1

CLAIM SUMMARY / DETERMINATION FORM 

Date : 2/26/2010 

Claim Number : 908101-001

Claimant : Federal Mutual Insurance and Perry Oil 

Type of Claimant : Corporate (US) 

Type of Claim : Affirmative Defense 

Claim Manager : 

Amount Requested : $290,418.26

THE CLAIMANT

The claimants are Perry Oil Company and Federated Mutual Insurance Company (Perry/Federated) The 

claim has been submitted by Concord Environmental Services, Concord, on behalf of Perry and 

Federated, its insurance company. 

1

 Concord Environmental has been authorized to submit the claim on 

via correspondence from of Federated Mutual.2

THE CLAIM

This claim was submitted to the Oil Spill Liability Trust Fund (OSLTF) to recover uncompensated 

removal costs in the amount of $290,418.26 expended by Federated on behalf of Perry for costs incurred 

as the result of a traffic accident where a tanker truck owned by Perry Oil discharged oil into the 

navigable waters of the United States. The claimants Perry Oil/Federated are asserting a defense to 

liability pursuant to 33 U.S.C. 2703, asserting that the discharge of oil occurred as the result of the sole 

fault of a third party and therefore the claimants are not liable for the costs associated with the removal of 

the oil. The claim was received at the NPFC on or about 4 August 2008. 

Although Perry Oil is the Responsible Party under the provisions of OPA, it is asserting that it is entitled 

to recover all costs associated with the removal aspects of this incident because the event that caused the 

oil pollution incident was caused solely by the actions of a third party. The claims regulations that govern 

this process provide that it is the claimant’s burden to prove all elements of each claim by a 

preponderance of the evidence.3

 In order to prevail in its assertion of a defense to liability, the claimants 

here must prove by a preponderance of the evidence that the incident was solely caused by the actions of 

a third party; that it exercised due care with respect to the oil and that it took all reasonable steps to 

prevent all foreseeable acts to prevent the event from occurring. 4 

The underlying claim is for uncompensated removal cost claims in the amount of $290,418.26. This 

memorandum will address both the defense to liability and the removal cost claim. 

THE INCIDENT

The incident that is the subject of this claim was a traffic accident that occurred on or about 30 March 

2006 on the Hal Rodgers Parkway in London, Kentucky. The accident involved a tanker truck owned by 

Perry and driven by its employee, and a personal vehicle, SUV operated by a private 

individual, Ms. . At the time of the accident, the tanker truck was traveling in the 

 

1 Claimant’s submission letter of 31 July 2008 from Concord Environmental Services to National Pollution Funds 

Center 

2

 Correspondence from of Federated Mutual dated 16 September 2008 

3

 33 CFR 136.105 

4

 33 U.S.C 2703 
2

eastbound lanes of the Parkway. The SUV was also traveling the eastbound lanes. The accident occurred 

when the tanker truck attempted to pass the SUV and the SUV made an abrupt left turn in front of the 

tanker truck. The tanker attempted to stop in order to avoid hitting the SUV but could not do so, and 

collided with it. As a result of the accident, the tanker truck was ruptured and spilled approximately 

7,000 gallons of high sulfur, off-road, No. 2 fuel oil. The fuel flowed approximately 75 feet from the 

point of the accident and into a flume that conveyed the fuel approximately 300 feet into Sally’s Branch, 

into Lick Creek, to Little Laurel River, to Laurel River, and ultimately to Cumberland River a navigable 

waterway of the United States.5 The FOSC was EPA Region 4 who responded to the incident. Some of 

the product was removed with tank trucks, some was removed from the soil and the rest evaporated from 

the water. The incident was reported to the NRC and assigned NRC Number 792471. According to the 

evidence submitted by the claimant, the third party, driver of the SUV was cited by the police for the 

traffic accident, specifically for failure to control a vehicle. The driver of the tanker trucker owned by 

Perry Oil was not issued a citation for violation of any traffic regulation.6 

APPLICABLE LAW: 

Under OPA 90, at 33 USC § 2702(a), responsible parties are liable for removal costs and damages 

resulting from the discharge of oil into navigable waters and adjoining shorelines, as described in Section 

2702(b) of OPA 90. A responsible party’s liability will include “removal costs incurred by any person for 

acts taken by the person which are consistent with the National Contingency Plan”. 33 USC § 

2702(b)(1)(B).

2703. Defenses to liability

(a) Complete defenses 

A responsible party is not liable for removal costs or damages under section 2702 of this title if the 

responsible party establishes, by a preponderance of the evidence, that the discharge or substantial threat 

of a discharge of oil and the resulting damages or removal costs were caused solely by—

(1) an act of God; 

(2) an act of war; 

(3) an act or omission of a third party, other than an employee or agent of the responsible party or a third 

party whose act or omission occurs in connection with any contractual relationship with the responsible 

party (except where the sole contractual arrangement arises in connection with carriage by a common 

carrier by rail), if the responsible party establishes, by a preponderance of the evidence, that the 

responsible party—

(A) exercised due care with respect to the oil concerned, taking into consideration the characteristics of 

the oil and in light of all relevant facts and circumstances; and 

(B) took precautions against foreseeable acts or omissions of any such third party and the foreseeable 

consequences of those acts or omissions; or 

(4) any combination of paragraphs (1), (2), and (3)

"Oil" is defined in relevant part, at 33 USC § 2701(23), to mean “oil of any kind or in any form, including 

petroleum, fuel oil, sludge, oil refuse, and oil mixed with wastes other than dredged spoil”.

The Oil Spill Liability Trust Fund (OSLTF), which is administered by the NPFC, is available, pursuant to 

33 USC §§ 2712(a)(4) and 2713 and the OSLTF claims adjudication regulations at 33 CFR Part 136, to 

pay claims for uncompensated removal costs that are determined to be consistent with the National 

Contingency Plan and uncompensated damages. Removal costs are defined as “the costs of removal that 

are incurred after a discharge of oil has occurred or, in any case in which there is a substantial threat of a 

discharge of oil, the costs to prevent, minimize, or mitigate oil pollution from an incident”.

 

5 Executive Summary, page 1 (Claimant’s Submission) & Appendix G

6 Kentucky Uniform Police Traffic Collision Report
3

Under 33 USC §2713(b)(2) and 33 CFR 136.103(d) no claim against the OSLTF may be approved or 

certified for payment during the pendency of an action by the claimant in court to recover the same costs 

that are the subject of the claim. See also, 33 USC §2713(c) and 33 CFR 136.103(c)(2) [claimant 

election]. 

33 U.S.C. §2713(d) provides that “If a claim is presented in accordance with this section, including a 

claim for interim, short-term damages representing less than the full amount of damages to which the 

claimant ultimately may be entitled, and full and adequate compensation is unavailable, a claim for the 

uncompensated damages and removal costs may be presented to the Fund.” 

Under 33 CFR 136.105(a) and 136.105(e)(6), the claimant bears the burden of providing to the NPFC, all 

evidence, information, and documentation deemed necessary by the Director, NPFC, to support the claim. 

Under 33 CFR 136.105(b) each claim must be in writing, for a sum certain for each category of 

uncompensated damages or removal costs resulting from an incident. In addition, under 33 CFR 136, the 

claimant bears the burden to prove the removal actions were reasonable in response to the scope of the oil 

spill incident, and the NPFC has the authority and responsibility to perform a reasonableness 

determination. Specifically, under 33 CFR 136.203, “a claimant must establish - 

(a) That the actions taken were necessary to prevent, minimize, or mitigate the effects of the incident; 

(b) That the removal costs were incurred as a result of these actions; 

(c) That the actions taken were determined by the FOSC to be consistent with the National Contingency 

Plan or were directed by the FOSC.”

Under 33 CFR 136.205 “the amount of compensation allowable is the total of uncompensated reasonable 

removal costs of actions taken that were determined by the FOSC to be consistent with the National 

Contingency Plan or were directed by the FOSC. Except in exceptional circumstances, removal activities 

for which costs are being claimed must have been coordinated with the FOSC.” [Emphasis added]. 

ANALYSIS: ENTITLEMENT TO DEFENSE TO LIABILITY

As previously stated, the provisions of OPA generally provide that a Responsible Party is liable for all 

costs and damages associated with an oil pollution incident. An exception to that is if a Responsible Party 

can establish by a preponderance of the evidence that the incident was caused solely by the actions of a 

third party. 33 U.S.C. 2703 

Perry Oil is the Responsible Party because the oil discharged from its tank truck into the waters of Sally’s 

Branch, a tributary of the Cumberland River a navigable water of the United States. However, in this 

claim, the claimant asserts that because the discharge occurred as the result of a traffic accident that was 

caused by a third party, , therefore, it should not be liable for the costs incurred and 

damages that resulted from the incident. 

The NPFC has reviewed and analyzed the evidence submitted by the claimant and has determined that the 

evidence supports a decision that claimant is entitled to a defense to liability. 

Claimant Exercised Due Care

The evidence submitted supports a finding that the claimant exercised due care with respect to the oil. 

Claimant submitted a traffic report as part of the evidence to support its assertion of a defense to liability. 

This report indicates that the traffic accident was caused by the actions of a Ms. , the driver 
4

of a personal SUV. According to the traffic accident report the driver of the SUV was charged with the 

following offenses: failure to yield the right of way, inattention and failure to maintain proper control. 7 

Claimant’s submission includes a list of witnesses to the accident: and 

 Only Mr. statement is included in the submission because according to the 

submission, Ms. did not return calls for an interview. 

Mr. statement was in-line with the police accident report that the SUV driven by Ms. 

was at-fault in the accident. Specifically, he stated that following: that he was traveling in an eastbound 

direction directly behind the tanker on the Hal Rodgers Parkway; that the weather was clear and the road 

conditions were dry; he was behind the tanker truck immediately before the accident; he estimates the 

speed at 55 mph; there were no vehicles approaching from the other direction; he could not see around the 

tanker to see if other vehicles were approaching from the other direction. At the time of the accident the 

tanker truck had its left turn signal on to enter the westbound lane. It was at that time that Mr. 

noticed the S10 Blazer traveling eastbound. The tanker completely entered the westbound lane as it was 

attempting to pass the Blazer. As it was parallel with the Blazer, the Blazer began to make a left turn. 

The tanker applied its brakes but was unable to avoid striking the Blazer midway on the driver’s side. He 

describes the Blazer’s actions as an “abrupt left turn” as the tanker was attempting to pass. Mr. 

stated that he was unclear as to where the Blazer was attempting to turn as there were no drives or roads 

on the left side of the roadway. Finally, he states that when the impact occurred the tanker overturned 

onto the driver’s side and came to a final rest on the shoulder of westbound traffic. The Blazer was on its 

wheels at its final rest. Mr. stated that in his opinion the driver of the Blazer was at fault for the 

accident.8

 

49 CFR 396.3 Requires “that every motor carrier shall systematically inspect, repair, and maintain, or 

cause to be systematically inspected, repaired, and maintained, all motor vehicles subject to its control.”9

The claimant submitted records for repair and maintenance records for the truck for the years 2000, 2001, 

2002, 2003, 2004, 2005 & 2006. Claimant submitted the same type of records for the tanker for the years 

1999, 2000, 2001, 2002, 2003, 2004, 2005 & 2006. Claimant submitted tank truck inspection reports for 

the following: May 1997, May 1998, May 2001, April 2002, January 2003, April 2003, April 2004, 

January 2005, April 2005, March 2006, May 2007 and December 2007. The NPFC has determined that 

the claimant complied with the requirement of the Federal Regulations. 

Mr. was the driver of the tanker truck was an employee of Perry Oil and was licensed to 

operate a tanker truck 10

 According to the information provided by the claimant in support of this claim, 

 was licensed to operate this kind of vehicle per a CDL issued by the State of Kentucky, 

at the time of the accident.11

 Mr. Joseph was born on 13 July 1959. He was an employee of Perry Oil 

from October 2003 through May 2006. According to his employment records, Mr. has over 

twenty (20) years of experience operating tanker and tanker trailers, specifically hauling coal. Over his 

career he had completed training modules to include the following: Driving Tankers, Preventing 

Rollovers, Hazards of Tailgating, Traffic Violations & CDL Disqualifications, Drugs and Alcohol in the 

Workplace, The Alert Driver – Guide to Sleep – Fatigue & Rest, Hours of Service, Truck Driver and 

Cargo Security, and Homeland Security & Hazmat 126F. 

According to the Kentucky State Police (KSP), Mr. driving record includes no suspensions and 

was in good standing. Finally, there was no evidence presented that Mr. had any contractual 

relationship with the driver of the SUV, Ms. 

The Claimant took Precautions against Foreseeable Acts

 

7

 Kentucky Uniform Police Traffic Collision Report #70304312 

8

 Statement of 

9

 49 CFR 396.3 

10 Copy of driving record No. J95029331
5

The evidence submitted including police reports and witness statements show that the driver of the tanker 

truck was licensed and was driving within the established speed limits. The evidence listed above with 

regards to the maintenance, repair and inspection records supports a finding that the claimant took all 

reasonable precautions to prevent foreseeable acts. The vehicle was in good repair and maintained 

properly and in accordance with Federal and industry standards. The driver, Mr. was licensed at 

the time of the incident. Although no drug or alcohol tests were administered, there was no evidence of 

drug or alcohol use on the part of Mr. The evidence shows that the vehicle was being properly 

operated based on the conditions at the time of the accident. 

There is nothing in the claims submission or any other evidence to indicate that the driver of the 

SUV/Blazer was an employee of or in any contractual relationship with the claimants, Perry 

Oil/Federated Mutual. Nothing in either the witness statements or the accident reports indicate that the 

Ms. had any type of relationship with the claimants. 

Pending Litigation: 

On or about 26 March 2007 the claimant initiated litigation against the for damages to the 

tanker truck, to the trailer, for loss of fuel, for the recovery of workmen’s compensation costs and for 

payments of deductibles made pursuant to the insurance policy in the amount of $85,566.49. (Perry Oil 

Company, Inc.(Plaintiffs) and Federated Mutual Insurance Company v. (Defendant), 

Case No. 07-CI-00405, Laurel Circuit Court, Division II, Twenty-Seventh Judicial Circuit, 

Commonwealth of Kentucky)12

 The NPFC is in possession of this complaint and other relevant pleadings 

in this litigation. A review of the complaint has determined that the costs that are the subject of that 

lawsuit are not the OPA costs that are the subject of the underlying claim to this defense to liability claim. 

The current status of the litigation is as follows: On or about 14 January 2009 an Agreed Order of 

Dismissal With Prejudice was entered on behalf of the intervening plaintiff, because he 

settled his claim against the defendant, On or about 4 February 2009 an Agreed Order of 

Partial Dismissal With Prejudice was entered on behalf of Perry Oil/Federated Mutual because they 

settled their claims for reimbursement of workmen’s compensation claim on behalf of 

against the defendant, 13

 

The NPFC also obtained copies of the underlying settlement agreement entered into by Perry 

Oil/Federated Mutual and This agreement releases from only workmen’s 

compensation benefits and specifically excludes claims against property or environmental clean-up 

expenses. This settlement release preserves the NPFC’s rights to pursue for OPA costs.14

 

The records submitted indicate that the status of this current litigation is not a bar to the NPFC reviewing 

this claim or making a determination on either the assertion of an affirmative defense or on the underlying 

removal cost claim. 

CONCLUSION: 

The NPFC has reviewed all of the documentation submitted in support of this claim and has determined 

that the claimant has met its burden of proof to have its request for defense to liability granted. The 

claimant has provided evidence to support that it exercised due care with respect to the oil and took 

precautions against all foreseeable acts. There is no evidence that the driver of the tanker truck, 

 contributed in any way to the incident, nor was he cited for any traffic violations. Finally, there is 

no evidence that he was in a contractual relationship with the other driver, 

 

12

 Complaint & Jury Demand, Case no. 07-CI-00405 

13

 Orders dated 14 January 2009 & 4 February 2009 in Civil Action 07-CI-00405 

14 Partial Release and Settlement Agreement signed 30 October 2008 
6

The NPFC therefore recommends granting claimant’s request for its defense to liability, as requested. 

Having granted this defense, the underlying claim for removal costs will be reviewed and adjudicated in 

the next section of this memorandum. 

CLAIM FOR UNCOMPENSATED REMOVAL COSTS

A. Analysis:

Claimant in its claims submission asserted it incurred costs totaling $290,418.86. Invoices for these costs 

were provided in support of these costs. NPFC CA reviewed the actual cost invoices and dailies to 

confirm that the claimant had incurred all costs claimed. The review focused on: (1) whether the actions 

taken were compensable “removal actions” under OPA and the claims regulations at 33 CFR 136 (e.g., 

actions to prevent, minimize, mitigate the effects of the incident); (2) whether the costs were incurred as a 

result of these actions; (3) whether the actions taken were determined by the FOSC, to be consistent with 

the NCP or directed by the FOSC, and (4) whether the costs were adequately documented and reasonable. 

In the course of adjudicating this claim two issues were raised as areas of concern: 1. whether removal of 

all of the oil from all compartments of the truck was necessary and 2.) whether the landfill where the 

contaminated soil was disposed was licensed to accept this solid waste. Both issues will be addressed. 

During response actions the oil was removed from the all compartments of the truck. The tanker truck 

was a four compartment vehicle, with a capacity of 8,750 gallons. At the time of the accident 7007 

gallons of No. 2 fuel oil were on board. There were areas where the tanker skin was punctured as 

follows: the front driver’s side, the top side near the rear man-way, and the rear driver’s side corner. 

Based on the description of the tanker and of the damage to it was necessary for all of the fuel to be 

removed. The removal was necessary in order to avoid additional discharge of oil and to ensure the safe 

movement of the badly damaged tanker.15

 

The landfill where the soil was disposed was properly licensed by the State of Kentucky to accept 

contaminated soil as solid waste.16 

During the adjudication process, the Claims Manager worked with the claimant and the EPA FOSC in 

order to discuss the actions performed since the EPA FOSC actually went to the spill location. The EPA 

FOSC spoke with of the NPFC Claims Division on a couple of occasions and advised 

that he concurs that the scope of the response actions associated with the oil spill, was in fact necessary to 

mitigate the ongoing spill and substantial threat of contamination and discharge to the nearby waterway. 

The Claims Manager and the EPA FOSC have determined that the response actions were reasonable and 

necessary to continue mitigating the substantial threat. The Claimant has substantiated the need for the 

ongoing response action by way of sample analysis which demonstrates the continuing presence of oil at 

an actionable level. 

On the basis stated above, the Claims Manager hereby determines that the claimant did in fact incur 

$274,384.20 of uncompensated removal costs and that that amount is properly payable by the OSLTF as 

full compensation for the reimbursable removal costs incurred by the claimant and submitted to the NPFC 

under claim number 908101-001. The claimant states that all costs claimed are for uncompensated 

removal costs incurred by the claimant for this incident for the time period of 30 March 2006 – 15 

 

15 E-mails dated 16 April 2009 and 17 April 2009 between National Pollution Funds Center and 

 Concord Environmental 

16 Correspondence from Kentucky Department for Environmental Protection , dated 31 July 2008 and enclosed 

permit of the same date 
7

October 2006. The claimant represents that all costs paid by the claimant are compensable removal 

costs, payable by the OSLTF as presented by the claimant. 

B. Determined Amount: 

The NPFC hereby determines that the OSLTF will pay $ 274,384.20 as full compensation for the 

reimbursable removal costs incurred by the Claimant and submitted to the NPFC under claim number 

908101-001. Although the claimant’s submission indicates a sum certain of $290,418.26, after a review 

of the documentation the NPFC determined that documentation had been submitted to support only 

$274,384.20. All costs claimed are for charges paid for by the Claimant for removal actions as that term 

is defined in OPA and, are compensable removal costs, payable by the OSLTF as presented by the 

Claimant. Of those costs presented, the NPFC has determined that claimant is entitled to compensation in 

the amount of $274,384.20. 

AMOUNT: $274,384.20

RECOMMENDATION: I recommend making the claimant a settlement offer in the amount of 

$274,384.20. 

Claim Supervisor: 

Date of Supervisor’s review: 

Supervisor Action: 

Supervisor’s Comments: