Copyright 1975 by Lance D. Wood. Published by arrangment with the author.

[5 ELR 50116]

I.

Introduction and Purpose of This Study

Even though the highly-publicized problem of vessel-source oil pollution has generated much discussion among attorneys in the United States and in other nations,¹ the private law remedies for oil pollution damage both here and abroad remain grossly inadequate. The vast majority of those United States citizens who are exposed to detrimental aftereffects of oil spills from ships still have little or no chance to recover any compensation for their losses under state or federal law.

The only comprehensive plan yet adopted to deal with the international problem of liability for oil discharges from vessels which transport oil is found in the two related treaties drafted under the aegis of the Inter-Governmental Maritime Consultative Organization (IMCO), a specialized agency of the United Nations. These proposed treaties are the International Convention on Civil Liability for Oil Pollution Damage² (hereinafter the "Civil Liability Convention" or "Liability Convention") and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage³ (hereinafter the "Fund Convention").

The Liability Convention was recently ratified by the necessary number of nations, and entered into force on June 19, 1975. In all likelihood the Fund Convention will enter into force soon thereafter. The United States has yet to ratify the two Conventions. If the United States does ratify, our Ninety-fourth Congress will face the difficult task of incorporating these two Conventions into an effective United States domestic system of civil liability for ships' oil pollution. A number of failings and lacunae of the two treaties should be remedied by domestic legislation, and the structure of the Conventions' system can be shaped by United States influence.

The goal of this article is to analyze selected aspects of this challenging opportunity for creative legislation. Hopefully this analysis will make some small contribution to the effective integration of the two Conventions with a United States domestic regime for oil pollution liability and compensation.

More specifically, this study attempts to emphasize one essential objective of the civil liability program which has usually been neglected by commentators on the two proposed Conventions. Even though the most obvious goal of a liability system is compensation of the innocent victims of oil pollution, civil liability can also serve a prophylactic function. A properly-structured system for civil liability could exert a powerful influence to discourage polluting discharges of oil onto the world's waters and to ensure that unavoidable oil spills are contained and "cleaned up" expeditiously.

The two IMCO Conventions deal only with oil discharged from vessels which carry petroleum as cargo. Thus they treat only a part of the oil pollution problem. Nonetheless, the Conventions appear to be the best hope at present for an internationally effective mechanism to compensate that major set of pollution damage claims.

Although the restricted subject-matter of the two Conventions will focus the attention of this article on tanker-source pollution to a large degree, the United States domestic liability regime should cover oil pollution from every source. Thus this study presupposes that the principles recommended herein apply to a comprehensive domestic system encompassing all civil liability for oil pollution damage.

[5 ELR 50117]

Furthermore, the multi-faceted nature of civil liability for oil pollution presents a formidable interaction of international law, admiralty law, environmental law, private tort law, and a host of non-legal disciplines. Thus this article cannot be limited to the precise questions raised by the two Conventions on vessel-source oil pollution, but must attempt to explain the context in which the Conventions will function.

Despite their limited objectives, the Liability and Fund Conventions deal with an international problem of immense proportions. At present some sixty percent of total world petroleum production is transported by seagoing tankers,⁴ resulting in over two million metric tons of marine oil pollution yearly.⁵ Polluting oil is often discharged from vessels intentionally as a result of deballasting or cleaning of cargo tanks, or by unintentional oil spills caused by various maritime accidents.

Although accidental oil spills from ships receive much publicity, they account for only 4.8 percent of the total volume of oil released annually into the earth's waters. Oil discharges from ordinary tanker operations are responsible for about 25.4 percent of oil losses, and other ships release approximately 24 percent more from their bilge-pumping and other normal operations.

Accidental spills from shore facilities, such as oil terminals, contribute about another 4.8 percent of oil pollution. The daily activities of offshore oil production lead to 4.8 percent of oil discharges, and refineries contribute about 14.4 percent to total oil pollution. The remaining 21.6 percent of oil pollution enters the world's waters from rivers in the form of automobile, industrial and similar waste oils, from natural seeps of petroleum through the ocean floor, and via the atmosphere as vaporized products of combustion.⁶

A large amount of oil pollution damage is concentrated along crowded shipping lanes such as those along the east coast of the United States, the English Channel, the Sea of Japan and certain international straits.⁷ Many areas endangered by tanker oil discharges possess valuable tourist beaches and marine resources vulnerable to oil pollution.⁸

An effective civil liability system is especially important for vessel-source oil pollution, because a major tanker spill can wreak catastrophic damage upon the impacted locality's ecosystem and economy. The number and magnitude of tanker disasters will increase as the number and size of these ships grow.⁹ Thus the implementation of both international and domestic systems for oil pollution liability deserves priority attention of the new Congress.

In brief, this article attempts to accomplish three basic objectives. First, it will provide an overview of the patchwork of legal mechanisms which now control civil liability for vessel-source oil pollution. This overview indicates the desirability of a new, comprehensive liability regime to compensate for oil pollution damage.

Second, this article describes selected features and advantages of proposed international and domestic systems to govern oil pollution liability for ships which transport petroleum. The author advocates United States ratification of the IMCO Liability and Fund Conventions and enactment of a United States Comprehensive Oil Pollution Liability and Compensation Act.

Finally, this study attempts to analyze certain legal problems presented by the proposed international and national regimes for oil pollution liability. Special emphasis is placed on making the United States domestic system compatible with the international program of the Liability and Fund Conventions.

II.

The Miscellaneous Legal Mechanisms Which Now Govern Oil Pollution Liability

A. The Inadequacy of Tort Recovery Under Present United States Law

At the present time, most private American parties who sustain damages from oil pollution which originated from privately-owned ships are legally dependent for compensation upon tort suits in the civil courts.¹⁰ For many reasons the recovery available to the average American plaintiff through civil litigation for vessel-source oil pollution damage is inadequate or non-existent.

First, an injured party often cannot identify the source of the discharged oil, so no tort action can be filed.¹¹ If the damaged plaintiff can get jurisdiction over an identified, polluting vessel, the plaintiff must carry the burden of proof that the defendant vessel caused the damage. If the plaintiff's cause of action sounds in negligence, he must prove that the oil was discharged negligently or intentionally, or that the oil spill resulted from an "unseaworthy" condition of the offending [5 ELR 50118] vessel.¹²

A private plaintiff rarely is able to sustain successfully the requisite burdens of proof.¹³ A shore-bound claimant usually cannot prove negligent seamanship of the vessel's crew or officers, since he has no friendly witnesses from the tanker (which usually is registered in a foreign nation).¹⁴ It is indeed seldom that the plaintiff can prove unseaworthiness from faulty ship construction, especially since most oil tankers are built in foreign shipyards.¹⁵

If the "negligence" or "unseaworthiness" causes of action fail, no greater success can be expected from a "tresspass" action. Modern tort law holds a trespass actionable only if the plaintiff proves an intentional or negligent intrusion onto land, or if the source of damages was by legal definition an abnormally dangerous activity.¹⁶ As indicated above, negligent trespass is difficult to prove against vessels, and the courts have not declared marine transportation of oil to be an ultra-hazardous enterprise.¹⁷ A private nuisance cause of action confronts the same difficulties discussed above, and usually requires a showing that the plaintiff's injury is distinct in kind from that of the public generally.¹⁸

Even if a private plaintiff does establish one of the above causes of action against a vessel which discharged oil, the vessel's owner can often escape liability by invoking one of a number of valid defenses. For example, the shipowner might attribute the oil spill to an "Act of God" such as lightning or a hurricane.¹⁹ In many jurisdictions a defendant can also avoid liability in whole or in part by successfully asserting other defenses, including contributory negligence, assumption of the risk, and, in maritime law and in certain other jurisdictions, comparative negligence.²⁰

Finally, even if the injured plaintiff manages to gain a judgment against the owner of a polluting vessel, the Federal Limitation of Liability Act of 1851,²¹ as amended, usually restricts recovery to the value of the vessel and pending freight after the voyage has ended. If the oil discharging ship has been destroyed or badly damaged during the voyage, the injured plaintiff may be left with no hope of compensation.²²

While the oil shipping interests often do not pay significant court damages for oil pollution, the oil cargo interests are even less susceptible to tort liability. The common law actions of trespass, negligence and nuisance cannot reach the oil companies when their cargoes are spilled from vessels, and oil companies are not parties to admiralty court actions for unseaworthiness.²³

The factors cited above indicate why the American civil courts do not now provide full compensation to the victims of oil pollution. Of course, some parties damaged by oil pollution from an identified source do not even attempt litigation but instead "settle out of court" with claims adjusters representing the oil discharger or his insurance company. Although settlement of claims may avoid the vexing delays inherent in litigation, such recoveries often reflect only a fraction of the total damage caused by oil pollution. Because the legal position of the polluter is inherently strong and the resources of many private claimants are inadequate to sustain protracted court contests, private victims of pollution must negotiate their settlements from weak positions which make full recoveries unlikely.²⁴

B. Liability for Government Cleanup Expenses under the Federal Water Pollution Control Act

In 1970 the United State Congress finally recognized the inadequacy of American civil liability law to reimburse even the federal government for its expenditures to remove spilled oil from United States waters and shorelines. Belatedly, Congress enacted the 1970 amendments to the Federal Water Pollution Control Act²⁵ ("FWPCA") to deal with this problem. The 1970 amendments established a form of strict liability for oil discharged from vessels, though the 1851 Limitation of Liability Act is superceded only to the extent necessary to compensate the United State Government for "removal" (i.e. "cleanup") costs, up to specified limits of vessel liability.

The oil pollution provisions of the amended Federal Water Pollution Control Act authorize establishment of a $35 million revolving fund within the United States Treasury to finance government cleanup of oil spills.²⁶ The Act provides for government recovery from those responsible for oil spills, up to limits of liability which supposedly reflect the maximum levels of insurance obtainable on the private market. A vessel which has discharged oil is liable for all government removal expenses up to $100 per gross ton of the ship's tonnage or [5 ELR 50119] $14 million, whichever is less.

The vessel's owner or operator can escape liability only if he establishes that the spill was caused solely by an act of war, an Act of God, negligence on the part of the United States Government, an act or omission of a third party, or any combination of these defenses.²⁷ On the other hand, the vessel's owner is subject to unlimited liability for all cleanup expenses if the government can prove that the oil discharge resulted from "willful negligence" or "willful misconduct" within the privity and knowledge of the owner.²⁸

Obviously, the liability provisions of the Federal Water Pollution Control Act have a very narrow scope and purposes; they provide no direct relief for private victims of oil pollution. Understandably, therefore, the terms of the FWPCA disclaim preemption of state pollution laws which are not in conflict with the Act.²⁹

C. State Statutes on Oil Pollution Liability

The general failure of American law to compensate private victims of oil pollution has inspired a number of individual states to enact special statutes dealing with civil liability for oil pollution damage.³⁰ Nearly all of these state enactments impose some form of strict liability for oil pollution and assure recovery for damaged claimants by requiring oil tanker owners to establish proof of financial responsibility within the state. The state statutes vary in many particulars, such as the number of defenses which a vessel's owner can raise.

Significantly, most of the state legislation attempts to place pollution liability upon oil shipping interests. Maine's statute, however, collects fees from oil terminal operators to establish a state compensation fund,³¹ thereby taxing the oil cargo interests and avoiding preemption by federal or treaty law. The Maine act would retain an effective compensation system for vessel-source oil discharges despite the exclusivity provision of the Liability Convention, which precludes additional liability for a shipowner. Maine's statute effects this by placing vicarious liability upon an oil terminal for discharges from any tanker destined for the terminal from the time the tanker enters the United States contiguous zone.

Of course, both the oil companies and the oil carriers have vigorously opposed the adoption of varying state statutes on civil liability and have challenged the statutes in state and federal courts.³² In Askew v. American Waterways Operators, Inc.³³ the United States Supreme Court in 1973 upheld the controversial Florida statute³⁴ against assertions that the entire field of oil pollution liability has been preempted by federal law. Under the Askew decision, the states are now free to legislate liability for vessel-source oil discharges, barring clear conflict with federal statutes.

The Askew decision left many questions unanswered, however, including the amounts of liability which state statutes can impose upon vessels notwithstanding the terms of the Federal Limitation of Liability Act of 1851.³⁵ Although that antiquated statute generally limits recoveries under the state enactments, the Court specifically left open the possibility that the Federal Water Pollution Control Act³⁶ may have amended the Limitation of Liability Act to permit states to recover their expenditures to "clean up" oil spills, at least within the limits of cleanup liability set by the Federal Water Pollution Control Act.³⁷ Clearly, the Askew decision did not simplify the imbroglio of oil pollution liability, but instead has invited continued proliferation of state liability statutes and continued challenges to them by the oil carriers.

D. The Voluntary Programs of the Petroleum Importing and Shipping Industries: TOVALOP and CRISTAL

Responding to the glaringly inadequate legal order for civil liability, the petroleum shipping and production industries voluntarily instituted two noteworthy contractual devices: the Tanker Owner's Voluntary Agreement Concerning Liability for Oil Pollution (TOVALOP)³⁸ and the Contract Regarding an Interim Supplement to Tanker Liability for Oil Pollution (CRISTAL).³⁹ These two agreements have been discussed previously in legal journals,⁴⁰ thus, a detailed recitation of their provisions lies beyond the scope of this article. However, the limited purposes of these two voluntary institutions must be emphasized, because they are not substitutes for the proposed IMCO Conventions or for a comprehensive [5 ELR 50120] United States domestic structure for oil pollution liability.

Both TOVALOP and CRISTAL are temporary measures designed to function until the IMCO Civil Liability Convention and Fund Convention enter into force.⁴¹ Furthermore, their scopes are very restricted. TOVALOP requires only that a participating tanker owner remove a spill of persistent hydrocarbon oil or reimburse a national, state or local government which reasonably expends public funds to clean up such a discharge.⁴² Even these requirements apply only to negligent oil spills.⁴³ Liability is limited to $100 per gross registered ton of the tanker or $10 million per vessel per incident, whichever is less.⁴⁴

CRISTAL establishes a fund from contributions of participating oil companies to supplement the monies available under TOVALOP (or under the Liability Convention once that Convention supersedes TOVALOP). CRISTAL will reimburse the owner of a tanker which has spilled oil for those cleanup costs which exceed $125 per gross ton or $10 million, whichever is less, up to $30 million.⁴⁵

CRISTAL will compensate non-shipowning interests only under the following restricted set of circumstances. Both governments and private parties who suffer "pollution damage" can receive payment from CRISTAL up to $30 million per incident, but only after deduction from that amount for (1) all cleanup costs incurred by the tanker's owner up to $125 per gross ton or $10 million, whichever is less, which have not yet been reimbursed by CRISTAL, and (2) further deducting any compensation previously paid by CRISTAL to the tanker's owner for his cleanup expenses, and (3) further deducting the amount of the tanker owner's liability to a government under TOVALOP, and (4) further deducting any amount reasonably recoverable by the claimant from any other source.⁴⁶ This priority of payments under CRISTAL clearly favors tanker owners and might often leave insufficient funds to reimburse governments fully for cleanup costs. Inevitably, private claimants would receive partial or no compensation in many large-scale cases of pollution damage.

Similarly, CRISTAL provides no compensation whatever if the spilled oil escaped from any source other than a tanker subject to TOVALOP,⁴⁷ or if the oil was not owned by a party to CRISTAL,⁴⁸ or if the tanker owner could have escaped liability under any provision of the Civil Liability Convention.⁴⁹ Furthermore, neither TOVALOP nor CRISTAL will make any compensation for "ecological impairment" caused by oil pollution, or for consequential losses, or for fires or explosions caused by spilled oil.⁵⁰

Undoubtedly TOVALOP and CRISTAL are commendable interim measures to pay some claims for oil pollution cleanup and damages anywhere on earth. However, their highly restricted potential for compensation indicates the necessity for a comprehensive plan for oil pollution liability in the United States and internationally.

E. Recent Federal Legislation on Oil Pollution Liability

In apparent recognition that both state and federal law have failed thus far to provide adequate compensation for oil pollution damage, Congress recently enacted two specialized statutes, each of which included its own pollution liability mechanism. Far from providing unity in the field, these federal measures exacerbate the patchwork inconsistency of civil liability coverage under United States law.

1. The Trans-Alaska Pipeline Act. The Trans-Alaska Pipeline Authorization Act⁵¹ (hereinafter cited as the "TAP" statute) places strict liability for oil pollution damage on the owners and operators of ships which transport "TAP" oil to United States ports, though vessel liability is limited to $14 million per incident.⁵² Claims beyond that amount to a limit of $100 million are to be paid from the Trans-Alaska Pipeline Liability Fund, created by the TAP statute.⁵³ The $100 million TAP Liability Fund will be established with a levy of five cents on each barrel of TAP oil loaded on a vessel for shipment to United States ports.⁵⁴

The only defenses available to the TAP Liability Fund or to the vessel require proof that disputed pollution damage was caused by an act of war, the negligence of the United States or other governmental agency, or the negligence of the claimant party.⁵⁵

2. The Deepwater Port Act. The Deepwater Port Act of 1974⁵⁶ places strict liability on the owner and operator of a vessel which discharges oil or natural gas into the safety zone around a United States deepwater port.⁵⁷ A vessel is liable without regard to fault up to $150 per gross ton or $20 million, whichever is less, for each discharge or to an unlimited amount if the discharge was [5 ELR 50121] caused by gross negligence or willful misconduct.⁵⁸ Each deepwater port licensee is strictly liable to a limit of $100 million for an oil discharge which emanates from a deepwater port or from a vessel moored at a deepwater port.⁵⁹

The Act also establishes a $100 million Deepwater Port Liability Fund to pay all damages in excess of the liability limits of the vessel owner or operator or the deepwater port licensee.⁶⁰ The Fund is established by a levy of two cents on each barrel of oil (or equivalent volume of liquefied natural gas) which passes through a deepwater port.⁶¹

Defenses under the Deepwater Port Act permit the vessel or licensee to avoid liability by proving an oil discharge was caused by an act of war or by negligence on the part of the federal government in establishing and maintaining aids to navigation.⁶² If one of these defenses is established, the Deepwater Port Liability Fund pays for damages.⁶³ In addition, the deepwater port licensee, the vessel's owner and operator, and the Deepwater Port Fund can avoid payment of any damages proved to have been caused solely by the negligence of the damaged claimant.⁶⁴

F. Conclusions on the Current Array of Oil Pollution Liability Provisions

The foregoing overview of American law on oil pollution liability reveals the patchwork, ineffective nature of our multi-faceted system. This confusing maze of state and federal legislation and the industry's voluntary efforts yield inequitably different results for similarly-situated claimants and defendants. Even the federal statutes on the subject show little consistency in the amounts of liability imposed, the classes of claimants benefited, or the defenses available to defendants.

The international nature of the petroleum transportation industry demonstrates the necessity for a uniform, comprehensive regime for oil pollution liability. The administrative burden imposed upon oil shippers by the multitude of American statutes and common law systems is staggering in itself. Especially burdensome would be the high costs for vessels to certify their financial responsibility in many American states, in addition to meeting even heavier security requirements of the Federal Water Pollution Control Act, the Trans-Alaska Pipeline Statute and the Deepwater Port Act.

Another obvious flaw in the existing piecemeal approach is the redundancy of compensation funds of the several state and federal statutes. All these funds should be consolidated for efficient administration and reduction of costs to oil consumers, who will ultimately finance the funds.

Yet all the aforementioned burdens upon interstate and international commerce seem small compared to the multitude of liability systems which confront oil shipping interests within and among the many coastal nations which now can regulate oil pollution liability.⁶⁵ Thus the desirability of a unified and simplified civil liability regime seems obvious for elementary reasons of economy, equity and efficiency.

III.

Prospects for International Cooperation to Compensate Oil Pollution Damage

A. Synopsis of the IMCO Civil Liability and Fund Conventions

The only realistic prospect for achieving any degree of international coherence for oil pollution liability lies in the two related treaties sponsored by the U.N.'s Inter-Governmental Maritime Consultative Organization (IMCO). These are the International Convention on Civil Liability for Oil Pollution Damage⁶⁶ (the "Liability Convention") and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage⁶⁷ (the "Fund Convention"). This article will not discuss the two Conventions "section by section" but instead will analyze selected parts of these treaties as they relate to establishment of a United States domestic program for civil liability. Before turning to the many problems of designing a United States compensation system compatible with the two Conventions, however, the basic pattern of the Conventions should be explained briefly.

1. The Civil Liability Convention. The Civil Liability Convention places strict liability on the owner of a vessel which causes oil pollution damage, although a number of defenses are preserved for the shipowner.⁶⁸ By posting a limitation fund in accordance with the Convention, the shipowner can limit his liability to a set amount for any one pollution incident.⁶⁹ The maximum liability is expressed in Poincare gold francs; their equivalent value in dollars is discussed hereinafter.⁷⁰ Despite the limitation provisions, if the pollution incident occurred as a result of the "actual fault or privity" of the shipowner himself, his liability is unlimited.⁷¹

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By posting his limitation fund pursuant to the Liability Convention, the shipowner frees himself from any liability inconsistent with or in addition to the Convention's provisions.⁷² The shipowner's servants or agents are expressly granted immunity from claims for pollution damage,⁷³ but the owner's general right of recourse against third parties is preserved.⁷⁴

Actions against a shipowner must be brought in the civil courts of some nation in which pollution damage from the liable vessel was sustained.⁷⁵ Similarly, the shipowner must constitute his limitation fund in one jurisdiction where pollution damage occurred.⁷⁶

To ensure financial responsibility, the owner of any ship which carries over 2,000 tons of oil as cargo and which trades with one or more nations which are parties to the Liability Convention must maintain insurance or other security for the amount of Convention liability.⁷⁷ A vessel's state of registry will issue a "Certification" to verify the financial responsibility of each oil tanker which satisfies the Convention's requirements.⁷⁸ If a tanker registered in a Contracting State of the Convention does not properly establish financial security, its state of registry must forbid that ship to trade.⁷⁹

Both private and public parties can present claims under the Liability Convention for a wide range of pollution damages.⁸⁰ These claims rank equally with claims of the shipowner for his expenses to prevent or minimize pollution damage after the pollution incident has occurred.⁸¹

2. The Fund Convention. Although the Liability Convention was generally recognized as a positive achievment, the member nations of IMCO soon concluded that it would not be ratified unless its deficiencies were remedied by a supplementary convention. General dissatisfaction with the Liability Convention was exemplified by the response of the United States Senate Foreign Relations Committee, which declined to recommend advice and consent to the Civil Liability Convention for many months, largely because the limits of compensation afforded pollution victims were deemed inadequate.⁸² Eventually the Committee recommended to the full Senate that advice and consent to ratification be given, but that the Senate should delay final action until it could simultaneously approve a supplementary convention to augment compensation to damaged parties.⁸³

In response to such sentiments, the IMCO draftsmen produced the Fund Convention to complete the structure of an international liability regime by obtaining additional funding from oil cargo interests. The Fund Convention's levy on oil imported by sea⁸⁴ would support a large compensation fund administered by an Assembly of Party Nations, an Executive Committee, and a Secretariat.⁸⁵

The Fund, financed by contributions from oil importers, would pay most pollution damage claims not compensable under the Liability Convention due to shipowners' defenses⁸⁶ or where the shipowner and his guarantor had defaulted on their obligations.⁸⁷ The Fund Convention would also pay in cases where total damages exceeded the Liability Convention limits,⁸⁸ or where the shipowner presented unpaid claims for his voluntary efforts to prevent pollution damage.⁸⁹ The Fund Convention is also designed to reimburse a shipowner for a major portion of damage payments which the owner had paid pursuant tothe Liability Convention, except in cases of willful misconduct by the shipowner.⁹⁰

B. Entry into Force of the Liability and Fund Conventions

Although the community of nations responded cautiously to the Liability and Fund Conventions, those treaties will dominate the field of oil pollution liability in the near future. The Liability Convention entered into force on June 19, 1975, and immediately governed much of the world's shipping. The following nations had ratified or acceded to the Liability Convention as of May 12, 1975: the United Kingdom, Denmark, France, Sweden, Norway, Liberia, Lebanon, Algeria, Morocco, Fiji, Senegal, the Dominican Republic, Ivory Coast and Syria.⁹¹ A total of 29 nations have signed the Liability Convention, so the eventual influence of that Convention surely will be great.

Although no definite date when the Fund Convention will enter into force can be predicted, international acceptance of that Convention seems likely. As of May 12, 1975, the following nations had ratified or acceded to the Fund Convention: Liberia, Norway, Sweden, Syria and Denmark.⁹² Seventeen nations are signatories of the Fund Convention, and Japan, the United [5 ELR 50123] Kingdom, and other major maritime powers reportedly have already announced plans to ratify that Convention.⁹³ Thus the Fund Convention will probably enter into force relatively soon after the Liability Convention becomes effective.

Clearly, the Liability and Fund Convention will establish the basic international law on oil pollution liability even if the United States declines to ratify either treaty. Whether or not the United States ratifies the two Conventions, every United States flag vessel will be subject to certain terms of the Conventions if our vessel enters a port of any ratifying nation to take on or discharge an oil cargo. In all probability, the realities of the oil production and shipping industries will make United States ratification of the Liability and Fund Conventions inevitable.

One consideration favoring United States ratification of the Liability Convention is that oil tankers registered in the United States and trading with nations which ratify the Liability Convention must satisfy the financial responsibility requirements of that Convention whether or not the United States becomes a "Contracting Party" of that treaty. Each nation party to the Liability Convention requires proof of financial responsibility for every ship which carries 2,000 tons or more of oil as cargo, as a condition for such a ship to use the ports or deepwater terminals of a ratifying nation.⁹⁴

If a vessel's state of registry is a party to the Liability Convention, that vessel's owner will demonstrate his capacity to pay damages under the Convention with an official "Certificate" issued by his flag state.⁹⁵ However, if a vessel's state of registry is not a Contracting Party of the Liability Convention, that vessel's owner still must provide the insurance or similar guarantee required by the Convention's levels of liability.⁹⁶ Of course, the owner of an oil tanker registered in a non-ratifying nation probably would face added expense and administrative difficulties to establish financial security, lacking the convenient certification process which ratifying states will provide to their flag vessels.

Furthermore, the insurance or other security required by the Liability Convention must be available exclusively for satisfaction of claims under the Convention.⁹⁷ Thus the overlapping requirements for financial responsibility of the Federal Water Pollution Control Act or the Deepwater Port Act would not satisfy the Liability Convention's terms for United States flag vessels.

Among the nations which already have ratified or seem destined to ratify the Liability Convention are states which import or export large quantities of petroleum. Because many American flag oil tankers will at least receive oil cargoes from ratifying states which export oil, our ships will be forced to satisfy the expensive financial security requirements of the Liability Convention even if the United States fails to ratify and thereby denies the many benefits of the Liability Convention to United States vessels. To obtain the limitation of liability and other advantages which the Convention provides to vessels registered in ratifying nations, United States shipping interests doubtlessly will exert pressure for prompt United States ratification of the Liability Convention.

Furthermore, a number of nations apparently have deferred action on the Liability and Fund Conventions until the United States act to accept or reject them.⁹⁸ Considering the difficulties encountered in the formulation and drafting of the two Conventions, and considering the importance of the United States ratification to protect United States' interests and to inspire international acceptance of the treaties, prompt ratification by the United States is highly desirable.⁹⁹

IV.

Recent United States Initiatives for a Comprehensive System for Oil Pollution Liability

A. The Liability and Fund Conventions Before the United States Senate

The vehicle proposed in the Ninety-third Congress for Senate advice and consent to the Liability and Fund Conventions was S.841. Hearings on that bill were conducted on April 17 and 18, 1973, by the Oceans Subcommittee of the Senate Foreign Relations Committee, and testimony taken generally supported the underlying concept of the treaties. However, the comments of the senators and the testimony of experts reflected some dissatisfaction with the proposed levels of compensation and with other particulars of the Conventions.¹⁰⁰

In a letter to the Department of State dated February 25, 1974, Senators Magnuson and Jackson stated what appears to be the current position of the Senate Foreign Relations Committee. Believing that the Conventions' levels of compensation are set too low, they advocated a United States domestic oil pollution compensation fund to provide liability coverage up to $100 million per oil pollution incident. Their proposal would pay damages to victims of oil pollution without regard to the fault of [5 ELR 50124] the oil discharger except in cases resulting from acts of war.¹⁰¹

In response to the Senators' letter, the State Department expressed acceptance of a domestic compensation regime consistent with the terms of the Liability and Fund Conventions. Draft amendments to S.841 proposed by the State Department would establish a domestic compensation fund liable under the same circumstances as those designated by the two Conventions.¹⁰² However, the domestic fund would be liable only to the extent that a claimant could not recover fully under either of the Conventions.¹⁰³

Senate acceptance of the two Conventions through S.841 and congressional action on the State Department's proposal for a complimentary domestic fund were deferred temporarily by the end of the Ninety-third Congress. However, the entire subject of oil pollution liability has received renewed attention in both the executive and legislative branches in late 1974 and in 1975.

B. United States Proposals for a Unified Domestic System for Oil Pollution Compensation

Since late 1974 a federal "inter-agency task force" has been drafting legislation for a comprehensive domestic regime for oil pollution liability. In addition, the newly-enacted Deepwater Port Act¹⁰⁴ directs the Justice Department, in cooperation with other federal agencies, to study civil liability and compensation for oil pollution and to prepare legislative initiatives to meet the deficiencies in this area. Simultaneously, a number of congressional committees have continued their ongoing work on marine oil pollution questions, including the civil liability issues.

C. One Feasible Pattern for the Proposed "Comprehensive Oil Pollution and Compensation Act"

The incipient stage of legislative proposals and the variety of viewpoints in the field prevents a positive prediction of how Congress will resolve the oil pollution liability question. Nevertheless, the author hopes that the Senate will soon give advice and consent to ratification of the Liability and Fund Conventions, and that Congress will remedy their inadequacies with domestic legislation.

Congressional, Executive, and non-government students of oil pollution liability are now considering a number of different forms which a domestic compensation system could follow. Because consideration of a domestic liability system is at an early stage, this article will analyze selected general principles which might benefit the ultimate legislative formulation for such a system. The article will attempt to give substance to these principles by referring to one specific pattern which a comprehensive domestic compensation system might reasonably follow. This arrangement would establish an independent Commission of the federal government charged with administering all aspects of civil liability for oil pollution damage. The "Federal Oil Pollution Damage Compensation Commission" would administer one unified domestic revolving fund from which the Commission would pay directly claims of oil pollution victims.¹⁰⁵ The federal Commission would then recover its expenditures from the owner or operator of the vessel which had discharged contaminating oil or, eventually, from the financial reserves of the Fund Convention.¹⁰⁶

The domestic revolving fund would also receive monies as needed from a fee collected from the owners of imported oil and oil produced from United States offshore production facilities,¹⁰⁷ and would be the depository of certain monetary civil and criminal penalties.¹⁰⁸ The new fund would probably subsume all of the other federal oil pollution funds (i.e., the Trans-Alaska Pipeline Act Fund, the Deepwater Port Act Fund, and the Federal Water Pollution Control Act Revolving Fund).¹⁰⁹ Overlapping and inconsistent provisions of other federal statutes would be repealed by the new Comprehensive Oil Pollution Liability and Compensation Act.To further unify the law, the new statute would expressly preempt all state statutory and tort law which would provide damages compensable under the federal act.¹¹⁰

V.

Integration of A Comprehensive United States Compensation Regime with the Liability and Fund Conventions

Although the author has noted that some agreement is developing in United States governmental circles on the general outlines of an integrated oil pollution liability system, too little attention has thus far been devoted to accommodating the domestic and international proposals. Before turning to the substantive provisions of the two plans, a few general considerations [5 ELR 50125] for coordinating national and treaty law-making should be stated.

A. The Conflicting Objectives of the International and Domestic Systems

At least one major policy dilemma must be confronted if the United States simultaneously embraces the two Conventions and an effective domestic system for oil pollution compensation. If the gaps and flaws of the Conventions are to be remedied, the United States must adopt a comprehensive domestic plan requiring extensive funding and administrative participation by the oil companies and shipping interests.

On the other hand, each addition to and variation from the specific provisions of the Conventions by the United States system detracts from the Conventions' declared goal of "uniform international rules and procedures for determining questions of liability and providing adequate compensation…."¹¹¹ For better or worse, the defects and inadequacies of the Conventions may force the United States to sacrifice international uniformity to the degree necessary to protect vital national interests.

B. The Advantages of Early United States Action on the Liability and Fund Conventions

In determining the priority of action on the two Conventions, Congress must consider that both could enter into force without participation by the United States and this development could be prejudicial to American interests. For example, vital internal regulations and personnel appointments will be made during the first months of operation of the Fund Convention, whether or not the United States is a contracting party.

Similarly, the terms of United States domestic legislation can influence both the organizational structures of the two Conventions and early interpretation of their terms by national courts and by the Fund Convention's administrative bodies. American influence would enhance both the effectiveness of the Conventions and the prospects of national interests. Thus the United States can best protect itself during the organizational period of the two Conventions if our Senate grants advice and consent to ratification before or soon after the Conventions enter into force. The United States could then deposit its instruments of ratification with IMCO at the most advantageous moment.

C. The Nature of United States Enabling Legislation for the Liability and Fund Conventions

The domestic aspects of the comprehensive civil liability regime could conveniently be included in the enabling legislation needed to incorporate the two treaties into federal law. A domestic implementing statute is needed because the two Conventions would require the executive department of the United States to perform "particular acts" to enforce the treaties. For example, the Liability Convention requires a ship's state of registry to issue a certificate of financial responsibility to each qualifying vessel and to enforce financial security requirements against its own flag vessels and all vessels using its ports.¹¹² Thus each IMCO Convention "addresses itself to the political, not the judicial department; and the legislature must execute the contract before it can become a rule (for domestic United States law)…."¹¹³ Furthermore, neither Convention purports to be self-executing, so domestic legislation was apparently contemplated by the treaties' draftsmen to implement the Conventions as domestic law.¹¹⁴

The enabling legislation proposed for the two Conventions in the Ninety-second Congress, S.841, is not a satisfactory model for the new implementing statute. First, S.841 did not include the many provisions for adomestic liability system which the new bill should provide.On the other hand, the text of S.841 unnecessarily repeated many provisions of the two treaties which could be more simply incorporated into United States law by reference. It is feared that unnecessary repetition of the treaties' terms in the enabling act would tempt some members of Congress to "amend" the Conventions' terms "unilaterally." Such amendment obviously would cause many difficulties in both national and international operation of the two Conventions.¹¹⁵

D. Avoiding Problems of Preemption

The demestic regime for civil liability should ideally be designed to mesh with the Liability and Fund Conventions when they enter into force and to function independently of the two Conventions for those times and circumstances when the treaties would not control. Thus the domestic compensation act should be designed to cover the entire problem of civil liability for all national oil pollution damages, initially. If and when the IMCO Conventions are ratified by the United States, their provisions would control for those matters covered exclusively by the Conventions, and the domestic fund would continue to compensate all other pollution damage.

Nevertheless, prospective implementation of the two Conventions by the United States, in addition to a comprehensive domestic compensation plan, raises important questions of preemption. Of course, any treaty preempts prior state or federal law which covers the same subject matter in an irreconcilable manner¹¹⁶ or conflicts directly with the treaty.¹¹⁷ This follows from [5 ELR 50126] the Supremacy Clause of the United States Constitution, which states that treaties

… shall be the supreme Law of the Land, and the Judges in every state shall be bound thereby, anything in the Constitution or Laws of any State to the contrary notwithstanding.¹¹⁸

However, the United States should accept the Liability and Fund Conventions despite their many flaws only if the domestic liability statute can make interstitial adjustments where the Conventions are inadequate to protect national interests. Thus, even assuming that one goal of a national liability regime would be to preempt all conflicting state legislation in the field, the provisions of the new Federal Comprehensive Oil Pollution Liability Act and certain preexisting federal statutes must be safeguarded from preemption by the treaties.

Congress can easily ensure that the particulars of its domestic program will prevail against any contrary interpretations of the two Conventions by employing the rule that a subsequent act of Congress limits or supersedes an earlier treaty.¹¹⁹ Accordingly, the optimal legislative scenario would probably begin with Senate advice and consent to the two Conventions, followed by enactment of the comprehensive domestic act for civil liability. After the treaties receive Senate action, passage of the comprehensive domestic act might be accompanied by reenactment of selected parts of other federal statutes, such as the emergency action and cleanup provisions of the Federal Water Pollution Control Act and certain sections of the Ports and Waterways Safety Act of 1972,¹²⁰ to preclude any preemption problems with those statutes.¹²¹

VI.

The Proper Scope of Compensation Under the Conventions and the Domestic Liability Regime: All "Oil Pollution Damages"

A. The Economic Function of Compensation for Oil

Virtually all authorities on the subject seem to agree that one essential goal of both the domestic and international regimes for oil pollution liability should be "internalization" of the social costs of marine oil transportation to the greatest extent practicable, that is, imposing the costs of pollution on the industry which profits from the polluting activity rather than on society as a whole.¹²² A detailed examination of the economic principles which require that policy objective is beyond the scope of this article. However, the basic justifications for internalizing all oil pollution costs can be briefly summarized as follows.¹²³

First, the interests of justice are served by full compensation of oil pollution victims. Since the transportation of oil by sea can and often does impose pollution damage costs on innocent third parties, justice requires that the beneficiaries of the oil industry (the oil carriers, oil cargo interests, and ultimately the oil consumers) should fully compensate oil pollution victims.

Second, the provision of liability insurance coverage for unavoidable oil spills can be made a legal responsibility of oil shipping and cargo businesses easily, while oil pollution victims could not readily purchase such insurance. This is explained in part by the random nature of oil pollution damage. For example, a fisherman is unlikely to insure against the improbable destruction of his leased oyster bed by oil, but a major oil carrier should anticipate and insure against oil pollution damage, which will occasionally occur despite the carrier's best efforts.

Third, full liability for all pollution damage is necessary to deter unnecessarily dangerous or negligent conduct and to encourage a socially optimal level of precautions for the petroleum industry. So long as the costs of negligent or intentional oil discharges or the inherent risks of shipping oil by sea can be shifted to innocent third parties, the oil production and oil shipping industries have insufficient incentives to improve technology and personnel performance to minimize oil pollution.

Finally, all costs of oil pollution must be internalized to permit the market system to favor the most economical among alternative sources of energy and methods of petroleum transportation. At present, American oil consumers obtain petroleum products at prices which do not reflect all the costs of petroleum, since the social costs of oil pollution damage are not indluded. Despite the monopoly pricing now imposed by the oil cartel, petroleum will be "underpriced" relative to alternative products so long as the costs of oil pollution are not added to the final price of oil. This condition leads the economy to misallocate resources to the petroleum industry and away from alternative energy sources and from substitutes for petroleum-based-products.

Similarly, oil pollution costs elevate the prices of other goods and services. For instance, the seafood and water-recreation industries must subsidize the oil industry to the extent that seafood and recreation interests suffer uncompensated pollution damage. Thus the basic goal of any oil pollution liability system should be to incorporate all pollution costs into the price of oil products, [5 ELR 50127] making oil pollution a "cost of doing business" when it is unavoidable and providing a strong incentive to abate oil pollution to the greatest degree practicable.¹²⁴

The foregoing suggests that the internalization of oil pollution costs would increase petroleum prices to some degree, thus inviting opposition from long-suffering victims of the oil cartel. Such opposition should yield to factual analysis, however, since the price-rise from internalizing pollution damage costs would be miniscule compared to the price increases imposed by the cartel.¹²⁵

More importantly, pollution damage payments would greatly benefit American citizens and the American economy by compensating losses which otherwise would go unredressed. Most significantly, internalization of all oil pollution costs would serve important economic functions, including producing benefits for our national energy policy, by encouraging shifts in investment and consumption to the most economically efficient sources of energy.

B. Determination of What is "Oil Pollution Damage" Compensable under the Domestic and International Systems

Accepting the goal of complete internalization of social costs, the international and domestic liability systems should require the oil transportation and distribution industries to pay for all oil pollution costs as fully as is practicable. For the Liability and Fund Conventions, and eventually for the United States domestic liability act, the degree to which this objective is attainable depends largely upon the interpretation of the term "pollution damage."

The Liability and Fund Conventions define "pollution damage" as:

loss or damage caused outside the ship carrying oil by contamination resulting from the escape or discharge of oil from the ship, wherever such escape or discharge may occur, and includes the costs of preventive measures and further loss or damage caused by preventive measures.¹²⁶

Thus the social value of the two Conventions depends in large part on the meaning given to the nebulous terms, "damage," "loss," and "contamination."

Undoubtedly, defendant shipowners and oil cargo interests will challenge numerous claims as not constituting "pollution damage" cognizable under the two Conventions, thus not stating a cause of action or providing even legal standing to sue. Although these pressures to restrict compensable pollution damage should be resisted, the legislative histories of the two Conventions place some limitations on the types of claims the Conventions will compensate.

For example, apparently the term "contamination" was used to define compensable pollution damages for both Conventions to preclude recovery for fires or explosions resulting from oil spills.¹²⁷ Even if this construction of the Conventions prevails, no justification has been offered to exclude such damages from domestic fund coverage. In general, the United States domestic liability system should pay legitimate claims excluded by the two Conventions to maximize internalization of pollution costs.

In addition, to encourage proper international interpretation of "pollution damage," the United States domestic liability legislation should use the same terminology as the Conventions. However, the United States statute should expand the Conventions' definitions by listing the specific forms of pollution damage which the domestic (and hopefully the international) liability regime will compensate. A specific statutory sanction is necessary for some types of damages, such as income losses,¹²⁸ since the American courts have not always been willing to compensate certain of these damages in tort cases.

The following subsections examine briefly the more important categories of pollution damage which both the domestic and international systems should recognize. However, many technical problems of defining and measuring all damages and weighing the social utility of alternative compensation policies are beyond the scope of this study. These problems can best be resolved by specialized expertise and case-by-case analysis developed by the proposed United States Oil Pollution Damage Compensation Commission and by the federal courts.

1. Oil Pollution Damage to Aquatic Living Resources

Relying on presently available evidence, scientists disagree on the potential harms to ocean ecosystems presented by oil pollution. A few experts even contend that insufficient data have yet been amassed to condemn crude oil as a serious pollutant, though all agree that it despoils coastal amenities and kills myriad seabirds.¹²⁹ On the other hand, a spill of refined petroleum products is generally admitted to destroy much marine life in the local area of the spill.¹³⁰

The cumulative and long-range effects of oil on the marine environment will not be known until much additional research is conducted.¹³¹ Nevertheless, significant [5 ELR 50128] damage to a wide range of living resources has been documented already.

Much oil pollution damage is attributable to the fact that spilled oil spreads rapidly to cover large areas of water, and ultimately shorefront lands. To be specific, one hundred barrels of oil discharged into calm waters can spread to cover eight square miles in less than one week.¹³² The significance of these figures is demonstrated by the fact that several hundred barrels of oil can be discharged from operational tank cleaning of an oil tanker,¹³³ and a large tanker could spill more than two million barrels of crude oil in a grounding or collision.¹³⁴

These large "oil slicks" on the water's surface often destroy great numbers of ducks, geese, terns, gulls and other pelagic birds.¹³⁵ Slicks also kill surface-feeding fish, shellfish and the floating eggs and larvae of many marine animals.¹³⁶

Potentially more destructive than oil slicks are the heavier fractions of petroleum which settle to the bottom and spread outward from the source of an oil spill. This persistent oil has recently been shown to devastate much bottom-dwelling marine life, including commercially valuable mollusks and arthropods.¹³⁷

Massive damage from settling oil can extend across large areas of ocean floor and can continue to kill sea life for years or even decades after the oil discharge.¹³⁸ Studies just released by the National Water Quality Laboratory at Narragansett, Rhode Island, show that tiny quantities of polluting oil can kill shellfish through cardiovascular damage, and larger amounts of petroleum cause cancerous tumors in marine life.¹³⁹ Serious damage to the internal organs of fish has been attributed to oil pollution by the U.S. National Science Foundation's studies.¹⁴⁰

All of these toxic effects of oil pollution explain the documented potential of oil spills to disrupt the complex life cycles of marine ecosystems, reducing their overall productivity.¹⁴¹ As the increasing human population turns to the sea as a vital source of protein, the destruction of marine life by oil pollution must be recognized as an intolerable environmental insult for which compensation should be made.

The extent to which recoveries by national governments for destruction of "publicly-owned" living resources will be permitted under the two Conventions is still undetermined.¹⁴² The legislative history of the Conventions suggests that destruction of marine life was contemplated as "pollution damage" under the treaties.¹⁴³ Thus some form of compensation should be sought under the Conventions; the proceeds might be used to restore damaged resources and to conduct scientific research.

This article will not analyze the many complex considerations which should guide the international and the domestic liability systems in measuring and compensating destruction of natural resources by oil pollution. It must suffice here to observe that both economic and aesthetic losses from destroyed living resources should be included in both domestic and international definitions of "pollution damage," and the domestic regime should compensate for and restore natural resource losses not covered by the Conventions.

2. Oil Pollution Damage Through Physical Impacts on Human Property Interests

The direct, physical damage from oil pollution to property interests affects beaches and other waterfront lands, piers, vessels, marinas, ponding areas, oyster beds, etc.¹⁴⁴ American tort law has usually permitted recovery for physical damage to property because of its obvious nature, and the proposed domestic liability surely should cover such damages.

The American cases have permitted recovery for oil pollution which damaged small boats and piers,¹⁴⁵ fishing gear,¹⁴⁶ a hotel's private beach,¹⁴⁷ a leased shellfish bed,¹⁴⁸ and a state-owned jetty.¹⁴⁹ One leading federal court recently held that an injury to sea-going commercial vessels and an interference with their right to navigation from the Santa Barbara oil spill constituted a compensable maritime tort.¹⁵⁰

[5 ELR 50129]

Thus even if the domestic liability statute fails to define "pollution damage" as explicitly including physical harms from oil pollution, the American courts would probably pay those claims under the statute. Similarly, direct damage apparently falls within the rubric of "… loss or damage caused … by contamination …" under the Conventions.

3. Oil Pollution Damage to Human "Economic Interest": Expected Profits and Wages

Many forms of income losses should be clearly defined as compensable pollution damage under the United States oil pollution compensation statute, because American courts have traditionally been unreceptive to recovery of economic losses in tort cases.¹⁵¹ Since lost profits are usually designated as "consequential damages" not "foreseeable" by a tortfeasor, they are rarely granted in negligence or strict liability judgments.¹⁵² For these reasons, fishermen at times have been denied court recoveries for tortious reductions in their catches.¹⁵³ This hoary policy has no legitimate place in a system designed to internalize all social costs, so the domestic liability regime should compensate many types of lost profits, where these can be proved with requisite certainty.

Recognizing that oil pollution destroys valuable marine life, the domestic compensation statute should affirmatively sanction recovery for economic losses borne by those who harvest seafood. Of course, this compensation should be coordinated with any public recovery for destruction of living natural resources. To whatever extent governmental monies could be invested to restore marine life to its former abundance and health, a public recovery seems preferable to competing private claims, which usually would not be used to restock marine animals or plants. However, the practical difficulties of rebuilding a damaged ecosystem would at times exceed the capabilities of current science and technology, so direct payments to damaged fishermen may constitute the best manner of internalizing pollution damage to living resources, at least for the present time.

Another form of economic loss which befalls professional fishermen results from oil pollution's reduction of the productivity of the waters they fish. One example of a large business loss to fishermen was the destruction of the entire oyster fishing industry of Narragansett Bay by one oil spill.¹⁵⁴ Fish and shellfish which survive oil pollution may nonetheless be rendered inedible by the soluble fractions of petroleum, which accumulate in their tissues.¹⁵⁵

For these reasons the recently-enacted Canadian legislation on oil pollution liability specifically provides for payment of income losses by fishermen.¹⁵⁶ Similarly, a significant case from the Ninth Circuit Court of Appeals has recently sanctioned recovery of economic losses for fishermen resulting from the Santa Barbara spill. Union Oil v. Oppen¹⁵⁷ held that the alleged diminution of aquatic life in the Santa Barbara Channel resulting from oil pollution would, if proved, constitute a legally compensable injury to commercial fishermen. These recent Canadian and United States precedents further demonstrate the validity of compensating fishermen for economic pollution damage under the two Conventions and under the domestic regime in the United States.

Of course, many economic interests other than those of fishermen can suffer from oil pollution damage. Business profits are lost by beachfront recreation interests and by the entire local economy of a tourist area impacted by an oil spill, because many businesses and employees' salaries are dependent to greater or lesser degrees upon recreation and fishing interests.

The economic integration of areas subject to oil pollution disasters shows the necessity for an expeditious and certain compensation for oil pollution damage.¹⁵⁸ If economically damaged individuals anticipate full and prompt recovery of their losses from the United States Oil Pollution Compensation system, their levels of expected permanent income would remain unchanged. Thus their levels of consumption expenditures would be maintained by borrowing against expected repayment, and fewer indirect losses would be generated throughout the local economy. On the other hand, an integrated economy would suffer from reduced consumer expenditure to whatever extent those damaged by oil pollution would expect incomplete or long-delayed compensation.

Compensation of many forms of economic losses would present problems to any liability system. For example, profits lost by the recreation-tourist industry of one polluted locality may become a windfall to a competing resort which attracts displaced vacationers, thereby reducing "societal damages." Similarly, one large public carrier which lost fares to the polluted resort might recapture those profits as vacationers travel to the competing beach: only net losses should be considered "damages."

All claimants of economic damages should be required to prove that they minimized their losses by [5 ELR 50130] seeking new employment or business. Time limits for unemployment or business-loss compensation would necessarily be enforced to require adaptation and initiative from pollution victims.

Undoubtedly, the scope of compensable pollution damage will present difficult questions for both the domestic and international compensation systems. Assuming that some claimants will recover for lost profits and wages, some limit of "remoteness" or "proximate cause" must be imposed to prevent speculative or fraudulent claims. Determination of this "cut-off point" for damages is merely one of many technical matters which should be resolved by the United States Oil Pollution Compensation Commission as it pays claims and writes regulations. The advice of economic and legal experts clearly will be required to analyze properly the many problems of defining compensable pollution damages.

4. Oil Containment and Cleanup Expenses as Compensable Oil Pollution Damage

The costs of oil pollution which are most easily measured are those usually borne by governments for "cleanup:" i.e., dispersion, containment and removal of spilled oil from the water's surface, beaches and shore facilities. Most of these expenses are surely within the definition of "pollution damage" of the Liability and Fund Conventions.¹⁵⁹

However, the legislative histories of those two treaties suggest that their terms may not compensate certain expenses of preventing pollution from wrecked tankers. If these costs (e.g., salvaging or destroying the vessel or jelling oil remaining within the vessel's hull) are not covered by the Conventions, the domestic regime should encompass them.¹⁶⁰

A number of governments which have dealt with major oil spills have established a respectable data-base to predict the magnitude of typical cleanup expenses. These figures permit initial evaluation of the adequacy of compensation limits proposed for the two Conventions and for the United States Oil Pollution Damage Compensation Fund.

Estimates of cleanup costs must be accepted cautiously, since outlays depend upon variables of geographic location, temperature, tide, currents, wind, waves, available cleanup equipment and personnel, etc.¹⁶¹ Nevertheless, one frequently-cited standard to predict cleanup expenses is derived from the Torry Canyon disaster. That tanker was relatively small by modern standards, registering 61,263 gross tons and carrying 880,000 barrels of crude oil.¹⁶² When the Torrey Canyon ran aground 15 miles off the English coast it spilled 700,000 barrels of oil, contaminating 242 miles of English and French shoreline.¹⁶³

The British and French Governments reportedly "cleaned up" 59,000 tons of oil, spending over $16 million in oil removal expenses.¹⁶⁴ Accepting the ratio of deadweight tonnage (i.e., cargo capacity) to gross tonnage for the Torrey Canyon at two to one,¹⁶⁵ the governmental cleanup costs were about $540 per gross registered ton of the tanker.

The Federal Water Pollution Control Administration (now the Environmental Protection Agency) conducted studies to determine the cost of government cleanup of oil spills from vessels. These studies revealed that oil removal costs can vary from a minimum of $450 for each gross registered ton of vessel to well over five times that amount, or $2,250 per gross ton of the tanker.¹⁶⁶ The most conservative estimates of government cleanup costs come from the American Petroleum Institute (A.P.I.). Their figures suggest that $244 per gross vessel ton might be a fair average cost.¹⁶⁷

To calculate the maximum cleanup costs which the domestic or international fund might have to bear from a tanker disaster, the increasingly gigantic capacities of modern tankers must be considered. The 238 tankers on order in 1970 averaged over 240,000 gross tons each. The trend since that date is indicated by the construction, primarily in Japanese shipyards, of vessels registered for 477,000 gross tons each.¹⁶⁸ Even the modest cleanup estimates of the A.P.I. would predict that one of the latter vessels could cause over $125 million in cleanup costs if it broke up at sea while carrying its full capacity of oil. Specific examples of giant oil tankers are the Universe Island and the Universe Kuwait, either of which could spill over 300,000 tons of oil if she were to run aground or break up while fully loaded.¹⁶⁹ The government cleanup expenses alone from such a catastrophe could far exceed $80 million.¹⁷⁰

C. The Capacity of the Liability and Fund Conventions to Compensation for All Oil Pollution Damage

The foregoing projections of potential cleanup costs [5 ELR 50131] establish the minimum levels of compensation which the national and international liability regimes must provide. Unfortunately, the degree to which the Liability and Fund Conventions could compensate such extensive cleanup costs is a matter much in dispute, primarily because the Convention's effective levels of compensation are in doubt.

The limits of liability under the two Conventions are expressed in terms of the "Poincare gold franc," a non-negotiable monetary unit with a value measured in gold. After the two Conventions were drafted, establishing their limitation figures in Poincare francs, several international monetary developments occurred to alter the current dollar equivalent value of the Poincare franc. Official devaluations of the dollar, suspension of the convertibility of the dollar into gold, and great increases in the value of gold on the free market lead to one tentative conclusion: the Poincare franc is now worth more in dollars than it was when the Liability and Fund Conventions were first written.¹⁷¹

The Civil Liability Convention permits shipowners to limit their liability for any one pollution incident to 2,000 francs for each ton of the vessel's gross tonnage or 210 million francs per oil pollution incident, whichever is less.¹⁷² In 1970 these limitation sums were equivalent to the lesser of $134 per gross ton or $14 million.¹⁷³

The aggregate amount of compensation provided by the Liability and Fund Conventions would be 450 million Poincare francs, or $30 million in 1970 dollars.¹⁷⁴ The Assembly of the Fund Convention could increase this amount up to 900 million francs by a three-fourths vote of all parties to the Fund Convention;¹⁷⁵ this was equivalent to $60 million in 1970.¹⁷⁶

By 1973 the enactment of the Par Value Modification Act¹⁷⁷ would have established the following "official" dollar equivalents: the Liability Convention's limits would be $144 per gross registered ton or $15.12 million. The aggregate compensation figure under both Conventions would be $32.4 million, which could be increased to $64.8 million by a three-fourths vote of the Fund Convention's Assembly.¹⁷⁸

However, the levels of compensation which the Conventions would provide when they actually begin to function could be much higher than the estimates last cited. This is true because an increasing number of authorities insist that the value of the Poincare franc should be set by the free market value of gold.¹⁷⁹ This method of valuation, plus a high market price for gold, would greatly increase the amount of compensation available under the two Conventions. Taking one recent value from fluctuating free market gold prices, one authority calculated the aggregate amount which both Conventions would provide for any one pollution incident to exceed $75 million.¹⁸⁰

One can readily understand why many students of oil pollution liability would welcome the increased levels of compensation which a free market valuation of the gold franc would provide under the Liability and Fund Conventions. Free market gold prices might exert only indirect influence on the Conventions' compensation levels, however, since the verified texts of both Conventions provide that the limitation figures expressed in gold francs should be converted into a national currency on the basis of the "official" value of that currency."¹⁸¹ Unfortunately, this reference to official currency values was inadvertently omitted from the text of the Liability Convention which was distributed in the United States by the State Department, leading to widespread confusion on this issue.¹⁸²

Of course, definition of the franc in terms of official values of currencies merely raises the additional question: which "official" values control? Since the Liability Convention is to be implemented by the national courts of each ratifying state, a variety of competing "official gold values" could present difficulties. For example, the French government recently set its "official" value for gold at $175 per ounce. In contrast, the "official" value of gold in the United States is set at $42.22 an ounce, and some nations have set no "official" value for gold.¹⁸³

Similarly, the definition of key terms needed to resolve the franc valuation question are subject to dispute. An "official currency value" might refer either to the official value of gold established by municipal legislation, or to the par value of a national currency which a government established in terms of gold with the International Monetary Fund (IMF). However, recent world monetary developments have rendered these IMF par values all but meaningless, even as reference [5 ELR 50132] values.¹⁸⁴

Any attempt to resolve the complex questions as to the dollar amounts of compensation which the Liability and Fund Conventions will provide lies beyond the scope of this inquiry. However, the maximum levels of recovery under any possible resolution of these questions still leaves doubts as to the adequacy of compensation for the worst foreseeable pollution incidents. This fact provides one additional justification for establishment of a supplementary national liability regime with its own oil pollution compensation fund.

VII.

The Designation of Parties Liable for Oil Pollution Damage Under the Conventions and Under the Domestic Regime

A. Allocation of Liability Based upon Actual Control Over Vessel Operations and Oil Discharges

A number of serious inadequacies of the Liability and Fund Conventions can be partially remedied by placing liability for oil pollution under federal law upon parties other than the shipowner. The Civil Liability Convention places all legal responsibility for oil pollution damage upon the registered owner of the vessel or, in the absence of registration, upon the person owning the vessel.¹⁸⁵ The supposed rationale for this decision relies upon ease of identification and insurability of one registered owner for each vessel.¹⁸⁶ However, this provision means that the charterer of an oil tanker (i.e., the actual operator) would face no liability under that Convention for oil pollution damage he causes.¹⁸⁷

The domestic liability regime should alter the Conventions' simple formula of exclusive shipowner liability to achieve important policy objectives. First, the goal of minimizing oil pollution suggests that joint and several strict liability should rest upon each party who could take significant precautions to prevent polluting discharges of oil. In theory, at least, each liable party would have to insure his risks or demonstrate financial responsibility as a self-insurer. Insurance rates should reflect the likelihood of a liability-inducing oil discharge and should reward safety measures with lower premiums.

This function of liability to discourage negligence and reward safeguards would be poorly served by placing all liability upon registered shipowners, since they rarely have significant control over the operation, manning or navigation of oil tankers.¹⁸⁸ Instead, the typical registered owner is a "strawman" corporation in a "flag-of-convenience" nation.¹⁸⁹ Shipowners often surrender all control of their vessels to bareboat or demise charterers, which are often subsidiaries of the oil companies for which most tankers are in fact constructed.¹⁹⁰

Although charter arrangements can be quite complex, some form of charterer is likely to operate the vessel, so charterers or "operators" usually exercise more effective control over oil tankers than do the "owners." Since negligent operations are responsible for nearly all accidental oil spills,¹⁹¹ imposition of liability upon charterers is needed to provide them with a strong incentive to reduce accidental discharges.

The foregoing rationale is embodied in the various federal statutes which now designate responsibility for vessel oil discharges: all established joint and several strict liability among owners, operators and demise charterers of vessels.¹⁹² A similar approach is employed by the four international conventions relating to liability for nuclear ships: all place full liability upon the operator of a nuclear vessel.¹⁹³

Of course, many oil spills are caused by parties other than shipowners and ship operators. Oil terminal operators discharge much oil negligently upon United States waters while unloading vessels' cargoes and conducting other terminal activities.¹⁹⁴ A shipyard may cause an oil spill by negligent construction of an oil tanker or oil barge. A master of an oil tanker could cause a spill by negligently failing to instruct his crew, or a pilot could run a tanker aground by failing to navigate the vessel properly.

Presumably, a shipowner faced with legal responsibility for pollution under the Liability Convention would protect himself contractually against negligent actions of his charterer-operator or other parties who might actually cause oil discharges. For example, the shipowner would require the vessel operator to carry adequate liability insurance and to hold the shipowner harmless whenever the operator caused an oil spill. Similar arrangements might be made with oil terminal operators or even the shipyards which build oil tankers.¹⁹⁵

[5 ELR 50133]

Appropriately enough, the Liability Convention states that none of its provisions should prejudice the shipowner's right of recourse against third parties.¹⁹⁶ However, that Convention does not provide any assurance that a legally liable (though actually faultless) shipowner will in fact recover from a negligent vessel operator, terminal facility or shipbuilder who might have caused an oil spill.

B. The Function of the United States Domestic Compensation System in Allocating Liability

The proposed domestic liability act should provide a mechanism which would both pay claims expeditiously and ensure that ultimate liability falls upon that party who most directly caused the oil spill in question, whenever possible. Thus claims estsblished by a preponderance of evidence should be paid initially by the Domestic Oil Pollution Compensation Commission. The Commission should thereafter recover its expenditures from that party which was the cause-in-fact of the oil discharge. For the sake of simplicity, the operator of the vessel or terminal from which the polluting oil originated should be strictly liable, unless that "source discharger" could establish that culpable conduct of some third party actually caused the oil spill. The Commission should recover whenever possible from a culpable party, but the Commission could recover from one of the jointly liable parties even if jurisdictional, evidentiary or solvency problems prevented recovery in full from the most culpable party.

To achieve these ends, the domestic statute should create joint and several strict liability for vessel-source oil discharges among the vessel's registered owner, operator, any charterer who actually has significant control of ship operations, any oil terminal owner or operator, any insurer against oil pollution liability, any ship-building company which caused an oil discharge by negligent construction, or any other party which actually caused an oil spill.

The statute should expressly preserve an action over by the liable party against any third party who actually caused the oil spill in question. Limits to each of these liabilities could be established by reference to the maximum levels of insurance available through the private market or through a government insurance program.

The institution of joint and several liabilities would still permit the domestic regime to provide initial payment of all valid claims through the domestic fund, after the claimants had established their losses through a preponderance of evidence. Direct payment of claims by the Pollution Compensation Commission would ensure expeditious compensation without protracted litigation to establish comparative fault.

Although valid claims could be paid by the Domestic Fund in the interest of uniformity, speed and convenience for the claimants, the rights of the identified oil discharger could be safeguarded by permitting him to challenge any claim deemed improper. The domestic fund would then recover its expenditures from one or more of the vessel's owner, operator, builder or insurer.

Ultimately, the burden of liability should fall upon whichever party is shown to have been the actual cause of the oil discharge; furthermore, if any party was at fault, he should be made in one lawsuit joining all parties subject to United States jurisdiction, if this is possible. However, any party forced to pay more than his "fair share" should be able to recover through contribution or third-party actions, even if actions must be instituted in foreign jurisdictions.

The domestic liability statute should state that any party actually responsible for a polluting oil discharge must accept liability under the statute or cover his responsibility with his own insurance.Similarly, the domestic act might explicitly require that whichever party actually controls the operations of an oil tanker must accept legal responsibility for oil spills, all contracts among the jointly liable parties notwithstanding. Of course, each party liable under the United States statute should be required to demonstrate his financial responsibility according to standards established by the United States Oil Pollution Compensation Commission. The imposition of joint and several liability should force all liable parties to adopt needed safeguards or to face economic penalties, because direct liability to the Domestic Fund for repeated oil spills would lead to higher insurance premimums or inability to obtain insurance coverage to demonstrate mandatory financial responsibility.

The value of legislating joint and several liability is demonstrated by the present pattern of government recoveries for its oil pollution cleanup expenditures under the Federal Water Pollution Control Act. Because vessel owners and operators are jointly liable, the government bills (and, if necessary, sues) the party who actually discharged the polluting oil. If a third party was the cause-in-fact of a vessel's oil discharge, that party is also sued by the government, or he can be joined as a party defendant by the ship's owner or operator.¹⁹⁷

Imposition of liability upon vessel operators, charterers, builders, etc., apparently would be consistent with the Liability Convention. Although that Convention contains an "exclusivity provision," this merely requires that all claims against vessel owners be made under the Liability Convention.¹⁹⁸ The exclusivity clause would not preclude independent claims by the domestic Oil Pollution Compensation Fund against [5 ELR 50134] vessel operators, oil terminal companies, shipyards, etc.

In any case in which a registered shipowner appeared to be an appropriate party defendant, the Domestic Fund would seek recovery from him under the terms of the Liability Convention. In many cases the Liability Convention would provide jurisdiction over at least one party defendant even if no other possible defendant were subject to United States jurisdiction.

C. The Domestic Imposition of Liability to Ensure Financial Responsibility

Another justification for imposition of liability on parties other than shipowners by the domestic regime is to ensure full recovery by the domestic fund despite the possible default of shipowners' security under the Liability Convention. Although the Liability Convention requires each liable shipowner to qualify for a certificate of financial responsibility,¹⁹⁹ the fact that many oil tanker registrations utilize flags of convenience raises doubts on the soundness of the certifications, which can be issued only by the state of registration.²⁰⁰ Because certain states which register vessels might not ratify the Liability Convention or wish to cooperate with its purposes, certain flag states might grant security certificates based on inadequate assets or credit, thereby hoping to increase their revenues from tanker registrations.²⁰¹

If a coastal or port state were to object to the soundness of a certificate of financial responsibility, the only "remedy" provided by the Convention consists of "consultations" between the complaining nation and the flag state of the challenged vessel.²⁰² The weaknesses of the Liability Convention's guarantees of shipowner responsibility justify imposition by the United States of the joint and several liability discussed above.

To ensure financial responsibility, the domestic system should require further assurances from vessel operators as well as shipowners, and should police vessels approaching the United States to exclude from our ports and waters ships which do not meet our standards for financial responsibility. The policing of United States financial responsibility requirements raises questions of jurisdiction and freedom of navigation which will be discussed below.

In addition, any domestic requirements for financial responsibility of vessel owners or operators might be attacked as inconsistent with the Convention's plan of financial responsibility. To avoid charges of violation of the Conventions or "denial of justice," the United States should express an appropriate reservation to the Conventions to permit additional domestic requirements for financial security.

VIII.

The Financing and Benefits of the United States Domestic Oil Pollution Compensation Fund

A. The Necessity that the Domestic Compensation Fund Obtain Supplemental Revenues in Addition to Indemnification from Liable Oil Dischargers

The foregoing discussion suggests the rationale for requiring any party responsible for an oil spill to pay for all pollution damage caused thereby. If the domestic liability system in the United States implements this principle, it should not only motivate all liable parties to minimize oil pollution, but also reimburse the Domestic Oil Pollution Compensation Fund for most of its expenditures for government cleanup costs and private claims.

Nevertheless, if the Domestic Compensation Fund attempts to internalize all oil pollution costs by compensating directly from its coffers all pollution damages, the Domestic Compensation Fund's claims for indemnification against liable oil dischargers and the International Fund probably would not suffice to replenish the Domestic Fund, absent additional sources of revenue. One reason why additional funding is necessary is that some oil dischargers will escape liability by establishing defenses recognized by the domestic liability regime (e.g., that an "act of war" caused the oil spill). Similarly, some liable oil dischargers will be unable to pay, and some insurers or other guarantors of financial responsibility will default.

Also, the Domestic Compensation Fund will be unable to recover from the discharger or the International Fund in some cases where no vessel can be proved to have caused the oil pollution damage in question. Even if the United States Oil Pollution Damage Commission were to undertake an expensive program to chemically "tag" each shipment of oil entering our waters to identify the source of each spill, many oil discharges from ships on the high seas would remain untraceable to even an "unnamed vessel."²⁰³ At any rate, although a system of identifying chemical tracers might be useful occasionally to detect intentional or recurring discharges, if would probably be too unwieldy for general use.²⁰⁴

The domestic fund would similarly be unable to recover all of its expenditures from oil dischargers who spill into an already-polluted harbor or waterway. Even if several ships or terminals could be identified as guilty parties, equitable apportionment of damages probably would not be possible because even if the respective volumes of each oil discharge could be determined, the damage done by each could not be ascertained.

Thus may claims paid by the Domestic Compensation Fund will not be balanced with indemnification payments from liable oil dischargers or their insurers. The Domestic Compensation Fund could acquire the [5 ELR 50135] needed supplemental monies from a number of sources. For example, criminal and civil penalties imposed upon intentional or grossly negligent oil dischargers could be deposited in the Domestic Fund. Inevitably, however, a major part of the Domestic Fund's revenues will almost certainly be derived from a levy upon oil cargo interests, collected in a manner similar to that prescribed by the Fund Convention. Nonetheless, the Domestic Fund should improve upon the contribution provisions of the Fund Convention to advance the goal of minimizing oil pollution.

B. The Fund Convention's Imperfect System to Collect Non-Variable Fees on Imported Oil

The Fund Convention's basic means for obtaining income requires private companies which import oil by sea to contribute directly to the International Fund with contributions proportionate to the quantities of oil received.²⁰⁵ Of great importance for an effective domestic liability regime, however, is Article 14 of the Fund Convention, which permits a national government to make all payments to the International Fund on behalf of that nation's contributing oil receivers. By utilizing the option made available by Article 14, the United States can gain the benefitsof both the Fund Convention and the proposed Domestic Oil Pollution Liability Regime.

One advantage gained by administration of all contributions for oil pollution liability by the United States is that the domestic regime could structure its system of levies to provide incentives for private efforts to minimize oil pollution damage. Unfortunately, the Fund Convention seems to require direct contributions to the International Fund to be fixed fees set equally for each ton of oil received by each contributing oil company.²⁰⁶ The Fund Convention makes no provision to vary an oil importer's fees according to the safety record of his terminals or oil tankers, the safety devices he employs on his ships or reception facilities, the training of his employees, etc. Thus the Fund Convention could be said to establish a "no fault" system for oil pollution liability in which negligence is treated identically with care. In contrast to the simplistic regime of the Fund Convention, the theoretically ideal system for internalizing oil pollution costs would assess a variable charge upon every shipment of oil according to the risks of oil pollution associated with its transportation by sea. Obviously, adoption of an optimal system might impose considerable administrative burdens on the Domestic Oil Pollution Compensation Commission and on the oil companies. Nonetheless, the paramount goal of reducing marine oil pollution to an acceptably low level requires that the domestic regime adopt one of the many alternative plans which would simultaneously provide funds to compensate pollution victims and create incentives for oil receivers and transporters to reduce oil pollution.

C. A Proposal That the United States Domestic Fund Charge Fees Which Reflect the Risk of Oil Spills

One proposed system of revenue for the Domestic Compensation Fund would have the Oil Pollution Compensation Commission levy a variable fee on each barrel of oil entering the United States by ship or marine pipeline. This fee would be collected by the oil terminal operator who first receives the oil in the United States. The charge should vary according to the amount of oil pollution associated with the importation of each oil cargo. Thus the charge might be based initially upon the number of oil spills which each specific vessel or terminal had caused in the past, if that record seems indicative of current operating standards.²⁰⁷

A contributing oil terminal or oil tanker should be allowed to decrease its premiums by installing better equipment to prevent pollution, hiring better pollution-control personnel, training employees in pollution-abatement, etc.²⁰⁸ The variable charges applied to each oil tanker could be collected by oil terminal operators upon receipt of each cargo of petroleum.

For administrative simplicity, a series of rate categories could be established to charge the highest premiums to those terminals and vessels most likely to cause oil spills and the lowest premiums to those least likely to discharge oil. These rate categories would eventually be defined with objective criteria based on equipment used, employee training, past record of oil spills,etc., and would be certified for each terminal and oil tanker by the Oil Pollution Compensation Commission or a similar authority.

Thus, for example, when an oil tanker would arrive at a terminal facility, it would show to the terminal operator its official United States rate category certificate. This certificate would inform the terminal operator what rate of variable fee he must collect per barrel of oil unloaded from this particular tanker, in addition to the fee of the terminal itself.

If a system which would charge fees to both vessel operators and terminal companies should be deemed unwieldy, then one set of variable premiums could be levied upon the owner of the oil at the time it is offloaded in the United States. Those charges could vary according to the overall pollution record of the oil importing company, so that the importer would be encouraged to patronize those terminals and vessels which would be least likely to cause oil spills.

From all the monies collected in variable fees from United States oil terminal operators, the Domestic Oil Pollution Compensation Commission would make its contributions to the International Fund pursuant to Article 14 of the Fund Convention. Eventually, the Fund Convention itself should be amended to implement a similar system of fees related to actual risks of oil spills.

Many refinements could eventually be added to the [5 ELR 50136] basic system of variable fees collected by oil terminal operators.For example, additional elements of fee collection could be instituted to encourage both terminal and vessel operators to prevent and identify the source of any oil spill. Each oil tanker entering a harbor or deep-water port in the United States could be required to post a bond with the government authority responsible for water pollution control or with a local agent of the Domestic Oil Pollution Compensation Commission. This bond could be posted on a continuing basis or anew with each cargo, and would be posted in addition to the vessel's variable fee contribution to the Domestic Pollution Compensation Fund. The additional sum would be refunded to the vessel's operator only if no oil spill was caused by that vessel during the transfer of its oil cargo to the shore facility or deepwater port. A similar bond would be posted by each oil terminal operator for each oil shipment received. This sum also would be refunded only if the terminal's employees caused no oil discharge during the transfer.

The bonding system would provide an incentive to terminal operators not only to prevent oil discharges, but also to inspect the work of the vessel's employees; the vessel operator would be similarly motivated to observe the work of the terminal's employees. If an oil discharge occurred, the blameless party would attempt to avoid forfeiture of his "bond" by proving that the guilty party was responsible for the spill.

Implementation of this plan to "bond" vessel and terminal operators for each shipment of oil delivered would impose certain administrative costs at each American port where it operates. However, since more than 90 percent of the total petroleum demand in the United States moves through only 29 major ports, the plan could be adopted without insurmountable expenses of administration.²⁰⁹

D. The United States Domestic Fund as a Device to Avoid Delayed Compensation under the Conventions

The imposition of a Domestic Oil Pollution Compensation Fund as an intermediary between United States claimants and the compensation provisions of the Liability and Fund Conventions would permit American pollution damage claimants to receive payment without the long delays implicit in the Conventions' system. In theory the two Conventions were designed to compensate claimants relatively promptly, since they established "strict liability" for pollution damage. Yet even though time lost in litigation over "fault" would usually be minimal under the Conventions, claimants would nonetheless face long delays before receiving payment.

Delays would stem in part from the limitation periods of the Liability Convention: claims could be submitted for three years from the date of damage, or for six years from the date of the first of series of events comprising a single pollution incident.²¹⁰ The six-year period is justifiable to protect potential claimants who might not be able to determine the full extent of their damages until long after the oil spill occurred. In addition, the six-year period was apparently included to cover a delayed discharge of oil from a sunken or stranded tanker: such a discharge could occur years after the time of the original pollution incident.²¹¹

If the court administering the shipowner's limitation fund under the Liability Convention could foresee the possibility of an aggregation of claims exceeding the limitation figure, a delay in payment for six years would be likely. The Liability Convention requires distribution of a shipowner's limitation fund "in proportion to the amounts of established claims,"²¹² and the court could not know which claims would be established before the six-year period had run. Since all claim payments might have to be reduced proportionately,²¹³ the court would probably delay any payment until six years had passed to ensure equal apportionment.²¹⁴

To spare American claimants the hardships of long delays in compensation, the domestic fund should pay valid claims as soon as possible. The domestic fund could then recover from the vessel owner's limitation fund that portion of compensation available when distribution is finally made.The remainder of the domestic fund's outlays could then be recovered through lawsuits against the jointly liable vessel operator, terminal facility, etc., or from the International Fund, as appropriate.

Obviously, that arrangement would require a lengthy period of limitation during which the Domestic Fund could bring actions against jointly liable oil dischargers. To ensure full recovery of its outlays, the Domestic Fund should be permitted to bring actions for a lengthy period following the initial pollution incident.

IX.

The Respective Provinces of the International and Domestic Systems for Oil Pollution Liability: Jurisdictional Matters

A. Subject Matter Jurisdiction: The Necessity that the United States Domestic Pollution Liability System Cover Non-persistent Petroleum Distillates

The Civil Liability Convention does not establish shipowner liability for all petroleum pollution but only for spills of

… any persistent oil such as crude oil, fuel oil, heavy diesel oil, lubricating oil and whale oil … (emphasis added)²¹⁵

The Fund Convention restricts its subject matter even further to persistent hydrocarbon mineral oils, defined [5 ELR 50137] as "crude oil" and "fuel oil."²¹⁶

The term "persistent oil" has no recognized technical meaning,²¹⁷ but will be defined by the courts as they decide cases under the two Conventions. In all probability, however, the more refined petroleum products, including gasoline, naphtha, and kerosene, would not be subject to the two Conventions, since these volatile distillates leave relatively little residue after evaporation and emulsification with water has occurred.²¹⁸ On the other hand, any petroleum product which does cause actual damage from identifiable residue might reasonably be designated "persistent."²¹⁹

Because spills of the "non-persistent" oil distillates could damage many interests in the United States, the Domestic Oil Pollution Compensation System should cover these products, at least until the Liability and Fund Conventions are amended to include them. For example, liability for spills of gasoline and kerosene should be enforced, because these highly refined petroleum products are very toxic to marine life in the immediate area and time of the spill.²²⁰

It is reported that approximately 37 percent of the intra-coastal tanker traffic around the continental United States now carries "non-persistent" oil products.²²¹ This percentage is expected to increase in coming years, since major refineries now being developed in a number of Caribbean nations are expected to distill gasoline and kerosene for export to the United States.²²²

If Congress fails to establish appropriately strict liability standards for non-persistent petroleum pollution, this failure will provide an incentive to evade all United States pollution liability coverage. Even if the United States becomes a party to the Liability and Fund Conventions, crude oil could be refined in a neighboring nation and the resulting gasoline or kerosene could be shipped to the United States without full liability for possible pollution damage.

B. Territorial Jurisdiction of the International and Domestic Systems of Oil Pollution Liability

Both the international and domestic regimes to compensate oil pollution damage must contend with the thorny problem of territorial jurisdiction over areas of the ocean where oil pollution damage could occur. Related jurisdictional questions would be presented by national measures to exclude from our territorial sea or contiguous zone vessels which have not satisfied the requirements of the United States for financial responsbility. These two sets of jurisdictional questions will be discussed in turn.

1. Jurisdictional Questions Arising From the Disputed Maximum Permissible Breadth of the Territorial Sea

The Liability and Fund Conventions create civil liability for a polluting discharge of oil no matter where the spill occurs so long as the "pollution damage (is) caused on the territory including the territorial sea of a Contracting State…."²²³ Thus even though many oil spills result in pollution damage on the high seas to living marine resources and to ships and fishing equipment, the Conventions will compensate injuries only in the territorial sea.

Although the question of the maximum breadth of the territorial sea is notably unsettled, the two Conventions do not establish their own measure nor do they refer to any international standard to delimit the territorial sea in which pollution damage is compensable. Since the Conventions will be enforced by the domestic courts of each nation,²²⁴ each judiciary will presumably apply its own official measure of its nation's territorial sea, whether that be three miles, twelve miles, or even 200 miles in breadth.

The above factors obviously suggest one additional justification for the United States to extend our territorial sea claim to the maximum permitted by international law (presumably twelve miles, although even this breadth is not yet accepted by the United States).²²⁵ Extension of our territorial sea to twelve miles would protect the interests of the United States under the two Conventions on a parity with other nations by permitting United States claims for oil pollution damage as far seaward as possible.

More importantly, unless the wide discrepancies between claims of territorial seas are resolved at the U.N. Law of the Sea Conference or elsewhere, serious problems in the operation of the two Conventions will result. For example, the United States might prejudice its current position on the maximum permissible breadth of the territorial sea if our courts recognize foreign judgments in compliance with Article X of the Liability Convention for pollution damage 150 miles from the coast of any nation which claims a 200-mile territorial sea. Recognition by the United States of a 200-mile territorial sea for the two Conventions might [5 ELR 50138] encourage such claims of excessive territorial jurisdiction for all purposes, jeopardizing freedom of navigation, scientific research, naval mobility, etc.²²⁶

At least until international agreement is reached on the territorial sea question, the United States might resolve this dilemma with a reservation in its ratification of the Conventions and a corresponding provision in our domestic implementing legislation. These enactments would provide that our courts may recognize judgments under the Liability Convention for pollution damage occurring within only that breadth of territorial sea accepted by the United States as legitimate under international law. This determination could be made by the State Department and promulgated in the Federal Register or by certification to our courts on a case-by-case basis.

At present, this reservation might restrict recognition by the United States of foreign judgments to those judgments based on pollution damage within a three-mile territorial sea. However, the State Department would have discretion to accept greater territorial sea claims if appropriate, pending resolution of these questions by international agreement.²²⁷

Significantly, if the United States treaty reservation were not properly and clearly expressed and our courts refuse to give effect to judgments rendered by foreign national courts for pollution damage more than three miles from shore, the United States might be charged with "denial of justice" under the Conventions. Both the Liability and Fund Conventions require mutual recognition of judgments among contracting states,²²⁸ and no exception is provided for the territorial sea controversy. To avoid a "denial of justice" charge,²²⁹ the United States should carefully state its reservation to acceptance of the Conventions to clarify the aforementioned position of the United States on the territorial sea.²³⁰

2. Jurisdiction of the United States Domestic Pollution Liability Regime over the Contiguous Zone

Because the Liability and Fund Conventions compensate pollution damage only in the territory or territorial sea of a contracting state, no damage on the high seas, and thus no damage in the contiguous zone of the United States, would be covered by the Conventions. The contiguous zone, lying between the outer limit of our three-mile territorial sea and the twelve-mile limit of the contiguous zone,²³¹ contains valuable marine resources vulnerable to oil pollution damage. In addition, the contiguous zone of the United States is regularly subjected to many sizeable oil discharges. In 1971, 392 major oil spills were reported in the zone, and 696 spills were reported in 1972.²³² Thus Congress should create civil liability for oil discharges in the contiguous zone and forbid entry into the contiguous zone by vessels not satisfying our standards for financial responsibility, if the United States has jurisdiction to enact and enforce these measures for our contiguous zone.

The United States now asserts certain powers to control oil pollution in our contiguous zone.²³³ For example, the terms of the Federal Water Pollution Control Act now have a limited but significant application to the zone. Because the Act and its enforcing regulations forbid polluting discharges of oil and establish civil liability for government cleanup expenses in the contiguous zone, Congress has apparently asserted jurisdiction for both of these purposes.²³⁴ Congress would merely reassert this present jurisdictional claim by adopting a comprehensive oil pollution liability regime for the contiguous zone. Because the Civil Liability Fund Conventions do not consider pollution damage in the contiguous zone, coverage of the zone by the United States domestic liability regime is consistent with the Conventions. The degree to which international law would permit enforcement of domestic law liability for oil discharges in contiguous zone is uncertain, but a reasonable case for assertion of jurisdiction by the United States can be made.

a. United States' jurisdiction over oil spills in the contiguous zone which damage territorial waters

First, an oil spill in the contiguous zone which causes pollution damage to United States territory or territorial sea probably would be subject to civil or criminal jurisdiction of the United States. This position finds support in the 1958 Territorial Sea Convention, which permits each coastal state to "prevent infringement of its … sanitary regulations within its territory or territorial sea … [and to] punish infringement of the above regulations committed within its territory or territorial sea."²³⁵ The jurisdiction of a coastal state over the contiguous zone for "sanitary matters" is broad enough to include some pollution control regulations, although even this proposition is disputed.²³⁶

[5 ELR 50139]

To enforce United States civil liability provisions, criminal jurisdiction might conceivably be asserted against any polluting ship which later enters territorial water of the United States, if pollution damage extends to the United States territorial sea or coast.²³⁷ However, criminal arrest or punishment for pollution damage limited to the contiguous zone may still be beyond accepted limitations of international law. For example, the Territorial Sea Convention sanctions criminal jurisdiction for a coastal state only for acts within its territory or territorial sea.²³⁸

b. Jurisdiction of the United States over oil pollution damage limited to the contiguous zone

An oil spill which causes pollution damage only in the contiguous zone poses more difficult jurisdictional problems for imposing civil liability. Of course, any United States flag vessel would automatically be subject to United States civil jurisdiction and control, in the contiguous zone or elsewhere and regardless of where the oil spill occurred,²³⁹ but foreign oil tankers present more difficult questions.

(1) Foreign flag ships which eventually enter United States territorial waters. Vessels of foreign registry which cause oil pollution damage only to the contiguous zone but later enter United States ports can be subjected to United States civil jurisdiction as a condition of port entry. The domestic liability regime would require proof of financial responsibility to be deposited in the United States, so a foreign flag ship which later enters United States ports would be subject to effective civil jurisdiction for pollution damage in the contiguous zone.²⁴⁰ Since most oil tankers navigating in the contiguous zone will eventually enter ports of the United States or will use our deepwater terminals, civil jurisdiction could be asserted over most foreign flag-source oil spills in the contiguous zone.²⁴¹

If necessary the United States might even levy execution upon ships which cause pollution damage in the contiguous zone and then proceed to United States ports or into United States territorial waters. Article 20(2) of the Territorial Sea Convention provides that:

The coastal state may not levy execution against or arrest the ship for the purposes of civil proceedings save only in respect of obligations of liabilities assumed or incurred by the ship itself in the course or for the purpose of its voyage through the waters of the coastal state. (emphasis added)

Oil discharges into the contiguous zone from a deballasting tanker bound for a United States port might arguably be said to create civil liability "for the purpose of its voyage" to waters of the United States, thus permitting arrest for civil liability purposes.

Further support for enforcement of United States civil liability is found in Article 20(3) of the Territorial Sea Convention, which recognizes:

the right of the coastal state in accordance with its laws, to levy execution against or to arrest, for the purposes of any civil proceedings, a foreign ship lying in the territorial sea…. (emphasis added)

(2) Foreign flag ships which do not enter territorial waters of the United States. The most troublesome jurisdictional questions are raised by foreign flag vessels which attempt to enter the contiguous zone of the United States or which actually cause pollution damage in the contiguous zone, yet the offending vessel never enters United States territorial waters or a United States port. The jurisdictional assertions of current national legislation and of developing international law suggest that a reputable case can be posited to enforce the new United States pollution liability regime even in these circumstances.

The Federal Water Pollution Control Act now asserts jurisdiction over all oil discharges in the contiguous zone of the United States if they may later pollute United States territory or territorial sea or threaten the fishery resources of our contiguous zone.²⁴² This claim of jurisdiction has substance, because the regulations promulgated by the Interior Department to enforce the Act forbid any oil discharge in the zone which would leave a visible sheen of oil on the water or a suspended sludge underneath the water, declaring any such discharge to be harmful.²⁴³

In support of this broad assertion, some legal scholars contend that customary international law already has established a coastal state's right to protect its contiguous zone from pollution by excluding vessels and otherwise enforcing civil liability in the zone.²⁴⁴ In addition, a liberal reading of the Convention on the Territorial Sea and the Contiguous Zone would permit exclusion of vessels to prevent infringement of "sanitary regulations," as noted previously. That Convention would also permit the United States to forbid passage by vessels which do not "comply with the laws and regulations enacted by the coastal state …"²⁴⁵ However, the State Department has not yet accepted these interpretations of international law, which would broaden coastal [5 ELR 50140] state jurisdiction over areas of the high seas.²⁴⁶

If civil jurisdiction should be claimed by the proposed United States domestic liability regime, the only remedy which the domestic fund could seek often would require suit in the courts of a foreign vessel's state of registry. If the domestic fund has already paid claims for pollution damage caused by such a foreign flag ship, recovery by the domestic fund would be problematical in many foreign suits.

3. The Role of the State Department in Resolving Jurisdictional Questions

All of the above questions on territorial jursidiction are now subjects of legal controversy and sensitive diplomatic negotiations. The resolution of many jurisdictional questions by the Domestic Oil Pollution Compensation Commission or by federal courts might require the advice of the State Department to preclude interference with American diplomatic efforts, most notably those at the current U.N. Law of the Sea Conference.

For these reasons the State Department has proposed that the following provision be included in legislation to establish a comprehensive oil pollution liability system:

Section 13(a) The jurisdiction of the United States for purposes of this Act shall be exercised in conformity with international law; and the Commission shall consult with the Secretary of State to assure that no actions are taken pursuant to the Act which are contrary to international law.

(b) The Commission is authorized and empowered, with the concurrence of the Secretary of State, to retain legal counsel and to do all other necessary acts to institute and maintain legal actions or other proceedings, in foreign states (emphasis added).²⁴⁷

X.

Initiatives by the United States to Effectively Implement the Liability and Fund Conventions as International and Domestic Law

A. Action by Congress to Strengthen Article 5(3) of the Fund Convention

By emphatically expressing its interpretation of terms in the legislative history of Senate advice and consent or in domestic implementing legislation, Congress may be able to salvage a significant clause of the Fund Convention which has the potential to reduce marine oil spills. Arguably, the "shipowner indemnity" function of the Fund Convention could decrease a vessel owner's incentive to minimize oil pollution, since it operates as follows.

The International Fund will indemnify a shipowner for his damage payments paid pursuant to the Liability Convention, to the extent that his liability exceeds 1,500 francs per gross ton of the vessel or 125 million francs per incident, whichever is less, up to the Liability Convention's limit of 2000 francs per gross ton or 210 million francs, whichever is less.²⁴⁸ The Fund Convention's reduction of shipowner's liability might proportionately reduce his motivation to avoid oil discharges.

To provide each shipowner with an additional incentive to prevent oil spills, Article 5(3) of the Fund Convention conditions the obligation of the International Fund to indemnify a shipowner upon his compliance with four specified IMCO Conventions. To avoid payment the Fund must carry the burden of proving the shipowner's non-compliance, however.²⁴⁹ The four specified Conventions are the International Convention for the Prevention of Pollution of the Sea by Oil, 1954, as amended in 1962,²⁵⁰ the International Convention for the Safety of Life at Sea, 1960,²⁵¹ the International Convention on Load Lines, 1966,²⁵² and the International Regulations for Preventing Collisions at Sea, 1960.²⁵³ The Fund Convention would automatically change the requirements for indemnification as the four specified Conventions are updated by amendment²⁵⁴ or by replacement conventions.²⁵⁵

Article 5(3) of the Fund Convention seems quite beneficial when taken at face value. For example, Article 5(3) increases the effectiveness of the four listed Conventions, since Article 5(3) applies to all indemnification claims whether or not the liable vessel's state of registry is a party to the relevant IMCO Convention.

This feature of the Fund Convention is a marked departure from the traditional rule by which IMCO dealt only with national governments.²⁵⁷ Article 5(3) bypasses national acceptance of the four IMCO Conventions by inducing each individual shipowner to comply whether or not his vessel's state of registry is a party to those Conventions. Article 5(3) thus expands a progressive principle implicit throughout the Fund Convention, since it requires private parties to deal with international legal rights, duties and fora independently of their national governments.²⁵⁸

Despite the beneficial nature of Article 5(3), that provision will have little real utility in reducing oil pollution incidents unless Congress acts decisively to strengthen its effectiveness. One serious defect of Article [5 ELR 50141] 5(3) which should be remedied by legislation is the probable limited application of that article to those shipowners who effectively control their vessels. Article 5(3) would bar indemnification from the Fund only if a vessel failed to comply with one of the specified Conventions in a situation where the shipowner himself had "actual knowledge or privity."²⁵⁹ In maritime law, "actual fault or privity" traditionally has meant personal fault rather than the fault of a vessel's master or crew attributed to the shipowner under the doctrine of respondeat superior.²⁶⁰

As previously explained, the "owner" of an oil tanker usually has no knowledge of or connection with the operation of his vessel,²⁶¹ so Article 5(3) would not bar his claim for full indemnification even if the tanker's operator or master had violated many provisions of the four specified IMCO Conventions. Thus numerous operational requirements of the Collision Regulations and other Convertions would not affect most registered tanker owners.

Nonetheless, if properly interpreted, Article 5(3) should at least deny indemnification to the registered owner of an oil tanker if his vessel violates the ship construction requirements of the four Conventions; knowledge of a vessel's construction could be presumed of its owner. To ensure this result, in the process of giving advice and consent to the Fund Convention the Senate should express its interpetation of Article 5(3) as establishing a prima facie case to deny indemnification if the Fund proves a violation of the construction standards of the Load Line Convention, the Safety of Life at Sea Convention, or the 1971 amendments to the 1954 Oil Pollution Convention.²⁶²

United States implementing legislation for the Fund Convention also might attempt to enforce Article 5(3) more generally against shipowners by "redefining" the legal effect of "actual knowledge or privity" for purposes of Article 5(3). The Congress might flatly state its interpretation of that term to impute to the shipowner the actions of master, crew, or even a charterer-operator. Although this redefinition might appear to require semantical gymnastics, substantial authority already supports general imposition of respondeat superior liability on a shipowner despite a statutory prerequisite of his "privity or knowledge." Gilmore and Black, the Admiralty Law Scholars, in addition to Senator Edmund Muskie and Allan Mendelsohn, an expert on maritime law, have all indicated that the "privity or knowledge" requirement of the limitation of Liability Act presents no bar to full shipowner liability for oil pollution damage.²⁶³ Even if the "escalated" requirement of "actual knowledge or privity" found in the Liability Convention could not be interpreted into oblivion, a senatorial expression of disapproval might lead to rapid amendment of the Fund Convention to eliminate that unwise condition for shipowner liability.

Standing alone, Article 5(3) also might prove ineffective because only the "requirements" of the four specified IMCO Conventions bind claimant shipowners, while most of those Conventions' provisions are recommendations, not true requirements.²⁶⁴ A related defect of Article 5(3) is that many of the causes of oil pollution incidents are not now covered by the four specified Conventions or by their implementing recommendations adopted by the IMCO Council or Assembly to date.²⁶⁵

To remedy these failings of Article 5(3), United States implementing legislation for the Fund Convention should express our interpretation of "requirement" to include at least all of the "recommendations" of the four IMCO Conventions.²⁶⁶ In addition, the Congress might express its understanding of "requirements" to include recommendations of the IMCO Council and Assembly to implement those Conventions.²⁶⁷ If accepted, this interpretation by the United States would encourage IMCO to broaden the effective scope of the four specified Conventions by promulgating effective rules on tanker operating procedures, port traffic control and separation plans, navigation, crew and officer training, tanker construction standards, and similar means to reduce oil pollution incidents.²⁶⁸

B. Resolution of the Difficulties in Establishing the Source of Specific Oil Pollution Damage

The Civil Liability Convention allows a damaged claimant to recover only if he can identify the vessel which caused the particular pollution damage he demonstrates.²⁶⁹ The Fund Convention will compensate claimants who cannot identify a specific vessel which discharged oil, but the International Fund will not compensate any claim if "the claimant cannot prove that his damage resulted from an incident involving one or more ships."²⁷⁰

The claimant's burden of identifying the source of his pollution damage would present an insurmountable [5 ELR 50142] obstacle to many legitimate claims, since the sources of oil pollution are many, as indicated by the percentage breakdown by source offered in the Introduction to this article. For instance, natural seeps of petroleum from the ocean floor are thought to contribute relatively little oil to the pollution problem,²⁷¹ however, they could provide another scapegoat by which shipowners under the Liability Convention or the International Fund of the Fund Convention could evade liability.

Since vessels frequently can discharge waste oils under cover of night, many claimants could not specifically identify one polluting vessel to satisfy the burden of the Liability Convention. In industrialized coastal areas, or in regions with offshore drilling or natural seeps, many claimants could not satisfy the Fund Convention's burden by proving that their pollution damage was caused by any vessel.

Further, if oil discharges from more than one source do pollute an area, it may be impossible to specify which oil did what amount of the total pollution damage sustained by a claimant. This failure also would make recovery all but impossible under either Convention, since both compensate only vessel-source pollution damage.

Of course, the resources available to most claimants for investigating the origins of polluting oil would be quite limited. Yet neither the Liability nor the Fund Convention provides for any administrative machinery to assist in investigating polluting oil discharges.

Principles of equity and the goal of fully internalizing the social costs of the petroleum industry would suggest that the United States Oil Pollution Damage Compensation Fund should pay those claims where pollution damage is established but where the sources of the oil are unknown. However, domestic Fund compensation of all established pollution damage would remove important incentives for the claimants themselves to investigate and identify the specific source of oil pollution damage. Claimants should be strongly encouraged to identify polluters, because the imposition of liability on oil polluters will discourage avoidable oil discharges. Unless polluting sources are identified and penalized, neither civil nor criminal sanctions nor higher insurance premiums could operate to discourage polluting discharges. Adequate evidence to identify polluters is also necessary to permit replenishment of the Domestic Oil Pollution Compensation Fund, which should recover most of its outlays from specific oil dischargers under the Liability Convention or domestic law, or from the International Fund.

The domestic compensation regime could motivate claimants to determine the sources of polluting oil by paying decreased compensation if no pollution source were identified by the claimant. Alternatively or additionally, the Domestic Fund could establish its own system of investigations to determine the source of polluting oil. The investigatory apparatus of the domestic system of pollution liability might be supplemented and assisted by a similar investigations administration which might logically be proposed for the Fund Convention. As would be true under the domestic system, the Fund Convention would provide the individual claimant little incentive to identify the specific ship which discharged oil, since proof that any vessel caused damage would permit recovery under the Fund Convention. Thus the administrators of the International Fund should cooperate with the Domestic Fund to identify the particular guilty vessel so that ship could be held liable for oil pollution damage it had caused.²⁷²

C. The Interpretation of Shipowners' Defenses under the Conventions and the United States Domestic Liability System

1. The Narrow Scope of Shipowners' Defenses:

Causation of Pollution Damage

Compensation vel non for claimants under the Liability and Fund Conventions often will depend upon the interpretation and scope of several defenses available to the shipowner. The Liability Convention grants shipowners a complete defense if the pollution damage in question:

(a) resulted from an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irresistible character, or

(b) was wholly caused by an act or omission done with intent to cause damage by a third party, or

(c) was wholly caused by the negligence or other wrongful act of any government or other authority responsible for the maintenance of lights or other navigational aids in the exercise of that function.²⁷³ (emphasis added)

The imprecise wording of the Liability Convention raises doubts as to whether or not one of the listed exculpatory events must be the sole cause of pollution damage before it can serve as a shipowner's defense. The consensus of the scholarly commentators and the United States Department of Justice holds that, in the context of these defenses, "resulted from" should mean "was wholly caused by."²⁷⁴ Nonetheless, national implementing legislation for the Liability Convention should stipluate that the two terms are identical in the view of the United States. These shipowner defenses should be read narrowly because some element of negligence or intent is usually responsible for oil discharges.²⁷⁵ Thus the domestic Oil Pollution Compensation Commission and the courts should place [5 ELR 50143] liability upon a shipowner or other party if he had any responsibility for an oil spill.

Furthermore, restricted application of shipowners' defenses is necessary even though the terms of the Fund Convention will compensate pollution damage for many claims where the shipowner escaped liability through a defense.²⁷⁶ As previously noted, direct liability of a shipowner is desirable for any pollution incident where the fault of the shipowner or his agents contributed to cause pollution damage, because shipowner liability has a necessary deterrent effect.

To provide the charterers-operators of vessels with strong incentives to prevent oil pollution incidents, the Domestic Liability System might reasonably hold ship operators liable even for those oil spills caused by "acts of God" or "acts of war." A certain incidence of such disasters could be anticipated by tanker operators, who could purchase insurance to cover those risks. Strong precedents for such an imposition of "absolute liability" are provided by the several international agreements on aircraft disasters, which do not grant to airlines similar defenses for "acts of God or war."

However, since the "act of God" or "act of war" defenses are provided by the Liability Convention, they should also be integrated carefully with the domestic regime in the United States to ensure compatibility between the two systems, as discussed immediately below.

2. The Necessity that Defenses under the Domestic Liability System in the United States be Identical with Defenses under the Conventions

The precise wording of the shipowner's defenses under the Conventions is highly significant. Unfortunately, the draftsmen of the national Oil Pollution Liability Bill thus far have not utilized the Conventions' terminology but instead have taken phrases from existing United States statutes, such as the Federal Water Pollution Control Act and the Trans-Alaska Pipeline Statute. Two representative defenses found in the Liability and Fund Conventions demonstrate the importance of using the Conventions' terms in drafting the domestic liability legislation.

a. The "act of war" defense

Under the two Conventions, neither the shipowner²⁷⁷ nor the International Fund²⁷⁸ is liable for pollution damage caused by "an act of war, hostilities, civil war or insurrection …" In contrast, all present United States legislation on oil pollution and the drafts of the Comprehensive Oil Pollution Liability and Compensation Bill provide a defense only for "acts of war."²⁷⁹ Even though "act of war" is a term of art which denotes conflicts other than formally declared wars, the national Comprehensive Oil Pollution Liability and Compensation Act should use the Conventions' more specific formulation.

Furthermore, if the domestic liability statute permits only an "act of war" defense for registered vessel owners, refusal of our domestic liability regime to recognize an "insurrection" as a shipowner's defense might lead to a "denial of justice" charge against the United States. Shipowner liability in that case would be inconsistent with the Liability Convention's terms and thus would violate the shipowner's rights under international law.

b. The "act of God" defense

The importance of using the precise terms of the Conventions in drafting domestic legislation on oil pollution liability is further demonstrated by another shipowner's defense. Under the Liability Convention the shipowner has a complete defense if oil pollution damage "resulted from a natural phenomenon of an exceptional, inevitable and irresistible character."²⁸⁰ Some commentators have equated this defense with the common law "act of God" defense and have predicted identical interpretations by the courts of common law countries.²⁸¹ Similarly, the draft bill proposing the domestic oil pollution liability system has provided for an "act of God" defense for vessel owners and operators, apparently because the term "act of God" is used in the Federal Water Pollution Control Act.²⁸²

However, the two defenses are not identical in legal effect,²⁸³ so the Domestic Liability Act should provide for a "natural phenomenon" defense using the same language as the Civil Liability Convention. It is true that the "natural phenomenon" defense does not apply to the Fund Convention: thus claimants usually would recover from the International Fund even if a shipowner escaped liability because the oil spill in question was caused by a hurricane, tidal wave or other "act of God." The difference between an "act of God" and a "natural phenomenon" under the Liability Convention might have great importance for certain shipowners, however, since their liability vel non could depend upon the distinction.

The usual formulation of the common law "act of God" defense differs on its face from the Liability Convention's "… natural phenomenon of an exceptional, inevitable and irresistible character." Thus, the definition [5 ELR 50144] of "act of God" provided by the Federal Water Pollution Control Act is "an act occasioned by an unanticipated grave natural disaster."²⁸⁴

One distinction between the two defenses arises from the condition that the Convention's "natural phenomenon" be "exceptional." The common law "act of God" need not be an exceptional occurence, but can be any storm or lightning, in addition to more extreme events.²⁸⁵ Furthermore, an oil spill caused by a hurricane at a season and in an area where such storms are known to occur would be subject to a shipowner's defense under the "act of God" formulation but not under the Convention's terms, since the storm would not be "exceptional."²⁸⁶

Another distinction between the common law "act of God" and the Liability Convention's "natural phenomenon" is the condition that the latter be "inevitable." Taken in its usual sense, an "inevitable" event is one which no human being could prevent despite utmost efforts and care to escape harm.²⁸⁷ Thus to avoid the Convention's liability a shipowner would have to prove that no one could have averted the phenomenon under any circumstances.

This contrasts with the common law "act of God" defense, which would allow the shipowner to defend against liability if he merely did all that reasonably could have been expected of the shipowner in his particular circumstances to avoid the disaster. Thus, under the Liability Convention the shipowner cannot invoke the "natural phenomenon" defense if any degree of care and foresight by any person could have avoided the phenomenon; the "act of God" defense would require only reasonable efforts of the particular defendant shipowner.²⁸⁸

Because the Convention's defense is clearly narrower than the common law "act of God," the former should be used in the domestic liability statute. This would promote consistency of interpretation between the national and international regimes and would ensure that the Domestic Fund of the United States would be able to recover its expenditures from a greater number of shipowners through the Liability Convention's machinery.

C. The Defenses of Government Negligence and International Destruction of a Polluting Vessel

Another potentially troublesome shipowner defense under the Liability Convention provides that:

If the owner proves that the pollution damage resulted wholly or partially either from an act or omission done with intent to cause damage or from the negligence of that person, the owner may be exonerated wholly or partially from his liability to such person.²⁸⁹

Arguably, this provision could allow a shipowner to refuse compensation for government cleanup expenses where the government intentionally destoryed a grounded vessel or was negligent in the cleanup methods used.²⁹⁰

Such an interpretation of the Liability Convention would be incomsistent with the specific defense provided in the Liability Convention for government actions. That defense absolves the shipowner only for government negligence or misdeeds in maintaining "lights or other navigational aids."²⁹¹ The Convention's "government action" defense apparently reflects the emergency nature of government cleanup operations, which must be undertaken promptly with many procedures still in an unperfected stage of development. Thus the Liability Convention apparently adopts the view that a government should not be denied reimbursement for its good faith efforts to prevent oil pollution even when those efforts require destruction of a stranded vessel or suggest negligence on the part of governments.

To ensure that the Liability Convention will be interpreted to compensate all United States Government emergency actions, the national enabling legislation for the Conventions should provide that no government preventive or cleanup measure can qualify as a third party act to absolve a shipowner under the Liability Convention or United States domestic law. In the unlikely event that the United States would lose in an international challenge to this interpretation by a shipowner, the Domestic Fund could still recover all government expenses from jointly liable ship operators or terminal operators, if domestic law of the United States permits this.

To ensure government recovery, the proposed Comprehensive Oil Pollution Liability Act should alter the current domestic law in the United States, which now provides an unsatisfactory resolution of the government negligence question. First, the Federal Water Pollution Control Act authorized the government to "remove or eliminate"²⁹² a pollution threat and to "summarily remove, and, if necessary, destroy (a) vessel …"²⁹³ which is damaged and spilling oil. Any government expense incurred in these emergency measures can be recovered from the oil discharger who is liable under the Federal Water Pollution Control Act for government cleanup costs.²⁹⁴

On the other hand, an oil discharger who is otherwise liable can defend against efforts to recover government [5 ELR 50145] cleanup expenses if

an owner or operator can prove that a discharge was caused solely by … negligence on the part of the United States Government …²⁹⁵

Similarly, the Trans-Alaska Pipeline Statute grants vessels' owners and operators a defense against strict liability if any negligence of the United States Government caused the pollution damage at issue.²⁹⁶ These defenses contrast with those of the Liability Convention and the Deepwater Port Act, which absolve a shipowner only for negligent government maintenance of lights or other aids to navigation.

To make United States law uniform and compatible with the Liability Convention, the proposed Comprehensive Oil Pollution Liability Act should continue broad authorization of government emergency and cleanup measures, and should provide that the oil discharger has no right to challenge government costs except as to reasonableness of amount to reflect actual expenditures. In clearly adopting this policy the Domestic Liability Regime would reasonable follow the "successive tortfeasor rule." That is, the first tortfeasor (the oil discharger) should be liable for all the probable consequences of his actions, including the negligence of later tortfeasors (the government in cleanup operations).²⁹⁷ Expressed differently, the discharge of oil or the grounding of a tanker would be the "proximate cause" of the oil pollution damage, even if government actions later wer contributory causes.

Adoption of this uniform rule for domestic liability law in the United States would permit the national Oil Pollution Compensation Fund to recover from oil dischargers for all government cleanup expenses, including emergency measures and "negligent" mishaps. Such a provision would comply with the letter and spirit of the Liability Convention and would implement the sound principle of internalizing all social costs of the petroleum industry.

XI. Conclusion

The inadequate remedies now available to the victims of oil pollution in the United States and abroad should be generally revised and augmented. To preclude the proliferation of inconsistent statutory plans for oil pollution liability among our states and within the federal government, one comprehensive program should be enacted by Congress.

To promote international cooperation and uniformity in dealing with oil pollution compensation, the United States also should ratify the IMCO Liability and Fund Conventions, and accept those treaties as major components of the United States compensation system. Of course, the Conventions' failings must be remedied by our domestic legislation.

Integration of the international and the domestic regimes will present difficulties, but these problems can be overcome. Surely the Congress will respond positively to the challenges for careful legislating which this subject provides, and the Executive Branch will cooperate to establish domestic and international systems for oil pollution liability.

Although the immediate problem of vessel-source oil pollution has claimed the attention of this article, the principles discussed herein have far broader implications. The author hopes that the approaches examined in this study eventually will apply to all oil pollution, regardless of source. In all probability, the Liability and Fund Conventions will be restricted to consider pollution from vessels. However, the national Domestic Oil Pollution Liability and Compensation System should eventually cover all oil pollution of our navigable waters, no matter where polluting oil discharges originate.

Furthermore, the principles supported in this article should be applied to the great number of non-petroleum pollutants which now are discharged into international waters free of civil liability. Thus the Liability Convention should be amended to cover vessel-source discharges of non-oil pollutants, and the Domestic Oil Pollution Liability and Compensation System for the United States should be expanded similarly. Hopefully, these international and domestic liability systems eventually will reduce to a socially acceptable minimum all pollution of the world's waters, while at the same time compensating society for all pollution which cannot be prevented.

1. See, inter alia, Green, Internalizing the Costs Associated with Catastrophic Accidents in Energy Systems, Draft Article, (Aug. 1, 1973); Institute on Man and Science and U.S. Environmental Protection Agency, Assessing the Social Impacts of Oil Spills (1974) (G. Enk, Editor and Project Director); Kuzmach, Measures of the Potential Economic Loss from Oil Pollution, Professional Paper No. 67, Center for Naval Analyses (1971); Mendelsohn, Maritime Liability for Oil Pollution — Domestic and International Law, 38 Geo. Wash. L. Rev. 1 (1969); Note, Civil Liability for Oil Pollution, 10 Hous. L. Rev. 394 (1973); Sweeney, Oil Pollution of the Oceans, 37 Fordham L. Rev. 195 (1968).

2. 8 Intl. Legal Materials 453 (1969); 9 Intl. Legal Materials 45 (1970). For citation purposes the Liability Convention will be designated CLC hereinafter.

3. For the text of the Fund Convention, See Exec. K, 92nd Cong., 2nd Sess.; or Hearings before the Subcomm. on Oceans and International Env. of the U.S. Sen. For. Relations Comm., 93rd Cong., 1st Sess., Apr. 17 and 18, 1973; J. of Mar. L. and Comm. at 627-45 (1972), "Message of President Nixon," May 5, 1972. The Fund Convention hereinafter will be cited as FC.

4. Marine Science Affairs — Selecting Priority Programs, Annual Report of the President to the Congress on Marine Resources and Engineering Development (1970).

5. U.S. National Academy of Sciences, Petroleum in the Marine Environment (Jan. 1975).

6. Source: Study of Critical Environmental Problems; Man's Impact on the Global Environment (1970). Some authorities suggest that the greatest quantities of hydrocarbons enter the oceans via the atmosphere as vaporized petroleum products of combustion. However, this source of marine hydrocarbons is not considered herein, since "pollution damage" therefrom has not been documented. See National Academy of Science, Marine Environmental Quality, Ocean Science Comm. Report, pp. 106-8 (1971).

7. Sweeny, supra n. 1, 37 Fordham L. Rev. at 156.

8. Id.

9. This development is further discussed at Section VI (F) infra.

10. The relatively minor problem of compensation for oil pollution from vessels owned by the United States Government is now handled through federal statutory claims provisions (e.g, Public Vessels Act, 46 U.S.C. § 781 et seq.; Suits in Admiralty Act, 46 U.S.C. § 741 et seq.; Admiralty Extension Act, 46 U.S.C. § 740).

11. This problem is examined at Section X infra.

12. T. Lundquist, "Compensation for Oil Pollution Damage", in Assessing the Social Impacts of Oil Spills, n. 1 at 109-10; Sweeney, supra n. 1.

13. Lundquist, supra n. 12 at 109.

14. Id.

15. Id.

16. T. Post, Private Compensation for Injuries Sustained by the Discharge of Oil from Vessels on the Navigable Waters of the U.S., a Survey, 4 J. of Mar. L. and Comm. 40 (1972).

17. Lundquist, supra n. 12, at 110.

18. Post, supra n. 16, at 42.

19. Landquist, supra n. 12, at 111.

20. Id.

21. 46 U.S.C. §§ 183-189.

22. Post, supra n. 16, at 44-45.

23. Hunter, The Fund Convention, 4 J. of Mar. L. and Comm. 138 (1972).

24. See generally, Evans, in Assessing the Social Impacts of Oil Spills, supra n. 1.

25. The key sections were enacted as the Water Quality Improvement Act of 1970, 33 U.S.C. § 1161 et seq., now part of the FWPCA, 62 Stat. 1155, 33 U.S.C. § 466 et seq.

26. 33 U.S.C. § 1161(F)(1). The Congress appropriated $20 million to the revolving fund, of which $10 million has been used so far for clean-up operations.

27. Id.

28. Id.

29. 33 U.S.C. § 1161(o).

30. See e.g. Alaska: Alaska Statutes, § 46.03.740 et seq.; Maine: Oil Discharge Prevention and Pollution Control Act, 38 Me. Rev. Stat. Ann. 541 et seq. (Supp. 1972); Massachusetts: Clean Waters Act, Mass. Ann. Laws, Ch. 21 (1973); Washington: Water Pollution Control Act, RCWA, Ch. 90.78 (Supp. 1972).

31. Me. Rev. Stat. Ann., Title 38, §§ 544-546 (Supp. 1971).

32. Sources: Statement of D.S. Dearing, Dept. of Legal Affairs, State of Florida, in Hearings on the Fund and Liability Convention before the Subcom. on Oceans and International Environment of the Senate Comm. on For. Relations, 93rd Cong., 1st Sess., (1973) at pp. 65-72; Capt. C. R. Hallberg, Chief, Maritime and Intl. L. Div., Off. of Chief Counsel, U.S. Coast Guard.

33. Askew v. American Waterway Operators, Inc., 411 U.S. 325 (1973).

34. Oil Spill Prevention and Pollution Control Act, Fla. Stat. Ann., Ch. 376 (Supp. 1973).

35. Supra. n. 21.

36. 86 Stat. 816, 33 U.S.C. § 1151 et seq., as amended.

37. Askew, supra n. 33, at 331-32.

38. ELR 40306. The terms of TOVALOP are set out in the Hearings on S. 7 and S. 544 before the Subcommittee on Air and Water Pollution of the Senate Committee on Public Works, 91st Cong., 1st Sess., 261-65 (1969).

39. The provisions of CRISTAL are explained by Becker in TOVALOP and CRISTAL, 5 J. of Mar. L. and Comm. 609 (1974).

40. See, e.g., Becker, id.

41. See e.g., CRISTAL, Clause III(B) and (C) and Preamble.

42. TOVALOP, Clause IV(A); Clause I (i).

43. TOVALOP, Clause IV(B). However, the burden of proof rests on the oil discharging tanker's owner to demonstrate due care in order to avoid liability.

44. TOVALOP, Clause VI(C).

45. CRISTAL, Clause IV(C)(1).

46. CRISTAL, Clause VII.

47. CRISTAL, Clause IV(A)(1)(a).

48. CRISTAL, Clause IV(A).

49. CRISTAL, Clause IV(A)(1)(a) and (b).

50. See TOVALOP, Art. IV(A).

51. TAP Statute, 30 U.S.C. § 185, ELR 41427.

52. Id., § 204(c)(1)(3).

53. TAP Statute, § 204(c)(4).

54. TAP Statute, § 204(c)(5), (6), (7).

55. TAP Statute, § 204(c)(2).

56. P.L. 93-627, 33 U.S.C. § 1501 et. seq., ELR 41705 (1974), hereinafter cited as the Deepwater Port Act.

57. Deepwater Port Act, § 18(d), 33 U.S.C. § 1517(d).

58. Id.

59. Deepwater Port Act, § 18(e), 33 U.S.C. § 1517(d).

60. Deepwater Port Act, § 18(f), 33 U.S.C. § 1517(f).

61. Id.

62. Deepwater Port Act, § 18(g), 33 U.S.C. § 1321(g).

63. Id.

64. Id.

65. U.S. Department of Transportation, Oil Pollution Liability and Financial Responsibility: A Report to the President and Congress, p. 7 (1970).

66. Supra n. 2.

67. Supra n. 3.

68. CLC, Art. III (1), (2), (3).

69. CLC, Art. V(1).

70. Id. The limit of liability is a matter of dispute since it depends upon the value which the Poincare franc now carries in exchangeable currencies. See Section VI of this Article.

71. CLC, Art. V(2).

72. CLC, Art. III(4).

73. Id.

74. CLC, Art. III(5).

75. CLC, Art. V(3), (21), VI.

76. CLC, Art. IX(1).

77. CLC, Art. VII(1), (2).

78. CLC, Art. VII(11).

79. CLC, Art. VII(10).

80. CLC, Art. I(6), II, III(1).

81. CLC, Art. V(8).

82. Exec. Rep. No. 92-9, 92d Cong., 1st Sess., p. 507 (Aug. 5, 1971).

83. Id.

84. FC, Art. 10-15.

85. FC, Art. 16-34.

86. FC, Art. 3, 4.

87. Id.

88. Id.

89. Id.

90. FC, Art. 5.

91. Source: U.S. State Department, Office of the Assistant Legal Advisor for Treaty Affairs, May 12, 1975. (Ms. Fincher).

92. Id.

93. Lettow, "The Control of Marine Pollution," in Federal Environmental Law, at 624-5 (1974). The United States becomes a "signatory" to an international agreement when the agreement is signed by the appropriate United States official. This signing does not bind the United States, but indicates that ratification will be sought by the Executive Branch. "Ratification" requires: (1) advice and consent to ratification, given by the Senate; (2) "deposit" of the instrument (noting United States approval to be bound) with the international body.

94. CLC, Art. VII(11).

95. CLC, Art. VII(2), (6), (7), (11).

96. CLC, Art. VII(1).

97. CLC, Art. VII(9).

98. Sources: Capt. Hallberg, supra n. 32; Mr. John Crook, Office of the Legal Advisor, U.S. State Department.

99. Id.

100. Many of these defects of the two Conventions are discussed infra.

101. Letter from J. Enyart, Attorney for the Office of the General Counsel, U.S. Dept. of Commerce, to Hon. Roy Ash, Director, OMB, at p. 11 (1974).

102. Id.

103. Id.

104. Deepwater Port Act, § 18(n).

105. "Comprehensive Oil Pollution Liability and Compensation Act" (Interagency Working Draft No. 1), § 2. Certain of the provisions discussed herein for a domestic regime for oil pollution liability were considered by the interagency drafting committee and incorporated into an early working staff draft for a "Comprehensive Oil Pollution Liability and Compensation Act," designated "Interagency Working Draft No. 1." This draft bill does not necessarily reflect the official or current views of the Executive Branch or of any agency of the federal government.

106. Id., § 13(c).

107. Id., § 3(c)(1).

108. Id., § 3(c)(3)

109. Id.

110. Id., § 9.

111. CLC, Preamble, Paragraph 4.

112. CLC, Art. VII, § 2, 10, 11.

113. Foster and Elam v. Neilson, 2 Pet. 253 (U.S.) (1829).

114. See generally, Bishop, International Law, Cases and Materials, at 147-49 (1962 ed).

115. Source: A. Mendelsohn, Statement in Hearings Before the Subcommittee on Oceans and International Environment of the Comm. on Foreign Relations, 93rd Congress, on Executive K, 92nd Congress, 2nd Sess., Apr. 17 & 18, 1973, pp. 156-7.

116. See generally, Letter from R. Kleindienst to Sen. Muskie, dated April 15, 1971; John T. Bill Co. v. U.S., 104 F. 67 (C.C.P.A., 1939); Cook v. U.S., 288 U.S. 102, 118 (1933).

117. Asakura v. City of Seattle, 265 U.S. 332 (1924).

118. U.S. Constitution, Art. VI, Cl. 22.

119. The Cherokee Tobacco, 78 U.S. (11 Wall.) 616, 621 (1871).

120. Pub. L. No. 92-340, 33 U.S.C. §§ 1221-1227 (1974 Supp.); 46 U.S.C. § 391a et seq.

121. Edge v. Robertson, 112 U.S. 580 (1884).

122. See e.g., Bradley, Marine Oil Spills, 14 Nat. Res. J. pp. 340-45; Green, supra n. 1 pp. 2-5; Kuzmach, supra n. 1, pp. 1-4, 11-12; McGurren, The Externalities of a Torrey Canyon Situation, 11 Nat. Res. J. 349-72 (1971); Program of Policy Studies in Science and Technology, George Washington University, Legal, Economic and Technical Aspects of Liability and Financial Responsibility as Related to Oil Pollution, DOT Contract No. CG-10255 A (1970); Esposito, Air and Water Pollution, 5 Harv. Civ. Rts. — Civ. Lib. L. Rev. 32, 34-36 (1970); Katz, The Function of Tort Liability in Technology Assessment, 38 U. Cin. L. Rev. 587, 592-3 (1960).

123. See generally, Green, supra n. 1.

124. See generally, Kuzmach, supra n. 1, at 10-12.

125. Program of Policy Studies, supra n. 122.

126. CLC, Art. I(6), Art. 1 (2).

127. See the comments of the United Kingdom in Observations on Civil Liability Draft 15, p. 32; Swan, Approaches to Oil Pollution Responsibility, 50 Ore. L. Rev. 503 at 526 (1971); Doud, Oil Pollution Liability, 4 J. of Mar. L. and Comm. at 531 (1973).

128. Discussed infra n. 151-156 and accompanying text.

129. Report of the Third Session, Joint Group of Experts on the Scientific Aspects of Marine Pollution, May 13, 1971.

130. M. Blumer, Testimony, Hearings on S. 7 and S. 554 Before the Subcomm. on Air and Water Pollution of the Senate Comm. on Public Works, 91st Cong., 1st Sess., at 1488 (1969).

131. Report of the FAO Technical Conference on Marine Pollution and its Effects on Living Resources and Fishing, (FAO Report No. 99), at pp. 41-42, 49-50 (1971).

132. J. Fay, "The Spread of Oil Slicks on a Calm Sea," Oil on the Sea p. 53 (D. Hoult, ed., 1969).

133. Id. Also, Cdr. Richard Sutherland, Chief Marine Systems Evaluation Branch, U.S. Coast Guard Headquarters, U.S. D.O.T., Wash., D.C.

134. British Petroleum Corp., "Review of World Industry," Conversion Factors reproduced in Hearings, supra n. 32 at 84 (1973).

135. O. Schachter and D. Server, Marine Pollution Problems and Remedies, 65 Am. J. of Intl. L. 84, 89 (1971).

136. Id.

137. P. Yevich of the National Water Quality Laboratory at Narragansett, R.I., quoted on National Public Radio's "All Things Considered," Feb. 13, 1975; also see National Science Foundation, Baseline Studies of Pollutants in the Marine Environment p. 54 (1972).

138. Id., both sources.

139. Yevich, supra n. 137.

140. National Science Foundation, supra n. 137.

141. Yevich, supra n. 137, Nat. Sci. Found., supra n. 137. Also see: N. Shutler, Pollution of the Sea by Oil, Hous. L. Rev. 415, 416 (1970).

142. Swan, supra n. 127, p. 526.

143. See the views of the Netherlands in Observations on Civil Liability Draft 15, pp. 28-29.

144. Kuzmach, supra n. 1, p. 10.

145. U.S. v. Ladd, 193 F.2d 929 (4th Cir. 1952).

146. Carson v. Hercules Powder Co., 240 Ark. 887, 402 S.W.2d 640 (1966).

147. Small v. U.S., 333 F.2d 702 (3rd Cir. 1964).

148. Carr v. U.S., 136 F. Supp. 527 (E.D. Va. 1955).

149. Portland Tug & Barge Co. v. U.S., 90 F. Supp. 593 (D. Ore. 1949).

150. Oppen v. Aetna Insurance Co., 485 F.2d 252 (9th Cir. 1973).

151. See e.g., Petition of Kinsman Transit Co., 388 F.2d 821 (2d Cir. 1968); Stevenson v. East Ohio Gas Co., 73 N.E.2d 200 (1946); Sinram v. Pa. RR, 61 F.2d 767 (2d Cir. 1932); H.R. Moch Co. v. Renssalaer Water Co., 247 N.Y. 1960, 159 N.E. 896 (1928); Shubitz v. Consolidated Ed. Co., 59 Misc. 2d 732 (1969).

152. T.W.A., Inc. v. Curtis Wright Corp., 1 Misc. 2d 477, 48 N.Y.S.2d 284 (1955).

153. The Menominee, 125 F. 530 (E.D.N.Y. 1903).

154. Post, supra n. 16, p. 29.

155. O. Schachter and D. Server, Marine Pollution Problems and Remedies, 65 Am. J. of Intl. L. 84, 89 (1971).

156. Gold, Marine Pollution and International Law, 3 J. of Mar. L. and Comm. at p. 39.

157. 4 ELR 20618, 6 ERC 1748 (9th Cir. 1974).

158. See generally Kuzmach, supra n. 1, at pp. 1-2.

159. Swan, supra n. 127, p. 523.

160. Swan, supra n. 127, p. 523-24.

161. RADM Benkert, U.S.C.G., Statement at Hearings, supra n. 32, p. 138.

162. Program of Policy Studies in Science and Technology, supra n. 122, at Appendix G, pp. 12-13.

163. Id.

164. Post, supra n. 16, p. 27; Note: Liability for Oil Pollution Cleanup and the Water Quality Improvement Act of 1970, 55 Cornell L. Rev. 973, 982 (1970); Cowan, Oil and Water: The Torrey Canyon Disaster, pp. 195-200 (1968).

165. Sweeney, Oil Pollution of the Oceans, 37 Fordham L. Rev. 155, 157, 158 (1968).

166. Federal Water Pollution Control Act Amendments-1969, Hearings on H.R. 4148 and Related Bills before the House Comm. on Public Works, 91st Cong., 1st Sess., p. 316 (1969). These figures should be adjusted upward to reflect inflation.

167. Note: This statistic was derived by the author from A.P.I. estimates of the Torrey Canyon cleanup costs.

168. Gold, supra n. 156, at 41.

169. Mendelsohn, Maritime Liability for Oil Pollution-Domestic and International Law, 38 Geo. Wash. L. Rev. 1, at 10-11 and n. 34 (1969).

170. Note, 55 Cornell L. Rev. at 983 (1970 supra n. 164.

171. Mendelsohn, supra n. 115; Heller, The Warsaw Convention and the 'Two Tier' Gold Market, 7 J. of World Trade 126 (Jan.-Feb. 1973).

172. CLC, Art. V(1).

173. Doud, supra n. 127, at 529.

174. Id., FC Art. 4(4a)(6); Art. 33(1)(a).

175. Id.

176. Doud, supra n. 127.

177. P.L. 92-268 (1973).

178. Doud, supra n. 127, at 529.

179. See e.g. Heller, The Warsaw Convention and the 'Two Tier' Gold Market, 7 J. of World Trade, 126 (Jan.-Feb. 1973); Mendelsohn, Statement before the Senate Foreign Relations Committee, supra n. 115, p. 155.

180. Mendelsohn, supra n. 115, at 155.

181. CLC, Art. V(9). See, Heller, The Value of the Gold Franc — A Different Point of View, 6 J. of Mar. L. and Comm. 73, 78 (1974).

182. Source: Mr. John Crook, Office of the Legal Advisor, U.S. State Department. See CLC, Art. V(9); FC, Art. 1(4). The reference to official gold values was mistakenly omitted from the translation of the Liability Convention widely distributed in the United States as Executive G of the 91st Cong., 2d Sess.; the Fund convention merely refers to the Liability Convention's definition of the franc.

183. Heller, supra n. 181, at 91.

184. Id. at 98.

185. CLC, Art. I(3).

186. Swan, supra n. 127, p. 522.

187. Id; Capt. Hallberg, supra n. 32.

188. Swan, supra n. 127, p. 521.

189. Gold, supra n. 156, p. 324.

190. Swan, supra n. 127, p. 521.

191. See, inter alia, L. Naxby, Manager for Environmental Affairs, Shell Oil Co., "The Oil Company's Position in an Oil Spill," in Institute on Man & Science, supra n. 1, p. 42; Urban Systems Research & Engineering Inc., Methods for Financing Water Pollution Abatement from Modified Points Sources (U.S.E.P.A. Contract No. 68-01-0002, 1971) (hereinafter the Urban Systems Study).

192. See FWPCA, 33 U.S.C. § 1161(a)(6); Deepwater Port Act, § 18(3)(d), 33 U.S.C. § 1321(3)(d); Trans-Alaska Pipeline Statute, § 204(c)(1).

193. See, e.g., Brussels Convention on the Liability of Operators of Nuclear Ships, Art. XXIV, para. 1.

194. See generally, Urban Systems Study, supra n. 191.

195. Statutory liability for ship officers presents difficult problems, of course. Expensive insurance would probably have to be purchased for a master by his employer: premiums might reflect the master's safety record, level of training, etc. The exclusivity provision of the Liability Convention would preclude liability only for masters deemed "servants or agents of the shipowner" (CLC, Art. III(4)). The prophylactic value of liability for ships' officers below "Chief Mate" level is questionable because the maritime unions often control designation of lower-ranked officers. (Sources: Capt. Hallberg, supra n. 32; Fred Presley, Esq., of the same office, supra n.32.

196. CLC, Art. III(5).

197. Sources: Capt. Hallberg, supra n. 32; LCDR Brown, U.S.C.G., Headquarters, U.S. D.O.T.: F. Presley, Attorney, Office of Chief Counsel U.S.C.G.

198. CLC, Art. III(4).

199. CLC, Art. VII(1).

200. CLC, Art. VII(2).

201. See J. Brierly, The Law of Nations, p. 310-11 (6th Ed., 1963) Gold, supra n. 156, p. 325.

202. CLC, Art. VII(7).

203. See Urban Systems Study, supra n. 191.

204. Id.

205. FC, Art. 10(1).

206. See FC, Art. 10, 11, 12.

207. See generally, the Urban Systems Study, supra n. 191.

208. See the Urban Systems Study, supra n. 191, at 16-17.

209. See Urban Systems Study, supra n. 191

210. CLC, Art. VIII.

211. See Swan, supra n. 127, at p. 539.

212. CLC, Art. V(4).

213. Id.

214. Swan, supra n. 127, at 539.

215. CLC, Art. I(5).

216. FC, Art. 1(3). The petroleum industry did not wish to pay for spills of whale oil or vegetable oils.

217. Adm. Benkert, Response to a Question of Sen. Pell for the Record, Hearings, supra n. 32, at p. 137.

218. E. Weller, "Oil: Its Properties and Environmental Effects," in the Institute on Man and Science Study; supra n.1, p. 115.

219. Doud, Oil Pollution Liability, 4 J. of Mar. L. and Comm. p. 533, supar n. 127.

220. "Pollution," World Fishing, December, 1971, Vol. 20, No. 12 at p. 10.

221. Pell, Hearings, supra n. 32, at 137.

222. Large oil refineries now operate in a number of Caribbean island and coastal nations, and in Puerto Rico. In addition, oil refineries in eastern Canada eventually could export distilled products to United States markets.

223. CLC, Art. II; FC, Art. 3.

224. CLC, Articles IX, X.

225. See, e.g., Hearings, supra n. 32, at 115-17; generally, see Knight, U.S. Oceans Policy: Perspective 1974, 40 Notre Dame Lawyer 241 (1973); Stevenson & Oxman, Preparations for the Law of the Sea Conference, 68 Amer. J. of Intl. L., (Jan. 1974); Mr. John Crook, Office of the Legal Advisor, U.S. State Dept.

226. Henkin, The Law of the Sea: National Policy Recommendations, pp 171, 175-76 (Proceedings of the Fourth Annual Conference of the Law of the Sea Institute, June 23-26 (1969). "Craven's Law" of creeping jurisdictional expansion is discussed in this work.

227. See the authorities cited at n. 225, supran.

228. CLC, Art. X; FC, Art. 8.

229. See A. Freeman, International Responsibility of States for Denial of Justice (1938).

230. On the question of treaty reservations, see K. Hollway, Modern Trends in Treaty Law (1967).

231. International Convention on the Territorial Sea and the Contiguous Zone, Art. 24; 37 Fed. Reg. 11906 (1972).

232. Source:U.S. Coast Gruard, Marine Environmental Protection Division, quoted by Lettow in "Marine Pollution," Federal Environmental Law (1974), p. 613.

233. Swan, supra n. 127, at 512-15.

234. See FWPCA, 33 U.S.C. § 1161(6)(1), (6)(2), B(3) (Supp. 1973).

235. Article 24(1).

236. See the comment of the International Law Commission to its final draft of the Territorial Sea Convention, Report on the Law of the Sea (1958) at pp. 294-95.

237. Territorial Sea Convention, Art. 19(1)(a), (b).

238. Article 24(1).

239. See Bishop, International Law: Cases and Materials pp. 477-481, 506-507 (1962).

240. See, e.g., RADM Benkert, Response to Sen. Pell, Hearings before the Oceans Subcommittee of the Senate Foreign Relations Committee, Apr. 17 & 18, 1973, supra n. 32, p. 138.

241. Wulf, Contiguous Zones for Pollution Control, 3 J. of Mar. L. and Comm. 537, at 552-553 (1972).

242. FWPCA, 33 U.S.C. § 1161(6)(3).

243. 35 Fed. Reg. 14306 (1970).

244. See, e.g., Swan, supra, n. 127, at n. 32, p. 248. This position has not yet been accepted by the United States, according to Mr. Crook of the State Dept.

245. Convention on the Territorial Sea and Contiguous Zones, Arts. 24, 16(1), 17.

246. Mr. John Crook, Office of the Legal Advisor, U.S. State Dept.

247. Letter from L. Holton, Asst. Sec. for Congressional Relations, U.S. State Dept. to Hon. Roy Ash, Director, OMB, Dec. 13, 1974.

248. FC, Art. 5(1).

249. FC, Art. (5)(3).

250. 12 U.S.T. 2989, T.I.A.S. No. 4900, 327 U.N.T.S. 3.

251. 16 U.S.T. 185, T.I.A.S. No. 5780, 536 U.N.T.S. 27.

252. 18 U.S.T. 1857, T.I.A.S. No. 6331, 64 U.N.T.S. 133.

253. 16 U.S.T. 794, T.I.A.S. No. 5813.

254. FC, Art. 3(3)(a)(v).

255. FC, Art. 3(4).

257. See, inter alia, Hunter, supra n. 23; Doud, supra n. 127.

258. Id.

259. FC, Art. 5(3).

260. N. J. Healy, G. W. Paulsen, Marine Oil Pollution and the Water Quality Improvement Act of 1970, 1 J. of Mar. L. and Comm. 537, 566 (1970); Hunter, supra n. 23, at 133.

261. See Section VII(A) of this Article, supra.

262. See Prepared responses of RADM Benkert, U.S.C.G., to Questions of Sen. Pell, Hearings, supra n. 32, at p. 137.

263. Gilmore and Black, The Law of Admiralty, pp. 695-696 (1957); Muskie, Torts, Transportation and Pollution, 7 Harv. J. Legis. 477, 489 (1970); Mendelsohn, Analysis of American Waterway Operators Inc. et al. v. Askew, Report to U.S. Sen. Comm. on Public Works (1972).

264. Doud, supra n. 127, 537, at n. 34.

265. Id.

266. Id.

267. See Hunter, supra n. 23.

268. Id.

269. CLC, Art. III.

270. FC, Art. 4(2)(b).

271. See M. Blumer, Science, June 16, 1972.

272. See Hunter, supra n. 23, p. 124-5.

273. CLC, Art. III(2).

274. See e.g., Swan, supra, n. 127, at 529; Letter from R. Kleindienst, Dep. Attorney General of United States, to Sen. Muskie, April 15, 1971, at pp. 1-3.

275. See e.g., L. Haxby, Manager for Environmental Affairs, Shell Oil Co., "The Oil Company's Position in an Oil Spill," in "Institute on Man and Science," supra n. 1, 142.

276. The International Fund can avoid liability only with the "act of war, hostilities, civil war or insurrection" defense. (FC, Art. 4(2)(a)).

277. CLC, Art. III(2)(a).

278. FC, Art. 4(a).

279. See, e.g., FWPCA, § 1161(F)(1) (1970), 33 U.S.C. § 1161(F)(1); TAP Statute, § 204(c)(2); Deepwater Port Act, § 18(g), 33 U.S.C. § 1321(g).

280. CLC, Art. III(2)(a).

281. See, e.g., Note, supra n. 1, 10 Hous. Law Rev. 394, p. 418.

282. See, e.g., FWPCA, 33 U.S.C. §§ 1161(a)(12).

283. Forster, Civil Liability of Shipowners for Oil Pollution, 1973 J. of Bus. L. 23 (Jan. 1973).

284. FWPCA, 33 U.S.C. § 1161(a)(12).

285. Forward v. Pittard (1785), 1 Term Rep. 27, 33, Mansfield, C.J.

286. Forster, supra n. 283, at 26.

287. Forster, supra n. 283, at 25.

288. Id.

289. CLC, Art. III(3).

290. Hearings, supra n. 115, at 15.

291. CLC, Art. III(2)(c).

292. FWPCA 33 U.S.C. § 1161(d).

293. Id.

294. Id.

295. FWPCA, 33 U.S.C. § 1161(F)(1).

296. TAP Statute, § 204(c)(2).

297. See Letter from R. Kleindienst, supra n. 116, at pp. 9-10.

5 ELR 50116 | Environmental Law Reporter | copyright © 1975 | All rights reserved