A much feared rule that could force tanker owners to pay oil spill claims far in excess of the actual damages is closer to reality under a recent agreement between environmentalists and federal officials.
But the Republican Congress may nix the agreement first.Late last month, one federal agency agreed to a partial settlement of the Natural Resources Defense Council's lawsuit accusing the government of dragging its feet on implementing the 1990 Oil Pollution Act.
That law, widely considered unreasonable by international tanker operators and liability insurers, was unanimously passed by Congress in the wake of the March 1989 Exxon Valdez disaster.
Under the settlement, the National Oceanic and Atmospheric Administration has agreed by the end of the month to again propose its controversial regulation on determining how much shipowners will have to pay for the damage spills do to natural resources.
The regulation, which is particularly controversial because it could force shipowners to pay for psychological damages done to people who had never even seen an oil-fouled shoreline, would have to be finalized by the end of the year under the agreement.
But, on Tuesday, the same Republican Congress that found itself eager to limit the liability companies owe to their stockholders, will hold hearings on NOAA's natural resource damage assessment rule.
"A lot of people think the whole concept is outrageous," said one congressional staffer.
"From the vessel owner's perspective, (the issue) goes to whether the world insurance structures we all depend on really have the resources to meet" the large assessments that can come from the rule, said Jonathon Benner, a Washington lawyer representing the International Association of Independent Tanker Owners, or Intertanko.
Both industry and environmentalist leaders will testify at the Tuesday joint hearings before two subcommittees of the House Transportation and Infrastructure Committee. The hearings will also cover the natural resource damage provisions of Superfund law.
"I think it's possible there might be some constructive (legislative) changes" made by Congress, said Richard Hobbie, president of the Water Quality Insurance Syndicate in New York. "The contingent valuation method of assessing the value of natural resources has been under extreme criticism."
Under contingent valuation, opinion surveys are used to determine how much the public values a natural resource that is temporarily unavailable because of a spill.
Although only governments can actually sue for damages, even the purely psychological harm felt by individual citizens who had thought about someday visiting a damaged place, but had never done so, would be counted against the spiller.
It is this prospect of massive damage claims emanating out of surveys and computer formulas, rather than actual cleanup costs, that so upset insurers like Mr. Hobbie.
But governmental officials say these fears are exaggerated because contingent valuation would only be used in the very largest of spills and that normally a spiller would only be required to restore the damage it had done. NOAA is frantically rewriting its rule so that will be more clear in the resubmitted version.
"It (the rewritten rule) is trying to calm the waters a bit," said Linda Burlington, general counsel for natural resources at NOAA. But "if you're an insurer I guess you can not be calmed because it's your job to be nervous."
Ms. Burlington said that in many cases a spiller would not even be required to pay any dollar damages at all. Instead the spiller would be required to carry out the actual restoration of the damaged asset, or, if that is not possible, the improvement or restoration of a similar natural resource.
"We're trying to get people to focus on fixing what is broken or lost," said Ms. Burlington. "Restoration is the goal."
The portion of the NRDC's suit against the Coast Guard, which was charged by Congress with implementing most provisions of the pollution act, was not covered by the agreement. But Washington officials said we may soon see a similar agreement concluded with the Coast Guard.