Financial responsibility for oil spills
We require owners and operators of onshore facilities, offshore facilities, and covered vessels, including tank vessels, barges and commercial cargo/fishing/passenger vessels, to demonstrate financial responsibility. This means Ecology requires these regulated entities to provide proof that they are able to pay for the costs and damages of a spill up to a specified amount.
What is financial responsibility?
Financial responsibility requirements are different than the concept of limit of liability and it is important to understand that this rule’s levels refer to the proof or demonstration that a responsible party is able to pay for the costs and damages of a spill up to a specified amount. Typically, financial responsibility is evidenced by an insurance policy or protection and indemnity (P&I) club documents, but also may involve surety bonds, guarantees, letters of credit, or qualification for self-insurance.
It is important to understand that this rule’s levels of financial responsibility in no way impacts Washington’s laws on unlimited liability for oil spills. RCW 90.56.360 and 90.56.390 require that the responsible party of an oil spill is responsible for the costs of that spill. Ecology expects regulated industry to pay the full costs of any spill and will ensure that they do pay under current regulatory authority.
In Washington, there is no limit of liability for the costs of spilled oil.
Financial responsibility requirements
Financial responsibility requirements for facilities are based on Class and worst-case spill volume. Financial responsibility requirements for vessels are based on the vessel type, size, and the volume of fuel or cargo. Washington has established a certification program and requires that regulated vessels are either members of an International P&I club or submit documents that provide proof of financial responsibility and obtain a Washington certificate of financial responsibility (COFR).
On June 14, 2024, Ecology adopted a new chapter of rule, Chapter 173-187 WAC Financial Responsibility. The adopted rule ensures that vessel and facility owners and operators have adequate financial resources to pay cleanup and damage costs arising from an oil spill. Additionally, the previously existing Chapter 317-50 WAC – Financial Responsibility for Small Tank Barges and Oil Spill Response Barges, was incorporated into the new rule and repealed. For information about the rulemaking, visit our website at https://ecology.wa.gov/Regulations-Permits/Laws-rules-rulemaking/Rulemaking/WAC-173-187.
The tables below show the types of regulated vessels and facilities and the amounts of financial responsibility they are required to prove.
|
Type of vessel |
Financial requirements |
|---|---|
| Barges that transport hazardous substances in bulk as cargo | $5 million or $300 per gross ton, whichever is greater |
|
Tank vessels and large barges of equal or greater than 300 gross tons |
$1 billion |
| Tank vessels, including tank barges, of less than 300 gross tons | $5 million or $3,000 per barrel of the barge's total capacity, whichever is greater |
| Cargo vessels | $300 million |
| Passenger vessels | $300 million |
| Passenger vessels that transport passengers and vehicles between Washington and a foreign country | $500,000 or $600 per gross ton, whichever is greater |
| Fishing vessel that carries predominantly nonpersistent oil | $1.334 million or $133.40 per barrel of total capacity; whichever is greater |
| Fishing vessel that carries predominantly persistent oil | $6.67 million or $400.20 per barrel of total capacity; whichever is greater |
|
Type of facility |
Financial requirements |
Maximum Amount Required |
|---|---|---|
| Class 1 facility (oil handling facilities including refineries and marine terminals) | $12,500 per barrel times worst case spill (WCS) volume | $300 million |
| Class 1 facility (offshore facilities) | $12,500 per barrel times worst case spill (WCS) volume | $300 million |
| Class 1 facility (pipelines) | $12,500 per barrel times worst case spill (WCS) volume | $300 million |
| Class 2 facility (mobile tank units) | $12,500 per barrel times 30 percent of the entire contents of the container(s) in which the oil is stored or transported | $5 million |
| Class 3 facility (small marine terminals) | $12,500 per barrel times the volume of the largest facility tank | $5 million |
More information
- Financial responsibility rule. Defines financial responsibility requirements for regulated facilities and vessels.
- West Coast Spill Financial Responsibility Requirements. Washington is a member of the Pacific States/British Columbia Oil Spill Task Force which has compiled comparative summary of oil spill financial responsibility requirements.
Helpful information
For more information on how to complete the COFR application, click here: Financial Responsibility – Instructions, ECY 24-08-008.
The additional publications below were developed to meet all the requirements for providing proof of financial responsibility. They may be used at the discretion of the COFR applicant. If the applicant chooses not to use these forms, alternate forms that meet all the COFR requirements may be used to prove financial responsibility.
- Proof of Financial Responsibility – Attestation Form, ECY 070-751: This provides an attestation of the completeness and accuracy of the application inputs and must be signed by the owner or operator or designated representative of the facility or vessel.
- Proof of Financial Responsibility – Delegation of Authority Form, ECY 070-758: This document may be used if a designated representative of the owner or operator of the facility or vessel signs the attestation. The owner or operator of the facility (i.e. the Binding Agreement Signator for the Contingency Plan) or vessel (i.e. CEO) must sign the delegation of authority.
- Proof of Financial Responsibility – Certificate of Insurance Form, ECY 070-752: This document may be used when an insurance policy is used to prove financial responsibility. The agreement provides detailed information about the insurance policy, coverage term and amounts, and lists the covered facilities and/or vessels. The agreement must be completed and signed by a representative of the insurance provider.
- Proof of Financial Responsibility – Surety Bond Agreement Form, ECY 070-754: This document may be used when a surety bond is used to prove financial responsibility. The agreement provides detailed information about the surety bond, coverage term and amounts, and lists the covered facilities and/or vessels. The agreement must be completed and signed by the COFR applicant and a representative of the surety company.
- Proof of Financial Responsibility – Guarantee Agreement Form, ECY 070-757: This document may be used when a guarantee is used to prove financial responsibility. The agreement provides detailed information about the relationship between the COFR applicant and the Guarantor, the coverage limit amount, the terms under which the guarantee may be terminated, and lists the covered facilities and/or vessels. The agreement must be completed and signed by the Guarantor and requires a notary.
- Proof of Financial Responsibility – Letter of Credit Agreement Form, ECY 070-756: This document may be used when a letter of credit is used to prove financial responsibility. The agreement provides detailed information about the letter of credit, coverage term and amounts, and lists the covered facilities and/or vessels. The agreement must be completed and signed by a representative of the issuing institution.
- Proof of Financial Responsibility – Chief Financial Officer Letter Agreement Form, ECY 070-755: This document may be used when self-insurance or a guarantee is used to prove financial responsibility. The letter provides detailed information about the amount of financial responsibility that will be covered by self-insurance, lists the covered facilities and/or vessels, and provides financial information that satisfies the financial test requirements. The letter must be completed and signed by the chief financial officer, general partner, proprietor of a sole proprietorship, or authorized representative of the facility or vessel or the chief financial officer, general partner, proprietor of a sole proprietorship, or authorized representative of the Guarantor.
- Proof of Financial Responsibility – Standby Trust Agreement Form, ECY 070-753: This document may be used when a surety bond, a guarantee, a letter of credit, or a certificate of deposit is used to prove financial responsibility. The agreement provides detailed information about the responsibilities of the grantor, trustee, and beneficiary, the conditions under which the trust will be funded, the types of costs that the trust may and may not be used to pay, the term of the trust, and lists the covered facilities and/or vessels. The agreement must be completed and signed by the Guarantor and the trustee and requires the signature of a witness.