Major oil spills in the United States often result in some natural resource damages (NRD), which arise from injuries to natural resources and losses of their services. Other things being equal, larger spills lead to larger NRD. Previous research on NRD settlements using multiple-regression analysis identified several factors that predicted variations in damages, other than the number of gallons spilled (Dunford and Lynes 2014). Those factors included the geographic location of the spill, whether threatened and endangered species were injured, whether recreation closures occurred, and whether unvalued compensatory restoration was part of the settlement. The current paper extends the previous research by adding NRD settlements in the past three years, and by exploring a new multivariate statistical method. Specifically, the new method employs a binary division of sample observations to create tree-like regression models, which are used to determine the correlations among the settlement characteristics. The new approach is non-parametric, which means that it imposes no assumptions about the underlying distribution of the predictor variables. The model identifies multiple combinations of key explanatory variables, providing more insights on observed differences in NRD settlement amounts.

The Oil Pollution Act of 1990 allows federal and state government agencies, acting as Trustees for natural resources on behalf of the public, to collect monetary damages from parties responsible for oil spills in the United States for the concomitant natural resource injuries. The monetary damages are usually based on the cost of projects to restore the lost or impaired services resulting from injuries to natural resources.1 Oversight and monitoring costs for the restoration projects are often included in settlement amounts.

In this paper we develop a statistical model that explains a substantial portion of the variation in NRD settlement amounts for past oil spills. The next section of our paper describes the sources of the NRD settlement data, explains the challenges in determining the NRD amount for oil spill settlements, and presents the NRD settlement data. Then, the following section provides our statistical model. The penultimate section presents the results of our statistical model, while the final section describes future research plans.

We obtained information for our analysis of NRD settlements from a variety of sources. The consent decrees accompanying settlements were our preferred source for settlement amounts. When consent decrees were not available, we used NRD documents such as Damage Assessment and Restoration Plans for settlement amounts. We also used Federal Register notices, press releases, and newspaper articles for settlement amounts, when necessary.

We encountered several difficulties in developing our NRD settlements database. The main difficulty was in isolating the NRD amount in “global” settlements, which often included reimbursement for response costs, penalties and fines, and other non-NRD elements. In several settlements, assessment costs were combined with a portion of response costs or other non-NRD costs. Even when assessment costs were not combined with non-NRD costs, the settlement documents often excluded earlier payments of assessment costs. (For example, sometimes the responsible party had paid for some of the Trustees’ assessment costs in an earlier stage of the assessment, so those costs were not part of the settlement amount.) Furthermore, the assessment costs in NRD settlements only reflect the Trustees’ assessment costs. The assessment costs incurred by the responsible party are not included in the settlement amount. Therefore, we excluded assessment costs from our measure of NRD amounts, focusing exclusively on primary restoration costs, compensatory restoration costs, compensable values, and oversight/monitoring costs for restoration projects. Furthermore, we excluded payments for unspecified support of governmental and non-governmental programs (e.g., oil spill prevention programs), whenever possible, under the assumption that these payments were made in lieu of fines or penalties.

We also found that some of the NRD settlements included projects that the responsible party was going to implement for which there was no cost estimate in the settlement. For example, the responsible parties on the 1994 Tampa Bay oil spill purchased some coastal property and developed a mangrove marsh on that property as part of the NRD settlement, but the settlement documents do not include a dollar value for that compensatory restoration project. Therefore, the Tampa Bay settlement amount in our database understates the full cost of that NRD settlement.

Finally, different sources of information on NRD settlements sometimes did not agree on the amount of the settlement or other characteristics of the spill (e.g., the amount of oil spilled). In such instances we assumed that the consent decree or the NRD document from the trustees (if we did not have the consent decree) was the most reliable source of the information in dispute. We also used the lower end of the range provided for the amount of oil spilled.