Innovative Project That Could Provide 25 Percent of California's Residential Energy Needs Moves Forward

By Tim Riley
April 25, 2004
Ventura County Star

Two liquefied natural gas deepwater port facilities are being proposed off our Malibu, Oxnard, Ventura and Santa Barbara shores, and many people are concerned about the financial liability for an LNG disaster to our communities.

Unfortunately, the existing laws protect the foreign LNG vessel owners and the corporate LNG deepwater port operators, rather than the living and breathing American citizens who could potentially be incinerated.

All LNG vessel owners are protected by the Limitation of Vessel Owner's Liability Act, 46 U.S.C. 181, et seq.; and the owner's liability is limited to the value of the vessel and value of its cargo contents remaining after a calamity occurs.

The U.S. Supreme Court has long held that where a ship sinks after a calamity, the sinking is the termination of the voyage and the value of the vessel — thus the limitation of the ship owner's liability.

Ironically, the more damage that occurs to the vessel and its cargo, the lower the liability for the vessel owner. This means that an LNG tanker disaster resulting in the total loss of the vessel and total loss of its cargo would result in minimal financial liability for the LNG vessel owner — even where the disaster incinerates an entire coastal community — killing 100,000 people, injuring 50,000 others and destroying billions of dollars of property and infrastructure.

Shockingly, the vessel owner's financial liability in such a scenario for all property damage would be absolutely zero, and for loss of life and bodily injuries would be limited to just $420 per vessel ton.

Protecting vessel owners was established by the act in 1851, and our Supreme Court has long held that the owner's duty is essentially satisfied when he properly equips the vessel and selects competent crew to operate it, and neither the vessel, nor her owners are responsible for damage or loss resulting from faults or errors in navigation or in the management of the vessel.

All LNG deepwater port facility operators are protected by the Deepwater Port Act's financial liability limitation of $350 million, and the U.S. Coast Guard may even lower this amount.

Originally, this limitation was created for offshore oil ports contemplating sufficient liability for an oil spill and cleanup costs. Now, protecting operators processing and storing millions of gallons of the ultrahazardous LNG, that upon release, could incinerate entire communities — the $350 million limitation is totally inadequate.

Losses from mounting wrongful death claims, serious burn victim claims, medical costs, loss of earnings, destruction of homes, cars, businesses, stores full of inventory, and community infrastructure could run into the billions.

Destruction of Point Mugu or Port Hueneme and their contents could run into the billions.

LNG proponents throughout America constantly hype LNG's alleged safety record; and they proclaim their LNG facilities and LNG tankers will operate and deliver safely — without accident, human error, or defect and will be impervious to natural calamity and terrorism.

They should pay the price for such claims, and be held strictly liable for their ultrahazardous activities — without any financial limitations.

The current laws protect foreign interests and the very few importers of LNG, while at the same time they expose American citizens and local government facilities and infrastructure to devastation without adequate recourse for recovery.

Next time you have breakfast with an LNG deepwater port applicant — there are approximately a half-dozen in America — ask them to stipulate to strict liability and waive the financial liability limitations. Also, ask them to indemnify LNG vessel owners for all damages caused by LNG vessels coming to or from their deepwater ports.

Or, you can simply suggest they put their money where their mouth is, and get out of town.