OIL SPILL LIABILITY IS STICKY PROBLEM Law might deter help in cleanup


Early one winter morning a tanker steaming up the Chesapeake Bay just north of the Virginia-Maryland line collides with a containership. The tanker starts gushing oil into the bay, while a fog of hazardous material oozes out of a punctured container on the other ship.


The Coast Guard, called to the scene, declares an emergency and urgently summons cleanup crews to contain the damage. But one Virginia company refuses to respond, because of reluctance to expose itself to damage suits under Maryland's unlimited liability statutes.

That was the scenario confronting Coast Guard Capt. Roland L. Edmiston as response coordinator during a drill held in February to simulate an oil spill on the bay.


The incident focused attention on what many in the maritime industry and state government regard as shortcomings in the state law designed to protect the bay from oil spills and has prompted proposed legislation to change the statutes.

About 700 participants assembled at a hotel in downtown Baltimore for the drill. Many of them were taken aback when the Virginia company said that it was unwilling to respond to the collision in Maryland. "They simulated they would not respond unless they were exempted from Maryland's unlimited liability statute," Captain Edmiston said.

As the Coast Guard's port captain in Baltimore, he would be responsible for coordinating a cleanup of an oil spill in the bay. He was sobered by the drill. "If some of the team members aren't willing to come, that frustrates my efforts as team builder," he said.

By going beyond the liability standards embodied in federal law and the laws of neighboring states, Maryland has unwittingly exposed itself to greater damage in the event of a spill by impairing response to an emergency, critics of the law say.

"Unlimited liability could mean unlimited catastrophe. That's where we are right now," Maryland Transportation Secretary O. James Lighthizer said this week.

Maritime interests argue that the state's laws also could drive business from the port, because shipowners, wary of the risks of operating in Maryland waters, might simply send their vessels elsewhere. "This has a chilling effect on commerce. . . . It's nice for our competition; it's not so nice for us," said Peggy Chaplin, a lawyer hired by a coalition of maritime groups in the port to push for revision of the legislation.

The goal, Ms. Chaplin said, is to bring Maryland law into conformance with the federal model and the laws of other coastal states.

The administration of Gov. William Donald Schaefer apparently agrees with that goal. Richard Collins, an official with the state Department of the Environment responsible for hazardous- and solid-wastes issues, said that his agency has developed proposed legislation that was recently approved by the bTC governor's office for submission to the legislature at its next session.


The proposed law was prepared by the environmental agency with the help of the Department of Transportation. Mr. Lighthizer said that his agency would "take a leadership role with the Department of Environment" in pushing for revision of the statutes governing liability for oil spills.

The proposed legislation would bring two basic changes in the ** state law:

* Companies responding to a spill would no longer be subject to unlimited liability if they somehow contributed to the damage caused by the spill. They would continue to face unlimited liability, however, if they were found to be grossly negligent.

* Ship operators who caused a spill would no longer be as vulnerable to huge damage claims from people, such as watermen or waterfront property owners, hurt by the spill. Liability of the shipowner would be limited to $10 million, in accordance with federal standards.

Again, the unlimited liability provision would apply if the party causing the spill were guilty of gross negligence or willful damage.

That does not mean only $10 million would be available to pay for the cleanup and damage caused by a spill in the bay. The Oil Pollution Act passed by Congress last year establishes a $1 billion fund for cleanup costs and damages in excess of the $10 million federal cap. The fund is financed with a 5-cent per barrel tax on oil.


Environmental groups have not had the chance to examine the Schaefer administration's proposal for reform of the state's oil spill.

Ann Powers, general counsel for the Chesapeake Bay Foundation, said that her group has not taken a formal stand but is ready to consider any measures that would contribute to a more effective cleanup in the event of a spill. But she is wary of any measure that would reduce the penalties for ship operators or anyone else responsible for a spill.

"By and large, we would want to make sure the party responsible for the spill is responsible for all the costs of the spill," she said. "In general, we would not be in favor of loosening the liability requirements for the party who causes the damage."

Her organization wants to study the bill before passing judgment. "It's something we have to look at real carefully," she said.

Current legislation does not affect just those companies that transport oil in tankers. Some of the large cargo ships that come to the port can carry as much fuel for their own engines as World War II tankers carried in their holds. Any grounding or collision has the potential to create a serious oil spill.

In addition, the current law could make it difficult for local businesses that fuel ships to get insurance, effectively driving them out of business.


The potential liability problems posed by the state's law give ship owners one more reason not to use the port of Baltimore, maritime executives say, at a time the port has problems enough. "We just want to be equal to other ports," said Roy A. Schleicher, head of the Maryland Maritime Association, which represents ship agents and owners.