(www.MaritimeCyprus.com) On the evening of November 26, 2004, the 60,000 dwt tanker Athos I struck an uncharted nine-ton anchor on the river bed located about a shipâs length off the CITGO Asphalt Refining Company (CARCO) berth at Paulsboro, New Jersey. The single bottom tanker was holed in her Number 7 port ballast tank and Number 7 center cargo tank, resulting in a spill of 265,000 gallons of heavy crude oil. Some 280 miles of river shoreline were affected, including 70 miles heavily to moderately oiled â resulting in cleanup costs, natural resources and third-party claims totaling to $300 million.
Update 1: March 29, 2018.
The US Court of Appeals for the Third Circuit ruled on the claims of various parties concerning financial responsibility of the spill of heavy oil from the tanker Athos I into the Delaware River on 26 November 2004.
Damages totaled $143 million. Tanker owner Frescati Shipping initially paid the costs, but was reimbursed in the amount of $88 million by the Oil Spill Liability Trust Fund (OSLTF) established by the Oil Pollution Act of 1990 (OPA 90). The tanker owner and the United States then sought recovery from the companies that had contracted for the purchase of the heavy oil and designated the port of delivery.
The appellate court affirmed the district courtâs judgment in favor of the tanker owner on the breach of contract claim and the prejudgment interest award. It vacated the district courtâs judgment in favor of the tanker owner on the negligence claim.
The court affirmed the district courtâs judgment in favor of the United States on the subrogated breach of contract claim, but reversed and remanded for further proceedings in light of the courtâs equitable recoupment ruling for the purpose of recalculating damages and prejudgment interest.
Click on below image to download court papers: In re Petition of Frescati Shipping, No. 16-3470 (3rd Cir., March 29, 2018):
Update 2: March 20, 2020.
U.S. Supreme Court Rules in Favor of Ship Owner in Athos I âSafe Berthâ Case.
The U.S. Supreme Court ruled on 20 March 2020, that CITGO is responsible and must pay back cleanup costs for the 2004 oil spill on the Delaware River after CITGO-charted tanker Athos I struck a submerged anchor while docking.
The Supreme Court decision ultimately puts to rest the interpretation of the âsafe berthâ warranty under U.S. law.
The Tsakos-managed oil tanker Athos I was chartered by CITGO when it struck an uncharted nine-ton anchor while docking at CITGO facility in Paulsboro, New Jersey, puncturing the tankerâs hull and spilling approximately 263,000 gallons of crude oil into the river.
Some hundreds of miles of shoreline were impacted.
Cleanup costs amounting to $133 million was paid by the shipowner, Frescati Shipping Company, under their OPA obligations, of which $88 million was reimbursed by the U.S. Oil Spill Liability Trust Fund.
The U.S. Coast Guard concluded in itsÂ Marine Casualty Investigation ReportÂ that the cause of the incident was the abandoned anchor lying on the seabed, and there was no negligence or violation on the part of the shipâs crew or embarked pilot. No fines or penalties were ever issued.
Frescati and the U.S. eventually sued CITGO and others (collectively CARCO) to recoup the costs, arguing that CARCO had breached the safe-berth clause by failing to designate a safe berth, and therefore was at fault for the spill.
Justice Sotomayor delivered the 7-2Â majority opinionÂ of the Court.
âAccording to Frescati and the United States, CARCO had breached a contractual âsafe-berth clauseâ obligating CARCO to select a âsafeâ berth that would allow the Athos IÂ to come and go âalways safely afloat.âÂ
âThe question before us is whether the safe-berth clause is a warranty of safety, imposing liability for an unsafe berth regardless of CARCOâs diligence in selecting the berth. We hold that it is,â wrote Justice Sotomayor.
âThe many years of effort, which have culminated in the decision, underscore our confidence in the rule of law while the Supreme Courtâs decision underlines the importance and significance of safe, well respected, understood and applied marine navigation practices, which have, for decades, safeguarded human life at sea, the protection and preservation of the marine environment as well as property,â a statement from the shipowner said.
Law firm Holland & Knight said the landmark ruling reaffirms popular form safe berth/safe port clause.
âInÂ Citgo Asphalt Refining Co. v. Frescati Shipping Co., Ltd.,Â the U.S. Supreme Court has provided a roadmap for interpreting safe berth / safe port clauses, ruling that the form clause commonly used in the industry must be construed as an express warranty of safety and imposes on the charterer an absolute duty to select and provide safe berth,â Holland & Knight wrote in anÂ analysisÂ of the case.
âIn a 7-2 opinion, the Supreme Court considered the key terms in the agreement consistent with the intent of the parties as is necessary in any contract dispute. Because the safe berth clause was clear and unambiguous, the majority found that the analysis began and ended with a plain-meaning reading of the key terms in the clause itself.â
Take a quick look at the aftermath of this little-known oil spill, which ultimately fostered several significant changes to address future oil spill accidents across USA.
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