FOLLOW-UP

Oil and troubled waters

Ann Walmsley September 17 1984
FOLLOW-UP

Oil and troubled waters

Ann Walmsley September 17 1984

Oil and troubled waters

FOLLOW-UP

Ann Walmsley

More than six years after the largest and most costly oil tanker spill in history, the battle over the bill for the damage it caused is now beginning. When the supertanker Amoco Cadiz broke in two on rocks near

Brittany’s western shore on March 16, 1978, an 80-mile-long oil slick seeped into 131 miles of beaches, killed 20,000 shorebirds and destroyed 220,000 tons of marine life. Then, last spring, after a two-year trial, a U.S. court found Standard Oil (Indiana), better known as Amoco, and two of its subsidiaries,

Amoco Transport and Amoco International Oil Co., owner and operator respectively of the vessel, negligent in allowing the unseaworthy ship to sail. Now more than 100 claimants ranging from the French government to Breton seaweed harvesters are competing for compensation. Court proceedings to determine the damages will begin Sept. 15. At stake is $1 billion in combined claims—a figure the company has described as “wildly exaggerated.”

Lawyers from both sides admit that Amoco will certainly face the largestever court-awarded damages for an oil tanker spill. Most of the parties involved in oil-spill disputes settle out of court, but lawyers are arguing the Cadiz case in a U.S. federal district court in Chicago, where Amoco’s headquarters are located. In the liability phase of the trial, which concluded last April, Judge Frank McGarr overturned the company’s argument based on two international treaties that limit liability of shipowners and oil companies to roughly $60 million for any one spill. Instead, McGarr ruled that Amoco’s recklessness in its maintenance of the ship’s steering gear and its training of crew made it liable for much greater damages under U.S. negligence law. Even though the Cadiz carried insurance for only $50 million, the company, with assets of $25.9 billion, may not suffer greatly from the suit. Said Frank Cicero, the company’s senior counsel: “We intend to collect all of it from the shipbuilder.” However, the Spanish government-owned builders, Astilleros Españoles S.A. (which also built Christopher Columbus’s ships the Pinta, Niña and Santa Maria), will fight Amoco’s claim.

Legal arguments over which claims are valid will be murky and could prolong the second phase of the trial another two years. Cicero insisted that overlapping suits have inflated the bill and that the awards will not exceed $150 million. Said Cicero: “The French government and the communes [Breton municipalities] are apparently suing for the same thing.”

The French government must also be prepared to defend its bill for the cleanup operation. In frantic efforts to contain the damage, six government agencies issued contradictory orders and, as a result, heavy pumping equipment damaged the fragile marshlands. As well, environmental lawyers anticipated that both the government and the municipalities will try to claim for ecological and other intangible damages, for which there are few precedents in U.S. law. The court will have to place a value on rarely assessed losses ranging from the destruction of plankton —which has no commercial value, although sea creatures including whales feed on it—to the diminished attractive-

ness of the oil-clogged beaches for tourists. Said Roger Dower, head of research at the Washington-based Environmental Law Institute: “The general bias will be to replacement cost—it could be six cents for some disgusting little worm.” The calculations are further complicated by the fact that Brittany’s coast has not yet returned to normal. According to Senator Alphonse Arzel, mayor of the town of Portsall, where the spill did the most damage, Bretons are complaining about short supplies of fish. Said Arzel: “It will be 10 years before adult sole, turbot, crab and lobster will return.” Added Barry Kingham, a New York City lawyer for 76 Breton communities represented at the trial: “Certain species in the food chain have never regenerated.” Oyster cultivators are harvesting again, but hydrocarbon pollution in Breton estuaries has continued to prevent the reseeding of many of the oyster beds. And, although the Atlantic surf has scoured the surface of Brittany’s beaches, the light crude oil has seeped into the sandy bed.

Independent studies that will likely be evidence at the trial have estimated the real cost of the spill at less than $500 million. Last summer the U.S. government’s National Oceanic and Atmospheric Administration released a report which concluded that the total amounted to only $284 million. In that figure the researchers included $33 million for losses to the commercial fisheries, including damage to boats and the loss of harvest; as much as $82 million for damage to the tourist industry; and $98 million for the cleanup by the French government. Explained Norman Meade, one of the authors of the report: “We took a conservative estimate. But the French suits that I am aware of were not backed up by any hard analyses.” Indeed, all the parties are now revising their estimates. In the original suits the French government claimed $400 million, the Breton communities $300 million and parties from ferry operators to hotel owners each sought $200,000. Arzel told Maclean's that the municipalities’ updated claim, expected this month, will be more modest. Said Arzel: “There are things that cannot be proven and were not right. This time the bill will be much more correct.”

Regardless of the trial’s outcome —which Amoco lawyers have already announced they will appeal—oil-spill victims are now increasingly confident about their ability to collect after a tanker disaster. Last May the International Maritime Organization raised the liability limit on its oil-pollution treaties to $150 million from $60 million in response to the enormity of the Brittany accident. And the Amoco Cadiz case served as a reminder that in oil spills, liability could be unlimited.^