Document ID: USCG-2015-0382-0006
Agency: uscg
Document Type: Supporting & Related Material
Title: 
Posted Date: 2015-12-01T05:00Z

Supporting Statement
                                       for
                  Claims Under The Oil Pollution Act of 1990
                              OMB NO.:  1625-0067
                     COLLECTION INSTRUMENTS:  INSTRUCTION

   A. JUSTIFICATION

This Information Collection Request application supports a renewal of the existing information collection authorized under OMB 1625-0067.  The current Office of Management and Budget (OMB) authorization supports the efforts of the U.S. Coast Guard National Pollution Funds Center (NPFC) to adjudicate claims submitted by affected parties for reimbursement from the Oil Spill Liability Trust Fund (Fund), in accordance with provisions of the Oil Pollution Act of 1990 (OPA).  Finally, this application revises burden estimates to be consistent with the burden estimation process outlined by OMB in the 1999 publication The Paperwork Reduction Act of 1995:  Implementing Guidance.  Below we provide supporting information consistent with OMB instructions for completing an 83-I form.
	
   1.    Circumstances Requiring Information Collection

The information collection requirements described in this supporting statement are necessary to implement the claims provisions of the Oil Pollution Act of 1990 (OPA).  To ensure fair and reasonable payments to claimants and to protect the interests of the Federal Government, all claims must be fully substantiated and the procedures for advertising and presentation of claims must be followed, set out in OPA.  The Authority for this collection is 33 U.S.C. 2713 and 2714.

   2.    Purpose of Information Collection

This information collection request supports all claims adjudication activities undertaken by the NPFC.  The NPFC will use the information collected under this request to determine whether claims submitted to the Fund are compensable from the Fund.  For compensable claims, the information collected will also provide the basis for determining the appropriate reimbursement of removal costs or compensation for suffered/sustained damages from the Fund.  If the information is not collected, NPFC will be unable to comply with the provisions of OPA that require that all claims must be fully substantiated.  

   3.    Use of Electronic Collection

Electronic information collection is not practical for this information collection effort.  Claims are one-time efforts that reflect a variety of circumstances, and may require supporting data that are unique to specific claims and may not exist in electronic form (e.g., financial statements).  

   4.    Duplication of Effort

Current regulations under OPA require claimants to submit claims to responsible parties (RPs) where these have been identified, prior to submitting claims to NPFC.  Claims not settled by the RPs within 90 days of submission may be filed with the NPFC for payment from the Fund.  Claims to NPFC may require some duplication of effort for cases in which an RP is identified, to the extent that claimants must reassemble and resubmit materials.

   5.    Minimizing Burden on Small Entities

Because burden is determined by the complexity of the claim (e.g., the type and amount of costs/damages incurred) and not the size of the entity, it is not possible to systematically provide alternative information requirements for small entities without compromising the quality and consistency of the adjudication process.

   6.    Consequences of Less Frequent Collection

A claim represents a single, voluntary submission of information by each claimant after damage has occurred (i.e., following a spill).  Reduced information collection would impair the ability of the Coast Guard to adjudicate claims as required by OPA.

   7.    Unusual ICR Requirements

Information will be collected in a manner consistent with 5 CFR 1320.6.

   8.    Public Comments

A 60-day Notice will be was published in the Federal Register to obtain public comment on this collection.

   9.    Payments or Gifts to Respondents

No payment or gift to respondents is provided.

   10.    Assurance of Confidentiality

All information will be handled in accordance with Agency policy ensuring compliance with the requirements of the Freedom of Information Act and the Federal Privacy Act.
   11.    Questions of a Sensitive Nature

The information collected for the NPFC claims process does not include questions of a sensitive nature.

   12.    Estimates of the Hour Burden

The NPFC claims process requires all claimants to read regulations, assemble materials, and submit claims.  In addition, the process may require clarification of needed information, submission of supplementary information, and the effort required to submit a denied claim for reconsideration.  Estimated claimant burden hours associated with all activities are based on review of claim files and instructions and consultation with Coast Guard staff.  These hours do not include the effort of paid preparers (e.g., attorneys and accountants) or consultants (e.g., scientists and analysts); that effort is included in cost burden in Exhibits 3 and 4.  The description and calculation of total hour burden is described below.

Activities Required by Claims Process
      
Burden associated with the claims regulations generally involves five separate activities, and is estimated based on average effort per claim.  These five activities are: obtaining and reading regulations; claim preparation; supplemental/clarifying activities; reconsideration requests; and preparation of advertisements.  The per-claim estimates do not describe actual burden associated with a specific claim.  Actual claims range from very simple (e.g., a damaged fishing net) to very complex (e.g., lost business from declines in tourism following a spill), and the burden associated with these claims varies considerably.  Average estimates of burden, based on expert opinion and review of claim files, remain the same as previously reported except for the reduction of hours for claim preparation activity.  This is based on the availability of historical determinations found on the web which account for +the +time savings.  Burden hours are summarized below in Exhibit 1:
      
                                   EXHIBIT 1
                                       
                    BURDEN HOURS BY CLAIMS PROCESS ACTIVITY
                                   Category
                            Claims Process Activity
                                       
                          Obtain and Read Regulations
                               Claim Preparation
                     Supplemental / Clarifying Activities
                           Reconsideration Requests
Third Party Damage Claims
(includes Loss of Profits and Earnings, Loss of Government Revenue, Loss of Subsistence Use, Public Service, Loss of Real or Personal Property)
                                       2
                                      16
                                       8
                                      16
Removal Cost Claims
                                       2
                                      16
                                       8
                                      16
Responsible Party Claims
(includes Affirmative Defense and Limit of Liability)
                                      10
                                      80
                                      60
                                      40

                                       
                         Preparation of Advertisement
                                       
                                       
Advertising by Responsible Parties
                                      10
                                      15
                                      n/a
                                      n/a
      
Calculation of Total Hour Burden  
   
The total hour burden estimate, in Exhibit 2 below, is based on the above hour estimates for each activity multiplied by the anticipated number of claims requiring that activity.  The total number of claims anticipated is based on annual average claims received for the calendar years 2012 through 2014.  The trend indicates that the average claim has become more complicated.  The number of claims expected to be submitted for reconsideration and the number of designated spills are based on historical averages from calendar years 2012 through 2014.  Finally, the number of claims anticipated to require clarification is based on the expert opinions and historical practice of NPFC staff.
      
Burden associated with initial review of regulations and claims filing applies to all claims.  Burden associated with clarification and reconsideration efforts applies to the estimated numbers of claims requiring these activities.  Claims are sorted into four categories of claim type to reflect different frequencies of clarification and reconsideration. The burden associated with responsible party's advertising applies to all designated spills (regardless of whether or not there are any associated claims).  The total estimated annual hour burden estimates for all NPFC claims adjudication activities (including both claimant burden and RP advertising) is 9370 hours. The anticipated number of cases, activities, and associated burden hours are summarized in Exhibit 2.  

                                   EXHIBIT 2
                                       
NUMBER OF ANTICIPATED CLAIMS, DESIGNATIONS, AND RESULTING BURDEN HOURS (Annually)
                                  Claim Type
                                Initial Claims/
                                 Designations
                        Number Requiring Clarification
                     Number Submitted for Reconsideration
                             Total Burden Hours**
Third Party Damage Claims*
(includes Loss of Profits and Earnings, Loss of Government Revenue, Loss of Subsistence Use, Public Service, Loss of Real or Personal Property)
                                      150
                                      120
                                      17
                                     3932
Removal Cost Claims*
                                      133
                                      106
                                      16
                                     3498
Responsible Party Claims*
(includes Affirmative Defense and Limit of Liability)
                                      12
                                      12
                                       3
                                     1920
CLAIMS SUBTOTAL
                                      295
                                      238
                                      36
                                     9350
ADVERTISING
                                      10
                                      n/a
                                      n/a
                                      20
TOTAL BURDEN HOURS
                                    9370***
*   Number of claims reflects average of claim submissions to NPFC from CY 2012 to CY 2014.
** Total burden hours for each claim type are calculated as follows:
[(# of Claims) X (# of Hours for Reviewing the Regulations)] + [(# of Claims) X (# of Hours for Claim Preparation)] + [(# of Claims Requiring Clarification) X (# of Hours for Clarification Activities)] + [(# of Claims submitted for Reconsideration) X (# of Hours for a Reconsideration Request)] = Total Burden Hours 
***Total Burden Hours value rounded to nearest 10 for simplicity

Total burden hours for the claimant, presented above in Exhibit 2, are calculated by multiplying the number of claims by the hours required for each of the four different activities, as set out in Exhibit 1.  For example, using the information presented in Exhibits 1 and 2, Total Burden Hours for Third Party Damage Claimants are calculated as follows:

      (150 X 2) + (150 X 16) + (120 X 8) + (17 X 16) = 3932 Burden Hours 

Other Costs Associated with Compliance

In addition to burden hours, costs associated with compliance include:
      
1.          Paid preparer expenses (i.e., accounting and legal assistance)
2.          Other direct expenses (e.g., postage, copying, advertising costs); and 
3.          For NRD claims, contractor expenses related to damage assessment
      
Exhibit 3 summarizes the average estimated hours of paid preparers employed in the NPFC claims process by activity.  Exhibit 4 summarizes the estimated cost burden on the public associated with compliance with the NPFC claims process.
      
                                   EXHIBIT 3
                     ACTIVITIES REQUIRED BY CLAIMS PROCESS
                               Claimant Activity
                                Hours per Claim

                         Third Party and Other Claims
                                   RP Claims

                                Paid Preparer*
                                Paid Preparer*
Obtain and read regulations
                                      10
                                      25
Claim Preparation
                                      85
                                      300
Supplemental/Clarifying Activities
                                      20
                                      100
Reconsideration Request
                                      50
                                      50
a  There are no estimated Paid Preparer hours for Removal Claims.

Assumptions
      
Paid Preparer Expenses:  For claims involving third party damages and for claims by responsible parties (i.e., for affirmative defense and limit of liability), paid preparer costs are estimated at $200 per hour, based upon input from actual claimant documents. 
      
Other Direct Expenses:  Other direct expenses include postage, copying, and telephone expenses.  NRD estimates are higher based on the quantity of information required and are reported in parentheses. These costs are estimated as follows:
      
1.          Obtaining and reading regulations:	$5 per claim
2.          Filing the initial claim:	$20 per claim 
3.          Providing supplementary or clarifying materials:     $20 per claim 
4.          Pursuing a reconsideration of the claim request:	$200 per claim 
5.          Responsible party advertising costs:	$6,840 per designation

Note that advertising costs reflect the requirement to advertise over a 30-day period.  NPFC historical records of advertising costs show that costs vary from a few hundred dollars (e.g., to print posters and circulate letters in an area near a small spill) to advertisements in multiple metropolitan newspapers (costing thousands of dollars).  $24,667 represents the most recent cost provided by an RP. 
      
                                   EXHIBIT 4
                                       
        ANNUAL COST BURDEN ESTIMATES FOR CLAIM SUPPORT AND OTHER COSTS
Claim Type
(Reference Exhibit 2)
                              Paid Preparer Costs
                                 Other Costs 
                            (including advertising)
                                    Total*
Third-Party Damages
                                  $3,500,000
                                    $37,900
                                  $3,537,900
Removal Costs
                                      $ -
                                     $8537
                                     $8537
Responsible Party Claims
                                  $1,050,000
                                     $3600
                                  $1,053,600
Advertising
                                      $ -
                                    $24,667
                                    $24,667
TOTAL
                                  $4,550,000
                                    $74,704
                                 $4,624,704**
*Calculation for claim support for each claim types was calculated as follows and is explained in detail in Exhibit 5: [(# of Claims) X (# of Hours for Reviewing the Regulations) X (Hourly Wage for Paid Preparer)] + (# of Claims X Other Costs associated with Reading the Regulations) + [(# of Claims) X (# of Hours for Claim Preparation) X (Hourly Wage of Paid Preparer)] +  (# of Claims X Other Costs associated with Claim Preparation) + [(# of Claims Requiring Clarification) X (# of Hours for Clarification Activities) X (Hourly Wage for Paid Preparer)] + (# of Claims Requiring Clarification X Other Costs associated with Claim Clarification Activities) + [(# of Claims Submitted for Reconsideration) X (# of Hours for a Reconsideration Request) X (Hourly Wage for Paid Preparer)] + (# of Claims Submitted for Reconsideration X Other Costs associated with Reconsideration Activities) =Total Cost of Claim Support
**Total rounded to the nearest 10 for simplicity
      
Total cost burden estimates for claim support and other costs, presented above in Exhibit 4, are calculated by multiplying the number of claims, number of claims requiring clarification, and the number of claims submitted for reconsideration by the number of hours supplied for each activity by either a paid preparer or contractor and also with other costs associated with each activity.  As an example, Exhibit 5 below shows how total cost burden for claim support and other costs are calculated for Responsible Party Claims.

                                   EXHIBIT 5
                    EXAMPLE COST CALCULATION FROM EXHIBIT 4
                           RESPONSIBLE PARTY CLAIMS
                                       
                              Paid Preparer Cost
                                   Activity
                               Number of Claims*
                             Paid Preparer Hours**
                            Paid Preparer Wage/ hr.
                            Total Cost by Activity
Obtain and read regulations
                                      12
                                      25
                                    $200.00
                                    $60,000
Claim Preparation
                                      12
                                      300
                                    $200.00
                                   $720,000
Clarifying Activities
                                      12
                                      100
                                    $200.00
                                   $240,000
Reconsideration Request
                                       3
                                      50
                                    $200.00
                                    $30,000
Total Paid Preparer Cost
                                                                                           $1,050,000
                                   Activity
                                  Other Costs
Obtain and read regulations
                                      12
                                      n/a
                                      $50
                                     $600
Claim Preparation
                                      12
                                      n/a
                                     $100
                                     $1200
Supplemental/ Clarifying Activities
                                      12
                                      n/a
                                     $100
                                     $1200
Reconsideration Request
                                       3
                                      n/a
                                     $200
                                     $600
Total Other Costs
                                                                                             $3600
                 TOTAL FOR CLAIM SUPPORT AND OTHER COSTS (RP)
                                  $1,053,600
*	Information obtained from Exhibit 2
**	Information obtained from Exhibit 3

Total Monetized Burden Estimate

OMB's guidance (i.e., in the 1999 Information Collection Budget and The Paperwork Reduction Act of 1995:  Implementing Guidance) emphasizes the importance of monetizing hour burden estimates to provide single monetary estimates of total burden.   Total monetized hour burden associated with the NPFC claims process is applied to the burden hours above, using the following values:

Claimant Costs (private sector): 	$44.66 per hour
   
Because past claimants reflect a broad range of occupations and geographic locations, we use the 2013 national average salary for all occupations of $22.33 per hour to approximate claimant wages.  We then adjust this rate to include a 100 percent overhead rate to allow for benefits and other costs included in standard overhead rates, resulting in a cost of $44.66 per hour. In addition, advertising is estimated to consume approximately 2 hours of staff time per advertisement at the above wage rate.
   
Claimant Costs (public sector):   	$84.00 per hour

To assess the cost of government effort, we use GS-13 level employee rates, based on the rates of reimbursement that the Coast Guard charges to RPs for adjudication activities.  We assume that this rate of $84.00 per hour is fully loaded with overhead and applies to all government claimants (i.e., the government officials specifically involved in preparing claims).

NPFC claims staff note that, in general, third party damage, removal cost, and RP claims are filed by private sector parties, while the majority of NRD claims are filed by public sector parties.  Therefore, monetization of burden assumes that private sector claimant costs apply to third party damage, removal cost, and RP claims, and public sector claimant costs apply to all NRD.  Exhibit 6 summarizes total monetized burden associated with the NPFC claims process.  Monetized Claimant Hour Burden (Exhibit 2) is calculated as follows:
Third Party Damage Claimants: (3932 Hrs) X ($44.66) = $175,603.12.
Removal Cost Claimants: (3498 Hrs) X ($44.66) = $156,220.68
Responsible Party Claims: (1920 Hrs) X ($44.66) = $85,747.20
Advertising: (20Hrs) X ($44.66.) = $893.20
                                   EXHIBIT 6
                                       
                        TOTAL MONETIZED BURDEN ESTIMATE
                                  Claim Type
                                 Claimant Hour
                                    Burden
                                  (Exhibit 2)
                        Monetized Claimant Hour Burden
                            Additional Cost Burden 
         (including paid preparer, contractor, and other direct costs)
                                  (Exhibit 4)
                            Total Monetized Burden
Third-Party Damages
                                     3932
                                   $175,603
                                  $3,537,900
                                  $3,713,503
Removal Costs
                                     3498
                                   $156,221
                                     $8537
                                   $164,758
Responsible Party Claims
                                     1920
                                    $85,747
                                  $1,053,600
                                  $1,139,347.
Advertising
                                      20
                                     $893
                                    $24,667
                                    $25,560
TOTAL
                                     9370
                                   $418,464
                                  $4,624,704
                                  $5,043,168

Conservative Assumptions
The burden estimates reported above are likely to represent upper limits of expected burden for two reasons:
   1.           The estimates do not assume that claimants have previously submitted the claim to an RP.  For claims with an identified RP, the burden associated with submitting a claim to the Coast Guard is likely to be lower because all or a portion of the claim has already been prepared.
   2.           The estimates do not account for some expenses that have the potential to be reimbursed as part of the claim payment.
It is difficult to predict the number of claims that will be submitted to RPs and the requirements for these claims, and it is difficult to predict the portion of claim preparation that will be determined to be compensable.  Therefore, the burden estimates are not adjusted to reflect these issues, and are likely to represent high-end estimates of actual burden.   

   13. Estimates of Cost Burden

There are no annualized capital and start-up costs.

   14. Estimates of the Annualized Cost to the Federal Government

The annualized cost to the Federal Government of collecting information associated with claims is generally limited to advertising, initial processing of claims materials, and requests for clarifying or supplemental information.  However, these activities have historically been tracked as part of the more general claims adjudication process and have sometimes been divided among Coast Guard and contractor staff.  However, according to NPFC personnel, costs specific to information collection and management likely represent roughly five percent of the total claims adjudication cost.

The total annual cost associated with all claims adjudication activities includes the cost of 18 full-time equivalent (FTE) claims adjudication staff, in addition to the total contractor budget associated with the claims division.  Claims adjudicators are GS-13, with an estimated total cost of $84 per hour (based on the rates of reimbursement that the Coast Guard charges to RPs for adjudication activities), and estimated to work an average of 2,000 hours annually.  Estimated annual contracting costs of $180,000 are based on the 2007 report, where a snapshot of a representative six months period of effort related to claims support, doubled to reflect annual costs.  Based on these assumptions, total government costs for claims adjudication are $5,043,168, and costs specific to information collection and management represent roughly five percent of this cost, or $252,158.

   15. Reasons for Adjustments to Reporting in Paragraphs 13 or 14

The estimates reported in paragraph 14 differ from previous hour and cost burden estimates for NPFC activities under OMB # 1625-0067 for the following reasons:

1.          2012-2014 Time Period:  Data for the most recent 3 years were used in the calculation of average claims submissions and the most recent references for hourly rates was applied.
      
2.          Increase in the Monetized Burden:  The monetized burden increased by $2,667,168. This increase is the result of the increase in the number of more complex claims submitted (Responsible Party claims and complex lost profit claims as well as an increase in the number of claims that requested reconsideration. Not only did the number of hours spent on these more complex claims increase but the hourly rate paid for experts to assist increased.

   13. Publication of Results

The information collected will not be published.
      
   14. Display of OMB Date of Approval

OMB date of approval will be displayed.
      
   15. Exceptions to Certification
NO EXCEPTIONS ARE REQUESTED.
COLLECTION OF INFORMATION USING STATISTICAL METHODS
THIS INFORMATION COLLECTION EFFORT ADDRESSES SPECIFIC INFORMATION SUPPORTING DAMAGE OR REMOVAL COST CLAIMS BY CLAIMANTS.  STATISTICAL METHODS ARE NOT APPROPRIATE IN THIS CONTEXT.