CLAIM SUMMARY / DETERMINATION FORM 

Date : 2/18/2009 

Claim Number : A08003-002

Claimant : National Response Corporation (NRC) 

Type of Claimant : Private (US) 

Type of Claim : Removal Costs 

Claim Manager : 

Amount Requested : $1,815,199.13 

FACTS: 

1. Oil Spill Incident: At approximately 07481on Wednesday, November 7, 2007, the 

container ship COSCO BUSAN cast off from Hanjin Terminal, Oakland Inner Harbor 

Berth 56, bound for sea. A San Francisco Bar Pilot was directing the movement of the 

vessel. The master, third officer, and an able seaman were on the bridge with the pilot. 

The third officer was operating the engine order telegraph and the able seaman was at the 

helm. The chief officer and the boatswain were on the bow, serving as lookout and 

prepared to drop the anchor. The master, as the senior person on the bridge, retained full 

authority for the safety of his vessel. Visibility at departure was less than one-quarter 

mile in fog, with reports from other vessels of heavy fog and restricted visibility in and 

around the Bay area. The visibility decreased when the vessel cleared the estuary2

and 

entered the Bay. The tug REVOLUTION assisted the undocking, and at the direction of 

the pilot, put a line aboard the COSCO BUSAN through a center stern chock, where it 

remained until after the casualty and the COSCO BUSAN was anchored in Anchorage 7. 

As the vessel exited the estuary and proceeded outbound, the pilot ordered increases in 

engine RPM’s until the vessel reached a speed of more than 11 knots. At 0827, a 

watchstander at Vessel Traffic Service (VTS) San Francisco contacted the pilot, Captain 

 because he noted the vessel’s Automated Identification System (AIS) heading was 

about 235 degrees True, which is approximately parallel to the bridge, and was setting up 

to pass well southwest of the intended track. The watchstander asked the pilot to confirm 

his intention to use the Delta-Echo span of the San Francisco-Oakland Bay Bridge (Bay 

Bridge), and the pilot replied he was “...coming around. I’m steering 280 right now.”

At 0830 the COSCO BUSAN, which was near its peak speed of 11.4 knots, allided with 

the fender system of the Delta Tower of the Bay Bridge, damaging the wood fender 

system and causing a breach in the port side shell, above the waterline, between frames 

128 and 150. The breach was three meters in height and extended inboard to the 

longitudinal bulkhead, which was buckled and punctured in way of cargo hold #2. The 

breach affected water ballast tank #2, fuel oil tank #3, and fuel oil tank #4. Fuel oil tank 

#4 discharged an estimated 53,653 gallons of intermediate fuel oil (IFO 380). The 

discharge ended when the fuel oil level dropped below the lower edge of the breach, 

which was later estimated to have taken approximately 10 seconds. The pilot reported 

the allision to the VTS immediately and anchored the vessel in Anchorage 7 at 0855. 

Due to relatively limited under keel clearance in this location, the COSCO BUSAN 

departed Anchorage 7 at 1020 and moved to Anchorage 9, where it anchored at 1105. As 

 

1

 All times are Pacific Standard Time (PST) and based on a 24-hour clock. 

2

 “Estuary” refers to the Inner harbor Entrance Channel, ending approximately at Lighted Buoys “5” and “6”.
of 5 January 2008 approximately 22,836 gallons of oil had been recovered, including 

17,788 gallons in liquid form and 5,048 gallons of solid waste. 

2. Description of removal actions performed: The claimant provided over 18 binders of 

invoices and supporting documentation to support the $1.8M in response costs claimed. 

The NPFC claims manager reviewed each and every submitted invoice as well as every 

“daily” sheet submitted to substantiate the invoices. The review of the actual costs, 

invoices and dailies focused on (1) whether the actions were taken to prevent, minimize 

or 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. The claims manager reviewed the payment record against the 

claimed costs for each contractor/subcontractor. See Enclosure (1) for the summary 

spreadsheet of vendors that make up this determination and amount allowed for each 

invoice submitted.

The COSCO BUSAN incident utilized several contractors (one being the claimant) as 

well as many subcontractors that worked under the main contractors. The claimant had 

contracted rate schedules in place at the time the services were rendered and the claimant 

billed costs in accordance with those published rate schedules. The claimant performed 

response activities for the responsible party from November 7, 2007 through June 3, 

2008. It is important to note that the FOSC issued Polrep 56 and Final stating the 

incident was deemed completed on October 24, 2008.

3. The Audits: During the incident, the claimant provided response resources and 

services under its contract with Fleet Management, Ltd. The services provided by the 

claimant were acknowledged by the O’Brien’s Group (TOG), who acted as the Qualified 

Individual (“QI”) for the Responsible Parties. Specifically, the claimant submitted daily 

sheets to the QI that listed the labor and materials provided by the claimant for each day 

of the response. The QI approved the materials and labor identified on each daily by 

signing the document. Underneath each signature, the QI made the notation “subject to 

audit”.

During the response, a process was established for paying NRC’s invoices. Initially, 

NRC submitted its invoices to TOG. After the QI reviewed the invoice and was satisfied 

with the costs, the QI forwarded the invoice to Hudson Marine Management Service 

(“HMMS”) with a request that 80% of the invoice be paid after another review for 

mathematical errors or other significant errors. After paying 80% of the invoice, HMMS 

withheld the remaining 20% of the invoice pending a comprehensive audit. The 

comprehensive audit included both a Financial Audit and an Operations Audit. For the 

Financial Audit, HMMS focused on whether the paperwork was complete and the costs 

were properly supported. For the Operations Audit, HMMS focused on whether the costs 

were operationally reasonable and necessary. 

If invoiced costs failed to meet the audits’ standards, then HMMS deducted those costs 

from the amounts previously withheld. Before any deductions were finalized, HMMS 

gave NRC an opportunity to dispute the initial findings. After the audit process was 

finalized, HMMS authorized some additional cost payments, but continued to deny more 

than $1.6 million in costs billed by NRC. Based on the Financial Audit, HMMS refused 

to pay $391,598.12 of the costs claimed by NRC. Relying on the Operations Audit, 

HMMS also denied $1,208,669 of NRC’s costs. 
HMMS gave three different justifications for its denials of NRC’s costs resulting from 

the Financial Audit. For Category A denials, HMMS reasoned that items had been 

invoiced without documentation. For Category B denials, HMMS concluded that the 

items were incorrectly invoiced or disputed. Category C denials included items that 

would be allowed upon submission of proper backup documentation. 

With respect to the Operations Audit, HMMS denied costs determined to be unreasonable 

or unnecessary. The Operations Audit also denied costs determined by HMMS to be 

unverified or unconfirmed. In particular, the Operations Audit criticized NRC’s costs for 

personal protective equipment (PPE), decontamination, and items of dispute that were 

categorized as “in decontamination” which references items that were moved to 

decontamination stations awaiting cleaning. HMMS found that some of the containment 

boom costs were unreasonable because NRC charged more than other response 

contractors and some of NRC’s charges for use of the boom exceeded its replacement 

cost. HMMS also refused to pay some of the charges for skimmers because their 

assignments could not be confirmed in an Incident Action Plan (IAP) or other 

documentation. HMMS denied charges for PPE under the theory that the number of PPE 

invoiced did not correlate to the number of NRC personnel in the field. HMMS also 

denied costs for disposable overboots as unnecessary and personnel costs because they 

did not match manning levels shown in the IAP. 

4. The Claim: On July 16, 2008, National Response Corporation (NRC) submitted a 

removal cost claim to the National Pollution Funds Center (NPFC), for reimbursement of 

their uncompensated removal costs in the amount of $1,815,199.13 for the services 

provided from November 7, 2007 through June 3, 2008. This claim is for removal costs 

based on the rate schedule in place at the time services were provided. A copy of all 

pertinent vendor rate schedules is provided in the claim submission.

This claim consists of copies of the invoicing and associated dailies, disposal manifests; 

contracted rate schedules, NRC report, Incident Action Plans, internal email 

correspondence, USCG Pollution Reports, and the RP submitted a complete copy of their 

Audit associated with NRC’s invoicing. The review of the actual cost invoicing and 

dailies 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 consistent with the NCP or directed by 

the FOSC, and (4) whether the costs were adequately documented. 

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).

"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”. 33 USC § 

2701 (31).

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]. 
DETERMINATION OF LOSS: 

A. Overview:

1. The FOSC coordination has been established under the Federal Project by way of Incident 

Action Plans and USCG Pollution Reports.

2. The incident involved the discharge and continuing substantial threat of discharge of “oil” as 

defined in OPA 90, 33 U.S.C. § 2701(23), to navigable waters.

3. In accordance with 33 CFR § 136.105(e)(12), the claimant has certified no suit has been filed 

in court for the claimed uncompensated removal costs.

4. The claim was submitted on time.

5. Presentment of costs to the RP was made by the claimant, prior to the submission of the 

claim. The NPFC also made presentment of costs to the RP and the RP has provided a 

complete copy of their Audit of the response costs presented.

6. The NPFC Claims Manager has thoroughly reviewed all documentation submitted with the 

claim and determined that the majority of all removal costs presented were for actions in 

accordance with the NCP and that the costs for these actions were indeed reasonable and 

allowable under OPA and 33 CFR § 136.205 with the exception of denied costs itemized in 

the attached Summary of Vendors spreadsheet: (See, Enclosure 1 – Summary of Vendors).

B. Analysis:

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. 

The Claims Manager, confirmed that response activities performed by the claimant were 

signed off by the Spill Management Team, The O’Briens Group. While the Incident Action 

Plans (IAPs) are helpful in corroborating actions taking place in the field at a given point in 

time and were utilized as part of the adjudication process, it is important to note that every 

action taken during response is not fully captured in IAPs or Pollution Reports. The claims 

manager also used the ‘Incident Specific Preparedness Review (ISPR) M/V Cosco Busan Oil 

Spill in San Francisco Bay’ generated on January 11, 2008 and final report generated on May 

7, 2008, as an additional means of obtaining corroboration for some of the actions performed 

by the responders.

The NPFC has determined $504,643.95 of costs is denied. The itemized breakdown of 

denied costs is addressed in the attached NRC – Cosco Busan Summary of Costs excel 

spreadsheet identified as Enclosure 1. The overall denial summary is as follows:

NRC07-0969-01 – denied $7,496.25

NRC07-0969-02 – denied $95,967.43

NRC07-0969-03 – denied $10,885.00

NRC07-0969-04 – denied $4,816.75

NRC07-0969-05 – denied $7,625.75
NRC07-0969-06 – denied $583.00 

NRC07-0969-07 – denied $168.00 

NRC07-0969SUP-01 – denied $66,068.75 

NRC07-0969SUP03 – denied $36.16 

NRC07-0969-01B – denied $1,916.91 

NRC07-0969-04B – denied $55,884.00 

NRC07-0969TP-01 – denied $50.00 

Interest - denied $253,145.95

With respect to the above, NRC’s claim for interest is denied because that amount is not a 

removal cost or damage compensable under OPA. Also, as detailed in Enclosure (1), NPFC 

agreed with some of the conclusions in the Financial Audit performed by HMMS and some 

of NRC’s claimed costs have been denied for lack of documentation. However, because 

some of the costs denied by the Financial Audit were adequately documented, NPFC allowed 

some of the costs denied by the Financial Audit. With respect to the costs denied by the 

Operational Audit, NPFC finds that the credibility of the evidence submitted by NRC in 

favor of paying these costs outweighs the evidence submitted by the responsible party as 

justification for their denial. The costs denied by the Operational Audit were approved by 

TOG when its employee signed the claimant’s daily sheets. Based on those signatures, 

NPFC finds that NRC has carried its burden of proving that it provided the services and 

materials listed on the daily sheets. One of the main purposes of a Spill Management Team 

like TOG is to confirm that the goods and services billed on a given day at a given location 

have been actually provided. Moreover, because the services and materials listed on the 

daily sheets were provided pursuant to a contract with negotiated rates, NPFC further finds 

that NRC has carried its burden of showing that the amounts claimed were reasonable and 

necessary. As a result, NPFC finds that NRC has carried its burden of proving its entitlement 

under OPA to the costs denied by the Operational Audit and those costs are approved. 

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

$1,308,228.69 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# A08003-002. The claimant states that all costs 

claimed are for uncompensated removal costs incurred by the claimant for this incident for 

the time period of, November 7, 2007 through June 3, 2008. The claimant represents that all 

costs paid by the claimant are compensable removal costs, payable by the OSLTF as 

presented by the claimant. 

C. Determined Amount: 

The NPFC hereby determines that the OSLTF will pay $1,308,228.69 as full compensation 

for the reimbursable removal costs incurred by the Claimant and submitted to the NPFC 

under claim # A08003-002. 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 Claimants. 

AMOUNT: $1,308,228.69

Claim Supervisor: 
Date of Supervisor’s review: 

Supervisor Action: 

Supervisor’s Comments: