OPA ’90 liability limit may increase

There have been no changes in liability limits under the Oil Pollution Act of 1990 since it became law. That could soon change. OPA ’90 liability limits may increase substantially for some vessels. 

The current proposal to increase OPA ‘90 limits can be traced to the Athos I oil spill in November 2004 on the Delaware River. The Athos I, a 750’ single-skin tanker, struck a submerged object while under pilotage and assisted by tugs. The tanker was maneuvering to its terminal in a federally charted and maintained anchorage. The investigation determined that the ship had struck a discarded piece of submerged pipe on the river bottom. Under OPA ’90’s current limits, the owner’s liability was capped at $45 million. The cost of the spill, however, including additional clean-up costs and third-party claims, has exceeded $165 million.

Even though the single-skin tanker appeared to have no liability in connection with the spill, there was an immediate response from New Jersey Sens. Frank Lautenberg and Jon Corzine to substantially increase liability limits for single-hulled vessels. The senators also called for the elimination of liability limits for single-skin vessels prior to the required 2015 phase-out date of single-hulled tankers. The “Oil Spill Prevention and Liability Act” contained limits that were later incorporated into the House and Senate version of the Coast Guard Authorization Act of 2005. The proposal to eliminate liability limits has been dropped from the House Bill. 

If the legislation passes, liability limits for all vessels will substantially increase, with the biggest jumps applied to single-skinned vessels. For the first time, the liability limits will be different for single- and double-hull vessels. The limits rise much quicker for single skins ($2,250 per gross ton by 2007, up from the current $1,200 per gross ton). For a 1,500 gt tank barge, its liability would increase from $18 million to $33.75 million by 2007. For double-skinned vessels, the limits would be $1,700 per gross ton by 2007. The final bill will also likely include increases in liability limits for non-tank vessels.

If the proposal passes, all vessel owners will face increased expenses, including a bigger price tag for insurance. 

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