descriptions were "Settled." "Closed subject to reopening, No claim submitted." 

14 See letter dated February 22, 2005. 

15 Declaration, Paragraph 10. 16 RP/Claimants' argument that the NPFC denial of their assessment costs is contrary to Congressional intent is 

without merit. They argue that a denial of the assessment costs is a disincentive for a responsible party to assess and 

pay claims and a claimant would seek reimbursement from the Fund. However, if a responsible party fails to settle a 

claim a claimant may commence an action in court against the responsible party for those costs or present its claim 

to the Fund. If the Fund pays those costs it then seeks reimbursement from the responsible party for those costs and 

if the responsible party fails to pay, the United States will file suit against the responsible party for those costs. 

6 
weren't any documents showing the reasonable costs to assess each claim. Further, it is not clear 

whether the claimed MRA costs were related to claims that were denied or closed without 

adjudication. Since there is no breakdown of MRA's costs associated with each claim or the 

time spent in assessing damages within that claim, it is not known if the assessment costs 

associated with each claim are compensable under OP A. RP/Claimants apparently seek their 

collective costs relating to all claims presented to them, whether the claims were paid or denied. 

OPA provides a claims process for individual claimants and their individual claims. With certain 

exceptions individual claimants must first present their claims to the responsible party or 

guarantor of the source designated in section 2714(c). 33 U.S.C. 27 l3(a). If a claim is presented 

in accordance with subsection (a) of this section and " ... the claim is not settled by any person 

by payment within 90 days after the date upon which the claim was presented ... , the claimant 

may elect to commence an action in court against the responsible party or guarantor or to present 

the claim to the Fund." 33 USC 2713(c). 

OPA authorized the promulgation of regulations for a claims process. 33 USC 2713(e). The 

Claims Regulations provide the process and requirements for individual claims and claimants. 

For instance "[ T] he claimant bears the burden of providing all evidence, information and 

documentation deemed necessary by the Director, NPFC, to support the claim." 33 CFR 

136. lOS(a). "Each claim must be in writing for a sum certain for compensation for each category 

of uncompensated damages ... " 33 CFR 136.105(b). "Each claim must be signed in ink by the 

claimant ... " 33 CFR 136. lOS(c). "Each claim must include the following, as applicable: ... (6) 

Evidence to support the claim." 33 CFR 136.105(d)(6). Also, "A claim for loss of profits or 

impairment of earning capacity due to the injury to, destruction of, or loss of real or personal 

property may be presented by a claimant sustaining the loss or imparment." 33 CFR 136.231(a). 

In addition, a claimant must establish the following: ... (b)That the claimant's income was 

reduced as a consequence of injury to, destruction of, or loss of the property or natural resources, 

and the amount of the reduction." 33 CFR 136.233(b). Finally, "[T]he reasonable costs incurred 

by the claimant in assessing the damages claimed." 33 CFR 136.l05(e)(8). Importantly, if the 

NPFC denies the claim, the assessment costs associated with that claim are not payable. 

There are no provisions either in OPA or the Claims Regulations that can be interpreted to mean 

that a responsible party's collective assessment costs incurred for all its adjudicated claims, paid 

or not, are reimbursable from the Fund. RP/Claimants argue that limitation claimants are no 

different from third party claimants and that as limitation claimants they are entitled to their 

assessment costs because that is consistent with the language of OPA and the Claims 

Regulations. The NPFC agrees that there is no differentiation between a third party claimant and 

a limitation claimant as it relates to assessment costs. As discussed above any claimant 

presenting a claim to the Fund must provide evidence to support its claim. 33 CFR 136.105. A 

claimant may submit its costs of assessing the damages that are the subject of that claim. 33 CFR 

136.105(e)(8). If the claim is an OPA-compensable claim and reimbursable and payable from the 

Fund, the reasonable assessment costs associated with estimating the damages within that claim 

are also reimbursable. In this case MRA has not provided evidence for each claim or the 

assessment costs associated with damages within each claim as required by the Claims 

Regulations. Much of its claimed costs appear to be the collective costs of "assessment" of 

claims reviewed by MRA. To the extent that some of the claimed $285,753.83 costs are for the 

assessment of claims these costs are denied. 

7 
Finally, RP/Claimants rely on Gatlin Oil Company v. United States,17 in their argument that an 

RP/Claimant is entitled to its assessment costs associated with a damage claim. Gatlin Oil is 

inapposite for two reasons. First, the discharge of oil at the Gatlin Oil facility was solely caused 

by a vandal and it was subsequently determined that Gatlin Oil was entitled to a sole fault third 

party defense; therefore, it was no longer a responsible party. Second, Gatlin Oil was assessing 

damages to its own facility and was not assessing damage claims of a third party claimant. 

For the reasons discussed above this cla' is denied on reconsideration. 

Claim Supervisor: 

Date of Supervisor's review: [REVIEW DATE] 

Supervisor Action: Approved 

Supervisor's Comments: 

17 169 F. 3d 2007 (4111 Cir. 1999). 

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