Log In

Reset Password

DON

A showdown between the United States and independent tanker owners over the difficulty of complying with new anti-pollution rules may be averted, the chairman of the International Association of Independent Tanker Owners (Intertanko) said yesterday.

Mr. Miles Kulukundis, who is also the chief executive for Bermuda-based London and Overseas Freighters Ltd., said schemes emerging in recent days would enable tankers to comply with tough new US liability requirements. He said Intertanko would watch development of the certification schemes designed to meet the US Oil Pollution Act (OPA). Some of them are being hatched by Bermuda-based reinsurers.

Speaking "personally'', Mr. Kulukundis said: "What is evident is that we'regoing to have a solution to the certification question.'' Mr. Kulukundis' statement is the first signal from Intertanko that owners will be able to meet the provisions of OPA which takes effect on December 28. Until a few days ago, owners had said they had not yet found a way to comply with the Act, which requires operators to carry certificates attesting to their ability to compensate oil pollution victims.

Independent tanker owners had said the US might have to postpone the December deadline or risk not getting enough oil.

But just this week, Shoreline Mutual of Bermuda announced the completion of a reinsurance programme to meet OPA's new liability requirements. And yesterday, Mr. Kulukundis said Opaclub, a new US pollution mutual insurer, had come out with a scheme that "we could sign up for today.'' Another scheme, First Line, is also in the wings.

Mr. Kulukundis said the new schemes had created availability of certificates "on a reasonable economic basis'' for tanker owners, though he added "that that's a lot of money for nothing.'' Mr. Kulukundis said there was a lot in OPA which is good and well-intentioned, particularly in its demands on operational soundness.

But he questioned the need for certificates for some carriers: "This certificate does not do anything to improve the reliability of an owner, who is a member of one of the international group of P&I clubs, to meet his oil pollution liabilities.'' He also questioned OPA's "unsound'' definition of the extent of liability in the event of an oil spill.

"If you cut through all the federal and state legislation and you make an oil spill in, say, California, you have unlimited liability for clean-up and damages. That's one problem.

"The other problem is the definition of those damages. The new law has moved from fairly narrow definition of strict economic loss to a much wider definition: loss of use.'' In the Exxon Valdez spill in Alaska, for instance, loss of use saw Exxon become liable to fishermen for their loss of fishing.

"Loss of use takes the consequences of damage further and further away from the incident itself,'' Mr. Kulukundis said. "By creating a very broad definition of economic loss and creating very large claims, they've created an unsustainable regime. It will probably not withstand one loss. The underpinning capital will say `We're not going to live with that.'' Mr. Kulukundis, who is also chairman of the UK P&I Club, was also critical of OPA's allowance for "direct action'' against guarantors.

"It removes all policy defences for P&Is,'' he said. P&I clubs, the industry's customary source of tanker insurance, have refused to act as guarantors for tankers for what is effectively unlimited liability.