Liability issues roll toward owner of collapsed oil tank
West Elizabeth, Pa. — Lawyers will be wrangling over the massive oil spill here long after the diesel fuel is flushed from the river. In the six days since a large fuel tank collapsed the company that owns the tank has insisted it will shoulder all cleanup costs. The company, Ashland Oil, has also said it will cover ``reasonable'' related expenses. For instance, it is paying for barges sent to Wheeling, W.Va., to transport emergency water.
But the company has refused to say where it will draw the line. ``What's reasonable is still yet to be seen,'' says Roger Schrum, an Ashland spokesman. ``We have to see what bills come in.''
At the core of the issue is Ashland's liability. On Wednesday, the first lawsuit was filed. Analysts expect the spill - one of the worst inland oil spills in United States history - to spark a wave of lawsuits.
``As soon as the spill occurred, you can bet some attorneys began preparing class- action suits,'' says Cyril A. Fox, a law professor at the University of Pittsburgh.
Class-action suits are frequently used in the wake of environmental disasters - where an event injures many people.
Rather than block up the courts with lots of individual claims, these suits are supposed to establish whether or not a group of individuals is entitled to compensation.
It's too early to tally the total impact of the spill, but most experts agree it will be staggering. The million-gallon spill, which went into the Monongahela River 20 miles south of Pittsburgh, has disrupted water supplies for communities miles down the Monongahela and Ohio Rivers. The spill forced conservation measures that closed some schools and factories around Pittsburgh. By late this week, the water crisis around Pittsburgh appeared to be easing. But communities farther down the river are still bracing for water shortages as the toxic diesel fuel, now widely dispersed, makes its way down the system.
The first class-action suit, filed in the state-level court of common pleas in Pittsburgh, was in the names of four area residents whose water service was lost or curtailed.
Among many other things, the suit accuses Ashland of failing to maintain a safe storage facility and endangering downriver residents as a result.
Ashland officials declined to comment on the suit.
Under state and federal clean-water laws, Ashland is expected to pay for the cleanup. If the company refused, the Environmental Protection Agency would simply ``federalize'' the project - doing the cleanup itself and then billing the company for the total.
The trickiest legal problems come when such a disaster affects a large number of people - sometimes only very indirectly.
``The farther you get away from the spill, the more speculative the legal arguments become,'' Professor Fox says. For example, if a factory can't open because of a water shortage, is Ashland responsible for the lost profits?
``The factory might have been planning to close anyway, or maybe it could have shifted its operations - there are just so many questions that have to be answered,'' Mr. Fox says.
In the past, courts have tended to limit the number of people who could claim economic injury from environmental disasters.
In 1973, for example, a federal court in Maine ruled that fishermen directly affected by an oil spill could receive damages for lost income. Hotel and restaurant owners - who claim their business was similarly harmed - were not.
Ashland officials emphasize that they have insurance policies totaling $400 million, designed to deal with claims arising from such incidents. The company's deductible is less than $3 million.
The company has the option to try to settle a claim without going to court.
Still, one Washington lawyer says the company is probably bracing for a ``tidal wave'' of lawsuits.
Complicating the dispute are a number of unanswered questions about the way the storage tank was built and maintained. The 40-year-old tank was recently dismantled in Cleveland and rebuilt on its current site.
Ashland has admitted that it failed to get the necessary permit and inspection required for such storage tanks.
The only federal environmental requirement for aboveground fuel tanks is that they be surrounded by a containment dike. Ashland says the diking system around its tank farm on the banks of the Monongahela is designed to hold 110 percent of the fuels stored there.
The accident has already sparked a flurry of interest in federal legislation designed to tighten controls on above-ground tanks. A bill introduced in the last session of Congress would give the EPA authority to regulate the construction and maintenance of the tanks.
Quick action on this, as well as oil-spill legislation, is expected in coming months.
What happened last Saturday, EPA officials say, is a highly unusual case of a catastrophic collapse. The tank burst open, sending out a column of fuel over 40 feet high. The force of the liquid was enough to bash in the side of a neighboring tank and breach the earthen barriers.
Federal investigators are picking over the rubble, even as efforts continue to mop up oil left in gullies all around the site. It could take months to determine the cause of the accident - a finding that could directly affect the court cases.
Meanwhile, Ashland appears well positioned to weather the storm. The company made a tidy $133 million last year on sales of just over $7 billion. Stock analysts say the company is considered well managed.