[Senate Hearing 105-943]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 105-943


 
                 OVERSIGHT OF THE OIL SPILL LIABILITY 
                               TRUST FUND

=======================================================================

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION


                               __________

             DECEMBER 10, 1998--NARRAGANSETT, RHODE ISLAND

                               __________

  Printed for the use of the Committee on Environment and Public Works



                                


                      U.S. GOVERNMENT PRINTING OFFICE
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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       one hundred fifth congress
                 JOHN H. CHAFEE, Rhode Island, Chairman
JOHN W. WARNER, Virginia             MAX BAUCUS, Montana
ROBERT SMITH, New Hampshire          DANIEL PATRICK MOYNIHAN, New York
DIRK KEMPTHORNE, Idaho               FRANK R. LAUTENBERG, New Jersey
JAMES M. INHOFE, Oklahoma            HARRY REID, Nevada
CRAIG THOMAS, Wyoming                BOB GRAHAM, Florida
CHRISTOPHER S. BOND, Missouri        JOSEPH I. LIEBERMAN, Connecticut
TIM HUTCHINSON, Arkansas             BARBARA BOXER, California
WAYNE ALLARD, Colorado               RON WYDEN, Oregon
JEFF SESSIONS, Alabama
                     Jimmie Powell, Staff Director
               J. Thomas Sliter, Minority Staff Director

                                  (ii)



                            C O N T E N T S

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                                                                   Page

             DECEMBER 10, 1998--NARRAGANSETT, RHODE ISLAND
                           OPENING STATEMENT

Chafee, Hon. John H., U.S. Senator from the State of Rhode Island     1

                               WITNESSES

Christopher, Albert B., West Kingston, RI........................    19
    Prepared statement...........................................    48
Morin, Stephen, Assistant to the Director, Rhode Island 
  Department of Environmental Management.........................     7
    Prepared statement...........................................    46
O'Connor, Craig, Deputy General Counsel, National Oceanic and 
  Atmospheric Administration.....................................     6
    Prepared statement...........................................    43
Sheehan, Daniel, Director, National Pollution Funds Center, U.S. 
  Coast Guard, Department of Transportation......................     4
    Prepared statement...........................................    36
    Response to additional questions from Senator Chafee......... 40-43
Sorlein, John, President, Rhode Island Lobstermen's Association..    21
    Prepared statement...........................................    51

                          ADDITIONAL MATERIAL

Articles:
    Block Island Fishing Areas Remain Shut.......................    57
    Fishing Ban Based in Area Polluted by Oil Spill Between Pt. 
      Judith and Block Island....................................    60
    Fishing Ban Tangled in Bureaucracy...........................    57
    Fishing Industry Slammed by Spill............................    54
    Plan Drafted for Reopening Contaminated Fishing Areas........    55
Claims forms....................................................93, 164
Claims documents.......................................113-120, 123-132
Claims summary documents, NPFC...............................94, 98-110
Letters:
    Department of Environmental Management, Rhode Island.........   112
    Hull and Cargo Surveyors, Inc................................ 84-92
    John P. Kelly & Associates 148, 154, 161, 162, 166, 174-176, 178, 179
    K70, 80, 83-88, 90, 91, 111, 121, 133, 155, 159, 161, 162, 172, 177
    National Pollution Funds Center, Coast Guard 41, 80, 82, 96, 144, 160
    RGL Gallagher, LLP.........................................150, 168
    Turnaboat Services, Ltd......................................   158
Press release, North Cape Claims, National Pollution Funds Center    64
Statements:
    Blount, Frank, for Gail Frances, Inc.........................    61
    Harsch, William W., Esq......................................    62
    Hartman, Barry M., Kirkpatrick & Patrick, LLP................    68
    Kopf, Bruce F................................................    52
    Nally, Raymond...............................................    63
    National Pollution Fund Center...............................    65



            OVERSIGHT OF THE OIL SPILL LIABILITY TRUST FUND

                              ----------                              


                      THURSDAY, DECEMBER 10, 1998

                                       U.S. Senate,
                 Committee on Environment and Public Works,
                                        Narragansett, Rhode Island.
    The committee met, pursuant to notice, at 4 p.m. at the 
University of Rhode Island Graduate School of Oceanography, 
Narragansett Bay Campus, Coastal Institute Auditorium, Ferry 
Road, Narragansett, Rhode Island, Hon. John H. Chafee (chairman 
of the committee) presiding.
    Present: Senator Chafee.

           OPENING STATEMENT OF HON. JOHN H. CHAFEE, 
          U.S. SENATOR FROM THE STATE OF RHODE ISLAND

    Senator Chafee. Our first panel consists of Mr. Daniel 
Sheehan, Director of the National Pollution Fund Center, US 
Coast Guard, is our key witness. Mr. Craig O'Connor, Deputy 
General Counsel, National Oceanic and Atmospheric 
Administration; Mr. Steve Morin, assistant to the Director of 
the Rhode Island Department of DEM.
    First, I want to thank everybody for coming this afternoon, 
and especially I want to thank our Washington-based witnesses 
from NOAA and the Coast Guard who have taken the trouble to be 
with us.
    Now, the purpose of this hearing is to examine how well the 
Oil Pollution Act claims process is working. The focus of the 
hearing is on those claims that are presented to the Government 
for payment. The Oil Pollution Act provides that a private 
party or a Federal, State or tribal natural resource trustee 
may present its claim to the Government for payments if 
negotiations with the party that caused the RP, the responsible 
party, caused--if the negotiations with the responsible party 
failed, in other words, if you're not getting satisfaction from 
the responsible party, then under the Oil Pollution Act the 
private party can present its claim to the Federal Government.
    Today we'll hear from two panels regarding two different 
types of claims against the Oil Spill Liabilities Trust Fund. 
The first panel will address claims by natural resource 
trustees against the fund. Until recently, the opinion of the 
Comptroller General was that the managers of the Fund, the 
Coast Guard's National Pollution Fund Center, could not pay, 
now this is very important, could not pay any claims for 
natural resource damage without Congress's approval. The 
Justice Department reversed that and so the National Pollution 
Funds Center is staffing a new office to process these claims.
    Now, how the National Pollution Funds Center will dispose 
of natural resource claims is extremely important here. Craig 
O'Connor, Mr. O'Connor, Deputy General Counsel of NOAA, will 
testify that the State and Federal trustees at NOAA and the 
Department of Interior recently completed the very first 
natural resource damage assessment and restoration plan under 
the new 1996 regulations required by the Oil Pollution Act, so 
we're working under some relatively new regulations here. 
Though this restoration plan is still open for public comment 
for a few days, it may become the first joint Federal/State 
natural resource damage claim presented to the claims fund for 
payment that complies with NOAA regulations. In other words, 
this may--the plan they've got here, this State may be the 
first one. Unlike some 1,800 other State trustee claims pending 
before the Pollution Control Fund, the Rhode Island claim will 
enjoy deference because of a so-called rebuttable presumption 
that Congress provided in the Oil Pollution Act for claims 
prepared in accordance with NOAA regulations.
    Mr. Dan Sheehan is of the Coast Guard's National Pollution 
Fund Center, this is really a tongue twister, they call it 
NPFC, but for short I'll call it the Pollution Fund Center. 
That saves one word, apparently. He's going to explain how his 
organization plans to handle these trustee funds. Does 
everybody understand that the trustee funds are funds not 
presented on behalf of an individual fisherman, for example, 
they're presented on behalf of, in this case it will be the 
State, and for damage done to natural resources. Trustees' 
claims raised some novel legal issues, and the Pollution Fund 
Center, along with the Justice Department, the Federal trustees 
are working how to resolve these. Mr. Sheehan will testify 
about recently completed guidance documents that spells out the 
claims process. I'm glad the Federal agencies were able to move 
forward with this, though the State trustees are only now 
receiving the document. I understand the pollution fund will 
consider revising the document in response to the feedback they 
got from this and other hearings.
    Mr. Steve Morin, Assistant to the Director of the 
Department of DEM, will provide the prospective of the State 
Natural Resource Trustee.
    OK, so the first panel deals with the recoveries for 
injuries to public resources. The second panel will address the 
very real economic losses suffered by individuals, so there's 
two separate things. In the two-and-a-half years since the 
North Cape spill, nearly 3 years, parties injured by the spill 
sought compensation from the responsible party and its insurer, 
from the trust fund, by making claims to the pollution fund. 
It's fair to say that many Rhode Islanders who suffered 
economic damages due to the spill are frustrated with the 
claims process, and I think that will probably come out pretty 
clearly. Parties injured by the spill, particularly commercial 
fishermen, have voiced serious concerns about the speed with 
which their claims are processed and the adequacy of the 
settlements offered by the pollution fund. Individual fishermen 
and the Rhode Island Lobstermen's Association feel the Funds 
Center is seeking unreasonable and unavailable evidence to 
prove the losses they claim they've suffered. On the other 
hand, the Funds Center claims it's attempted to pay proven 
losses as quickly as it can, while at the same time discharging 
its fiduciary duty to protect the Fund against poorly 
documented losses, and, obviously, they do have a 
responsibility.
    Mr. Sheehan will explain the claims process and review the 
Fund's experience with the North Cape claims. Mr. Sheehan will 
also discuss a new approach that may help resolve the claims 
for lost profits suffered by the lobstermen.
    We'll hear from the Rhode Island Lobstermen's Association, 
individual fishermen, seafood processor and charter boat 
operator about their experience and concerns.
    As I say, there's two witness panels this afternoon. After 
we hear from the second, there will be an opportunity for 
members in the audience, if somebody wants to offer some 
remarks, we'll give that person a chance, it will be for 2 
minutes, but, nonetheless, we want to hear what you've got to 
say. Anyone desiring to make remarks should sign up with John 
Goodman. Where is John. That will help us get some idea on the 
time that we want to allot for this, and they can be on, of 
course, we want it to be pertinent to what the hearing's all 
about; namely, claims for cost, damages and the time it's taken 
and so forth.
    I look forward to hearing from our witnesses and we'll 
start with Mr. Sheehan.
    Mr. Sheehan, as I mentioned, is the Director of the 
National Pollution Funds Center, U.S. Coast Guard and based in 
Washington.
    So, Mr. Sheehan, if you'd proceed, we would be grateful. 
Thank you.
    [The prepared statement of Senator Chafee follows:]
Statement of Hon. John H. Chafee, U.S. Senator from the State of Rhode 
                                 Island
    Good evening, and thank you all for attending. In addition to our 
Rhode Island witnesses, I wish to thank our Washington-based witnesses 
from the Coast Guard and National Oceanographic and Atmospheric 
Administration for traveling to Rhode Island.
    The purpose of this hearing is to examine how well the Oil 
Pollution Act claims process is working. The focus of the hearing is on 
those claims that are presented to the Government for payment. The Oil 
Pollution Act provides that a private party or a Federal, State or 
tribal natural resource trustee may present its claim to the Government 
for payment if negotiations with the party that caused the oil spill 
fail.
    Tonight, we will hear from two witness panels regarding two 
different types of claims against the Oil Spill Liability Trust Fund. 
The first panel will address claims by natural resource trustees 
against the Fund. Until recently, the opinion of the Comptroller 
General was that the managers of the Fund, the Coast Guard's National 
Pollution Funds Center (``NPFC''), could not pay any claims for natural 
resource damages without a Congressional appropriation. The Justice 
Department has reversed that position, and the NPFC is now staffing a 
new office to process those claims.
    How the NPFC will dispose of natural resource damages claims is 
extremely important to Rhode Island. Craig O'Connor, Deputy General 
Counsel of NOAA, will testify that the State and Federal trustees at 
NOAA and the Department of Interior recently completed the very first 
natural resource damage assessment and restoration plan under the new 
1996 regulations required by the Oil Pollution Act. Though this 
restoration plan is still open for public comment for a few days, it 
may become the very first joint Federal-State natural resource damage 
claim presented to NPFC for payment that complies with NOAA regulation. 
Unlike some 1,800 other State trustee claims pending at NPFC, the Rhode 
Island claim would enjoy deference because of the so-called 
``rebuttable presumption'' that Congress provided in the Oil Pollution 
Act for claims prepared in accordance with the NOAA regulations.
    Mr. Dan Sheehan of Coast Guard's National Pollution Funds Center 
will testify about how his organization plans to handle trustee claims. 
Trustee claims raise some novel legal issues, and the NPFC along with 
the Justice Department and the Federal trustees have been working to 
resolve many of these issues. Mr. Sheehan will testify about a recently 
completed guidance document that spells out the claims process. I am 
glad that the Federal agencies were able to move forward on this, 
though the State trustees are only now reviewing the document. I 
understand that NPFC will consider revising the document in response to 
the feedback they will receive from Rhode Island and other State and 
tribal trustees. Mr. Andrew McLeod, Director of Rhode Island's 
Department of Environmental Management, and Mr. Stephen Morin, 
Assistant to the Director, will provide the perspective of a State 
natural resource trustee on the claims process.
    While the first panel deals with recovery for injuries to public 
resources, the second panel will address the very real economic losses 
suffered by individuals. In the nearly 3 years since the January 1996, 
North Cape spill, parties injured by the spill have sought compensation 
from the responsible party and its insurer, and from the Trust Fund by 
making claims to the NPFC. It is fair to say that many Rhode Islanders 
who suffered economic damages due to the spill are very frustrated with 
the claims process.
    Parties injured by the spill, particularly commercial fishermen, 
have voiced serious concerns about the speed with which their claims 
are processed and the adequacy of the settlements offered by the NPFC. 
Individual fishermen, and the Rhode Island Lobstermen's Association, 
feel that the Funds Center is seeking unreasonable or unavailable 
evidence to prove the losses they claim to have suffered due to the 
spill. For its part, the Funds Center claims it has attempted to pay 
proven losses as quickly as it can, while at the same time discharging 
its fiduciary duty to protect the Trust Fund against poorly documented 
losses.
    Mr. Sheehan of the NPFC will explain the claims process and review 
NPFC's experience with the North Cape claims. Mr. Sheehan will also 
discuss a new approach that may help to resolve the claims for lost 
profits suffered by the lobstermen. We will also hear from the Rhode 
Island Lobstermen's Association, individual fishermen, a seafood 
processor, and a charter boat operator about their experience and 
concerns.
    After we hear from the second witness panel, there will be an 
opportunity for members of the audience to offer remarks for 2 minutes. 
Anyone desiring to make remarks should sign up with John Goodman of my 
staff--lohn, would you please identify yourself? I also ask that 
remarks be limited to the subject matter of this hearing--claims for 
costs or damages that are made to the National Pollution Funds Center.
    I look forward to hearing from our witnesses. We will start with 
(Director McLeod, if attending) then Mr. Sheehan, Mr. O'Connor and Mr. 
Morin.

STATEMENT OF DANIEL SHEEHAN, DIRECTOR, NATIONAL POLLUTION FUNDS 
     CENTER, U.S. COAST GUARD, DEPARTMENT OF TRANSPORTATION

    Mr. Sheehan. Thank you, Mr. Chairman. I truly appreciate 
the opportunity to appear before you today. To my mind, the 
communication, the open dialog in a forum like this, where we 
get to hear and we get to be heard in terms of our processes, 
both for the natural resource damage claims as well as the 
third-party claims, are the ones which are very, very important 
to us. As you noted, I do have the privilege of running the 
Coast Guard's National Pollution Funds Center and our 
assistance was a direct result of another catastrophic oil 
spill, the Exxon Valdez, which resulted in the Oil Pollution 
Act of 1990.
    One of the major provisions of that Act----
    Senator Chafee. Maybe you can pull that microphone a little 
bit closer, would you, Mr. Sheehan.
    Mr. Sheehan. I would be glad to.
    One of the provisions of the Oil Pollution Act of 1990 is 
to provide the parties damaged by an oil spill will be 
compensated either by the responsible party or from the Oil 
Spill Liability Trust Fund. Since I'm also on the second panel 
today, which concerns compensation of claims in general, in 
this first panel I'm going to limit my remarks to a more 
specialized type of claim, that of natural resource damage 
claims.
    Senator Chafee. That's right, then we'll do the individuals 
in the second round.
    Mr. Sheehan. An unfortunate consequence of many oil spills 
is the damage that occurs to natural resources impacted by the 
spill. OPA-90 specified that there were four categories of 
natural resource trustees, there were Federal trustees, State 
trustees, Indian tribe trustees, and in some rare instances 
foreign trustees, and in some cases, in its first three, there 
are some overlapping jurisdictional issues, but these trustees 
are permitted by law to submit claims to the Oil Spill 
Liability Trust Fund for not only the cost of implementing a 
restoration plan, but also for the cost of assessing the 
damage.
    As Senator Chafee pointed out, up until October of last 
year my organization was prevented from paying these claims 
because of a ruling by the Comptroller General. The Department 
of Justice's Office of Legal Counsel basically ruled in a 
different manner and gave us an interpretation which now 
permits us to entertain that type of claim. After the decision 
was made we took very quick action to convene a group, an 
informal group of Federal trustees to assist the Funds Center 
in understanding the natural resource damage assessment 
methods, certainly including the NOAA assessment regulations, 
which my colleague, Craig O'Connor, is going to describe today, 
as well as to help us scope out and define our resource needs 
to be able to adjudicate this type of claim.
    Mr. Chairman, we anticipate being able to begin 
adjudication of these claims in the late spring of next year. 
We currently have over 2,000 claims in State trustees. Now, 
while most of these claims are relatively small, they are still 
large in number. To assist all of the trustees, the three 
categories that we mentioned, in submitting claims, we've 
prepared a Natural Resource Damage Claimant's Information 
Guide. We have copies of that guide which we have provided 
outside, we announced on the 23 November that it was available 
on our Web site, we are making it available by letter and in 
hard copy to all of the State trustees. Just a few moments ago 
I gave to Mr. Steve Morin the very first letter to the State 
trustees, giving him a copy of that guide.
    In my written statement I've provided a brief overview of 
how we would generally handle this type of claim, and while we 
have attempted to anticipate many questions, if my experience 
is any teacher, as the process matures, we're going to have to 
make changes to this guide based on input, not only in hearings 
such as this, but from direct input from the State trustees and 
other trustees as well. It is of great assistance and will be 
of great assistance to us to have as much input as possible and 
we encourage that.
    With that, Mr. Chairman, I will conclude my remarks and 
will be pleased to answer your questions to the best of my 
ability.
    Senator Chafee. OK. What I thought I'd do is listen to the 
three witnesses and then ask the panel some questions. Next is 
Mr. Craig O'Connor, Deputy General Counsel of NOAA.

 STATEMENT OF CRAIG O'CONNOR, DEPUTY GENERAL COUNSEL, NATIONAL 
             OCEANIC AND ATMOSPHERIC ADMINISTRATION

    Mr. O'Connor. Thank you, Mr. Chairman. Thank you for the 
opportunity to appear here today. I'm appearing on behalf of 
not only NOAA, but the Department of Commerce, but also the 
Department of the Interior. I'm really quite happy with the 
opportunity to sit and talk to you about a process that was 
brought to the public through the Oil Pollution Act, the 
opportunity for us to have the full restoration of the natural 
resources that may be damaged by an oil spill and the 
opportunity to assure that that restoration occurs, 
notwithstanding the fact that those parties responsible for the 
oil spill may not choose to provide the compensation or be 
unable to provide that compensation. The oil spill liability 
trust fund is that indemnification on behalf of the people of 
the United States and the people of Rhode Island with regard to 
the North Cape oil spill to assure that your resources are 
fully restored.
    The issue of how those claims are presented and processed 
by the National Pollution Funds Center is the subject of our 
discussion today, and I would like to state, on behalf of both 
NOAA and the Department of Interior, that we are very 
appreciative of the opportunity to work closely with Dan 
Sheehan and his folks in the development of the guidance and 
the claims process. We feel comfortable that we have, as the 
Federal Government, been successful in merging the 
considerations that the natural resource trustees undertake in 
the development of a restoration plan as spelled out in our 
regulations with the claims process. We have worked closely 
with Dan and his folks, and although along the way we had some 
bumps and grinds that you usually have if you're trying to 
merge different statutory authorities and programs, at this 
point we feel comfortable. I also feel very comfortable that if 
it becomes necessary to submit to the Funds Center the claim 
that is presented by the restoration plan developed with 
regards to the North Cape oil spill, that that plan and the 
claim will be expeditiously processed and that we will be paid 
in full, Dan, for that claim. I feel very comfortable, because 
what we have been able to do, working with the State of Rhode 
Island and the Department of Interior, is to develop what I 
feel to be a very good and very solid natural resource 
restoration plan. We presented that plan to the public in 
September of this year, and it addresses fully, in our opinion, 
the natural resources that were injured as a result of the 
North Cape spill. Those resources included, as many of you 
know, lobsters, quahog claims, many shellfish, sea birds, 
including eiders and loons, damage to the salt ponds, damage to 
the fish and wildlife reserve. We have been able to capture 
through the work with Rhode Island, with the Department of 
Interior, with the academic community right here at the 
University of Rhode Island, what I feel to be a comprehensive, 
very fair, very reasonable and a technically adequate and well-
supported restoration plan. The claims process is designed to 
entertain such a claim. We did it in accordance with the 
regulations that we promulgated in 1996, we tracked those 
regulations, scripture and verse, we had the full participation 
of the responsible parties and the public in the development of 
that plan, and at this point, although I don't anticipate that 
we're going to be able to settle that claim with the 
responsible parties, I do anticipate that if that claim is 
presented to the Funds Center, it has been prepared fully in 
accord with their expectations and there will be no difficulty 
in having that claim processed and no difficulty in us moving 
forward in the spring with the restoration of those resources 
in accordance with that restoration plan.
    So it's with comfort that I sit here today and provide 
testimony on behalf of the Federal trustees and say that we are 
satisfied with the concerns that we have expressed to the Funds 
Center, we are satisfied that they have exercised their 
responsibilities in a judicious way and that we will be well 
accorded at such time as the plan is presented to them for 
compensation.
    Senator Chafee. OK.
    Now, Mr. Morin, Assistant to the Director of Rhode Island 
DEM.

 STATEMENT OF STEPHEN MORIN, ASSISTANT TO THE DIRECTOR, RHODE 
         ISLAND DEPARTMENT OF ENVIRONMENTAL MANAGEMENT

    Mr. Morin. Thank you, Mr. Chairman. I would like to offer 
Director McLeod's apologies, he couldn't make it here this 
afternoon, but he did send his greetings and indicate that 
however he can be of assistance, he would be happy to render 
that assistance to yourself and the committee.
    I have been the State of Rhode Island's trustee 
representative for the North Cape oil spill damage assessment 
and restoration plan since the unfortunate incident in January 
1996, and over that nearly 3 year period of time I've worked 
with NOAA and the Department of Interior, scores of scientists 
and able assistants to put together a, probably a five-foot 
long administrative record which the trustee's counsel will 
overview one more time after the close of the public comment 
period in a few days, and at that point we will put forward the 
restoration plan, the final restoration plan based on the 
public comment that we received and the overview of that 
administrative record.
    We've been extraordinarily careful, as Craig as mentioned, 
to follow all of the dictates of the NOAA NRDA regulations, for 
a number of reasons. The primary one I think is that when we 
looked at the Oil Pollution Act statute and the billion dollar 
trust fund that was there, we recognized that, unlike many 
Superfund cases, which may drag on for 10 or 15 years before a 
resolution, that a billion dollar trust fund that Congress had 
instituted was designed to speed that process along. I think 
that, although 3 years seems a long time compared to other 
natural resource restoration plans, I think that trustees for 
the North Cape have done a remarkable speedy job. The next 
place to go is to the responsible parties, and really we're not 
the going to the responsible parties themselves, we're going to 
the responsible parties' insurance company, and, absent the 
fund, if we did not have the billion dollar trust fund behind 
us, our only recourse would be litigation, which could take 
two, five, seven, 10 years through the appellate process before 
any restoration of the natural resources, the public trust 
resources was undertaken. With the billion dollar trust fund, 
it's like having our own insurance company. If the other guy 
hits my car and he's not willing to pay for the repairs, I can 
go to my insurance company and my insurance company will make 
me whole, that's how we've been viewing the National Pollution 
Funds Center, and so we've, as I said, we've spent a great deal 
of time, we've been extraordinarily careful to follow all of 
the NOAA guidelines, and for most of what the National 
Pollution Funds Center guidance document says, I have very 
little disagreement. We intend to undertake the restorations as 
recommended in the guidance, we're going to take any money that 
we get, put them in revolving funds, ensure that we properly 
document how that's been spent so that the resources that were 
injured can be restored. The one concern that I have, and in 
looking through the guidance document, is the, I think the way 
the fund seems to look at trustees, as if they were another 
claimant, and that the trustees, although they're following 
federally adopted and judicially vetted regulations, they are, 
in the case of the North Cape at least, two of the trustees are 
Federal agencies, we are following the Federal Administrative 
Procedures Act and the National Environmental Policy Act, at 
the end of the day we will have our administrative record, we 
will close that and we will issue our final report, and we view 
that, at least the State of Rhode Island views that, as the 
final executive decision regarding the restoration, the trust 
of the those natural resources. It's more than I think just a 
presumption of correctness, it is, we think, we think it should 
be viewed as the final decision in this matter, and that absent 
a finding of arbitrary or capricious on behalf of the trustees, 
that the Funds Center should be writing the check to the 
trustees for those restorations so that we can begin 
expeditiously putting back the trust resources that were lost 
to the public, and so our concern is, as I said, the issue of 
the finality that the guidance document, the Coast Guard's 
guidance document seems to indicate, that if they choose, they 
could deny, in whole or in part, the claim of a natural 
resource trustee for restorations.
    Now, I can understand that the 2,000 or so claims that may 
be pending that were made prior to the adoption of the NOAA 
regulations, I can understand their concerns relative to those, 
but I think that there needs to be a distinction drawn between 
those claims which were made under NRDA regulations that were 
adopted and those that were made another mechanism, and that, 
the review of the records that the claims center undertakes is 
a very basic review, have we checked off the boxes that were 
necessary in the regulations, and, if we have, then a check 
issues. Beyond that, I don't think they need to review it, 
because the trustees were the ones given that responsibility by 
Congress, and if we have done our job, if we followed the 
regulations, then our decisions need to be presumed correct.
    Senator Chafee. Let me ask you a question here. As I 
understand it, you first, as a trustee, and you represent the 
State of Rhode Island, as a trustee, you came up with your 
claim and you tried to conform to the regs that NOAA, I guess 
as NOAA puts them out, didn't they?
    Mr. Morin. Yes.
    Senator Chafee. But I was a little surprised, you haven't 
been to the responsible parties yet, is that right?
    Mr. Morin. We have not been formally to the responsible 
parties. The responsible party has been, as the regulations 
require, a participant in the damage assessment, that is they 
sat in on all of the work that we did in assessing the damage. 
In the construction of the restoration plan, however, that's 
left to the trustees alone, and the formal presentation of the 
claim to the responsible parties will take place after the 
closure of the public comment period; however, as in all 
litigations, we are generally in some kind of negotiations with 
the responsible parties' attorneys and insurance company right 
from the beginning, so there's been a very, very strong back 
and forth between the trustees and the responsible party 
regarding an attempt to settle the case.
    Senator Chafee. But NOAA or the Fund isn't going to pay 
anything until they know that the responsible party has 
declined, you fail, you struck out with the responsible party, 
is that right?
    Mr. Morin. Yes, Mr. Chairman. Ninety days later, 90 days 
after we make the demand on the responsible parties, if they 
have not paid, we would make the claim.
    Senator Chafee. OK. So there's a time limit, that's very 
important, otherwise this thing could drag on forever.
    Mr. Morin. That's correct, Mr. Chairman.
    Senator Chafee. So, obviously, you're dealing with the 
insurance company, but we'll call it the responsible party. 
Now, so here we are, 3 years after the, 3 years next month 
after the accident, and so you're getting together your claim, 
you're following the dictates of, the guidelines from NOAA, and 
this thing is three feet long, or what did you say?
    Mr. Morin. About five feet.
    Senator Chafee. Five feet, OK. So now you're going to lug 
it down to go before the responsible party and then they have 
90 days?
    Mr. Morin. That's correct.
    Senator Chafee. When does the clock start running, when you 
deliver it there?
    Mr. Morin. When we deliver the final demand, and we're not 
giving them the whole five feet, Mr. Chairman, we'll give them 
a summation of that document there. They're aware of most of 
the documents in the file.
    Senator Chafee. Because they've sat in, as I understood it, 
an awful lot. I mean, when a million lobsters were lost, or 
whatever it was, baby lobsters, you sit down with them, you try 
to figure, now what's the potential loss of these baby lobsters 
and what's it going to mean in 5 years and so forth and so on, 
you can figure that all out?
    Mr. Morin. That's exactly what we did, Mr. Chairman. We had 
University of Rhode Island scientists, in the case of lobsters, 
University of Rhode Island scientists go out and sample the 
area of the oil spill and the areas adjacent to the oil spill 
and do a field study to say how many lobsters were out there, 
how many lobsters should have been out there, and you subtract 
one from the other, and, in fact, our estimation is that now 
there were nine million lobsters of all sizes, mostly little 
ones, that were killed, and that over time they would yield 
some two-and-a-half million or two million adult lobsters to 
the commercial shellfishermen, the lobstermen after they all 
grew out, so that those nine million little guys need to be 
replaced so that in time we have the adults, plus we have all 
of the environmental services that those small lobsters who 
don't make it to adult size, food for cod, for example, and all 
the ecological services they provide are put back into the 
process. The responsible parties sat with us in the 
construction of those studies, and the outcome, although not 
every single study is agreed to, the outcome is agreed to, at 
least the responsible parties understand how the studies were 
done and they understand the system that was going on, many of 
the studies are the responsible parties' studies. A great deal 
of what's in the administrative record will be back and forth 
between the trustees and the responsible parties' investigators 
on interpretations of what science might be this way or that 
way.
    Senator Chafee. It seems to me the attitude of the 
responsible parties would be, well, why the heck should we pay 
this, all they've got to do is wait 90 days and then you go 
collect from the Federal Government. Now, I suppose that the 
downside of that is that once you collect from the Federal 
Government, the Federal Government is segregated, would come on 
in and sue the responsible party, or could, is that--what's the 
encouragement for the responsible party to settle?
    Mr. Morin. See, I think that is the encouragement, Mr. 
Chairman. The claim is subrogated to the Fund, the Fund then 
sues the responsible parties to get back its money that its 
paid to the trustees to do the restoration, and the incentive 
then is that not only, and I don't want to speak for the Fund, 
but, as I understand it, not only do they have to pay the cost 
of the restoration, but they'll have to pay the administrative 
cost to the Fund on top of that, and so you're going to----
    Senator Chafee. I presume they don't want the Federal 
Government suing them particularly?
    Mr. Sheehan. People generally don't like that.
    Senator Chafee. It must be extremely difficult to quantify 
the cost in something like this. I mean, I can see in the next 
panel we're going to have the individuals, and an individual 
with some definite, knows what he made last year and what's 
happened, what he's making this year and the losses and so 
forth, but with these, in effect, natural resource damages, 
it's--I don't know how you quantify it.
    Mr. Morin. What we did, and that's the, I think this is the 
difference between how natural resource damage claims were done 
before OPA-90 and done after OPA-90.
    Before, a monetary figure was arrived at, money changed 
hands and then trustees tried to do something that was 
generally associated with what the damage was, but in many 
cases we did not have that case, and in the World Prodigy is a 
perfect example. There is an ongoing--in fact, yesterday they 
opened up shellfish grounds that were transplanted, that was 
paid for by the World Prodigy damage assessment, but there were 
no clams killed during the World Prodigy oil spill. Now what we 
do is restore the resources which were injured, and we don't 
look at the cost of doing that until right at the end, what we 
find are technologically available mechanisms for restoring the 
natural resource, we scale out that to ensure that the amount 
that was killed is going to be restored on this hand, and at 
that point we say, OK, well, how much will it cost to do this.
    Senator Chafee. Well, take your nine million lobsters, now, 
OK, you're going to restore that, how do you restore nine 
million lobsters?
    Mr. Morin. What we've determined is that the lobsters--we 
have some fairly sophisticated biological models, and some 
very, very good biologists, including Tom Gibson of our staff, 
who broke down the lobsters into how many eggs would have made 
nine million lobsters and how many eggs would have flowed from 
those nine million lobsters, so that when it all grows out, you 
get the two-and-a-half or two million adult lobsters. We then 
say, OK, well, how do you increase egg production, and there's 
a fairly old method which has never been used in Rhode Island, 
but it's big in Maine, called V notching, where you take an 
adult female lobster, you mark their tails, after they become 
legal size, you mark their tails and you put them back in, then 
you prohibit the landing of a marked lobster, that marked 
lobster stays in the water as a legal size lobster but no 
longer able to be caught for about two more malts, which would 
be 2 or 3 years, essentially, and in that time period she will 
produce another large clutch of eggs and those eggs will 
replace the lobsters lost, and that's how we do it, and then 
you go and count up the number of lobsters you need to do that 
and how much that costs in the marketplace, how much it costs 
to administer the program, and it works out in this case to be 
about $10 million to do the restoration of the lobsters, and so 
we didn't--but we didn't get to the money part until we've 
gotten to all the rest of that. Had we found a way of restoring 
the lobsters less expensive than ten million, which would have 
had the same effect, we would have, by the regulations, would 
have been obliged to use that, but at this point we found what 
is the most economically viable mechanism for doing that and we 
think that's going to work.
    Senator Chafee. Mr. O'Connor, suppose the trustee went 
against the responsible parties and had six different 
categories of injuries and the responsible party is willing to 
settle on three of those but won't negotiate in the other 
three, now if the trustee takes a settlement of the first 
three, can he still come after you for the remaining three or 
does he have to go way back and, if he accepts anything from 
the--is he inhibited from moving forward if he's accepted a 
settlement of a partial part of his claim?
    Mr. O'Connor. My anticipation is that if we are to enter 
into a partial settlement with the responsible parties, that if 
we have any expectation of going to the Fund for the balance of 
the funding for that restoration plan, that we had better 
carefully structure that settlement to assure that we are 
preserving the remaining claims against the responsible party. 
The concern that the Funds Center has evidenced in its guidance 
is that, that the trustees in effecting a settlement not 
jeopardize the position of the Funds Center in collecting 
whatever moneys that they ultimately might pay for the trustees 
for the balance of the claim. I have would see no reason, and 
the guidance does not indicate that there would be a 
prohibition from effecting a partial settlement, preserving 
other portions for submission to the Funds Center, but, once 
again, it would be with that proviso, that we not jeopardize 
the interest of the Funds Center and collect from that.
    Senator Chafee. It seems to me that it's terribly important 
that the trustee, the tribe or the State or, I guess you 
mentioned you have a foreign trustee, but I suppose in most 
instances it would be, the State would be the trustee, wouldn't 
it?
    Mr. O'Connor. In most instances. The State is at least a 
significant trustee.
    Senator Chafee. So it seems to me it would be terribly 
important that the trustee work extremely closely with you?
    Mr. O'Connor. Yes, sir.
    Senator Chafee. And so now, and then in preparation of 
this--you're familiar with what they're doing, what the State's 
doing?
    Mr. O'Connor. We've been working hand in hand. I mean, 
there's been a full partnership. It's the position of the 
Federal Government that this restoration plan is a package, it 
is not a bits and pieces kind of thing, and we are going to 
maintain the partnership that we have with Rhode Island in 
prosecuting this claim, and if we can't get it fully 
compensated by the responsible parties, then our anticipation 
is that we will go as partners to the Funds Center and have the 
fund then provide that compensation.
    Senator Chafee. You'll go to Mr. Sheehan then?
    Mr. O'Connor. That's correct.
    Senator Chafee. What it does, I mean, I'm all for speed and 
admire speed, I must say 90 days is a short turnaround time for 
the responsible parties to makeup its mind. Is the theory that 
they've been in on it, they're in on it, too, judging from what 
Mr. Morin said, that to a considerable extent in calculating 
these costs? But 90 days, is that adequate time?
    Mr. O'Connor. Oh, I think it's more than adequate time. If 
the claim had been presented, prepared in isolation, without 
the responsible parties being part of the process, then I think 
that there would be an argument in favor of their having had an 
opportunity for further review and evaluation of the claim, but 
they have, in accordance with our regulations, been part of the 
process, they fully understand it, there is nothing that is 
going to be a surprise to them, and they had had more than 
adequate opportunity to evaluate that claim.
    Senator Chafee. I mean, for instance, they'd be in on--
suppose you lost some eelgrass or the lobster situation 
described, they have their own calculations in all that, I 
presume, they've been in on it?
    Mr. O'Connor. I would suspect--well, they have presented 
their own evaluations, their own calculations and their own 
conclusion based on the studies that were done, but they 
participated in the development and the implementation of those 
studies, so nothing should be of surprise to them.
    Senator Chafee. All right. Well, it sounds like, although 
this has taken 3 years, in all fairness, there was a roadblock 
there to start with, it seems like this damndest roadblock that 
the, not the Justice Department, who was it originally said you 
couldn't pay any claims out, what was the Fund for?
    Mr. O'Connor. Well, that was an interesting question. I 
mean, the Comptroller General had issued an opinion that the 
Fund was not----
    Senator Chafee. Well, that's really protecting a turf, 
isn't it? We setup a billion dollar fund and the Comptroller 
said nobody can be paid from it.
    Mr. Sheehan. Well, if I can respond to that. The 
Comptroller General, in his opinion----
    Senator Chafee. Well, don't be too sturdy in his defense.
    Mr. Sheehan. [continuing] . . . said the process that was 
to be followed was to obtain funds for payment, you had to go 
through the appropriations process. That, however, did not bar 
the process that was made with respect to the assessment of the 
natural resource damages, that proceeded independently.
    Senator Chafee. Because of the theory that you might have 
gone to Congress to get an appropriation?
    Mr. Sheehan. Yes, sir.
    Mr. O'Connor. We have prosecuted a number of oil spill 
cases since OPA was passed in 1990 and have moved forward and 
actually have settled almost all of those cases with the 
responsible parties. It wasn't until 1997 when we found out, 
that, in fact, the Fund will be there to indemnify us if we 
weren't able to settle it on our own and to indemnify us 
without the necessity of appropriation, going through the 
appropriation process. We felt comfortable, much more 
comfortable in prosecuting our claims.
    Senator Chafee. Do you think the presence of the Fund 
discourages the responsible party from settling?
    Mr. O'Connor. Well, I would echo what Steve said on that 
point. I think the fact that the Fund is there, the fact that 
the trustees are going to be able to get the money necessary to 
do the restoration and the fact that the Fund is going to 
ultimately sue to collect that money, it's just putting off the 
inevitable. I would think that, if I were a responsible party, 
I would be more inclined to try to settle my case with the 
trustees than to have to defend against the claim being filed 
by the Funds Center because the standard of review may be 
different and it may be an easier of standard of review 
collecting the money on behalf of the Funds Center than it 
would be if the trustees sued individually.
    Senator Chafee. Plus, the whole weight of the Federal 
Government on your back.
    Mr. O'Connor. Yes, sir.
    Senator Chafee. Do you have anything?
    Mr. Gibson. I do, Senator. Mr. Sheehan, could you talk a 
little bit about the staffing plans you have for this new 
function of evaluating natural resource claims, you were not 
previously staffed to perform that mission, when you'll be 
ready to accomplish it and how you're going to clear the 
backlog of 1,800 claims that have been presented to date?
    Mr. Sheehan. Thank you. I will be glad to do that. We 
basically have laid out, in consultation with the Federal 
trustees, a game plan for putting together----
    Senator Chafee. Steve, do you want to pull that a little 
bit closer.
    Mr. Sheehan. [continuing] . . . for putting together a 
natural resource damage claim division. There will be 
approximately, to begin with, seven folks in that, we will have 
a division chief, we will have some economists and biologists 
as well. We anticipate that we will be staffed up by late 
spring and at that point in time we will be able to start 
adjudicating these claims. The 2,000 claims that I mentioned 
earlier, a great majority of those are from the State of 
Florida, and we've already begun work with the State of Florida 
to get them to group these claims so that they can come up with 
a restoration plan, which is a necessary condition and 
necessary part for consideration of payment of a claim, but we 
should be ready by the time my colleagues to the left have gone 
through their process with the responsible parties and then to 
us.
    Mr. Gibson. Let's say that the North Cape claim proceeds to 
the process, is not settled, and was presented to you sometime 
in mid-spring; what is the estimation of NOAA and NPFC on how 
quickly that claim might be adjudicated? The statutory 
requirement is 90 days, is that deadline reasonable?
    Mr. Sheehan. Actually, there isn't a statutory requirement 
for 90 days for us, but we would look at the administrative 
record, we would be ready to review that claim when it came in, 
we would be working with the trustees to see, if we needed 
supplementary information for the administrative record, it is 
difficult for us to say how long it will take since we've never 
adjudicated one and it's difficult for them because they never 
submitted one, but I can assure you that we're going to do this 
as quickly as possible.
    One of the differences between this type of claim and 
third-party claims is that this goes through a stylized 
process, according to a set of regulations, in anticipation of 
submitting a claim, unfortunately, some third parties' claims 
you don't anticipate you're going to have a loss, so you don't 
necessarily have the records there all the time to bolster 
that, so there is a difference between the time factor.
    Mr. Gibson. Thank you.
    Senator Chafee. Just running over the time schedule again, 
and I appreciate that things can go wrong, but the anticipation 
now is that, Mr. Morin, as the trustee, you believe you have 
your claim in shape and ready to file, did I hear you say by 
January?
    Mr. Morin. Yes, Mr. Chairman, I think that that's, I was 
saying early January, and the Federal trustees cautioned me not 
to be overly optimistic, but in the month of January I think we 
will have finished review of the public comments and our final 
review, our final work on the plan, we will file a final plan 
sometime in the month of January and it will immediately be 
sent to the responsible parties for----
    Senator Chafee. Start of the 90 days?
    Mr. Morin. For the 90 day start, and at that point we would 
then be prepared to, if no settlement or partial settlement is 
reached, we would take the full claim, or the partial claim, to 
the Funds Center sometime in late spring, and we are concerned 
about the timing of the review process, and that was, the 
reason why I kept mentioning the adjudication process that we 
have gone through in following the NOAA regulations and over-
viewing this large administrative record, because I hear Mr. 
Sheehan, and I see in the guidance the fact that the Funds 
Center may want to review the administrative record and review, 
and either augment the record or ask for additional 
information, and our concern is that, in finally, in making a 
final agency determination as to what is the damages, we think 
that we sit in the place of the Government for that point, 
because we are partners with the Federal Government right now, 
NOAA and DOI are also co-trustees, so we will file that trustee 
claim as both the State of Rhode Island and the Federal 
Government, so it's the Federal Government, essentially, and 
one of the States.
    Senator Chafee. How did the Federal Government get in on 
the claim?
    Mr. Morin. They are co-trustees, Mr. Chairman.
    Senator Chafee. Because some of their lands have been 
effected?
    Mr. Morin. Because, that's correct, Mr. Chairman, greater 
than three miles from shore, NOAA's got trust interest as well 
as, migrating fish and so forth that may go between State 
waters and Federal waters and the bird issues or the land 
issues for the Fish & Wildlife Service, U.S. Fish & Wildlife 
Service, they're the trustees' migratory birds.
    Senator Chafee. And the wildlife refuge?
    Mr. Morin. And the wildlife refuge as well. And so we are 
three trustees together filing a single claim rather than 
simply the State of Rhode Island or simply the Federal 
Government filing bits and pieces of a claim.
    Senator Chafee. So you have the situation of the Federal 
Government being in on a claim against the Federal Government?
    Mr. Morin. That's correct, Mr. Chairman, and using Federal 
regulations, and that's why I'm concerned about the notion that 
biologists or economists might be reviewing the administrative 
record and not having gone through the 3 years of back and 
fourth and agony and so on and so forth, but at the end of the 
process substituting, somehow substituting their judgment for 
the judgment of the trustees. Well, the trustees by law, by 
OPA-90, were the ones who were supposed to make the 
determination on what is a restoration, what damage was done 
and what restoration is necessary. I think that their job 
should be very ministerial, and rather than biologists and 
economists, I think there needs to be a clerk typist with a 
checkbook at the end of the process for the, at least for the 
Government claims, doing that work.
    Senator Chafee. I'm anxious to get this thing settled and 
Rhode Island get as much money, but, gee whiz, I have a little 
trouble in thinking that you just submit a bill and they've got 
to pay it?
    Mr. Morin. And if it were, you know, out of the blue, I 
would agree with you, Mr. Chairman, but because we are in the 
place that we are, that is because we are together with the 
Federal Government, we followed the rules that they've done, 
we've followed the Federal Administrative Procedures Act and 
the Federal National Environmental Policies Act as well as the 
State law is involved, to make sure that we've touched all the 
bases, at the end of the process we are left with an 
administrative record, and it's interesting that the guidance 
documents that the Coast Guard puts out indicates that its 
findings, that its findings are final, they cannot be sued 
except on the arbitrary and capricious standard of their 
administrative record, and, yet, we have the same process, we 
file it all under the same rules, the Federal EPA, the Federal 
Environmental Protection Act, the National Environmental Policy 
Act and the NOAA rules, and at the end of our record the 
indication from the Fund is that they may be in there messing 
around with how it was that we did that and did we count the 
lobsters right, and we think that's a very dangerous sort of 
precedent, because at the end of the process what gets 
litigated is, I think, if the trustees have done their work, 
should be held to that same standard of arbitrary and 
capricious that the Coast Guard thinks it should be held.
    Senator Chafee. You put up a good argument. What do you say 
about that, Mr. Sheehan, you sit up there with a clerk typist 
to type out the check and just send it along?
    Mr. Sheehan. We're not going to do it, Mr. Chairman. Our 
authorities and responsibility stem from OPA-90. There is 
certainly deference which is given to the claimants that follow 
the NOAA rules, we've stated that, we're going to do that. We 
certainly need economists and biologists because we're going to 
be dealing with all sorts of different claims, not only from 
the Federal sector and ones that have gone through the NOAA 
process, but ones that are done by States, not done in 
accordance with that process. We are anticipating that we're 
basically going to be looking at the administrative record, 
looking at the rules which we have every confidence that that 
you have followed very closely, going through that, if we have 
questions about that, we'll go through the trustees. We expect 
to do it in an expeditious manner. We want to see the natural 
resources restored quickly and in a timely manner, and that's 
my commitment, to do that, sir.
    Senator Chafee. Well, also, we've had testimony here from 
Mr. O'Connor that Mr. Morin and he have worked very, very 
closely together. How much have you been in on all this, your 
organization?
    Mr. Sheehan. My organization has not been in on the plan 
itself.
    Senator Chafee. The claim.
    Mr. Sheehan. We have not participated in that particular 
process, basically because we do have a fiduciary 
responsibility and an adjudicatory responsibility with respect 
to the law itself, so we have not participated in the process. 
We have been following it as much----
    Senator Chafee. But, obviously, as you say, when the claim 
comes in and you've got questions, you've got, I don't know 
whether you've got biologists, but you've got people you've 
turned to, you say to them how did you get this count, 
presumably, won't you, quite likely, and ask them, and if they 
are convincing, you take it?
    Mr. Sheehan. Our primary role in that type of claim will be 
to look and see that they have followed their own regulations, 
and, other than that, having not seen a claim and having not 
gone through that process at this point, I'm not sure of the 
level of actual review that it's going to get, but we're going 
to be basically going through and looking at it.
    Senator Chafee. Now, he thought, Mr. Morin thought that by 
late spring they'd come to the Federal fund, so that gets us up 
to the Spring of 1999, late spring, how, you know, I'm not--
it's tough to figure these things, but you'll get to it, and 
when do you think you might come to a conclusion?
    Mr. Sheehan. I would say that it's going to depend on a 
number of factors, one, whether they come to us with a whole or 
whether they've settled it in part.
    Senator Chafee. If they settle it in part, presumably that 
would make it easier, wouldn't it?
    Mr. Sheehan. Presumably that would make it easier. Well, as 
soon as it arrives, we will start the process. We're not going 
to sit on it.
    Senator Chafee. OK, that's all. I'd like assurances from 
you that you will go right to this thing.
    Mr. Sheehan. Yes, sir, you have those.
    Senator Chafee. This is 3 years already, and late spring 
always seems to be later than early spring, heavy words for the 
day, but. So, in any event, I urge you on. Do you have some 
questions, Tom?
    Mr. Gibson. I did have one more question. In the North Cape 
claims situation, right now we have the Federal trustees and 
the State trustees working together, and, hopefully, going to 
go to the end of the process together, but what would happen if 
the Federal trustee decided to settle a claim for a resource 
that it shared trusteeship with the State, where would that 
leave the United States, where would that leave the State if 
litigation ensued?
    Mr. Sheehan. I'll be honest with you, we've looked at that 
and we would hope that we would be able to forge them back into 
a consensus to come with a single claim, because it would be 
very difficult from a precedential standpoint for this to 
occur. We think that the partnership, which has, obviously, 
been effected so far, is a good one, we would urge them to go 
back to the negotiating table between themselves to come to us 
with a unified claim.
    Mr. Gibson. Mr. O'Connor.
    Mr. O'Connor. I have no intention of terminating the 
partnership.
    Mr. Gibson. Well, let's talk about a hypothetical State, 
that is Rhode Island, where a claim has been presented where 
you did have a Federal trustee and a State trustee taking 
adverse positions and one settling and one not and the other 
seeking compensation from the fund, have you thought about that 
situation?
    Mr. O'Connor. Yes, we have thought about that situation, 
and what that creates is the necessity to define the scope and 
extent of the respective trusteeships between the State and 
Federal Government, and as difficult as it is to count 
lobsters, it is even more difficult to determine the line 
between that trusteeship, particularly, as Steve mentioned, 
with migratory species and so on, it would become a retractable 
situation, it would be a situation, if we were not able to 
negotiate it out with the Funds Center and reach some amicable 
resolution with the Division of Trusteeship, it ultimately 
might be an issue that we would have to litigate.
    Mr. Gibson. So the prohibition under the statute for double 
recovery means that one or the other trustee, the trustee that 
is left in the lurch after the settlement is very much at risk, 
at not being able to actually get its claim compensated because 
it would have to prove at what its part had not been covered by 
the settlement, it would be a difficult situation, it's a very 
strong discouragement for trustees to split up, and we would 
not, the Federal Government has no intent to do that. Mr. 
Morin.
    Mr. Morin. I would hope that we would not be in a position 
of having to split up the team this late in the date, because I 
agree with Craig, that we are--it is so difficult to decide 
whose got which parts of the resource, you could do it 
geographically, and for some resources that are less mobile, 
that might be all right, but for the mobile resources, 
particularly birds, we've got migratory birds that spend the 
winter in Rhode Island and they spend the summer elsewhere, in 
northern New England, and the Federal Fish & Wildlife Service 
has been acting as trustee in that regard. That's why we've, I 
think we've been very, very careful to try and work this thing 
together. I would hope that if we could not, that if for some 
reason someone wanted to settle this in a way that was not 
protective of the whole trust resource, that is that the entire 
public good was not taken into account, that one or the other 
would either come to their senses or sue the other one to keep 
them from doing that. One of the things, Mr. Chairman, that you 
should know is that in addition to, my Attorney Claude Cote is 
up there in the audience and he reminded me that not only do 
all the trustees have their own attorney, but we have a Justice 
Department attorney who sits in to make sure that we are 
following all of the Federal rules, and that that makes for an 
interesting discussion between the trustees and the center, if 
there's a disagreement on the compensation, because who 
defends, who defends the center if the trustees are angry at it 
if the Justice Department is part of the trustee council.
    Senator Chafee. Well, the Justice Department, both sides, 
huh?
    Mr. Morin. The Justice Department, at least in this 
instance, the Justice Department is on our side so far, but 
they represent the whole Federal Government. It's an 
interesting argument, that what happens if there's a 
disagreement between some parts of the Federal Government and 
the other part's egged on by the State.
    Senator Chafee. All right. Well, first, I want to thank 
you. I'll be following this very closely because, one, I'm glad 
you're cooperating so well, and you've indicated, you've given 
us some kind of a time schedule here, and I'm deeply interested 
in how all this comes along, so I will be following it with 
great interest and urge you to keep going, and I commend the 
close working relationship you and Mr. O'Connor formed, and now 
get on with the submission, get the answer from the insurance, 
from the responsible party and just move on. Thank you very 
much. OK.
    I think that Mr. Sheehan, you're staying, aren't you?
    Mr. Sheehan. Yes, sir.
    Senator Chafee. Now, the next panel, Mr. Brown is from 
Peacedale. Mr. Christopher. OK. Now, in this panel we have Mr. 
Christopher, owner of ABC Lobster Company in West Kingston. Mr. 
Bruce Kopf, commercial fisherman in Narragansett. Bruce, is he 
here?
    Mr. Hartman. No, he's not. Somebody will be reading 
something into the record for him, Mr. Chairman.
    Senator Chafee. OK. John Sorlein, president of the Rhode 
Island Lobstermen's Association. And do we have Mr. Nally here?
    Mr. Hartman. No. We have his testimony, Your Honor. He, 
unfortunately, was working and he couldn't get here.
    Senator Chafee. Now let's get straightened out who we do 
have. We've got Mr. Sheehan, Mr. Christopher, Mr. Sorlein.
    Mr. Sorlein. Yes, sir.
    Senator Chafee. Does that do it?
    Mr. Hartman. Mr. Chairman, Mr. Blount is not here and Mr. 
Nally couldn't be here because of work, but I did bring their 
testimony with us.
    Senator Chafee. And you are?
    Mr. Hartman. I'm Barry Hartman, I'm their attorney.
    Senator Chafee. So Mr. Kopf isn't here. OK.
    Now, why don't we start with Mr. Christopher.

    STATEMENT OF AL CHRISTOPHER, WEST KINGSTON, RHODE ISLAND

    Mr. Christopher. Mr. Chairman, my name is Al Christopher 
and I appreciate the opportunity to briefly address you today. 
My testimony is presented as the former owner of ABC Lobster, 
Inc., a seafood dealership that was located a 296 Great Island 
Road in Narragansett, Rhode Island. ABC operated by purchasing 
lobsters from inshore fishermen and then selling those lobsters 
on the wholesale market to large exporters. ABC also sold some 
fish and lobsters on the retail market to its walk-in 
customers. ABC did not purchase fish or lobsters from offshore 
fishermen because it was not profitable for it to sell such 
fish and lobsters.
    After ABC Lobsters started doing business in 1993, they 
subsequently increased sales every year. In 1993, ABC had gross 
sales in the amount of approximately one million dollars. In 
1994, when ABC began selling lobsters on the wholesale market, 
it purchased all new refrigerated lobster tanks and grossed 
approximately one-and-a-half million dollars in sales. In 1995, 
sales continued to increase, and by the year end, ABC had 
grossed 2.1, approximately 2.1 million dollars.
    1995 was a good year for lobstering, especially in the 
spring. Many fishermen who typically did not fish in the winter 
and spring were planning to gear up and fish hard during the 
Winter and Spring of 1996. Accordingly, I expected our lobster 
purchases and sales to increase and we bought four new lobster 
tanks, which increased ABC's holding capacity dramatically. 
Unfortunately, that increased demand for holding capacity never 
happened because on January 19, 1996 the North Cape Barge ran 
aground off Moonstone Beach and spilled over 800,000 gallons of 
heating oil into Block Island sound.
    In 1996, ABC gross sales were dramatically reduced as a 
result of the spill. For example, from June 25, 1996 until 
December 31st, 1996, ABC purchased only, approximately 300,000 
pounds of lobsters. During this same period, in 1995, ABC had 
purchased 465,000 pounds, in other words, my gross purchases 
declined by about 36 percent during this same period. The 
profitability of ABC declined accordingly. During this same 
time period, ABC's retail sales by almost 34 percent.
    My claim was first filed with Turnabout on May 31st, 1996 
and was later amended to include the entire year of 1996 and a 
filing date May 14, 1997. Since that amended filing, about 18 
months have elapsed. That is way too long.
    While waiting to be paid for my damages, business losses 
have continued to mount, as the lobstermen delivering to ABC 
continued to experience lower and lower catches due to the 
decimation of the lobster stocks. In the face of these 
continued losses with no end in sight, I sold my business in 
1997 at a price considerably below its former market value. My 
business is gone and my losses remain.
    Having failed to get a reasonable offer from damages from 
Turnabout, I filed my claim with the fund on September 16, 
1997. Instead of obtaining a quick resolution of my claim, I 
was forced to go through the process of delay and documentation 
all over again. If you look at the correspondence file today, 
you will see that first the Fund asked for information, then 
after assigning my claim to Hull & Cargo in January 1998, Hull 
& Cargo requested different information and then its accounting 
subcontractor required even further layers of detail. When the 
Fund finally came up with a settlement offer on June 18, 1998, 
9 months had elapsed since the Fund had started its review. 
Once again, this is way too long. Since the Fund settlement 
offer was unreasonably low for the first half of my claim and 
denied entirely the second half of my claim, I submitted a 
request for reconsideration on August 14, 1998. In this request 
for reconsideration I provided voluminous documentation to 
support my claim, in particular the second half of my claim 
which had been denied outright by the Fund. This documentation 
included the complete claims of five of my largest suppliers 
which were pending before Turnabout. These underlying claims of 
my suppliers unequivocally bolster, improve my claim for 
damages. In any event, despite the fact that the Fund should 
have proposed their final offer of settlement within 90 days of 
this final submittal, that deadline lapsed without explanation. 
I have been told that I can take this inaction as a denial of 
my request and then file suit. That makes no sense at all. I 
could have filed suit anyway without wasting time and resources 
by filing with the Fund. The fund has failed.
    I finally received a letter dated November 20, 1998 from 
the Fund. Instead of providing me with an offer on my claim, 
the letter stated that the Fund had waited until October 26, 
1998 before authorizing action by Hull & Cargo on my request 
for reconsideration. In other words, they waited 90 days after 
receiving my request for reconsideration before doing anything 
at all. It is no wonder that I didn't receive their final offer 
of settlement within the 90 day timeframe. Even more disturbing 
in this letter was their statement that they still could not 
tie my losses in the last half of 1996 to the oil spill. Why is 
this so difficult? Don't they even read the reports of the 
consultants who have documented the lobster losses for the 
natural resource damage assessment. And, guess what, they asked 
for more information to justify the losses of the lobstermen 
who supplied me.
    The Fund is adversarial claimants. If you will look at the 
Fund settlement proposal of June 18, 1998, alongside the 
request for reconsideration for ABC dated August 14, 1998, 
certain facts are clear. The Fund does not recognize that the 
North Cape oil spill produce any harmful effects other than to 
force closures of certain areas for fishing up until the end of 
June, 1996. Using their analysis, the effects of the spill 
stopped by the end of July, 1996. They interpret an unexpected 
increase in the lobster catch in August as being equivalent to 
a full and complete recovery from the spill. That's absurd. 
They just don't get the fact that the spill resulted in 
enormous damage to the lobster population off the coast of 
Rhode Island. Why doesn't the fund make any attempt to consult 
the scientists involved with the natural resource damage 
assessment studies, in effect, to understand the significance 
of the spill. They would see that not only has there been great 
damage, but that the effects of the spill will be felt in even 
greater degrees over the next few years.
    The Fund's analysis are designed to minimize damages. Great 
pains were taken by Hull & Cargo to reduce my potential award 
by selectively applying data, such as weather or the relocation 
of fishermen from one shore facility to another, as factors to 
lower my award. The Fund fails to understand that everything 
changed after the spill, business plans were revised and the 
factors that led to growth over previously years no longer had 
relevance. The Fund and its adjusters used a standard of proof 
consistent with insurance adjusting. Claimants are treated as 
potential scam artists seeking to capitalize on an accident and 
that is simply not the case. We did not ask for this spill and 
we only want to be made whole. I thank you for this opportunity 
to speak.
    Senator Chafee. Thank you, Mr. Christopher, very much.
    And now, Mr. Sorlein.

STATEMENT OF JOHN SORLEIN, PRESIDENT, RHODE ISLAND LOBSTERMEN'S 
                          ASSOCIATION

    Mr. Sorlein. Thank you, Mr. Chairman, and I appreciate the 
support that you are showing for our industry by coming to this 
community at this time to help us address this serious problem.
    My name is John Sorlein and I'm the president of the Rhode 
Island Lobstermen's Association. We are a nonprofit association 
of individuals who are engaged primarily in the business of 
fishing for lobsters. Several of our members also have onshore 
businesses or related businesses that rely in large part on 
lobstering for their livelihood. These businesses represent a 
large portion of the lobstering industry off Point Judith, 
Rhode Island, and the Rhode Island Lobstermen's Association has 
put together a group of over 100 businesses that have developed 
and continue to develop and document damage claims.
    The fishing industry has contributed greatly to the local 
and statewide economy. Millions of dollars have been pumped 
back into the economy by way of direct and indirect business 
resulting from the successful harvesting of Rhode Island's 
pristine seafood beds. Many lobstermen have been fishing in 
this area for years and the Lobster Association represents a 
large portion of that total. Lobstering is mostly a small 
business, each lobsterman owns a boat or two and each hires his 
or her own crewmen to help.
    We love what we do. We are independent and self-sufficient 
and we are successful because of our willingness to put in an 
honest day's work.
    Point Judith is also one of the largest fishing ports on 
the East Coast. Until January 1996, the lobsters caught in 
Point Judith were world renown for the quality, and, in fact, 
we absolutely think that they are the best lobsters caught, and 
the range of the lobsters far better than Maine lobsters.
    However, on January 19, 1996, the unthinkable happened, and 
a barge, the North Cape, spilled over 800,000 gallons of highly 
toxic Number 2 heating oil after running aground off of 
Moonstone. We say this is unthinkable since no one had expected 
this to ever happen. We had had an oil spill in 1989 with the 
World Prodigy, and to think that this could happen again, it 
was just unthinkable, but it did.
    The immediate impact of the spill was disastrous, and the 
only significance of dead lobsters, over 60,000 were measured 
by weight from the sample areas located on the beach, and over 
18,000 of these lobsters were studied to determine their sex, 
size and reproductive status. That information was used to 
project the loss of over 2.9 million lobsters, nearly three 
million lobsters that washed up on the beaches as a result of 
this spill, and this was only a small portion of the number of 
dead lobsters that remained beneath the surface of the ocean.
    When the spill happened, we were at a loss about what to 
do. Few of us had ever had to make a claim for lost profits and 
we didn't know how to do it. We immediately thought that we had 
to file a lawsuit. We soon found out, however, that a new 
procedure existed under the Oil Pollution Act of 1990, and 
under that procedure we would be able to file individual claims 
for losses without going to court and with a reasonable amount 
of evidence we would be able to recover in a quick period of 
time. That has not happened. Many of our members and others 
have filed claims and submitted literally thousands of pages of 
documents to establish our losses, but few of us have been 
paid. We provide information and we are asked for more. We 
provide more and are asked for still more. We prove a loss 
under one standard and the responsible party or the fund 
changes the rules. We simply don't understand why this is so 
difficult. The barge owner was convicted of criminal offenses 
that caused this spill, but rather than compensate us, the 
Nature Conservancy was given over one million dollars. Rather 
than compensate us, hundreds of thousands of dollars are going 
to be spent to buy habitat preservation land in Maine. Why 
haven't our claims been paid or even fairly considered? Why is 
it that to despite our efforts, instead of the claims being 
decided in 6 months by the responsible party or in 90 days by 
the Fund, now almost three full years later few have been fully 
decided? Why is it that the responsible party and the Fund are 
only paying one dollar for every four dollars that have been 
proven to have been lost? Why is it that the responsible party 
has decided that no one that fished next to the closed area 
could not possibly have lost more than 3 percent of his catch? 
Many people that fished in the closed are had moved to other 
areas so that there were more fishermen looking for few 
lobsters, in other words, we were competing with ourselves for 
a diminished resource. No one seems to understand that lobsters 
don't standstill, they migrate. Yet, the claims adjusters are 
assuming that no lobsters moved into or outside of the closed 
area and they assume that fishermen don't move either. They 
think that if you fished outside the closed area, you can't be 
effected, but the fact is we are. It is no mystery when someone 
has consistent catches every year for 5 years or more, or even 
better still, increase catches for the 5 years previous to the 
oil spill, and then suddenly, after January 19, 1996, the catch 
is dramatically less. We don't fish anymore, we mitigate our 
losses. It's a longstanding joke in my family. I have a 9-year-
old daughter who says ``daddy doesn't go fishing anymore, he 
mitigates''. We travel further, we spend more money, we work 
longer hours and catch few lobsters. The fun is gone and 
there's no mystery here.
    How can it be that the fancy study that was performed that 
says there were 200,000 adult lobsters lost in 1996 and 1997, 
but several of us alone caught over 400,000 less lobsters 
during those years than before. The responsible party and the 
Fund concocted theories of lost lobsters based on conjecture 
and guess. We have shown actual losses, but those losses are 
ignored.
    At this point, many of us are fed up with this 
administrative process. We are ready, we are willing and we are 
able to go to court and sue these criminals for our actual 
losses. Clearly, we cannot get a fair shake by the responsible 
party or by the Fund, we are being forced to go to court, that 
means the oil pollution process has failed us.
    We sincerely hope that you can fix this for the next set of 
victims, wherever they are. Thank you.
    Senator Chafee. Thank you very much, John. Now, is somebody 
making a presentation on behalf of--did you want to say 
something?
    Mr. Hartman. Mr. Chairman, there are two other witnesses 
who are clients that have filed claims that couldn't be here 
today.
    Senator Chafee Do you to want to give a summation of what 
they were going to say?
    Mr. Hartman. Very briefly. One was for the Gail Frances. 
The Gail Frances is a charter fishing boat business and they 
have a tale to tell. They're now before the Fund, they've been 
denied their claims, and to make a very long story short, it 
comes down to this. The Fund, after somebody submits a claim 
for hundreds of thousands of dollars, says, well, let's look at 
the weather on that day that you say you would have gone out 
but didn't, and if there were winds in greater than 25 miles an 
hour, we're going to assume you wouldn't have gone out, even 
though they went out on those days, and do you know what they 
looked at, they looked at the wind speeds at midnight, and 
based on the wind speed at midnight, they said you wouldn't 
have gone out that day. It's nonsense. These people have 
provided thousands of pages of documentation to the Fund to 
show their losses. They had letters from customers saying, dear 
Gail Frances, we're canceling because of the oil spill, and 
what did the Fund do, they said, we want the phone numbers of 
those people, you get them for us and give them to us, the 
letter's not enough. We provided the tax returns that went to 
the IRS, and what did they say, that copy of the tax return 
that went to the IRS isn't good enough, we want you to take it 
back and re-sign it in ink and then send it to us again. That's 
nonsense, Mr. Chairman. We did it and they've backed off, they 
don't require that anymore.
    The bottom line is, after almost 3 years the Gail Frances 
has yet to be paid for any lost income that they demonstrated.
    The other individual that couldn't be here is Bruce Kopf. 
Now, Bruce has a different situation. He's not in business 
anymore. His bottom line was this, the area was shutdown, he 
couldn't get out to fish, period, he couldn't get out to fish 
and they said he didn't prove his losses. There's nothing else 
that needs to be said. He provided his tax returns. That was 
his only business. He provided his revenues, he provided his 
cost, he provided his fuel, he provided the names of his crew, 
he provided his salary. He couldn't go out that day, he was 
prevented, and that's not good enough for the Fund.
    One last thing, if I may. Well, that's all we'll say with 
these particular claimants.
    Now, Mr. Chairman, I must say we appreciate your support, 
you're one of the few that have stood up for our clients, to 
try to make this system work out, as has Mr. Gibson, and try to 
see if OPA works, and I must say that I'm disappointed with how 
OPA's worked. I don't hold this against Mr. Sheehan, he's the 
safety net. I hold this against the responsible party, it's 
their fault and their responsibility, but now we need the 
safety net and that's all we need. Thank you.
    Senator Chafee. Well, thank you. Now, Mr. Sheehan, you'll 
get a chance to rebut. Let me just say this, Mr. Sheehan, it 
keeps coming up in here that, and I think you contradicted 
this, but there seems to be some confusion about 90 days before 
you, if I understood the testimony correctly here, I think that 
Mr. Sorlein and maybe Mr. Christopher indicated that, I think 
they had a little longer period before the insurance company, 
they suggested. Mr. Christopher, how long do you say you had 
before?
    Mr. Sheehan. Would you like me to layout the time for that?
    Senator Chafee. Yes, why don't you lay out the times for 
us. We know the 90 days before the responsible party.
    Mr. Sheehan. The claimant first has to go to the 
responsible party, if there is a responsible party. The 
responsible party has 90 days to respond to that claim. If the 
responsible party doesn't reply or gives an offer which isn't 
satisfactory after those 90 days, or if they deny it in 30 
days, they can come immediately to the Fund. There is no set 
timeframe for the Fund to adjudicate a claim, but let's say 
that we adjudicated Mr. Christopher's claim, and use his 
process that he described, made him an offer, he asked for a 
reconsideration, the reconsideration, by our regulations, we 
have to respond to the reconsideration within 90 days or you 
then have the option to then file suit, which is not the 
purpose of OPA-90, OPA-90 does not want you to have to go 
court, but you would have had that option at the end of 90 
days.
    Senator Chafee. Wait. I've got to get this clear in my 
mind. You go before the responsible party with a claim, Mr. 
Christopher would, that's a preliminary step that has to take 
place before they go before you?
    Mr. Sheehan. Before they come to us, yes, sir.
    Senator Chafee. OK. And the responsible party has 90 days 
to----
    Mr. Sheehan. To either act on it, deny it, or if there is 
no action in 90 days, they can then come to us.
    Mr. Hartman. It's 90 days from when they consider the claim 
to be complete.
    Mr. Sorlein. That's a big problem.
    Mr. Hartman. When they consider the claim to be complete.
    Senator Chafee. When the responsible party considers?
    Mr. Hartman. Yes, yes.
    Senator Chafee. Then I suppose----
    Mr. Sheehan. The responsible party is doing it wrong then, 
because the responsible party, when you file your claim, that 
starts the clock running, the 90 days.
    Mr. Hartman. They don't take that position. I couldn't 
agree with you more. Tell them.
    Senator Chafee. And they keep asking you for more and more 
information, we want a signed copy of the income tax and so on 
and so forth.
    Mr. Christopher. Yes.
    Senator Chafee. All right. That is a big difference, 
because whoever controls that can just delay forever.
    Mr. Christopher. Mr. Chairman, that's exactly what they did 
to us, and it was just constant, every time they asked for 
something, we would give it to them and then they would ask for 
something else and then it would just go on and on and on.
    Senator Chafee. This is adjusters, Hull & Cargo?
    Mr. Sheehan. Turnabout.
    Senator Chafee. Turnabout.
    Mr. Hartman. Now, let me tell you what happened, was that 
they would say if you want us to consider this claim to be 
complete, we will and we will adjudicate it but we think you 
should give us more information. When I talked to people at the 
Fund, they said to me, you'd better give whatever you want to 
give to the responsible party first because we won't consider 
new information, now that's what I was told, so we're betwixt 
and between, either the 90 days doesn't start so we have to get 
everything in to the responsible party, if we say forget it, 
responsible party, make your decision based on what we have, we 
don't like it and go to the Fund, the Fund tells me, well, you 
didn't present that information to the responsible party.
    Mr. Sheehan. Let me set the record straight. You file a 
claim, 90 days, if you haven't gotten an answer or they haven't 
responded to you, you can come to us. One of the things that, 
if we adjudicate that claim and we have a request for 
additional information, we require that that additional 
information also be sent to the responsible party. That is 
different than the process which you described.
    Mr. Hartman. Well, with due respect, Mr. Sheehan, I'll get 
you the name of the person that told me don't come to me with 
new information if you didn't give it to the responsible party 
first, that's what we were told.
    Senator Chafee. Well, there's a big difference here. Now 
there's a big difference, because under what Mr. Christopher is 
saying and the attorney saying here is, if you don't get what 
the responsible party asks for, you can't present it to Mr. 
Sheehan, whereas, Mr. Sheehan is saying not at all.
    Mr. Sheehan. That's not true.
    Senator Chafee. It's 90 days from when you submit your 
claim to the insurance company and to the responsible party, 
and if I, Mr. Sheehan, want more information when you come to 
me, then all we're saying is you send that to the responsible 
party.
    Mr. Sheehan. The responsible party as well.
    Senator Chafee. OK. So that's a whale of a difference. But, 
Mr. Sheehan, let's, OK, let's agree on that, so now they're 
before you, but they indicate, and, you know, it's pretty 
convincing testimony from Mr. Sorlein and Mr. Christopher, that 
they just can't satisfy you people, you want more and more, and 
I understand adjusters, and you've got fiduciary duty, but this 
thing seems to, they're very valid complaints that they got 
here.
    Mr. Sheehan. I think that they are legitimate issues which 
we are glad to hear. I think, sir, that one of the things, as 
you indicated, Mr. Sorlein, is the first time you've ever done 
a lost profit claim. Lost profit claims and business 
interruption claims, which basically these are, are easily the 
most complex claims to adjudicate that the entire insurance 
industry has, and they're particularly difficult to adjudicate 
in a fishing industry and a lobster industry.
    Senator Chafee. But, you know, Mr. Sheehan, you've got to 
take some people on faith. I mean, you're not dealing with 
General Motors, trying to make their regulations, you're 
dealing with John Sorlein, who knows what he did last year, who 
knows what happened when January, 1996 came, knows the effects 
of that, and can he rip you off, I suppose if he works hard at 
it he can rip you off, but what's in it for him?
    Mr. Sheehan. Sir, it's not my intention to even suggest 
that the folks who come to us, that we look at them in that 
manner. We do not. We have spent a, to put it in a bit of 
perspective, we received out of the North Cape spill 33 claims. 
Now, there have been many hundreds which have been settled by 
the responsible party. We have 33 claims. We've settled two, 
we've got, I think three were denied, we've got three offers 
out, we've got seven which are currently being measured, which 
are being looked at with the information that we've got, we've 
got sufficient information to measure them, and we've got 18 
which information has been requested, and sometimes as long ago 
as May and we were told in July we were going to get all of 
this information, we haven't heard anything from them. So part 
of it is, part of it's in the claimant's court, part of it is 
our fault, and in my statement, and I will say this publicly 
today, that there have been delays in this whole thing, and I 
apologize for those delays, some of it's due to our 
contracting, I've instituted a new process whereby we can get 
assistance faster for some of this, some of this has been to 
put together an honest model of the lobster industry so that we 
can adjudicate all of these claims. I've got that here today, 
which we're going to pass-out and make available to all of the 
potential claimants.
    If I may, I've got a couple of other points to deal with 
this.
    Senator Chafee. Go right ahead.
    Mr. Sheehan. One of the things that have been a concern to 
us has been the issue of the statute of limitations. OPA-90 has 
a 3-year statute of limitations from the time damages have 
occurred or easily discoverable. One of the things that the 
responsible party has, evidently, published and sent to the 
Lobstermen's Association and to a series of other interested 
parties is that they are going to be considering claims beyond 
the 3-year statute of limitations, they're specified in OPA-90. 
I have put together some information about that issue because 
it is of concern to us, that if you have filed a claim past the 
3-year statute of limitations with the responsible party and 
you don't get satisfaction, we are prohibited by law for you to 
come back to us. For example, let's say that you had a boat 
which was oiled by the spill and that occurred a week after the 
spill, which was in January 1996, and you had it cleaned, for 
whatever reason you decided that you were going to wait, go to 
the responsible party, and you went to the responsible party in 
the middle of February, you didn't get satisfaction from him, 
you're barred from coming to us because you've gone past that, 
you knew when that damage occurred. What we've put together, 
Mr. Chairman, is a document dealing with the statute of 
limitations issue, because I really want to make sure that 
nobody gets surprised by that and by the impact of that.
    Senator Chafee. Could you do that illustration of the oil 
again. I didn't get that. There's a 3-year statute of 
limitations?
    Mr. Sheehan. Yes, sir.
    Senator Chafee. Give us the time.
    Mr. Sheehan. It would have--the statute of limitations 
would run out, let's say----
    Senator Chafee. Take this spill, January 19.
    Mr. Sheehan. January 19th. A week later you had a boat 
which was oiled, you had it cleaned, that's a legitimate cost 
for recovery.
    Senator Chafee. Right.
    Mr. Sheehan. For whatever reason you didn't file that with 
the responsible party, but you waited until February 1999 to 
file that with the responsible party, because the responsible 
party has a letter out that says, I'm going to consider claims 
after the statute of limitations. If the responsible party then 
doesn't settle with you, you don't have recourse to come back 
to me because the 3 years has gone by, no matter what the 
responsible party has said. So we looked at this, we've written 
a letter to the responsible party, telling them to include that 
information to potential claimants, I've put together a press 
release which went out today to the Providence Journal, to a 
series of papers around here addressing that issue because 
we're concerned about the fact that folks might get caught.
    Senator Chafee. Because the 3 years is coming up.
    Mr. Sheehan. Because the 3 years is coming up for at least 
those things which are discoverable in the immediate aftermath 
of a spill. Now, that doesn't say, for example, that potential 
future losses on the lobster industry which aren't discoverable 
until a time in the future.
    Senator Chafee. I found Mr. Christopher's testimony very 
convincing, and particularly, it seems to me, that you can 
trace through his profits his gross sales year after year as he 
documents it there, and then, obviously, things stop, and I 
just have great trouble why he's had such a tough time trying 
to get compensated. Now, I assume that the responsible party, 
what, brushed you off in a lot of those, gave you some 
settlement figures but nothing specific?
    Mr. Christopher. Not at all, and then when we went to the 
Fund. I mean, the second, they split it up into two parts, from 
when the waters were reopened again until, as one part, and 
then from there until the end of the year, and they denied the 
second half completely, the Fund did, and that's why I said, 
they just figured as though it was over, the spill didn't have 
any effect after that, after they opened up the waters, that 
was the end the spill. And, I mean, we sent in lobster slips 
from the boats that were pending that and the whole works and 
they can see comparing from 1 year to the next how the catches 
were down and they just said, no, it doesn't effect it.
    Mr. Hartman. If I may, I promised when Tom and I talked 
about this we weren't going to try to make you the judge on 
claims, because that's not fair, and we're not really trying to 
do that, but I will say this----
    Senator Chafee. No, but Mr. Christopher presented, I think, 
a very interesting case, and one that seems to me to be quite 
well documented. I mean, you know, you can't assume that 
suddenly he's sitting at home on the sofa watching daytime 
shows, he's trying to pursue his business, and you can see, his 
document shows what his gross was and then it tails off. It 
wasn't that he just sat at home. He's not going lobstering.
    Mr. Christopher. He certainly didn't.
    Senator Chafee. Go ahead.
    Mr. Hartman. What I was going to say was, and I appreciate 
Mr. Sheehan saying there's now a model out of some sort, which 
is news to us, but I appreciate knowing that. The danger is 
this, the reason why Mr. Christopher's claim has been denied 
and the reason why we're having other difficulties is because 
the Fund, I'm sure, acting in good faith, is making assumptions 
about losses and saying to the individuals, we are making this 
assumption, it applies to you and we don't care about your 
facts, and the danger of any model and any rule, like the 3 
percent rule I told you about once before that the responsible 
party filed and you can only get 3 percent of your losses if 
you fished outside the closed area, we don't care what your 
real losses are, is that it ignores the facts, so all we're 
asking is look at the two banker boxes of documents he 
submitted, we know there was a loss out there, everybody knows 
lobsters died, everybody knows it was shutdown, look at the two 
boxes of financial documents he's provided, and based on the 
language of the regulations that talk about reasonable 
documentation and the legislative history that talk about let's 
not make everybody go to court, make a reasonable decision 
here, that's all we ask. That's all we ask.
    I have never, and I've litigated these cases in court, I've 
litigated lost profit cases, defending a lot more than I've 
been a plaintiff's lawyer for, Mr. Sheehan, I've never seen 
anybody require the level of documentation that's required here 
by any court, and that's all we ask, just look at reasonable 
documentation. If you think somebody is lying, say so; if you 
don't, assume they're honest business people and make a 
decision, that's all we ask.
    Senator Chafee. Mr. Sorlein, did you have a comment?
    Mr. Sorlein. Yes. You made a comment about a basic level of 
trust, Mr. Chairman, and at some point you have to have faith 
in an individual, that he's not out to cheat and get something 
that he doesn't deserve, and I talked earlier about mitigation, 
and it's interesting, when I think of the possibilities of 
people making an assumption, the Fund or the responsible party 
making an assumption that I'm out to cheat them, when I 
actually think about what I've done in the last 3 years to 
mitigate my damages, which is required by law, I believe, that 
I must do what is within reason, within reason of what I can 
possibly do to mitigate my losses, in other words, I can't sit 
around and watch soap operas and just pileup the losses, and, 
in fact, what I have done is I've burned more fuel on my 
lobster boat, spent more hours on, taken my pots further to try 
to get away from, not only the impact area where the lobsters 
were wiped out, but also to move further away from the areas 
adjoining the so-called impact area where lobstermen have 
migrated out with their own traps, in essence, helping me to 
catch my lobsters in some other location and going beyond that, 
to the point now where I am 60 miles offshore in an inshore 
lobster boat, which is not a good place to go in the interim 
time, because that's the only way I'm going to put food on my 
table and pay my bills. What I've done by doing that is I've 
removed my traps from this so-called closed area, this impact 
area they like to talk about, and by doing that and following 
through with the responsible party's philosophy of 3 percent 
outside a certain line, I have destroyed my chances of a claim, 
so it's a catch 22. I've worked to mitigate my damages. By 
mitigating my damages, I've eliminated myself from the claims 
process.
    Senator Chafee. Why have you eliminated yourself from the, 
because, when you use the word you've mitigated your damages, 
you mean you've now moved your gross up to where it was before?
    Mr. Sorlein. No. When I say mitigating my damages, I'm 
working to my fullest capability, operating my business to make 
as much money as I can, in other words, to find lobsters other 
places.
    Senator Chafee. Yes.
    Mr. Sorlein. And by doing that and by removing my pots from 
this impact area, the so-called impact area, where they draw 
lines on a chart which are very arbitrary and they say inside 
of here is where the oil spill killed the lobsters, but right 
on the other side of that line nothing happened, so if you put 
your pots over there, you have no claim.
    Senator Chafee. Yes, I see. Instead of staying local, 
you're going 60 miles out and taking more fuel and greater 
expenses, greater danger, too.
    Well, Mr. Sheehan, you're sort of on the hot spot here. You 
know, right from the beginning I said I wasn't asking you to be 
in a situation where you have to become clerk typist and just 
type up a check for every claim that comes up, we're not asking 
that, but we're also asking that, these are very legitimate 
complaints, and I think you've got to take some people on 
faith, and you yourself said that it isn't part of your 
standard to figure that everybody's trying to cheat your 
organization that submits a claim, and I certainly don't think 
these gentlemen are trying to do that. I think they present 
very good cases. One of the problems, apparently, that's come 
up, is working with your evaluation contractors, and I think 
you yourself said you've revised that, have you?
    Mr. Sheehan. Well, one of the problems, Mr. Chairman, has 
been the timeliness of getting our claims, commercial claims 
adjudicators to respond to some of the claimants, like yours, 
for example, and that was a contracting problem that we had 
internally in the Coast Guard, we have fixed that, we can get 
those folks to respond quicker at this point in time to the 
claims as they come forward. The commercial claims adjudicators 
that we've hired in this particular instance, Hull & Cargo, 
have a long history of adjudicating maritime type of claims, 
they are one of the best in the country, they basically follow 
our guidance with respect to what type of information is 
needed, they also use industry standards. One of the things 
which we make absolutely clear to them is that we want them to 
fairly adjudicate that claim because we end up finally signing 
off on it, they get no credit from us for coming in with a low 
ball offer, I think I made that statement in one of the 
interviews I had, that is not part of the process at all. We 
are not out to protect the Fund from future use. We're out to 
pay claimants, but we do have a requirement that there are 
certain standards of information that we need to pay folks. 
Now, there have been a couple of cases where we have settled, 
where we basically went in and worked with the claimants to 
help reconstruct their books. We spent money for our 
accountants to go in and help them do that because we 
recognized--we don't want to have a requirement where you have 
to custom tailor information to come to us. We are more than 
happy to have our folks go out and help work with the claimants 
to provide some of this information, and we're committed to 
doing that. I think one of the problems has been that there 
have been somewhat of a lack of communication back and forth.
    In the press release I put some information about the 
information that we needed and why we need it, because I think 
that that's a legitimate concern. Lots of times you get asked 
for information, if you're not told what it's for and why you 
want it and how it plays into the adjudicational process, you 
say, why do I need to do that, and I understand that, and 
that's one of the things that we put in this document to help 
with future claimants and to help with those that we've 
currently got on our plates.
    Senator Chafee. Well, I'd like to see some results here, 
and I'm not just, and I'm not just speaking on behalf of these 
two gentlemen here who I think have presented a very convincing 
case, but there are others, too.
    Mr. Sheehan. Yes, sir.
    Senator Chafee. And I'll follow this and I'll just, have 
your people take a look at these particular cases and the cases 
that the attorneys have here and let's just get this thing 
done. As Mr. Sorlein and Mr. Christopher said, you're going to 
end up with--somebody is going to have to make a decision, it's 
not going to be--the situation has got to be absolutely crystal 
clear, but usually in these cases these people want a decision. 
So I'll be staying in touch with you, Mr. Sheehan, on these, 
and I will get the rest of the cases, that, obviously, I'm 
intensely interested in the Rhode Islanders, but this is a 
national problem, too, and I'm representing the claimants 
nationally, likewise. Do you have any other questions?
    Mr. Gibson. No, sir.
    Senator Chafee. Let's see what we can do on all this. And, 
now, you gentlemen have got to respond quickly if he wants 
something more.
    Mr. Hartman. Absolutely. And, Your Honor, with all due 
respect to Mr. Sheehan, I don't know who he's talking about, 
but I can show you the list of documentation, believe me, 
there's no moss growing under this stone when we respond. It 
goes quickly, very, very quickly.
    Mr. Sheehan. I would like to say this, that I have letters 
from, we have requests out to 18 claimants, many of which are 
represented by my colleague over here, Mr. Hartman, from May 
and July who we have not received the documentation, so if 
that's not moss, I mean, I'm sorry.
    Mr. Hartman. That's simply not true.
    Senator Chafee. Let's not get back and forth. I think, you 
know, some people just for wariness or despair give up and 
don't respond, but I don't think we want it to be an endurance 
course either on these folks.
    Mr. Sheehan. We don't either. Please, accept my assurance 
of that.
    Senator Chafee. Sometimes, it seems inappropriate to say 
that you've got to fish or cut bait here, but on these things a 
decision has to be made and you're dealing with, these aren't 
shysters, these aren't guys out to shaft you, these are people 
who can, I think the income tax, it seems to me pretty that not 
many people are going to take a chance of cheating on their 
income tax to collect some more, and when they submit their 
income tax, as Mr. Christopher, you can see the level of his 
business going up, things going great and making purchases and 
then down she goes. So, in any event, so I'll stay closely in 
touch with you, Mr. Sheehan, and now you've got to do your 
part.
    Mr. Christopher. Absolutely.
    Senator Chafee. And the others who aren't represented here, 
likewise, I don't know whether the ones you represent and 
members of your organization, Mr. Sorlein.
    Mr. Sorlein. Certainly, certainly, sir, yes.
    Senator Chafee. So we'll follow them along. Did anybody 
else want to say anything? We have a chance for somebody to say 
a couple of minutes.
    Mr. Trager. I'm Bob Trager. I own a small lobster wholesale 
business in Jerusalem. I'd like to ditto what Mr. Christopher 
said because his business was similarly sized to mine, and 
Barry's representing our business, but what I'm hearing is not 
as encouraging as I'd like it to be because I don't know where 
we stand right now, I'm going to have to talk to Barry 
afterwards, because we haven't submitted this year's tax 
returns, but all of the things that Al said about how the 
insurance company has dealt with us when we put our short-term 
claim in, stacks of papers like this. My wife--I don't know if 
you know Skip's, I think you've been down to Skip's dock, 
Senator?
    Senator Chafee. Yes.
    Mr. Trager. Well, anyway, we're the oldest continuous 
running lobster wholesale business in the whole port, but we're 
probably the smallest, too, but we're also one of the oldest 
retail markets in the State of Rhode Island and it's in 
jeopardy of surviving right now because of the way this whole 
thing is transpiring. Right now my sons are down there, two of 
them, that are running that business, unloading lobster boats. 
I looked around here and I see what I think are a lot of 
lawyers and a few fishermen, and that's from guessing, but one 
of the reasons there aren't more fishermen here, and Mr. 
Sorlein didn't mention it, is today, and he probably shouldn't 
be here, because today is a calm day and practically everybody 
went out fishing today because there's so few calm days, if the 
wind is blowing, they won't fish, but they fish when they can, 
so I think this place would be packed with people if it wasn't 
a fishing day and the lobstermen could have been here.
    I've seen a decline in our business very similar to what he 
said. This year has been one of the slowest that I can 
remember, and, like I said, there are many people that have 
been in the business longer than me that are in Galilee, but 
we're the oldest ones there, and in the last 12 or 13 years, 
and I think with the 17 to 20 boats that sell to us, we've got 
a pretty good feel of what's going on with lobsters in the 
area, and, believe me, what's going on right now is not a 
healthy situation, and not only that, but we also have to 
contend with the regulations that are coming down with 
lobstermen now, that some of them are so far out in left field 
that the Government's playing around with that, that's a scary 
issue, too. So the lobster, we got that, and this, and this 
claims process, I wish I could describe my wife Ingrid to you a 
little bit, but nobody, she is so honest that it's scary 
sometimes, and, yet, we still couldn't get anywhere. It took us 
forever to get what I didn't even think was a fair settlement 
for that short-term claim. One of the things they would do, a 
slip was missing, but one slip out of 5,000 slips. Well, 
believe it or not, we ended up finding it, it was one that we 
canceled out, you know, that's the kind of thing they would do 
over and over again. We haven't even gotten the long claim. I 
don't know what's going on with the long claim process, but I 
know one thing, what's going on with my business and my two 
sons that decided that this is what they're going to be doing 
with their living for the rest of their lives, one of them has 
two children, my other son is probably starting along those 
lines pretty soon, and we don't fish. A lot of people, like 
they were saying, there's some people that have fishing boats 
and they have these businesses, all we do is serve the 
lobstermen and we run a retail market and we run a wholesale 
lobster business, we're on the other end of it, but whatever 
happens to the lobstermen, we are damaged, our damages are 
proportionate to whatever happens to them, and what's happening 
to them is not good right now. I think that----
    Senator Chafee. I think that----
    Mr. Trager. I'm just afraid that, even though I heard all 
this and I'm glad I came, I don't have a good feeling of 
comfort when I hear about statute of limitations that's going 
to come up in a few weeks, because my wife and I haven't done 
some kind of manipulation of our books and whatever. We're 
working down there, like Al's out of it, it's a good thing that 
he is, but right now we're still doing it, we've been doing it 
for a long time and we want to keep doing it. It's a hard job, 
and it----
    Senator Chafee. I also wonder whether the full effect 
hasn't really been felt yet.
    Mr. Sorlein. No, it has not.
    Senator Chafee. If you take the 3 years--when did they 
reach maturity, after about 3 or 4 years?
    Mr. Sorlein. Seven.
    Mr. Hartman. According to the draft assessment, the worst 
years are going to be 1999, 2000, 2001.
    Senator Chafee. Yes, that's what worries me, is that the 
full hit will come then. And then I think, I thought it was 
very interesting that the testimony was given about the others 
that are all part of the food chain, that looks very--it's very 
interesting.
    Mr. Sorlein. Senator, I have one more thing. With respect 
to some comments I believe that Mr. Sheehan was directing 
toward the documentation still outstanding and possibly, and he 
didn't say this, but possibly claimants that have not moved 
into the Fund process yet, I can speak for myself in saying 
that I have held back from asking my attorneys who represent me 
to move my claim from the responsible party to the Fund for the 
simple reason, and I call this the chicken and barbecue theory, 
that how many pieces of chicken do you throw onto the grill 
before you figure out that the coals aren't burning, and while 
lobstermen are different in a lot of respects, but we're also 
very similar, and when I see some of my colleagues with claims 
going that are involved in the Fund and getting nowhere, and I 
know that my claim is quite similar----
    Senator Chafee. With the Fund, John, or with the----
    Mr. Sorlein. With the Fund, sir.
    Senator Chafee. In other words, they've gone through the 
responsible party, the 90 days?
    Mr. Sorlein. Right. And now you're saying that there's no 
sense in my going, moving, going through the process of being 
in the Fund, when I can look at five or six of my colleagues 
who have claims that are identical to mine in all respects 
except for the name at the top of the tax return and the 
individual figures and the other supporting documentation, but 
we are, essentially, identical, and we're getting nowhere, so 
that it just makes little sense.
    Senator Chafee. Before the responsible party?
    Mr. Sorlein. Both the responsible party and the Fund.
    Senator Chafee. The ground rules are that you got to go 
first, you have to go through the responsible party?
    Mr. Sorlein. Absolutely. I understand that, sir.
    Senator Chafee. And I'm not quite sure that, you're saying 
they've done that, then you see them go before the Fund and 
they go nowhere and that discourages you, is that what you're 
saying?
    Mr. Sorlein. Exactly. What I'm trying to relate to you, 
sir, is that from a personal standpoint, my own claim, I have 
not pressed my claim to go forward into the Fund because I see 
no reason to be there. I'm just trying to describe to you the 
dismay that we have with the process that the Fund seems to be 
presenting to us because of the inaction on the claims that are 
similar to mine, and I see no sense in throwing yet another 
piece of chicken on the grill when I can tell that there's no 
fire there, so that's where I am.
    Senator Chafee. Well, Mr. Sheehan said he'd look into these 
and press these people along and get these things settled, is 
that a fair statement, Mr. Sheehan?
    Mr. Sheehan. Yes, sir, and I would like to make an offer, 
that we would be pleased to come up and meet with the 
Lobstermen's Association and sit down and go through this in 
their setting, just to go through and layout and describe 
whatever else you need. We will go through this process.
    Senator Chafee. I would say not only describe it, but 
arrive at some conclusions, in other words----
    Mr. Sheehan. I think there's a communication problem that 
needs to be addressed.
    Mr. Sorlein. If Mr. Sheehan was going to bring that clerk 
typist with him, we'd be more than happy to accommodate him.
    Senator Chafee. OK. Do you understand that offer, John? I 
should get your name.
    Mr. Hartman. It's Barry Hartman. We had asked from March 
5th, 1996, I sent the Freedom of Information Act request to Mr. 
Sheehan, saying tell me all the criteria you need and want to 
file these claims, and he said there were none. Give it to me, 
I will pass it on, I will make sure that all our claims meet, I 
will guaranty you that our claims meet every documentation 
requirement that you have there and then some, I will guaranty 
you that. I mean----
    Senator Chafee. Let's not replay it. Mr. Sheehan made this 
offer, I think it's a fine offer, that he or his people will 
meet you and----
    Mr. Hartman. Say the time and place.
    Senator Chafee. Let's get this doggone thing settled.
    Mr. Sheehan. If I can only make one other point, and 
that's, again, I would urge you to take a look at that document 
that we put together on the statute of limitations, it's out on 
the table out there, and I don't mean to scare you, but it has 
some implications.
    Mr. Trager. You scared me, and I'm going to go look at it.
    Mr. Hartman. We're quite familiar with that.
    Senator Chafee. That's enough to scare anybody, the statute 
of limitations. What was the date, the 19th?
    Mr. Hartman. The 19th of January.
    Senator Chafee. So that's enough to scare anybody. So time 
is of the essence here.
    Mr. Sheehan. For most folks that doesn't apply, but there 
are some that it might, and I want to make sure that everyone 
who has a loss has the opportunity to come to the Fund site.
    Senator Chafee. All right. Now, the ball's in your court 
over here, gentlemen, to work it out with Mr. Sheehan and----
    Mr. Hartman. Give me a date and time and I'll be in your 
office. I'll save you a trip to Rhode Island.
    Senator Chafee. And I personally will follow this thing and 
stay in touch with Mr. Sheehan as to how we're doing here in 
getting these things done.
    Mr. Hartman. I have to say something, Mr. Chairman, a 
comment was made by the counsel of Mr. Sheehan saying they've 
been asking to meet with claimants. That's simply not true. I 
am willing to meet on behalf of 122 claimants, to take all the 
information back to our claimants to put it together. These 
people can't afford to meet with bureaucrats all the time, 
that's what I'm there for. I'll give them the information. Tell 
me when to be in your office. Let's cut through this. To say 
that you want to meet with our claimants for the fifth time, 
tell me when to be in your office and I will be in your office, 
I'll do it.
    Mr. Sheehan. I don't want to replay this, but I think our 
dialog today has been very useful.
    Mr. Hartman. Absolutely.
    Senator Chafee. Well, I can understand, and I take it that 
what we're saying is that, yes, they're glad to meet with the 
lawyer, but what are you suggesting? You're the attorney for 
Mr. Sheehan?
    Mr. Sheehan. She's my deputy.
    Senator Chafee. Deputy. And what are you saying, you want 
to meet these fishermen face to face?
    Ms. Lane. We frequently have questions that we need to pose 
directly to the claimants. We deal with claimants on a day-to-
day basis.
    Senator Chafee. Well, would you do that up here?
    Mr. Sheehan. We will be glad to come up at your 
convenience, not at our convenience.
    Mr. Sorlein. Why can't those questions be posed to our 
attorneys who are handling our cases? This is a very complex 
process, Senator, and----
    Mr. Hartman. If you put a hundred people in a room, you're 
going to say, Mr. Smith, tell me about your claim.
    Ms. Lane. You don't have to meet with everybody at the same 
time, and sometimes questions can be answered in 2 seconds, 
whereas, sometimes when you go through attorneys it takes 2 
months to get.
    Mr. Hartman. That is just simply not true. That's not true. 
That has not been true.
    Senator Chafee. I think there's considerable merit, and if 
they're willing to come up here, and if the deputy or whoever 
is going to interview these individuals and it's going to, if 
they think it's going to move things along faster, I think 
there's some merit in that.
    Mr. Hartman. They're welcome to do it. I'm just trying to 
be practical and move it as quickly as we can, because our 
folks can't all be there.
    Senator Chafee. Oh, obviously. I don't think you're 
suggesting 120 call you.
    Ms. Lane. No, even over the phone sometimes we can get 
questions answered.
    Mr. Hartman. Oh, we've offered that with the clients, 
absolutely.
    Senator Chafee. Now, is this thing settled now, is it 
understood you're going to meet at a certain time up here?
    Mr. Sheehan. We'll work it out with them, Mr. Chairman. We 
will probably end up doing both and that will be fine with us.
    Mr. Hartman. That's fine.
    Senator Chafee. Now, just a concluding statement here.
    Mr. Allen. My name is Dick Allen.
    Senator Chafee. Dick, come on up front.
    Mr. Allen. I just wanted to comment on one thing, you kind 
of alluded to it, the frustration and making it an endurance 
contest, and one thing that I've realized, that this is a 
pretty heavy cost in pursuing your claim, not in just the 
defense fees that the lawyers are going to get or things like 
that, but, as someone mentioned, there are a lot of people who 
aren't here because they have to be out fishing. If they had 
given up the day, that's an additional loss. We put in a 
tremendous amount of time gathering this information, putting 
it in, and, as I understand the law, those kinds of things are 
not compensable, you can't put in a claim for what you put in, 
and so these continuing requests, people get to the point where 
they say, you know, I'm just adding to my losses by continuing 
to respond to these things, so I think it's a completely valid 
argument that we can't just keep saying they want to talk to 
you, they want to meet with you here, they want to meet with 
you there, how many days can you give up, how many times can 
you put in before you just say, hey, I'm starting to go 
backward now, forget the whole thing, you know, take your 
losses and you can go away.
    Senator Chafee. OK. Well, I think you're right, you're not 
going to be able to collect for the time you spent tabulating 
your losses, but, well, I think we made some headway here, and 
I'm very, very interested in this situation, so everybody put 
their shoulder to the wheel now and try and reach settlements 
on this, and, as I say, I'm going to make it my business to see 
how these things all come along, but it's up to you folks now 
to get together and work it out, and Mr. Sheehan has offered to 
come up here, his people, there's one, if you want to take, and 
when he comes, I'll get some conclusion.
    All right. That settles that, folks, and that concludes our 
hearing. I want to thank everybody for coming. You've all been 
very helpful.
    [Whereupon, at 6 p.m., the committee was adjourned, to 
reconvene at the call of the Chair.]
    [Additional statements submitted for the record follow:]
  Statement of Daniel F. Sheehan, Director, National Pollution Funds 
         Center, U.S. Coast Guard, Department of Transportation
    Good afternoon, Mr. Chairman and distinguished members of the 
committee. I am Dan Sheehan, the Director of the National Pollution 
Funds Center, responsible for the management of the Oil Spill Liability 
Trust Fund. I want to thank you for giving me the opportunity to 
testify concerning the claims process that resulted from implementation 
of the Oil Pollution Act of 1990 (OPA-90). A primary objective of OPA-
90 is to provide compensation, subject to certain statutory 
limitations, to those damaged by oil spills or threats to our navigable 
waters. Polluters are strictly liable for a broad range of damages and, 
if the polluter does not pay, the Oil Spill Liability Trust Fund 
(OSLTF) is available to ensure appropriate compensation. The National 
Pollution Funds Center (NPFC) is charged by Executive Order and 
internal agency delegations to implement and administer procedures for 
the payment of claims from the OSLTF for compensation of damages 
discussed in OPA-90.
    OPA-90 significantly broadened the scope of removal costs and 
damages claimants can recover, specifically eliminating the traditional 
admiralty ship owner's protection. If a responsible party does not pay 
a claim for damages or removal costs, or if the responsible party (RP) 
cannot be identified because the source of the spill is not known, a 
claim may be submitted to the NPFC for consideration of payment for the 
following categories:

    Uncompensated removal costs;
    Damages to real or personal property;
    Loss of subsistence use of natural resources;
    Net loss of certain government revenues by Federal or State 
    governments or political subdivisions thereof;
    Loss of profit and earning capacity due to loss or injury to real 
    or personal property or natural resources;
    Net costs for increased or additional public services during or 
    after removal activities by a State or a political subdivision of a 
    State; and
    Natural resource damages and the cost of assessing those damages.

    Prior to OPA-90 the only mechanism available for most non-Federal 
claimants was to seek redress for damages directly from a negligent 
responsible party. The scope and type of damages that were compensable 
were narrowly defined and the existing case law basically stated that 
in order to claim damage, individuals or their property had to be 
physically impacted or touched by the oil. This did not account for the 
myriad of real damages caused by oil spills. OPA-90 also provides a 
two-step process whereby a claimant may seek compensation directly from 
a strictly liable RP or a guarantor if a guarantor was required by OPA-
90. If the RP doesn't settle a claim within 90 days, the claimant can 
either seek compensation through litigation against liable parties (the 
RPs) or submit the claim to the NPFC for adjudication and payment from 
the OSLTF. In the latter event, when the NPFC pays a claim, it becomes 
subrogated to the rights the claimant had against the RP.
    OPA-90 sought to provide a mechanism that prevented a claimant from 
having to engage in potentially costly and lengthy litigation. Where an 
RP is known, the two-step process does in fact facilitate that goal. 
The North Cape spill serves to illustrate the achievement of the 
broader goal of having the RP respond first and take care of the 
claims, but also of giving claimants a second venue if they feel the RP 
did not adjudicate claims properly.
    By way of background, I would like to provide an overview of the 
NPFC's role with respect to the North Cape spill. The NPFC has served 
two roles in the aftermath of the North Cape incident. First was in 
support of the response effort. During the operational response to the 
North Cape incident, the NPFC served as ``banker'' for the government 
costs. We provided the funding source to the Federal On Scene 
Coordinator so that Federal response efforts could be initiated 
immediately. The government spent $1,886,034.92 during the clean-up 
phase of the incident. The NPFC also drafted the Notice of Designation 
that was delivered to the RP. This Notice advised the RP of its 
liabilities under OPA-90 and set out the requirements for advertising 
for claims, including informing claimants of their rights to submit 
claims to the OSLTF if unable to reach settlement with the RP. It is 
our opinion and general observation that the implementation of OPA-90 
and the requirement to inform claimants of the Fund's availability has 
provided significant incentive to RPs to act responsibly toward 
claimants.
    The second NPFC role was in support of third party claims. During 
the incident, an NPFC claims representative traveled to the site and 
provided information to various public officials and others. We made 
copies of the ``NPFC Claimant's Information Guide'' available during 
the incident and have mailed others to claimants since. In the 
immediate aftermath of the incident, we worked closely with 
representatives of the congressional delegation of Rhode Island, the 
Governor's Office, and the guarantor of the RP to implement a partial 
payment and settlement process for claimants. This partial payment 
policy had been in place for claims adjudicated at NPFC, but had not 
been adopted universally by the marine insurance industry. Through a 
cooperative and collaborative effort with that industry, and in 
particular the Water Quality Insurance Syndicate, the partial payment 
option was made available to claimants from the North Cape spill to 
tide them over until final adjudication was completed. In the aftermath 
of the incident you introduced legislation to make this a permanent 
feature of OPA-90, another positive step in refining the claims 
adjudication process.
    Based on information provided by the North Cape representatives, 
the RP received 1,460 claim inquiries from 1,180 claimants. Of these 
1,460 claim inquiries, 579 are still outstanding; most of these are 
phone inquiries following which the claimant has not pursued a written 
claim. Of the remaining 881 claims, 125 have been withdrawn by the 
claimants, and the RP has made partial settlements on 275 claims and 
full settlements on 481 claims. To date, the NPFC has received 33 
claims arising from the North Cape incident. All claims at the NPFC 
fall within the categories of property damage or lost profits and 
earning potential. These are claims for which either payment has been 
denied by the RP or the claimant did not feel the offer made by the RP 
was acceptable. As might be expected in the situation where claims have 
been denied by the RP, there is generally a lack of evidence to support 
the claims. In addition to this lack of documentation, there are two 
factors that have impacted our ability to adjudicate these claims 
expeditiously: claim complexity and delays resulting from government 
contracting requirements.
    The North Cape oil spill incident has presented the NPFC with some 
of the most complex claims received to date, in particular those claims 
of fishermen for loss of profits or earning capacity. We have hired 
experts to assist us in adjudicating these claims. We have received 
widely varying technical and scientific data and opinions on the impact 
of the spill on fisheries resources. We have had to acquire catch data 
and have spent a substantial amount of time helping claimants properly 
document their damages. All of these factors have contributed to delays 
in the processing of many of these claims. Many claimants submit their 
own claims. Others choose to use legal counsel. In some instances, 
claimant's counsel has been reluctant to provide information or to 
arrange for the NPFC's representatives to deal directly with the 
claimant, thereby also contributing to processing delays.
    I would again point out that the claims we have received are not 
all claims arising from this incident, but only those that were not 
settled by the RP or its guarantor. Arguably, we have received the 
claims that are more difficult to compensate because of a lack of 
supporting documentation.
    Some of the delays are our fault and I take responsibility for 
those. We believe in continuously improving the process and in making 
it more customer friendly. I have initiated a new technical support 
contract mechanism which I believe will assist us in being more timely. 
Additionally, I am reviewing the Claimant's Guide and our standard 
supplemental information request documents to see if they can be 
improved. We can speed up processing time if we can reduce the number 
of times we have to go back to the claimant for additional information. 
In support of that goal we have prepared a handout for the lobster 
industry, available at the hearing today, which provides a list of the 
specific documentation required, how we use the documentation, and the 
methodology which will be used to measure their claim. We are hopeful 
that this document and other supplemental guidance will clear up some 
of the confusion about the NPFC's adjudication process.
    I understand the frustration of individuals that believe they have 
not been adequately compensated as a result of an oil pollution 
incident through the claims regime established by OPA-90. And there is 
nothing we would like better than to be able to compensate every 
claimant to his or her complete satisfaction. However, our authority 
and ability to provide relief is not unfettered.
    First, there are statutory constraints, which limit any relief to 
those seven categories of costs and damages mentioned previously, and 
their respective classes of allowable claimants. The statute also 
requires that, generally, claims must be presented first to the RP and 
that the RP is allowed up to 90 days to settle the claim before the 
claimant may come to the NPFC. Clearly the RP does need time to 
consider claims, but I can understand the problem of an individual 
facing financial responsibilities whose livelihood has been taken away 
by a spill. In the aftermath of the North Cape spill, I wrote to every 
guarantor and gave a speech at a maritime conference stressing the 
absolute importance of timely claims adjudication to put money on the 
table for just such individuals.
    Second, as stewards of the public's money, we have a fiduciary 
responsibility to ensure that where funds payments are made that it is 
done equitably and that any payments from the OSLTF are based on 
supporting documentation. We are subject to congressional oversight and 
annual Inspector General financial audits. We are clearly, and 
appropriately, accountable for the funds expended.
    Lastly, one of our functions in administering the OSLTF is to 
pursue cost recovery vigorously from RPs. These costs include 
expenditures from the Fund for third party claims. We need to ensure 
that we have adequate documentation to support claims payments that are 
later billed back to the RP. That documentation is utilized in our 
litigation proceedings.
    I would now like to take the opportunity to give you a better 
understanding of our claims process--what we do with the claim when we 
receive it. Our basic approach is to first determine if the claim is 
compensable under OPA, and then to measure the amount of compensation. 
After we have determined the compensable amount, we offer 100 percent 
of that amount. This point is also emphasized to any contractor we hire 
in the adjudication process. Our contractors receive no bonus for 
``saving money'' for the Fund.
    The NPFC also insists that all claims be handled consistently. The 
methods used by the NPFC to measure these damages are the standard 
methods, where standard methods exist, that are used in the insurance 
industry. All claimants are held to the same general requirements: they 
must submit evidence to support their claim. 33 CFR 135.105. Claimants 
requesting compensation for lost profits or earning capacity must 
establish that property or natural resources were injured or lost as a 
result of an oil spill and that the claimant lost income as a result. 
The amount of the loss is established by income tax returns, financial 
statements and similar documents. Saved expenses, mitigation, and 
alternative employment or business factors are also relevant. 33 CFR 
136.233.
    To assist us with various aspects of the adjudication process, the 
NPFC sometimes hires contractors with specialized expertise. 
Contractors can provide technical expertise or surge capacity and also 
ensure consistency for those incidents where we anticipate a high 
volume of claims. For example, in handling the claims arising from the 
North Cape, the NPFC hired a contractor to prepare a report on the 
fishing bans imposed in the area, when and where the bans were imposed, 
when they were lifted in the various areas impacted by the spill, and 
how these bans generally impacted the seafood industry in that area. We 
also required the claims adjudication contractor to hire an accounting 
firm familiar with the New England lobster industry to assist with the 
lost profits claims, and an expert on lobster population dynamics and 
movements in southern New England. Although this has generally worked 
well, it has not always resulted in as timely an adjudication as might 
otherwise occur.
    As mentioned previously, I am implementing a new contracting 
process to allow us to hire the specialized expertise we require in a 
more timely and responsive manner. Regardless of which vehicle is used 
to obtain contracting services, the recommendation made by the 
contractor is closely scrutinized by appropriate personnel at Coast 
Guard Headquarters and the NPFC. Any claims adjudication recommendation 
is reviewed by two NPFC claims professionals, who make the final 
decision on disposition of the claim.
    As of November 10, 1998, the status of the 33 claims submitted to 
the NPFC are as follows: 2 have been settled; 3 have offers pending; 3 
have been denied; 18 await information from the claimants; and 7 are in 
the measurement process by our contractor.
    With respect to natural resource damage (NRD) claims, it is clear 
to anyone familiar with the North Cape oil spill that natural resources 
were damaged as a result of the spill. Even though the NPFC has not 
received an NRD claim from the various Natural Resource Trustees, I'd 
like to take this opportunity to discuss the current status of these 
claims in general at the NPFC. While the NPFC has provided (and will 
continue to provide) limited funding to Trustees to initiate NRD 
assessments, it has not previously paid NRD claims, relying on a 
Comptroller General opinion, issued in late 1995, that OPA-90 provides 
for payment of NRD from the OSLTF only by appropriation; OPA-90 allows 
the NPFC to pay other damage and removal cost claims direct from the 
OSLTF without appropriation. In late 1997, the Department of Justice 
(DOJ), Office of Legal Counsel, interpreted OPA-90 to permit payment of 
NRD from the OSLTF without further appropriation, like other damages 
and removal costs.
    Following the DOJ interpretation, the NPFC formed a Program 
Implementation Team with members from the Coast Guard, National Oceanic 
and Atmospheric Administration (NOAA), and Department of the Interior, 
and with advice and assistance from the DOJ and other agencies as 
needed. The NPFC had no experience with the science and economics of 
NRD. The Program Implementation Team provided technical assistance to 
the NPFC in determining the resources needed to carry out this program, 
especially the qualifications of the personnel necessary to evaluate 
these often complex claims. The Coast Guard is in the process of 
approving additional personnel resources for the NPFC that will be 
devoted to NRD claims processing. As soon as qualified staff is hired, 
the NPFC will begin adjudicating NRD claims. We are hopeful that the 
new staff will be in place by next spring.
    The NPFC has developed an outreach document, a Trustee claimant 
guide, that explains the process and general requirements for 
adjudication of NRD claims by the NPFC. Essentially, the guide 
summarizes certain OPA-90 provisions relevant to NRD, the general 
claims regulations already in place, and certain aspects of the NOAA 
damage assessment regulations. The guide is now available for the 
information of all Trustees on the NPFC's Web Site (http://
www.uscg.mil/hq/npfc/npic.htm). I plan to send a letter notifying State 
Governors, congressional delegations, and all Trustees (Federal, State, 
and Indian Tribes) about the availability of the Guide. I will also 
invite any comments they may have on the utility of the guide as an 
information source.
    Let me highlight a few OPA-90 NRD fundamentals that underlie the 
Guide.
    All Trustees have the same standing as claimants from the OSLTF. 
There are no preferences or differing procedures or standards for any 
particular Trustee or class of Trustees.
    The interests of Trustees may often overlap, so the Trustees are 
encouraged to coordinate their claims. NPFC cannot pay twice from the 
OSLTF for the same damage.
    A claim must be based on the cost of a plan to restore, 
rehabilitate, replace or acquire the equivalent of the damaged natural 
resources, the diminution in the value of those resources pending 
restoration, and the reasonable cost of assessing damages.
    Assessment or restoration plans must be made available to the 
public for comment before they are finalized.
    Any NRD claim must first be submitted to the responsible party. If 
the responsible party does not settle within 90 days, the Trustee may 
submit the claim to the NPFC.
    The Trustee has the burden to support its claim. However, the 
claims process comparable to an insurance adjustment process. It is not 
intended to be a proceeding with opposing parties arguing alternative 
evidence or law. Congress clearly intended that claims to the OSLTF be 
an alternative to litigation, not litigation in another form.
    Trustees may follow the NOAA damage assessment regulations in 
preparing their claim, but are not required to do so.
    Determinations or assessments made in accordance with the NOAA 
damage assessment regulations are presumed to be correct. Any 
presumption is subject to rebuttal. If the NPFC determines the rebuttal 
evidence is of sufficient weight, a claimant may need to supplement its 
record or claim with additional information.
    Ultimately, the NPFC may pay a claim in full, but it also may deny 
a claim in whole or part if it is not adequately supported.
    Any amounts paid to Trustees from the OSLTF must be retained in a 
revolving trust account and used only to reimburse and pay costs of 
assessment and restoration of the damaged natural resources.
    Regarding the North Cape incident, I understand that the Trustees 
have released a draft restoration plan for public comment. Under OPA-
90, they must conduct public hearings prior to finalizing the plan and 
then submit a claim for the cost of the final plan to the RP before 
they may submit the same claim to the NPFC. If the RP does not settle 
the claim, the Trustee claimants will determine whether and when to 
submit a claim to the NPFC or litigate their claim against the RP.
    In summary, Mr. Chairman, I would like to again thank you for the 
opportunity to appear before you today; to provide insight into our 
claims process; to let you know what steps we are taking to streamline 
our process; and to reassure you and your constituents that we share 
the goal of assuring that claimants are appropriately compensated for 
damages caused by oil spills, and that the natural resources damaged 
will be restored in a timely manner.
    I will be happy to answer any questions you might have.
                                 ______
                                 
Responses of Daniel Sheehan to Additional Questions from Senator Chafee
                    time frames for handling claims
    Question 1. There appears to be some confusion on the time frames 
in which the responsible party (RP) and the National Pollution Funds 
Center (NPFC) must act with respect to a claim. Can you clarify how 
long the RP has to handle a claim, when the claimant may go to the 
NPFC, and how long the NPFC then has to handle the claim?
    Response. A claimant is required by law to first present the claim 
to the RP. The RP has up to 90 days from presentment of claim to take 
action concerning that claim before it can be submitted to the NPFC. If 
the RP denies liability for the claim or the claim is not settled 
within 90 days of the date it was presented, the Oil Pollution Act of 
1990 provides that the claim may then be presented to the NPFC for 
payment from the Oil Spill Liability Trust Fund. With respect to how 
long NPFC has to handle the claim, there are no statutory or regulatory 
requirements, however, we strive to adjudicate all claims as quickly 
and efficiently as possible. All claims are not equal in their 
complexity or documentation requirements and as a result, the time 
needed for adjudication will vary from claim to claim. NPFC relies 
heavily on contract support for the analysis of claims injuries and has 
implemented improvements to make this process more timely.
                statute of limitations for filing claims
    Question 2. An announcement was made at the hearings concerning the 
Statute of Limitations for the filing of claims under OPA. Could you 
clarify this issue and its impact on the claimants in Rhode Island?
    Response. The Oil Pollution Act of 1990 (OPA-90) has a 6-year 
statute of limitations (SOL) for claiming removal costs, and a 3-year 
SOL for other compensable OPA-90 oil spill damages. The question was 
raised about when the 3-year clock starts. While the circumstances of 
each claim will determine when the clock starts, the rule is that the 
claimant must submit an OPA oil spill damage claim to the National 
Pollution Funds Center (NPFC) within 3 years after: 1) the injury, and 
2) its connection with the spill, were reasonably discoverable with the 
exercise of due care. Loss-of-profit injuries, and their subsequent 
claims, are often complex. As general guidance, NPFC believes that a 
loss-of-profit injury is reasonably discoverable no later than when, in 
the course of its normal business accounting practices, or otherwise as 
required by law, the claimant determines, or is required to determine, 
business loss for a given period. But if a business in fact discovers 
it suffered a loss at an earlier date, that date will control. In the 
absence of other information as to when a loss of profit was in fact 
discovered, the NPFC may rely on the date of relevant income tax 
filings to establish the date loss was reasonably discoverable.
    When is the connection between the injury and the discharge 
reasonably discoverable? Again, the circumstances of the claim will 
determine when the connection was reasonably discoverable. In general, 
the connection may be reasonably discoverable when the injury is 
discovered or discoverable. In some circumstances the connection with 
the discharge may be reasonably discoverable only at a later time 
because, for example, information on the spill or its impact was not 
available until a later time.
    This focus on ``reasonably discoverable with the exercise of due 
care'' is a recognition that some damages may not be apparent until 
some time after an oil spill incident. Rather than start the clock for 
all claims at the time of the incident, OPA provides a degree of 
flexibility depending upon the circumstances. Although the 
circumstances of each claim will vary in determining when the 3-year 
period starts for that claim, some examples may be helpful to 
claimants.
    Example 1: Fisherman ``X'' observes an unexplained reduction in 
catch for several months beginning in February 1994. X notes a 
resulting loss of profits for those months when preparing quarterly tax 
records. On January 15, 1996, State and Federal authorities announce, 
and X learns, for the first time, that catchable fish stocks in the 
area fished by X had been severely impacted by an oil spill in February 
1994. The 3-year period for X's loss-of-profit claim would arguably 
begin on January 15, 1996, which is the date the connection between the 
loss of profits and the oil spill was reasonably discoverable.
    Example 2: A charter fishing boat owner ``Y'' loses business for 
the month of January 1995 because charterers cancel as a result of a 
massive oil spill in the area. But business revives quickly after the 
spill and Y does not bother to pursue a claim. In February 1998 the 
responsible party for the spill places an ad in the local paper 
offering to continue to consider and pay damage claims from the spill 
even though the 3-year period may have passed. Y reconsiders and 
decides to present a claim. The responsible party denies the claim. Y 
then decides to present the claim to the NPFC for payment. The NPFC 
cannot pay the claim despite its merits because it cannot, unlike the 
responsible party, waive the 3-year period.
    The purpose of raising this issue at the hearing was to highlight 
our concerns with respect to potential claimants that have heretofore 
not submitted claims. As indicated in the hearing, the RP notified 
potential claimants that they would still consider claims even though 
they were beyond the SOL. By law, the NPFC cannot waive the 3-year 
limit for claims to the NPFC for payment from the Oil Spill Liability 
Trust Fund. Because the circumstances of each claim will determine when 
the 3-year period starts for that claim, the NPFC cannot provide a 
single date to begin the 3-year period that will apply to any class of 
claims. The only certainty is that the period begins no sooner than the 
initial date of the spill; any claim submitted within 3 years after the 
initial date of the spill will certainly be timely. Beyond that, the 
best guidance NPFC can offer claimants is not to delay submitting a 
claim for a period of years. Such delays will only increase the risk an 
otherwise valid claim may be denied in whole or part solely because it 
is submitted late. NPFC has taken steps with respect to the RP's public 
notice concerning their acceptance of claims beyond the SOL. A copy of 
NPFC's letter follows:
                                 ______
                                 
                              Department of Transportation,
                              U.S. Coast Guard, September 21, 1998.

Mr. Barry Hartman,
Kirkpatrick & Lockhart, LLP
1800 Massachusetts Avenue, NW,
Second Floor,
Washington, DC 20036-1800

    Dear Mr. Hartman: The Director of the National Pollution Funds 
Center asked that I respond to your 1 July 1998 letter. I have read it 
very carefully, and would like to address your concerns. Because the 
National Pollution Funds Center's (NPFC) mission requires that we deal 
with oil spills on a daily basis, through our claims process in 
particular, we are keenly aware of the consequences of oil pollution 
incidents. I think our goal is the same. We both want to see that those 
who hare been damaged as a result of incidents are made whole.
    Accordingly, we can appreciate the frustration which your clients 
feel. Our contractors began working on these claims in April 1998, and 
requested additional information from your clients on May 15, 1998. I 
was pleased to see the recent letter of July 24, 1998 from Mr. McIsaac 
of your firm which appears to indicate that we have now overcome your 
firm's initial unwillingness to our contractor's request for 
information and personal meetings with individual claimants. In 
preparation for those meetings, our contractors asked for 
contemporaneous documentation that provides the number, location, and 
monthly placement of traps as well as a monthly summary of catch pounds 
and dollars for these locations for 1994 through 1996. This will allow 
us to document each fisherman's efforts (measured by the number of 
traps and pounds caught) before the spill, and then after the spill. 
This is important as the latest inshore landing report for the Area 539 
provided by Mr. Tom Angell of the Rhode Island DEM is very different 
from the Table B you provided. (See enclosed schedule completed by our 
contractor based upon the handwritten information provided by Mr. 
Angell). After our contractor reviews the information, they have 
requested meetings with you and your clients to review any questions 
and issues, and to confirm a working understanding of each claimant's 
particular business operation.
    Your characterization of NPFC's approach to handling your clients 
claims is inaccurate. First, you assert that NPFC is holding your 
clients to the heightened standard of ``beyond a reasonable doubt.'' 
This is simply not true. The methods used by the NPFC to measure these 
damages are the standard methods used in the insurance industry. All 
claimants are held to the same standard of proof--they must submit 
evidence to support their claim, 33 CFR 135.105(e)(6), and they must 
submit proof that their income was reduced by damages stemming from the 
oil spill, 33 CFR 136.233. Second, your description of the NPFC 
Approach is not on point. You are of course correct in stating that the 
one claim for which we have submitted an offer does refer to the 
National Marine Fisheries Service (NMFS) total landings at Point Judith 
for the claim period of August 1 through December 31, 1996 which 
indicates an increase in lobster landings over 1995. However the 
inference is that the claimant is a lobsterman. In facts the claimant 
is a lobster wholesaler. Accordingly, using total Port Judith landings 
is the proper threshold to examine the supply availability of lobster 
in Port Judith. Our contractor clearly stated in the Claim Summary for 
this claim that they would need to evaluate the individual claims of 
fishermen who supplied this lobster wholesaler. I understand you 
represent these fishermen and this information should be readily 
available.
    As far as actual lobstermen are concerned, I agree that total 
landings is not the proper measure. This is precisely why we have been 
requesting individual catch/landing records for each lobsterman. Ours 
too is a straightforward approach. We project what the individual 
income would have been based on effort and adjust for saved expenses, 
actual income, mitigation or extra expense. Your methodology of merely 
comparing income falls short. Although proof of loss of revenue is an 
important threshold issue, loss of revenue alone is not proof of a 
compensable claim. A claimant must also demonstrate that the loss of 
revenue resulted from the incident, and that the claimant attempted to 
mitigate damages to the extent that it was reasonable to do so; Thus, 
our contractor has requested individual catch/landing records to 
support your clients claim.
    You also state that landings of lobster in Area 539 have decreased 
drastically since the North Cape spill and cite Thomas E. Angell's 
studies as authority. First, let me point out that the chart which you 
attached to your letter as Exhibit A indicates that the total lobster 
landings at Point Judith increased from 3.3 million pounds in 1995 
(before the spill) to 3.9 million in 1996 (after the spill). Second, 
Angell's data contains a tremendous margin of error. As I noted before, 
Mr. Angell has revised his estimates since producing the chart you are 
using. Attached you will find a schedule, based upon information 
provided to Hull and Cargo by Mr. Angell, summarizing lobster landing 
data for Area 539. This schedule shows the total landing for 1995 to be 
somewhere between 2.6 million and 3.2 million pounds in 1993 and 
between 2.1 million and 2.9 million pounds in 1996. The margin of error 
between the high and low figures for 1996 is almost a million pounds. 
The point to be taken from this is that the data does not clearly 
support your assertion that Area 539 findings hare decreased 
dramatically since the spill.
    Finally, much of your letter deals with your frustration with the 
responsible party (RP) and its claims adjusting representatives. Please 
understand that I have no authority to regulate how the RP processes 
claims. All I can do is to receive claims which have gone unresolved by 
the RP and then to adjudicate those claims in accordance with our 
regulations.
    I want to assure you we arc committed to the efficient adjudication 
of these claims, but we are also mindful of our fiduciary duty to 
ensure that all claims paid are meritorious and properly measured. I 
hope we can work together to achieve this mutual goal.
            Sincerely,
                        Linda F. Burdette, Chief of Claims,
                                   National Pollution Funds Center.


                                            DEM Low Range Comparison
----------------------------------------------------------------------------------------------------------------
                                                                                          1996 to
                            Month                                 1995         1996         1995      Subtotals
----------------------------------------------------------------------------------------------------------------
January.....................................................       71,519       30,228      -41,291  ...........
February....................................................       27,352        8,155      -19,197  ...........
March.......................................................       31,635        7,653      -23,932  ...........
April.......................................................       83,770       33,037      -30,733  ...........
May.........................................................       80,099       77,036       16,937  ...........
June........................................................      289,714      100,758     -188,956  ...........
July........................................................      885,788      421,837     -244,079     -531,301
August......................................................      530,283      511,817      -18,486  ...........
September...................................................      262,838      327,114       84,276  ...........
October.....................................................      305,994      235,569      -70,425  ...........
November....................................................      256,470      194,375      -62,005  ...........
December....................................................      125,689      157,163       31,474      -55,238
    TOTAL...................................................    2,693,124    2,106,588     -588,537     -586,537
----------------------------------------------------------------------------------------------------------------



                                            DEM High Range Comparison
----------------------------------------------------------------------------------------------------------------
                                                                                          1996 to
                            Month                                 1995         1996         1995      Subtotals
----------------------------------------------------------------------------------------------------------------
January.....................................................       72,133       33,348      -38,285  ...........
February....................................................       28,479        8,678      -19,801  ...........
March.......................................................       36,014       10,585      -25,429  ...........
April.......................................................       71,975       37,212      -34,753  ...........
May.........................................................       75,569      120,054       44,435  ...........
June........................................................      323,182      114,563     -208,619  ...........
July........................................................      778,979      493,671     -235,308     -587,720
August......................................................      636,545      699,285       62,641  ...........
September...................................................      196,688      462,513       85,820  ...........
October.....................................................      -54,158      377,223      -26,935  ...........
November....................................................      290,834      251,886      -38,948  ...........
December....................................................      144,197      358,211      214,014      276,596
    Total...................................................    3,220,349    2,929,726     -291,124     -291,124
----------------------------------------------------------------------------------------------------------------
Data provided by Mr. Tom Angell of Rhode Island DEM on July 16, 1998.

                           claims regulations
    Question 3. The natural resource damage claimant's information 
guide states that, ``It is likely that the interim final claims 
regulations will be finalized within the next several years.'' This 
reference is the interim claims regulations at 33 CFR Part 136. Please 
discuss in detail any plans that may exist for finalizing the interim 
claims regulations.
    Response. The National Pollution Funds Center (NPFC) plans to 
submit a regulatory project workplan for internal Coast Guard approval 
on or about October 1999. While the details of the plan have not been 
finalized, we anticipate the plan will include substantial revision to 
the current interim regulations, a notice of proposed rulemaking and 
opportunity for comments prior to publication of a final rule. Our 
target date for publication of the final rule is late 2000 or early 
2001.
                               __________
Statement of Craig R. O'Connor, Deputy General Counsel for Atmospheric 
     & Ocean Research & Services, National Oceanic and Atmospheric 
                             Administration
    Good evening Mr. Chairman and members of the committee. I'm Craig 
O'Connor, Deputy General Counsel for Atmospheric and Ocean Research and 
Services at the Department of Commerce's National Oceanic and 
Atmospheric Administration (NOAA). Thank you for inviting me to 
participate in this discussion of damage claims submission to the Oil 
Spill Liability Trust Fund (the Fund) by Federal, State and tribal 
natural resource trustees. Under the Oil Pollution Act of 1990 (OPA), 
trustees act on behalf of the public to restore natural resources when 
they are injured by oil spills.
    My testimony is being presented on behalf of NOAA and the 
Department of the Interior and will provide a Federal trustee's 
perspective on submitting damage claims to the Fund. I would like to 
begin by commending the U.S. Coast Guard's National Pollution Funds 
Center (NPFC) for the progress they have made in developing guidance 
for processing damage claims submitted by natural resource trustees and 
guidance for trustees regarding the claims process. In recognition of 
NOAA and DOI's extensive experience with developing and pursuing 
natural resource damage claims, the NPFC initiated early consultation 
with these two Federal agencies. My agency and DOI worked closely with 
the NPFC to increase their understanding of the restoration planning 
process and the NOAA natural resource damage assessment regulations to 
help them develop guidance useful to natural resource trustee 
claimants. I can assure you that the NPFC is striving to expeditiously 
establish an effective process for paying natural resource damage 
claims from trustees.
    When those who are responsible for oil pollution to navigable 
waters do not or cannot provide compensation, OPA authorizes 
compensation of qualified claimants for removal costs and damages. 
Until recently, the NPFC relied on a Comptroller General opinion which 
concluded that OPA provides for payment of natural resource damage 
claims from the Fund only by appropriation. Then, in September 1997, 
the Department of Justice concluded otherwise, determining that 
uncompensated claims for natural resource damages, like other 
uncompensated damages and removal costs, are payable from the Fund 
without further appropriation. Since that decision, Federal trustees 
have worked closely with the NPFC to develop guidance for processing 
and considering natural resource damage claims to the Fund.
    The NPFC has reached a general understanding with Federal trustees 
about how damage claims will be treated. This understanding is 
reflected in the Natural Resource Damage Claimant information Guide, 
which began circulating on November 24, 1998. This Guide discusses how 
trustee damage claims are presented to the Fund and how they are given 
consideration, consistent with the NPFC's existing claims regulations 
and the NOAA natural resource damage assessment regulations. The NPFC 
has invited comments from users and other readers of the Guide and 
expects to change the Guide content from time to time to improve its 
informational value. We expect the NPFC to begin processing trustee 
claims in the late spring of 1999.
    The Federal trustees recognize that the NPFC must consider the 
interest that trustees have to obtain compensation expeditiously to 
support restoration needs, as well as the Fund's interest to ensure 
that any claims paid are valid and properly supported. At the same 
time, it is important to develop a consistent national approach to 
damage assessment and restoration planning for oil spills. The Federal 
regulations for conducting natural resource damage assessments under 
OPA should serve as an important tool for ensuring consistent, high 
quality restoration planning by trustees and the development of solid 
restoration based claims. These regulations were promulgated by NOAA, 
and became effective in February 1996. They represent a commitment by 
natural resource trustees to focus on expeditiously restoring the 
natural resources and services injured by oil spills. Assessments 
performed in accordance with the NOAA regulations are entitled to OPA's 
rebuttable presumption of correctness.
    If a responsible party denies all liability or fails to settle a 
claim presented by trustees within 90 calendar days after an OPA claim 
is presented, trustees may either file a civil action in court against 
the responsible party or present the claim to the Fund. Generally 
speaking, like any other OPA claimant, a trustee bears the burden of 
proving its damages to the NPFC. However, the Guide recognizes OPA's 
intent that, when claims are prepared in accordance with the NOAA 
regulations, those claims are statutorily presumed to be correct, 
unless rebutted by sufficient evidence in the record of the assessment. 
In reviewing claims, the NPFC will determine whether trustees have 
complied with the regulations and met the burden of proof based upon 
review of a comprehensive administrative record developed in accordance 
with the NOAA regulations.
    The State of Rhode Island is acutely interested in this issue 
because of the January 1996 oil spill from the tank barge North Cape. 
Before I proceed, I would like to recognize the significant 
contributions of the State of Rhode Island and the Department of the 
Interior in pursuing a natural resource damage claim in the wake of 
this oil spill. Full restoration of the natural resources injured by 
this oil spill would not be possible without the commitment and 
cooperation of the Rhode Island Department of Environment Management 
and DOI. While the trustees have been engaged in a cooperative damage 
assessment with the responsible parties for this incident, there is a 
strong possibility that the restoration plan for this oil spill could 
be the first claim by a Federal trustee submitted to the Fund.
    A Draft Restoration Plan and Environmental Assessment (Draft RP/EA) 
for restoring the natural resources and associated services injured by 
the barge North Cape oil spill was released on September 15, 1998. The 
restoration activities in the plan are designed to return injured 
natural resources and their services to their prespill conditions and 
compensate for interim losses. The assessment and the Draft Restoration 
Plan were developed in accordance with the NOAA regulations on an open, 
public administrative record, so we fully expect that claim will be 
afforded record review by the NPFC.
    The trustees evaluated injuries to the following resources and 
services: (1) the offshore marine environment, including lobsters; (2) 
salt ponds; (3) birds; and (4) human uses. The responsible parties (RP) 
for this incident, including Odin Maritime Corp., Thor Towing Corp., 
and Eklof Marine, were invited to participate in the injury assessment. 
The trustees and RP designed, performed and funded many studies used in 
determining the nature and extent of injuries to natural resources.
    The trustees evaluated 25 restoration alternatives with the 
potential to enhance the recovery of natural resources injured by the 
spill (i.e., primary restoration) and to provide additional resources 
to compensate for the losses pending recovery (i.e., compensatory 
restoration). Based on analysis of these alternatives, the trustees are 
proposing the following restoration actions:

      Adult lobster restocking and protection project: To 
compensate for the 9 million lobsters killed, the trustees are 
proposing to purchase, ``v-notch,'' and release 1.25 million adult 
female and 300,000 adult male lobsters into Block Island Sound over a 
5-year period. ``V-notching'' describes the practice of cutting a small 
v-shaped notch in the lobster's tail. Lobster harvesters will be 
prohibited from possessing v-notched lobsters. The v-notch should last 
about 2 years and give the lobsters at least one more opportunity to 
reproduce before becoming commercially available.
      Quahog restoration--To compensate for the loss of 1 
million kg of shellfish and sea stars, the trustees are proposing a 5-
year quahog restoration project for the coastal salt ponds. The 
trustees are proposing to purchase and plant 49 million, 20 millimeter-
long hatchery-reared quahog seed into several of the salt ponds.
      Water quality improvement through land acquisition--To 
compensate for 880,000 kg of finfish, crabs, benthic animals and other 
organisms killed by the spill, the trustees are proposing to purchase 
sufficient land within the watershed of the salt ponds to prevent the 
development of 38 new houses. Acquiring these lands will prevent 
additional nitrogen loadings to the ponds from these homes, thereby 
preventing additional degradation of water quality and future losses of 
eelgrass beds and their associated animal communities.
      Piping plover protection--To compensate for the loss of 
five to 10 piping plover chicks, a federally threatened shore bird, the 
trustees propose a 5-year project to protect nesting sites on South 
County and Block Island beaches. This project will be designed to 
minimize predation and human disturbance on piping plover nesting pairs 
and chicks through protection of nest sites.
      Loon habitat protection--To compensate for the loss of 
loons, an iconic animal to the northeast, the trustees are proposing to 
purchase and protect loon nesting habitat in northern New England along 
lake shoreline that is threatened with development. The trustees have 
calculated that 33 nesting pairs and their associated nesting sites 
need to be protected to fully restore the loss. The trustees have 
identified potential acquisition sites, that would require purchasing 
development rights for a 500 to 1,000 foot buffer zone around nesting 
territories within a 25 mile stretch of lake shoreline and the purchase 
of easement rights for a 500 foot buffer zone along a portion of 30 
miles of privately owned shoreline.
      Marine bird habitat protection--To compensate for the 
loss of marine birds the trustees are proposing to purchase and protect 
island acreage in the State of Maine to prevent future losses of 
breeding eider populations due to development. The trustees have 
calculated that 414 nesting eider pairs and--their nest sites need to 
be protected to fully restore the loss of marine birds. The trustees 
have estimated that approximately 31 acres of nesting habitat will need 
to be acquired.
      Recreational Fishing Enhancement--To compensate for 
injuries to the recreational fishery caused by the spill the trustees 
are proposing two projects:
      Anadromous Fish restoration--fish passage improvements 
will be implemented on two rivers that flow into the coastal salt ponds 
to enhance populations of river herring to compensate for injuries to 
recreational fishing. Possible sites for improvements include Factory 
Brook, Cross Mills Dam, and Rum Pond/Smelt Brook.
      Shore access--The trustees are proposing to improve 
access to the shore for recreational anglers at Matunuck Point by 
reconstructing a public stairway and walkway down a bluff to the shore.
    The trustees are currently seeking public comment on the analyses 
used to define and quantify natural resource injuries and the actions 
proposed to restore injured natural resources or replace lost resource 
services. The Draft RP/EA is available to the public for a 90-day 
comment period and the trustees conducted a public meeting to solicit 
additional comments. Written comments must be received by December 16, 
1998 and will be reviewed before finalizing the document. If the 
trustees determine that significant changes to the plan are required, 
an additional opportunity for public review will be provided.
    In addition to this draft restoration plan, the trustees have 
compiled an administrative record containing documents considered in 
planning and implementing assessment and restoration planning 
activities. The record is available for the public to review at two 
locations in Rhode Island as well as through the website for the Rhode 
Island Department of Environmental Management. Additional material will 
be included in the administrative record at a Later date, including 
public comments received on the Draft RP/EA, the Final RP/EA and 
restoration planning documents.
    A Final Restoration Plan will be presented to the RP, either for 
funding or for the RP to implement the restoration projects set forth 
in the final plan. The natural resource trustees for the North Cape oil 
spill would prefer that the responsible parties agree to implement the 
restoration plan produced by this cooperative damage assessment 
process. Nevertheless, if the responsible parties are nonresponsive, 
the trustees are prepared to pursue their claim, either by presenting a 
claim to the Fund or by litigation to ensure that the American public 
is compensated for the losses from this oil spill. Restoring the 
Nation's natural resource heritage is a responsibility shared among 
many Federal, State and tribal agencies. The natural resource trustees 
look forward to working with the NPFC to guarantee that we meet the 
mandate to promptly restore natural resources for present as well as 
future generations of Americans.
                               __________
Statement of Stephen G. Morin, Assistant to the Director, Rhode Island 
    Department of Environmental Management the Trustee for Natural 
   Resources of the State of Rhode Island and Providence Plantations
    Good evening Mr. Chairman and members of the committee. I'm Stephen 
G. Morin, Assistant to the Director, Rhode Island Department of 
Environmental Management and the State's delegate to the North Cape Oil 
Spill Trustee Council. Thank you for the invitation to participate in 
tonight's hearing.
    The State of Rhode Island has been the unfortunate victim of two 
major oil spills in the last 10 years; the World Prodigy spill in 1989 
and the North Cape spill in 1996. During the World Prodigy spill, State 
and Federal responses operated from separate locations with harmonious 
but loose coordination. Afterwards the State independently pursued 
claims for natural resource damages and undertook separate restoration 
actions from the Federal Government.
    The Oil Pollution Act of 1990 (OPA) changed all of that. After 
concluding that separate, conflicting or untimely responses could 
exacerbate the damage from an oil spill, Congress directed the creation 
of a system that required all of the parties responding to an oil spill 
to work together. Most importantly, a Fund was created that allowed 
government responders, both State and Federal, to take any and all 
measures necessary to stop and clean up a spill.
    During the North Cape spill the Coast Guard and the State of Rhode 
Island implemented a preplanned response in which they and the 
Responsible Party operated in a Unified Command at a pre-designated 
command post. In another room the Federal and State Trustees began 
working with the Responsible Party's representatives on a natural 
resource damage assessment.
    The Presidentially appointed Federal On-Scene Coordinator, USCG 
Captain Barney Turlo, while having the ultimate say pursuant to OPA-90, 
insured that all of the decisions were acceptable to the State. Most 
importantly he made sure that we knew that the full resources of the 
Oil Spill Liability Trust Fund (the Fund) were available to the State 
of Rhode Island. As the Deputy State On-Scene Coordinator, I was 
repeatedly asked to estimate the amount of money Rhode Island would 
need to sustain the response. I was assured that, as a member of the 
Unified Command, all of our response expenses were consistent with the 
National Response Plan and eligible for immediate reimbursement by the 
Fund.
    So far the promise of OPA-90 was delivering 100 percent of its 
advertised benefits. However once the response phase concluded we 
switched our attention to the restoration of the substantial damage 
done to our natural resources.
    As in the response arena, Congress recognized that the speedy 
restoration of damaged natural resources was an essential element of 
the statutory reform. Experience showed that an absent or recalcitrant 
Responsible Party would delay or deny the restoration of damaged 
resources. Congress also recognized that the process of litigation, 
with its delays, costs and uncertainty might still not yield a complete 
or adequate restoration. The Fund was to be the remedy for these 
problems. It would act as the guarantor of a swift and complete 
restoration.
    In this realm the promise of OPA-90 has not yet been fulfilled. On 
February 5, 1996, during the North Cape oil spill, the final 
regulations for conducting natural resource damage assessments under 
OPA took effect. Since that time these rules have been challenged in 
court and upheld. Although able to use other methods, the State and 
Federal Trustees jointly decided to utilize these new rules. We agreed 
to work cooperatively on the damage assessment and restoration plan and 
to include, as required, the Responsible Party in the damage assessment 
phase.
    During the negotiations over OPA-90 the House of Representatives 
wanted to make the Federal liability scheme and Fund the sole methods 
of establishing liability and settling claims. The Senate, to your 
credit, insisted that States should be able to set their own liability 
laws and manage their own Trust Funds. The tradeoff for this however 
was that should States elect to sue using their own legislative 
authorities, outside of the OPA rules, they would not have guaranteed 
access to the Fund. Within hours of the spill, Rhode Island elected to 
follow the OPA path, giving up the ``home court advantage'' of trying a 
damage case in the State system. The anticipated speed and certainty 
offered by access to the Fund was too great an incentive to ignore.
    When I joined the Trustee Council, the first difference from the 
response operations that I noticed was the near complete absence of 
support from the Fund. Enough money had been provided to allow the 
Trustees to determine if there was damage to trust resources. 
Thereafter the Trustees would either have to use their own resources to 
undertake the assessment or they would have to rely on the Responsible 
Party to fund the studies. The Fund, we were told, was not available to 
fund either the Assessment or the Restorations. Despite the language of 
the Act and the endless references to the contrary in the Congressional 
Record, the Fund managers were told by the Comptroller General that 
they could pay other damage claims but not Natural Resource claims.
    As legislators, you know that few agencies have budgets with these 
kind of contingency funds. So when I joined the Trustee Council I found 
that the Responsible Party was funding the majority of the assessment 
studies. Had it not been for the small NOAA Damage Assessment Center 
budget the Responsible Party would have been completely in the driver's 
seat. This clearly was not what you intended when you set the Fund's 
ceiling at $1 billion.
    In the ensuing 2 \1/2\ years, thankfully, the Justice Department 
has reversed this position. The Fund can now be used to pay for Natural 
Resource Restorations. For the North Cape Trustees it came just in the 
nick of time. Our view was that with the Fund as our Insurance Company, 
we would not be forced to bargain from a position of weakness with the 
Responsible Party. Without the Fund we would have had no recourse other 
than lengthy litigation and we probably would have had to settle for a 
less than complete restoration in order to get back any of the lost 
resources within the next decade.
    In keeping with the requirements of OPA-90, Governor Almond 
appointed the Director of the Department of Environmental Management as 
the State's Natural Resource Trustee. He joined the Secretaries of 
Commerce and Interior as the Presidentially appointed Trustees. The 
Trustee Council, made up of the representatives of those three 
agencies, then spent nearly 3 years pursuing damage assessment and 
restoration planning under the new Federal NRDA regulations. We are now 
in the public comment stage of our Draft Environmental Assessment and 
Restoration Plan (the Plan).
    We intend to finalize the Plan by January 1999, taking into account 
the public comments, which we have received. In accordance with the 
requirements of OPA-90, we will then submit it to the Responsible Party 
for implementation or funding. After 90 days, if the Responsible Party 
is unwilling to undertake or pay for the Restoration in whole or in 
part it is our plan to submit a request to the Fund for the money 
necessary to complete the restoration of the damaged Trust resources. 
That sum would represent the amount that the Trustees have determined 
is necessary to fully implement the projects that restore the lost 
public resources as contained in the Plan. It would of necessity not 
include the cost of any of the restoration projects that would be 
performed or funded by the Responsible Party.
    The Trustees believe that this is the only rational interpretation 
of the language of OPA-90 and is consistent with the congressional 
intent as reflected in the Record. As duly appointed representatives of 
the Public Trust who followed properly adopted and judicially upheld 
Federal regulations, our Restoration Plan Is the final executive 
decision. As such it is entitled to immediate payment from the Fund to 
undertake restoration of the injured public resources.
    At a Conference on OPA-90 issues put on by Roger Williams Law 
School, we were surprised to learn that the National Pollution Funds 
Center (NPFC) does not necessarily share our view of the process. In 
their view Natural Resource claims are little different than any other 
claim.
    Since then, we have heard arguments that the NPFC's first 
obligation was to protect the fiscal integrity of the Fund. We also 
heard that the NPFC wanted to understand the Responsible Party's view, 
presumably to gauge the Fund's litigation risk when they sought 
reimbursement from the RP. In our opinion neither consideration is 
required by OPA-90 nor reflected in the Record. In fact the House 
Report (101-242) states ``In promulgating regulations establishing 
claims procedures under this legislation, the President shall observe 
the following principles: The Fund is to provide compensation for 
damage claims fully and promptly. While the Fund must require some 
evidence of loss and the establishment of a causal connection with oil 
pollution, it should not routinely contest or delay the settlement of 
damage claims. The Fund will sometimes be providing compensation where 
there is little chance of subrogation against the discharger. Even so, 
litigation or lengthy adjudicatory proceedings over liability, 
defenses, or the propriety of claims should be reserved for subrogation 
actions against dischargers.'' The Senate Report (101-94) states that 
``. . . the primary purpose of this Act is to guarantee that claimants 
will receive rapid and equitable compensation for any economic loss 
suffered as the result of an oil spill, the committee expects that the 
claims settlement procedures established by the Secretary will be 
formulated with this purpose in mind. Particular care should be taken 
to avoid unnecessary procedural delays or overly complicated 
bureaucratic processes.''
    That is as explicit as can be. Especially in the case of the North 
Cape, where the new NRDA regulations were first used, and where the 
Trustees have followed the National Environmental Policy Act as well as 
the Administrative Procedures Act. In pursuing this damage assessment 
the Trustees have reviewed scores of scientific reports as part of a 
voluminous Administrative Record. They will use these documents and the 
public comments they have received to make their final determination. 
There is no place for the Fund to review, re-work or second-guess the 
Trustees decision. A decision of the Trustee Council should be viewed 
as the decision of the executive branch of Government. The only 
adjudication should be by the Judiciary. All this is not to say that 
the NPFC should not exercise care when reviewing.
    Having invested 3 years in the NOAA NRDA process, the State of 
Rhode Island believes the Fund has a ministerial, non-discretionary 
duty to pay for the Restoration Projects that were developed by the 
duly delegated Natural Resource Trustees. Any adjudication the Fund 
engages in should be with the RP in a cost recovery for subrogated 
claims, which the Fund has already paid.
    I have just received a copy of the NPFC's draft Natural Resource 
Damage Claimant's Information Guide. The NPFC is, by their account, the 
final decisionmaker on the validity of an NRDA Plan. The Guide says 
that the NPFC will decide if a Restoration Plan is consistent with the 
NOAA regulations, even one submitted by NOAA!-It also says that its 
decision to deny a NRDA claim is final, ``subject to limited judicial 
review of the NPFC administrative record under the Administrative 
Procedures Act ``arbitrary and capricious standard.'' However two pages 
later they say that they may ``. . . request that a claimant supplement 
its administrative record. . .'' Not only is that an obvious double 
standard but it truly undermines the administrative decisionmaking 
process. The Trustees have an obligation to review the entirety of the 
Administrative Record and then to use their best professional judgment 
in crafting the Restoration Plan. The Trustees' decision is then 
``subject to limited judicial review''.
    It is clear that the NPFC is trying to take the NRDA regulations 
and the process they require into account in this new type of claim. 
But it is also clear that they are trying to force the private party 
claims review process to serve in the NRDA arena. That is not what 
Congress intended.
    The Fund should allow the Trustees to begin restoring the injured 
resources in the near future, rather than having to wait many years to 
obtain a judgment against the Responsible Party in Federal court 
litigation under OPA. We would ask that you re-convey this sentiment to 
the Coast Guard National Pollution Funds Center in the strongest 
possible fashion.
                               __________
                   Statement of Albert B. Christopher
    My name is Al Christopher and I appreciate the opportunity to 
briefly address you today. My testimony is presented as the former 
owner of ABC Lobster, Inc.(``ABC'' or ``ABC Lobster''), a seafood 
dealership that was located at 296 Great Island Road in Narragansett, 
RI. ABC operated by purchasing lobsters from inshore fishermen and then 
selling those lobsters on the wholesale market to large exporters. ABC 
also sold some fish and lobsters on the retail market to walk-in 
customers. ABC did not purchase fish or lobsters from offshore 
fishermen because it was not profitable for it to sell such fish and 
lobsters.
    After ABC Lobster started doing business in 1993, it subsequently 
increased sales every year. In 1993, ABC had gross sales in the amount 
of $921,582.00. In 1994, when ABC began selling lobsters on the 
wholesale market, it purchased all new refrigerated lobster tanks and 
grossed $1,531,238.00 in sales. In 1995, sales continued to increase 
and by the year-end ABC had grossed $2,120,605.00.
    1995 was a good year for lobstering. Many fishermen who typically 
did not fish in the winter and spring were planning to gear up and fish 
hard during the winter and spring of 1996. Accordingly, I expected our 
lobster purchases and sales to increase and we bought four new lobster 
tanks which increased ABC's holding capacity dramatically. 
Unfortunately, that increased demand for holding capacity never 
happened, because on January 19, 1996, the North Cape Barge ran aground 
off Moonstone Beach and spilled over 800,000 gallons of heating oil 
into Block Island Sound (the ``Spill'').
    After the Spill, about 250 square miles of Block Island Sound were 
closed to fishing. All of the lobstermen that sold to ABC were unable 
to fish. Soon after this closure, the Rhode Island Department of Health 
ordered the removal of all lobster pots from the closed areas. When the 
lobstermen who supplied ABC retrieved their gear from various closed 
areas soon after the Spill, I purchased the few uncontaminated lobsters 
that they found in an attempt to mitigate my damages.
    ABC's retail sales were especially affected during this period. I 
believe that the Spill created a stigma against Rhode Island seafood.
    On February 12, 1996 I received a written offer of $525,000 from 
the State of Rhode Island for the leasehold interest and one story 
building housing ABC Lobster. It was the intention of the State to use 
the property occupied by ABC for ferry parking purposes. Despite 
receiving this offer after the Spill, I rejected it outright because 
the business of ABC had been growing dramatically and was projected to 
continue its healthy growth. One factor in my decision was the 
downplaying of the Spill's effects that was presented in the media and 
from government sources. As I have progressed through the claims 
process that brings us here today, I have had ample opportunity to 
regret my decision not to sell to the State.
    In mid-April some of the closed areas were reopened to lobstering. 
Many of the lobstermen that sold to ABC began the laborious process of 
fixing and re-setting all their gear. At least another month elapsed 
before the lobstermen had harvested lobsters that they could resume 
selling to ABC. From the time the lobstermen's gear was initially 
retrieved until the time the gear was re-set and able to be harvested, 
ABC had almost no lobster purchases.
    Various areas of prime lobster grounds remained closed, off and on, 
until June 25, 1996. However, even after all of the closed areas had 
been reopened to lobstering, ABC continued to experience a decrease in 
wholesale and retail sales in comparison with 1995. This decrease is 
entirely due to the lower catches experienced by the lobstermen who 
supplied ABC. I believe that their reduced catches were entirely due to 
the effects of the Spill. There is simply no other explanation.
    In 1996, ABC's gross sales were dramatically reduced as a result of 
the Spill. For example, from June 25, 1996 until December 31, 1996, ABC 
purchased only 300,058 pounds of lobsters. During this same period in 
1995, ABC had purchased 465,459 pounds. In other words, my gross 
purchases declined by about 36 percent during this time period. The 
profitability of ABC declined accordingly. During this same time 
period, ABC's retail sales fell by almost 34 percent.
    On May 31, 1996 and May 14, 1997, by and through its attorneys, 
Kirkpatrick & Lockhart, LLP, ABC submitted to Turnaboat, Eklof Marine 
Corp.'s (``Eklof'') insurance adjuster, a claims package seeking 
compensation for losses from the Spill. This started the long process 
that brings me here today.
    My written testimony today includes copies of correspondence 
documenting my attempts to seek compensation for my losses. I have not 
included copies of the documents that I was forced to produce during 
this process because it would require the submittal today of about 2 
boxes of copies. Instead, let me tell you about what bothers me with 
this claims process.
1. Too much documentation is required
    When I first filed my claim I was under the impression that it 
would be a simple process under the Oil Pollution Act (``OPA'') so that 
I would not get the run around like those affected by the Exxon Valdez 
catastrophe. I report today that that is plainly not the case. As you 
can plainly see by looking at the copies of correspondence I have 
included today, there has been request after request for additional 
information. These requests were first from Turnaboat, and after that 
process produced unfavorable results, the same redundant and 
unnecessary requests were made by Hull & Cargo Surveyors, Inc. (``Hull 
& Cargo'') the claims adjuster for the Fund.
    I learned during these productions of documents that my sworn 
statements as to the facts of my situation, as provided in affidavits, 
had no real significance. It was always a case of ``document this'' or 
``compile that'' in justifying my losses. The thing that most surprised 
me was that even though Turnabout had requested a tremendous amount of 
documentation the Fund required that I provide significantly more and 
different documentation than Turnabout had bothered to ask for.
2. It takes too long to resolve a claim and get paid
    My claim was first filed with Turnabout on May 31, 1996 and was 
later amended to include the entire year of 1996 in a filing dated May 
14, 1997. Since that amended filing, about 18 months have elapsed. That 
is too long. While waiting to be paid for my damages, business losses 
have continued to mount as the lobstermen delivering to ABC continued 
to experience lower and lower catches due to the decimation of the 
lobster stocks. In the face of these continuing losses with no end in 
sight, I sold my business in 1997 at a price considerably below its 
former market value. My business is gone and my losses remain.
    Having failed to get a reasonable offer for damages from Turnaboat? 
I filed my claim with the Fund on September 16, 1997. Instead of 
obtaining a quick resolution of my claim, I was forced to go through 
the process of delay and documentation all over again. If you look at 
the correspondence filed today, you will see that first the Fund asked 
for information, then, after assigning my claim to Hull & Cargo in 
January 1998, Hull & Cargo requested different information and then its 
accounting subcontractor required even further layers of detail.
    When the Fund finally came up with its settlement offer on June 18, 
1998, 9 months had elapsed since the Fund had started its review. Once 
again, this is too long. Since the Fund's settlement offer was 
unreasonably low for the first half of my claim, and denied entirely 
the second half of my claim, I submitted a Request for Reconsideration 
on August 14, 1998. In this Request for Reconsideration, I provided 
voluminous documentation to support my claim, in particular the second 
half of my claim which had been denied outright by the Fund. This 
documentation included the complete claims of five of my largest 
suppliers which were pending before Turnabout. These underlying claims 
of my suppliers unequivocally bolster and prove my claim for damages. 
In any event, despite the fact that the Fund should have proposed their 
final offer of settlement within 90 days of this final submittal, that 
deadline lapsed without explanation. I have been told that I can take 
this inaction as a denial of my Request and then file suit. That makes 
no sense at all. I could have filed suit anyway without wasting time 
and resources by filing with the Fund. The Fund has failed me.
    I finally received a letter dated November 20, 1998 from the Fund. 
Instead of providing me with an offer on my claim, the letter stated 
that the Fund had waited until October 26, 1998 before authorizing 
action by Hull & Cargo on my Request For Reconsideration. In other 
words, they waited 70 days after receiving my Request For 
Reconsideration before doing anything at all. It is no wonder that I 
didn't receive their final offer of settlement within the 90 day 
timeframe.
    Even more disturbing in this letter was their statement that they 
still could not tie my losses in the last half of 1996 to the Oil 
Spill. Why is this so difficult? Don't they even read the reports of 
the consultants who have documented the lobster losses for the Natural 
Resources Damage Assessment? And guess what? They asked for even more 
information to justify the losses of the lobstermen who supplied me.
3. The Fund is adversarial to claimants
    If you look at the Fund's settlement proposal of June 18, 1998 
alongside the Request for Reconsideration for ABC dated August 14, 
1998, certain facts are clear:
    The does not recognize that the North Cape Oil Spill produced any 
harmful effects other than the forced closures of certain areas to 
fishing up until the end of June 1996. Using their analysis, the 
effects of the Spill stopped by the end of July 1996. They interpret an 
unexpected increase in the lobster catch in August as being equivalent 
to a full and complete recovery from the Spill. That is absurd. They 
just don't get the fact that the Spill resulted in enormous damage to 
the lobster population off the coast of Rhode Island. Why doesn't the 
Fund make any attempt to consult the scientists involved with the 
Natural Resource Damage Assessment studies in an effort to understand 
the significance of the Spill? They would see that not only has there 
been great damage, but that the effects of the Spill will be felt in 
ever greater degrees over the next few years.
    For the second half of my claim, covering the period from August 
through December, 1996 and amounting to $100,011, the Fund offered to 
pay nothing---zero dollars--on the basis that they could not see the 
connection between the Spill and the reduced lobster catches brought to 
ABC by the lobstermen. This failure in understanding astounds me and I 
invite you today to review the offer from the Fund and my Request for 
Reconsideration so that you can see how the Fund has failed me in so 
many different aspects.
    The Fund's analyses are designed to minimize damages. Great pains 
were taken by Hull & Cargo to reduce my potential award by selectively 
applying data such as weather or the relocation of fishermen from one 
shore facility to another as factors to lower my award. The Fund fails 
to understand that everything changed after the Spill. Business plans 
were revised and the factors that led to growth over previous years no 
longer had relevance. The Fund and its adjusters use a standard a proof 
consistent with insurance adjusting. Claimants are treated as potential 
scam artists seeking to capitalize on an accident, and that is simply 
not ask for this Spill and we only want to be made whole.
    I thank you for this opportunity to speak.
                               __________
   Statement of John Sorlein, Rhode Island Lobstermen's Association, 
                        Wakefield, Rhode Island
    Good evening. My name is John Sorlein and I am president of the 
Rhode Island Lobstermen's Association (RILA). RILA is a non-profit 
association of individuals who are engaged primarily in the business of 
fishing for lobsters. Several of its members also have onshore 
businesses or related businesses that rely in large part on lobstering 
for their livelihood. These businesses represent a large portion of the 
lobstering industry off Point Judith, Rhode Island. RILA has put 
together a group of over 100 businesses that have developed and 
continue to develop and document damage claims.
    The fishing industry has contributed greatly to the local and 
state-wide economy. Millions of dollars have been pumped back into the 
economy by way of direct and indirect business resulting from the 
successful harvesting of Rhode Island's pristine seafood beds. Many 
lobstermen have been fishing in this area for years and RILA represents 
a large portion of that total. Lobstering is mostly a small 
businesses--each lobsterman owns a boat or two and each hires his or 
her own crewmen to help. They love what they do. They are independent 
and self sufficient. They are successful because of their willingness 
to put in an honest day's hard work.
The Spill
    Point Judith is the largest fishing port on the east coast. Until 
January 19, 1996, the lobsters caught in Point Judith were world 
renowned for their quality, in fact, we think they were the best 
quality lobsters caught in this country. However, On January 19, 1996, 
the unthinkable happened--a barge spilled over 800,000 gallons of 
Number 2 heating oil (the most toxic to lobsters) after running aground 
off Moonstone Beach. We say this was unthinkable since no one expected 
this to happen at all. Nobody expected this because back in 1989 there 
was a similar spill--The World Prodigy in Narragansett Bay, which is 
just a few miles from Point Judith. No one thought that such an oil 
spill could ever happen again, at least not in this neighborhood, but 
it did.
    The immediate impact of the spill was disastrous. In the only 
significant count of dead lobsters, over 60,000 were measured by weight 
from the sample areas located on the beach and over 18,000 of those 
lobsters were studied to determine their size, sex and reproductive 
status. That information was used to project a loss of over 2.9 million 
lobsters that washed up on the beaches as a result of the Spill. And 
that was only a portion of the total number of lobsters actually killed 
by the Spill.
    Additionally, as a result of the Spill a 250 square mile area was 
closed to fishing and lobstering for an extended period of time. \1\ 
This closed region included the entire area leading into the Port of 
Galilee, where many seafood processors are located. Not only were 
lobsters not caught in this area, but also it was virtually impossible 
to transport other shellfish catches (upon which onshore facilities 
relied) into Point Judith.
---------------------------------------------------------------------------
    \1\ Area closed intermittently from January 19 to June 25, 1996.
---------------------------------------------------------------------------
    The purpose of these comments express our support and endorsement 
of the comments by the other victims of this spill, and the comments 
our attorneys. When the spill happened we were at a loss about what to 
do. Few of us ever had to make claims for lost profits, and we didn't 
know how to do it. We immediately thought we had to file a lawsuit. We 
soon found out, however, that a new procedure existed under the Oil 
Pollution Act of 1990. Under that procedure, we would be able to file 
individual claims for losses without going to court, and with a 
reasonable amount of evidence, would be able to recover in a quick 
period of time.
    That has not happened. Many of our members and others have filed 
claims, and submitted literally thousands of pages of documents to 
establish our loss. But few of us he been paid. We provide information, 
and are asked for more. We provide more, and are asked for still more. 
We prove a loss under one standard, and the responsible party of the 
Fund changes the rules.
    We simply don't understand why this is so difficult. The barge 
owner was convicted of criminal offenses that caused the spill. But 
rather than compensate us, the Nature Conservancy was given over one 
million dollars. Rather than compensate us, hundreds of thousands of 
dollars were spent to put loons in Maine. Why haven't our claims been 
paid or even fairly considered?
    Why is it that despite our efforts, instead of the claims being 
decided in 6 months by the responsible party, or in 90 days by the 
Fund, now, 3 years later, few have been fully decided.
    Why is it that the responsible party and the Fund are only paying 1 
dollar for every 4 dollars that are proven to have been lost? Why is it 
that the responsible party has decided that no one she fished next tot 
he closed area could not possibly have lost more than 3 percent of his 
catch? Many people that fished in the closed area had to move to other 
areas, so that there were more fisherman looking for fewer lobsters.
    No one seems to understand that lobsters don't stand still. They 
move. Yet the claims adjusters are assuming that the no lobsters moved 
into or outside of the closed area. And they assume that fisherman 
don't move either. They think if you fished outside the closed area, 
you can't be affected. But the fact is we are. It is no mystery when 
someone has consistent catches every year for 5 or more years before 
the spill, then suddenly, after January 19, 1996, the catch is 
dramatically less.
    We don't fish anymore. We mitigate our losses. We travel further, 
spend more money, work longer hours, and catch fewer lobsters. There is 
no mystery here.
    How can it be that the fancy study that was performed says there 
were about 200,000 adult lobsters lost in 1996 and 197, but several of 
us alone caught over 400,000 less during those hears than before?
    The responsible party and the Fund concocted theories of lost 
lobsters based on conjecture and guess. We have shown actual losses, 
but those are ignored.
    At this point, many of us are fed up with this administrative 
process. We are ready willing and able to go to court and sue these 
criminals for our actual losses. Clearly we cannot get a fair shake by 
the responsible party or by the Fund. We are being forced to go to 
court. That means the Oil Pollution Process has failed.
    We sincerely hope that you fix this for the next victims.
                               __________
                       Statement of Bruce E. Kopf
    My name is Bruce Kopf and I appreciate the opportunity to address 
you today. My testimony is presented as the former owner and operator 
of the Fishing Vessel Spartan. I will briefly describe my claim.
    The F/V Spartan was an off-shore fishing vessel that used 
circulating sea water to keep lobsters alive after capture. My fishing 
grounds have been in an area about 80 miles south/southwest of Block 
Island to just north of Hudson's Canyon. This is an area far removed 
from the areas impacted by the North Cape Oil Spill (the ``Spill''). I 
have fished this area for well over 10 years.
    At the time of the Spill, my boat was in port at Point Judith ready 
to sail as soon as the weather cleared. However, immediately after the 
Spill, a large portion of Block Island Sound was closed to lobstering 
due to the extensive environmental contamination. I was unable to fish 
for lobsters offshore from January 19 through March 29, 1996 because my 
vessel was unable to pass through the closed area. In addition, if I 
had traversed the closed area and obtained my catch offshore, the sea 
water in the closed area remained contaminated, so I would not have 
been able to preserve my catch by using that circulating sea water. It 
was really this simple: If I used any of the water from the closed 
areas for my circulating system, Rhode Island authorities would have 
classified my whole catch as contaminated.
    Likewise, if I had instead elected to traverse the closed area with 
closed circulation tanks and returned to Point Judith, this would have 
resulted in freezing conditions for my catch. In my best professional 
judgment, I would have lost all or most of my catch under these 
conditions.
    As I have fully explained and documented to the Fund, I was unable 
to mitigate my damages by landing at other ports since I would have 
either had to traverse the closed area to reach an alternative port, or 
I would have had to land in a State in which I was not licensed to land 
my catch, was not familiar with the dockside facilities, and for which 
I had no prior arrangement to sell my catch. In addition, in the 
aftermath of the Spill there were many reports in the media suggesting 
that the opening of the fishing areas was imminent. I have included 
copies of articles from the Providence Journal in the record today to 
show what I and other fishermen were being told by the regulators. 
Based upon this information and my own professional judgment, I elected 
to stay in shore until the matter was resolved.
    My $23,762 claim as presented to Turnaboat on March 26, 1997 and to 
the Fund on January 30, 1998 was straightforward and simple: I asked to 
be compensated for my losses during that 69-day interval from January 
19, 1996 to March 29, 1996 when I could not fish because of the Spill. 
My claim was based on my average income during that interval in the 3 
years prior to the Spill. I should note here that my claim ends on 
March 29 since that was the date that I sold my vessel. It had been my 
intention to fish until the time when I transferred title to the new 
owner of my boat. Turnaboat denied my claim on May 9, 1997 under the 
theory that my fishing area was never closed and I could have landed my 
catch in another State. The Fund has not presented a settlement offer 
to date.
    Please note that I have experienced two major difficulties with the 
OPA claims process:
1. The resolution of my claim is taking too long
    My claim was filed with the Fund on January 30, 1998. Approximately 
10 months have elapsed since that filing. My claim is simple. Why is 
there no resolution? Note that I have responded to all of the 
information requests presented to me by Mr. John P. Kelly, the adjuster 
hired by the Fund. My last response, which I believe resolved all of 
the outstanding issues for Mr. Kelly's analysis, was submitted on 
August 25, 1998. There had been no word from the Fund or Mr. Kelly in 
the 3-month interval after that submittal until just last week when I 
received a letter from Mr. Kelly requesting irrelevant, unnecessary and 
redundant documentation. More incredibly, this documentation had been 
provided and/or addressed to the satisfaction of both Mr. Kelly and the 
Fund back in August. I am a fisherman who was harmed by the Spill. Why 
does it take so long to get compensated for my losses?
2. I have been asked to provide too much unnecessary, irrelevant and 
        redundant information
    First, note that my written submittal today includes all of the 
relevant correspondence for my claim showing the multiple requests for 
information from the Fund and its adjuster, along with my responses to 
those requests. I have been asked to provide the following information, 
which I believe has no bearing on my claim, to John P. Kelly & 
Associates at one time or another:
    Although this claim is for damages for the first quarter alone, I 
had to supply settlement sheets and account information for all months 
during 1993, 1994 and 1995.
    I was asked to explain what other offshore lobstermen did after the 
Spill.
    I was asked to provide the names and telephone numbers of people 
who purchased directly from me off the docks.
    I was asked to provide a retrospective analysis of the costs and 
difficulties of bringing my catch to alternative ports during the time 
period of my claim.
    All of the above was unnecessary and intrusive. I had previously: 
(1) provided my tax records and backup documents that show what I 
earned during the first quarter of 1993 through 1996; and (2) submitted 
a sworn affidavit explaining, among other things, my fishing practices 
and the unavailability of other ports. Does any of the other 
information make any significant difference?
    If the Fund has to make any determination at all about my claim it 
is whether I showed reasonable judgment in the aftermath of the Spill 
in not somehow finding a way to traverse the closed areas and land my 
catch in some other State. I tell you today, and I have sworn before, 
that based upon my experience and the information presented to me in 
the aftermath of the Spill, that would not have been a responsible 
course to follow.
    I thank you for this opportunity to speak.
                                 ______
                                 
     [From the Providence (RI) Journal Bulletin, November 22, 1996]
                   Fishing Industry Slammed by spill
                         (By Elizabeth Abbott)
    Governor Almond and Rep. Jack Reed said they would seek Federal 
help for fishermen hurt by the oil spill.
    NARRAGANSETT--From offshore lobstermen who can't travel through the 
spreading oil slick without killing their valuable catch, to 
wholesalers along the Galilee waterfront whose lobster and crab supply 
has been embargoed by State health officials, Rhode Island's 
multimillion-dollar fishing industry is reeling from the grounding of 
the barge North Cape.
    ``I've got [lobster pots] six miles away, but I can't bring them up 
because I don't know where the oil is,'' Eric Winn, a Point Judith 
lobsterman, said Sunday.
    Peter Schone, whose lobster pots are a safe 100 miles out, has a 
different dilemma. Schone can't bring his catch into shore because he 
needs to pump ocean water into his boat to keep it alive.
    This he can no longer do.
    Commercial fishermen and seafood processors cannot use water from 
the fouled area, which now stretches from South County to Block Island, 
to store, wash or process seafood, according to emergency restrictions 
issued by the Departments of Health and Environmental Management.
    ``Nobody knows where they can bring live product,'' Schone 
complained.
    The State's fishing industry employs between 3,000 and 4,000 
people, and generates about $500 million in economic activity annually, 
according to David Borden of DEM. A dollar estimate of damage from the 
spill has not been formulated, but at a news conference Sunday Governor 
Almond predicted it would be considerable.
    Not only has shellfishing been banned in coastal ponds from Point 
Judith to Napatree Point and out to three miles offshore, but 105 
square miles of Block Island Sound Sunday was closed indefinitely to 
all kinds of fishing.
    ``The fishing industry will suffer a significant loss,'' Almond 
said.
    Almond and Rep. Jack Reed promised to seek Federal help for 
fishermen hurt by the oil spill.
    If this help comes, it won't be too soon for the State's 500 to 
1,000 lobstermen. So far, they have been hardest hit by the spill. The 
oil has killed thousands of adult lobsters--the count as of Sunday was 
11,000--and decimated the juvenile lobster population as well.
    ``What I don't understand is how they let the oil get in the 
pond,'' a frustrated Winn said, referring to Point Judith Pond.
    It's not just lobstermen who have been hurt.
    The oil has contaminated the coastal pond breeding grounds of 
winter flounder, a ``multimillion'' dollar fishery in Rhode Island 
whose stock is already perilously low, DEM's Borden said.
    ``This will do nothing but make matters worse,'' he said.
    The businesses who buy lobster and fish from the State's fishermen 
are also feeling the effects of the spill.
    On Saturday, about a dozen Health Department inspectors began 
embargoing lobsters and crabs from wholesalers throughout South County. 
Between 50 and 100 wholesalers were visited and an undetermined amount 
of lobster and crab seized.
    ``Nobody likes to have their food embargoed,'' said the Health 
Department's Ernest Julian, but he pointed out that this measure was 
necessary to keep contaminated seafood away from consumers.
    ``There's nothing on the market right now that's contaminated,'' 
Julian said.
    Nonetheless, health inspectors will also begin inspecting fish 
retailers and restaurants to ensure that no contaminated seafood is 
being used, he said.
    Fishing and shellfishing operations hurt by the spill can file a 
claim with the barge's owner with Turnabout Services LTD, officials 
said. The number to call is 800-995-4045.
                                 ______
                                 
     [From the Providence (RI) Journal Bulletin, January 28, 1996]
         Plan Drafted for Reopening Contaminated Fishing Areas
                       (By C. Eugene Emery, Jr.)
    NARRAGANSETT--Officials yesterday hammered out a draft proposal for 
gradually reopening the 250 square miles of ocean closed to fishing by 
the 828,000 gallons of oil spilled from the barge North Cape.
    The plan must still be formally approved by top representatives of 
several State and Federal agencies, and Eklof Marine, the company that 
owns the barge and has agreed to pay for the testing needed to allow 
fishing to resume.
    Edward S. Szymanski, associate director for water quality 
management at the Department of Environmental Management, said approval 
could come as early as tomorrow.
    But he and other DEM officials declined to predict how quickly, 
even under the best of circumstances, the fishing ban might be lifted.
    Other North Cape-related developments yesterday:
    --An official for the company holding the insurance policy on the 
North Cape said the total cost of the cleanup and the price tag for 
reimbursing fishermen for lost income will easily exceed $10 million.
    --Plans to begin pumping out the 70,000 gallons of diesel fuel left 
aboard the tug Scandia were postponed yesterday morning because heavy 
seas from yesterday's storm made conditions too dangerous. The Scandia 
lost control of the North Cape when its engine room caught fire. 
Workers will try to pump out the fuel today.
    --With the North Cape harbored in Newport, workers began 
disassembling the Coast Guard's command center at the Dutch Inn in 
Galilee. The agencies involved in the cleanup will continue working, 
with the Coast Guard directing operations from its headquarters in East 
Providence.
    --DEM workers at Moonstone Beach, which was hit hardest by the 
spill, continued finding dead birds, lobsters and starfish along the 
shore. The birds that have been rescued and cleaned, which are 
recovering in a Narragansett municipal garage, are not expected to be 
released for another week or so.
    --The Coast Guard captain overseeing the operation said yesterday's 
storm probably would have split the North Cape in two if it had 
remained grounded.
    The tentative blueprint for reopening the fishing areas must be 
approved by the DEM; the Rhode Island Department of Health, which tries 
to prevent contaminated fish from reaching the market; the University 
of Rhode Island, whose scientists are serving as consultants on the 
project; the National Oceanic and Atmospheric Administration; the Food 
and Drug Administration; and Eklof.
    Szymanski said that under the proposal, an area can't reopen to 
fishing until all oil sheens have disappeared, water tests show that 
the amount of oil is below Federal standards, and tests of fish and 
shellfish show that the animals are safe to eat.
    Yesterday's storm was expected to eliminate all of the sheens, 
Szymanski said, but aerial reconnaissance will be needed to be sure.
    Once the sheen has disappeared, Eklof, working under DEM 
supervision, will begin collecting water samples from at least two 
dozen areas, including Block Island Sound and the various ponds 
believed to be affected by the spill.
    The draft plan calls for collecting water 1 meter below the surface 
and 1 meter above the sea floor, said Szymanski.
    Those samples will be tested for traces of nearly four dozen oil-
related chemicals. If the individual concentrations of all of those 
chemicals are below Federal limits--usually ranging from 0.001 to 0.004 
parts per million--testers will move to the next step: looking for 
pollution in finfish, lobsters and shellfish.
    Only if the test results show that contamination levels are below 
Federal standards will State officials reopen an area to fishing.
    ``Our goal, obviously, is to open the fishery as soon as we 
possibly can,'' said DEM director Timothy R.E. Keeney.
    There has been some confusion over how much pollution is actually 
in the water.
    On Wednesday, Keeney said water samples from Point Judith Pond 
showing average oil concentrations of less than one part per million 
was ``good news'' because the Federal standard is 10 parts per million. 
Although one water sample showed an oil concentration of 3.8 parts per 
million, the results seemed to suggest that the oil that spilled had 
not produced a serious threat.
    But Keeney said yesterday that he had misunderstood the Federal 
standard, and one part per million is not good at all.
    ``If a lobster is exposed to 600 parts per billion (or 0.6 parts 
per million) over 4 days, it will not survive,'' Keeney said.
    Szymanski said he expects the closed fishing areas to be reopened a 
chunk at a time as test results show them to be clean.
    A priority, he said, will be to reopen the mouth of Narragansett 
Bay so fishermen can draw in ocean water as they come in and out of the 
Bay.
    Currently, if an incoming fishing vessel tries to keep its catch 
alive by taking on water from the mouth of the Bay, the whole catch 
immediately is classified by the State as contaminated.
    ``If we find an area that meets the standards, boom, we'll open 
it,'' said Keeney.
    The DEM director said although fishermen are eager to resume 
fishing, they also understand that the worst thing that can happen is 
to reopen a closed area and later discover that tainted fish from that 
area have made it to market.
    ``Then the whole market is at risk'' because consumers will lose 
all confidence in the safety of fish, he said.
    (U.S. Rep. Patrick J. Kennedy, saying that ``they have been 
inconvenienced for long enough,'' yesterday called on the Department of 
Health to allow lobstermen to recover their pots from the oil spill 
area so they can determine how much of their catch is contaminated and 
eventually get reimbursement from Eklof. He also said that lobstermen 
should be allowed to clean their traps so they'll be ready to resume 
work as soon as the ban is lifted.
    The estimate that the eventual cost of the spill will exceed $10 
million came from Ben Benson, the senior surveyor for the Maritime 
Response Syndicate, which represents the Water Quality Insurance Co. 
The company underwrites the first $10 million of Eklof's insurance.
    ``From an operations standpoint, the cleanup won't reach $10 
million,'' he said. ``But with the addition of claims and the NDRA 
(Federal Natural Resource Damage Assessment program) claim it will, in 
all likelihood, exceed $10 million.''
    Eklof has additional insurance to cover claims above the first $10 
million.
    Governor Almond and fellow Republican Nancy Mayer, general 
treasurer and candidate for U.S. Senate, spent part of yesterday 
touring the Dutch Inn command center, visiting the makeshift bird 
recovery shelter and checking on the progress in removing the oil from 
the Scandia.
    At the command center, Coast Guard Capt. Barney Turlo said it will 
probably be tomorrow or Tuesday before the North Cape, now berthed at 
the Newport Navy Base, gets the go-ahead to return to New York for 
repairs. The approach of yesterday's storm prompted Turlo to send the 
barge to Newport.
    Turlo said divers inspecting the barge found ``literally dozens of 
localized tears, cracks and holes'' at the bottom of the hull, made of 
\5/8\ths-inch steel. The biggest crack was 5 feet long and 8 inches 
wide. ``Some of the smaller ones were a foot and a half long and an 
inch wide,'' he said.
    Although welds prevented the cracks from spreading as the waves and 
tides put stress on the hull, Turlo said, ``We're not even sure it 
would have survived the next 2 days . . .'' without breaking in two.
    At the bird rehabilitation center at the Narragansett town garage, 
the Almond group watched one of the 23 long-necked loons being bathed 
in a series of steel basins. One worker used a toothbrush to clean oil 
from an animal's head.
    In all, about 40 birds are at the facility trying to regain their 
strength while resting in playpens, wooden boxes and 6-foot wide pools, 
some warmed by heaters and sunlamps. All were shielded from view by 
blue tarps, blankets or sheets.
    Lynne Frink, one of the women from the New Jersey organization in 
charge of the rescue operation, said the center would be in business at 
least another week. Even after the birds have recovered and their 
feathers can once again protect them from the cold, Federal officials 
must give their approval before the animals can be released.
    (The U.S. Fish and Wildlife Service announced yesterday that, 
beginning tomorrow, any sightings of oiled birds, either dead or alive, 
should be reported to the Ninigret National Wildlife Refuge 
headquarters in Charlestown at 364-9124.)
    At Moonstone, with the noontime waves crashing over the tug 
Scandia, the workers in charge of pumping out its fuel managed to 
pressure test the system. But they postponed the actual pumping because 
of the weather.
    DEM workers said they were still finding dead birds and 
contaminated lobsters being tossed onto the sand by the waves.
    A walk along the beach revealed many dead starfish and skate egg 
pockets.
    The faint smell of oil lingered, even in the bracing wind.
    Nonetheless, said Almond, the scene ``looks pretty good without the 
barge.''
    Across Narragansett Bay, salvage workers and Coast Guard officials 
had begun moving oil from the North Cape to the smaller Clear Waters 
12.
    Coast Guard Reserve Chief Brian Smith said the transfer would 
continue through today.
    Smith said the 17 or so members of the salvage crew would keep 
working as long as they could, despite the forecast of rain and a high 
wind warning from the National Weather Service.
    ``If this was a normal operation, we probably wouldn't be 
transferring fuel,'' Smith said. But seawater is seeping in through the 
North Cape's cracked hull and mixing with the oil to form ``slop.''
    ``If they stop pumping, it could possibly sink. It's a Catch-22. 
But (Captain Turlo's) policy is that no one's been hurt yet, and we'd 
like to keep it that way. You can always clean up the oil, but you 
can't replace somebody's hand or arm.''
                                 ______
                                 
     [From the Providence (RI) Journal Bulletin, February 23, 1996]
                 Block Island Fishing Areas Remain Shut
                            (By Tom Mooney)
    The expected reopening of portions of Block Island Sound to fishing 
this week has been delayed by another round of sampling that found 
lobsters still smelling of oil a month after the North Cape spill.
    ``It's a cause of concern because with some kinds of fishing gear 
lobsters can be caught,'' said Ernest Julian, chief of the State Health 
Department's Division of Food Protection. And one smelly lobster on 
someone's table ``could destroy the industry,'' he said.
    State environmental officials were planning earlier this week for 
the reopening of part of the closed 250-square-mile area to gill 
netters and hook-and-line fishermen. Trawlers were still to be 
prohibited since their bottom nets could catch lobsters, some of which 
still smell of oil.
    Since the area is in Federal waters--beyond 3 miles and east of 
Block Island--State officials were awaiting final approval from the 
National Marine Fisheries Service.
    But the number of test lobsters still smelling of oil--9 out of 44 
caught between Tuesday and Thursday--surprised scientists, said Julian.
    And even though all finfish samples continue coming back clean, 
Julian said, the lobster findings gave reason for pause.
    The scientists want more time to discuss how to enforce a 
prohibition against catching lobsters and whether ground fish, like 
flounder, should also continue being off-limits, said Julian.
    State and Federal officials also want to reach agreement on the 
type of fishing gear allowable.
    ``It's highly likely there will be an agreement next week,'' Julian 
said. But he wouldn't commit to a day. ``Things can change.''
                                 ______
                                 
       [From the Providence (RI) Journal Bulletin, March 2, 1996]
                   Fishing Ban Tangled in Bureaucracy
                           (By Peter B. Lord)
    Reopening of the 250-square-mile area off Rhode Island is expected 
soon, but it still needs official approval from at least a dozen State 
and Federal agencies.
    At first, they didn't realize they were doing something so unusual.
    Soon after the barge North Cape ran aground Jan. 19 and disgorged 
828,000 gallons of oil into the churning surf off Moonstone Beach, 
State health and environment officials announced they were banning 
fishing in all waters between Galilee and Block Island.
    It was a prudent public health measure, they said, and it wouldn't 
last long. The ban probably would be lifted within a week.
    More than 6 weeks have passed.
    Not a single fish tested by scientists since then has been 
contaminated with oil. But fishing is still prohibited in a 250-square-
mile area.
    State officials say they hope the ban may be partially lifted 
sometime next week. But they've made so many similar predictions 
already, they will not be more specific.
    Instead, they talk about a ``bizarre'' review process that has 
consumed the attention of dozens of State and Federal bureaucrats. One 
Federal official called it ``a mess.''
    Among the factors cited for delays in lifting the ban are the 
primitive metabolisms of lobsters (which until recently continued to 
smell of oil), snowstorms that shut down government offices, time spent 
consulting experts on the West Coast who cut their teeth on the Exxon 
Valdez disaster, and the slowness of completing critical laboratory 
analyses.
    The single most important explanation, however, is that apparently 
no other State has ever instigated such an extensive fishing ban after 
an oil spill. Consequently, no one has any experience in determining 
when such a ban should be lifted.
    So what sounded like a simple process of inspecting and certifying 
the cleanliness of a body of water and its fishlife has turned into an 
unprecedented bureaucratic and scientific tangle. Lawyers and 
regulators from at least a dozen State and Federal agencies have been 
groping toward an agreement on reopening the waters, literally making 
up the rules as they go along.
    ``I don't know that anyone in this office has ever done this 
before,'' said Dan Morris, a resource conservation officer for the 
National Oceanic and Atmospheric Administration in Gloucester, Mass. 
His is one of the key agencies that must approve the reopening.
    ``We're aware of only two emergency fishing closures: one for an 
outbreak of paralytic shellfish poisoning on Georges Bank and the other 
for a spill of drums filled with arsenic,'' Morris said. ``All this is 
new ground. That's why we're having to proceed carefully.''
    Insurers for the oil barge are expected to compensate fishermen for 
income lost during the closure. And when all the reviews are completed, 
there should be no doubts that the fish are safe.
    Ernest Julian, chief of the State Health Department's Food 
Protection Division, says it was his idea to close the fishing grounds 
the weekend of the spill.
    ``It was the logical thing to do,'' he recalled last week. ``You 
have 828,000 gallons of oil in the water, it didn't make sense to bring 
product up through that.''
    Julian and fishery experts at the State Department of Environmental 
Management initially closed a 105-square-mile rectangle of Block Island 
Sound. Later they extended it to 250 square miles.
    But State officials soon learned they had overstepped their 
authority in a big way. Most of the waters they closed were Federal 
waters over which the State has no jurisdiction.
    The oversight was kept quiet and Federal authorities quickly made 
the closure of the waters legal by publishing official notice in the 
Federal Register.
    Within days, State and Federal agencies launched a massive effort 
to collect samples of water and fish to determine the extent of 
contamination.
    Early indications suggested the oil was rapidly dissipating. 
Officials hoped much of the closed area would be reopened the first 
week of February.
    Soon, the regulators would learn that it was easier to collect the 
information than it was to agree on what it meant.
    The various agencies informally agreed to a ``protocol'' that would 
tell them when it would be safe to reopen the fishing grounds.
    Most of it was fairly straightforward. The North Cape and its tug, 
the Scandia, would have to be removed.
    Visible oil sheens would have to be gone. (Sheens were reappearing 
in Point Judith Pond as recently as a week ago, according to Julian, as 
large vessels churned up the bottom and caused oil in the sediments to 
return to the surface.
    The water would have to be free of oil.
    Finally, fish would have to pass the odor and chemical tests agreed 
to by toxicologists and other scientists.
    Most of the experts generally agreed to the terms of the protocol a 
month ago.
    David V.D. Borden, the DEM's assistant director for fish and 
wildlife, said the protocol has been approved by the following State 
interests: the Coastal Resources Management Council, the Health 
Department, the attorney general's office, the Governor's office, and 
the DEM's legal counsel, water resources division and director's 
office.
    A similar long list of Federal agencies is involved as well, and 
Borden said most of them have yet to officially approve the protocol.
    The Federal interests include: the National Marine Fisheries 
Service and its offices in Gloucester, Narragansett, Seattle and 
Washington, D.C.; the general counsel of NOAA; the New England Fishery 
Management Council and the U.S. Food and Drug Administration.
    ``All these people have agreed to the concept,'' said Borden. ``But 
they haven't formally signed off. It's a little bizarre.''
    ``It's one thing to get technical comments from experts. It's 
another thing to get the administrative sign off and approval,'' 
observed Bob Vanderslice, a risk assessment expert with the State 
Health Department. ``This is not something Federal agencies are used to 
doing. They have lawyers whispering in their ears telling them not to 
sign anything. Since they don't have clear authority, what should they 
be doing?''
    Several weeks ago, the pattern was clear. The water was clean. The 
fish were fine.
    The problems were with lobsters: Some picked up as far as 14 miles 
offshore continued to smell of oil. And oil was suspected to be in the 
sediments near the spill site.
    Scientists here consulted with the Northwest Fisheries Science 
Center in Seattle, where scientists have been studying the effects of 
oil on fish for more than 20 years.
    John Stein, director of environmental conservation at the center, 
said scientists tested many of their theories after the Exxon Valdez 
spill in 1989. (Even though the Valdez was a much bigger spill, it 
caused a much shorter and more limited fishing ban, Stein said.)
    Stein advised local officials that the problem with lobsters is 
their metabolism.
    ``What that means is when lobsters are exposed to aromatic 
hydrocarbons in the oil, they take them up, as do the fish. But the 
liver of a lobster is not as efficient as the liver of a fish in 
transforming the compounds into forms that can be easily excreted.''
    So while fish can consume oil and expel it from their systems, 
Stein said ``lobsters will accumulate appreciably higher levels.''
    State officials proposed a compromise. They wanted to reopen the 
fishery to gillnetters--fishermen who tow nets suspended in the water--
and to hook and line fishing. That way, regulators could be fairly 
certain that no one would bring in contaminated lobsters or any other 
catch from the ocean bottom.
    On Feb. 16, the DEM asked the National Marine Fisheries Service to 
agree to the limited reopening, expecting a response any day.
    It's still waiting.
    NOAA's Dan Morris acknowledged there have been delays, but he said 
Thursday that he expects the reopening plan to be approved very soon.
    ``It's an unusual circumstance to open and close a fishery,'' 
Morris said. ``We're talking about public perception and public health. 
You have to be careful with both.''
    No one suggests that any agency wasn't doing its best to resolve 
the fishing ban. In fact, there has been a lot of praise for the 
Federal-State team effort.
    But State officials remain amazed there are no national standards 
for such a situation.
    ``What environmental problem is more common than an oil spill?'' 
said Vanderslice. ``And yet there are no national protocols. No 
standards. They've never done it.''
    But Ken Sherman, chief of NOAA's marine laboratory in Narragansett, 
said he wasn't surprised that there are no national rules.
    ``Each spill is so unique. One has to tailor a closure and opening 
for each event. And the events are always different. We've been very 
fortunate with spills in the Northeast. We didn't have to do a closure 
with the Argo Merchant because it was wintertime and all the oil was 
taken offshore. With the World Prodigy, very little got into the 
sediment and it evaporated much more quickly.''
    Everyone agrees that the North Cape's oil is dispersing. DEM's 
Borden hopes fishing will be allowed to resume this week.
    Fishermen, however, face yet another roadblock--another problem 
that combines science, biology and government regulations.
    Gillnetting--the most important type of commercial fishing that the 
State is trying to reopen--will be prohibited for the month of March in 
waters off Rhode Island.
    It's just a bad coincidence.
    Months ago, the New England Fishery Management Council voted to ban 
gillnetting for all this month in a large block of water off Rhode 
Island and Martha's Vineyard to reduce the accidental netting of a 
threatened marine mammal called a harbor porpoise.
    Fishermen accidentally kill between 1,200 and 2,900 of the 
porpoises in the Northeast each year, so the council agreed to restrict 
fishing in certain areas where the highest number of kills occur.
    No one realized last fall, when the council agreed to the ban for 
the month of March, that the State would be trying to reopen its 
fishery in the same water, at the same time.
                                 ______
                                 
      [From the Providence (RI) Journal Bulletin, March 14, 1996]
Fishing Ban Based in Area Polluted by Oil Spill between Pt. Judith and 
                              Block Island
                            (By Peter Lord)
    Fishermen are still barred from dragging for bottom fish or 
catching lobsters or shellfish in the oil spill area.
    The North Cape fishing ban was eased yesterday. The action by the 
Federal Government was the first letup in a 7-week-long prohibition 
against all fishing in a 250-square-mile area between Point Judith and 
Block Island.
    Federal fisheries officials, who had the final word, finally signed 
off on a State request to reopen the area to fishermen using hooks and 
lines or gill nets.
    The fishermen most affected by the partial reopening are charter 
boat operators and commercial fishermen seeking herring and squid.
    But fishermen are still prohibited from dragging for bottom fish or 
trying to catch lobsters or shellfish within the area tainted by the 
Jan. 19 spill of 828,000 gallons of home heating oil from the barge 
North Cape.
    The partial reopening reflects what scientists have discovered in 
thousands of tests and samplings after the oil spill: that the water is 
clean and the fish are OK, but lobsters from as far as six miles out 
still smell of oil and some oil remains trapped in sediments near the 
spill and under coastal ponds.
    ``We're making continual progress,'' said Ernest Julian, chief of 
the State Health Department's Division of Food Protection. ``It's slow 
progress. But look at the water temperature. It's so cold it's slowing 
the breakdown of the oil. It's like putting something in the 
refrigerator; it takes longer to spoil.''
    Julian and other State officials recommended the limited reopening 
a month ago. Since then there has been growing tension between State 
and Federal bureaucrats over the delays in obtaining Federal approval.
    The final decision lay with regulators and lawyers in the National 
Marine Fisheries Service, an arm of the U.S. Department of Commerce. 
Some observers attributed the delay to the fact that no State has ever 
imposed such an extensive fishing ban before, so no one had any 
experience in lifting such a ban.
    For weeks State officials said fishermen had been understanding and 
cooperative with the ban.
    But tempers flared this week at a meeting in Narragansett to tell 
fishermen about compensation programs available to help them recoup 
their losses during the ban.
    Fishermen responded bluntly: Forget about laying blame, they said. 
Reopen the fishing grounds.
    On Tuesday, DEM spokesman Peyton Fleming said, he asked a National 
Marine Fisheries Service spokesman what Federal official would have the 
final approval on lifting the ban. The spokesman gave him a name, 
Fleming said, but refused to give him the person's telephone number.
    ``I told him that people up here are getting really impatient,'' 
Fleming said. Also on Tuesday, Fleming said, DEM Director Timothy R.E. 
Keeney called the Federal agency's general counsel and ``read him the 
riot act.''
    Sen. John H. Chafee and Congressman Jack Reed both said yesterday 
that they had been pressing the Federal fisheries people in recent days 
to expedite their decision. Reed said he met with Rollie Schmitten, 
director of the National Marine Fisheries Service, on Tuesday to urge 
him to make a decision.
    Yesterday afternoon, Schmitten officially lifted the ban. He issued 
a statement from Washington saying, ``We've moved as quickly as 
possible to guarantee this reopening strikes the delicate balance 
between providing fishing opportunities and yet ensuring Rhode Island's 
seafood is safe and wholesome.''
    Schmitten pledged to continue working with State officials on 
efforts to reopen the remaining fisheries.
    Governor Almond called yesterday's action ``a major step forward in 
getting Rhode Island commercial fishermen back to work.''
    Reed and Chafee said they continue to be anxious about the fact 
that the shellfishing beds are still closed.
    ``While I am certainly pleased by this first step toward a complete 
reopening of Rhode Island waters to fishing, each day that the grounds 
remain closed to other types of commercial fishing represents an 
enduring economic hardship for our State,'' Chafee said.
    It has been more than 7 weeks since the North Cape ran aground at 
Moonstone Beach and State officials jumped into a bureaucratic morass 
by imposing the fishing ban.
    Yesterday Federal officials confirmed that they were officially 
closing a 28-square-mile area southeast of Block Island to lobstering 
because lobsters in the area were being brought up with oil odors.
    The State requested the closure a month ago, according to the 
National Marine Fisheries Service, and has informally enforced it with 
patrol activities.
    Julian said yesterday that a closed area near Brenton Reef is 
looking ``pretty good'' for lobstering right now and may be the next 
candidate for reopening. But he declined to guess when any other bans 
will be lifted.
    Meanwhile, more samples are being collected. Water samples were 
taken yesterday from Point Judith Pond. The results should be available 
in a few days.
                               __________
            Statement of Frank Blount for Gail Frances, Inc.
    My name is Frank Blount and I appreciate the opportunity to address 
you this evening on behalf Gail Frances, Inc. My wife and I have been 
for many years the owners and operators of the Frances Fleet, three 
vessels that operate year-round out of the port of Galilee in 
Narragansett. Our business is based on charter fishing trips, where one 
of our boats is rented and daily fishing trips, which usually carry a 
large number of passengers.
    The winter season of 1996 started great, but then the Spill hit us 
hard and had a tremendous impact on our charter and daily fishing 
business. Regular customers, scared away by the closures and negative 
press, went fishing in other ports in New York, Connecticut, and 
Massachusetts. Charter trips were canceled one after another as groups 
expressed concern about the effect of the spill and the closures. 
Unfortunately, we could do nothing to counter all the negative 
publicity. We even had to shut down our restaurant due to the dwindling 
number of fishermen.
    Our claim was first submitted to Turnaboat, who was responsible for 
the spill. We sent them a detailed analysis of our entire claim, 
prepared by an accountant. We also sent them corporate tax returns, 
financial statements, calendars documenting passenger counts, letters 
supporting charter cancellations, invoices for trade shows, and other 
pertinent information. Amazingly, they kept asking us for more and more 
information, like copies of our leases and salary information, that was 
entirely duplicitous of what we'd already given. We gave them what they 
wanted anyway, and tried to negotiate a fair settlement. Finally, about 
18 months after the claim was first submitted, which is 12 months 
longer than they have under the law to decide our claim, they only 
offered us a fifth of what our damages were. It is clear to us now that 
they never intended to fairly compensate us for the damage they did. 
They said ``the ban on reel fishing was lifted on March 23, 1996,'' so 
they didn't want to pay anything after that. The funny thing is, people 
were not lined up outside our boats to go fishing on March 24. 
Everything was not back to normal.
    This same claim with the same exact documents given to Turnaboat 
was then submitted to the National Pollution Fund in August 1997 A 
month later, despite the fact that our claim had grown to over 200 
pages, the Fund demanded even more documents that wholly duplicated the 
original claim. We had already given them compiled financial statements 
prepared by certified public accountants for 1993, 1994, and 1995, but 
now they wanted bank statements for every month in those years. We had 
already given them copies of our tax returns for 1993, 1994, and 1995, 
but now they wanted us to make more copies and re-sign them in ink, 
something a court would not even do. The IRS doesn't give signed copies 
back! It seems like from the beginning, the Fund had a bias against us. 
Nevertheless, after much time and effort, we gave the Fund exactly what 
they wanted.
    All of this information was apparently still not enough for the 
Fund, as they insisted on a meeting I had no choice but to attend for 
fear of harming my claim. In February 1998, my wife and I met with 
representatives of the Fund, and thoroughly discussed our claim. We 
responded to numerous questions at this meeting that could have been 
answered by a thoughtful review of all the documents we already gave 
them--they asked us questions about documents they already had.
How Payment For Our Charter Business Was Avoided
    Incredibly, on March 1998, a month after the meeting, the Fund 
wrote a letter that demanded even more information. After asking for 
and receiving cancellation letters from every charter client, the Fund 
apparently decided that we also had the obligation of supplying the 
phone number of every individual who canceled a charter trip. We were 
amazed by this demand. We had already sent the Fund eight letters 
signed by each of the canceled charters that clearly stated that the 
Spill caused the cancellation. But that wasn't enough for the Fund. 
They wanted us to track down and give them the telephone number of 
every person who canceled with us. Where else does a victim have this 
burden?
    We nevertheless again tried to meet the excessive demands of the 
Fund by providing a charter history from our records for most of the 
clients who canceled, but that wasn't good enough, either. On July 27, 
1998, almost a full year after the claim was sent to the Fund, and 6 
months after they are supposed to come to a decision, its offer to Gail 
Frances for all of our lost charters was zero. We documented a claim 
for over $50,000 for those lost charters, and the Fund offered us 
nothing.
How Payment For Our Daily Fishing Business Was Avoided
    As incredible as that outright denial was, the Fund also managed to 
come up with a brand new idea to reduce their offer for the part of our 
claim for lost daily passengers. The Fund told us that we would not be 
compensated for lost passengers on days that the wind reached 25 mph or 
more, apparently because it decided that even if the Spill had not 
occurred, the weather would have kept many passengers away. They 
subtracted forty passengers from our total lost passengers for every 
day that the wind reached 25 mph. By their calculations, 356 passengers 
would not have fished in 1996 based on weather alone, so the Fund 
reduced its offer by another $15,000.
    The Fund's methods are madness. The fact is, wind records from the 
Point Judith Coast Guard Station and the Block Island Airport 
demonstrate that we carried 189 passengers in 1995 on days that the 
Fund would have credited us with none. Furthermore, the Fund subtracted 
forty passengers from our total for days like February 17, 1996--a day 
on which the wind reached 25 mph only once, when it was 25.3 mph at 
midnight! I couldn't believe that the Fund was basically telling us 
that less than a month after 800,000 gallons of oil had spilled, it was 
really the wind at midnight that was keeping people away from the 
water!
    The money the Fund did offer us doesn't come close to the losses we 
actually suffered. Its flat-out wrong for the Fund to desperately 
search for ways to avoid making us whole. It seems to me that the only 
difference between the National Pollution Fund and Turnaboat is the 
letterhead of each denial we receive. Why should we have to go through 
the same process twice?
    It's been 2 years and hundreds of pages since we first made a claim 
for our damages from this oil spill, and we still haven't gotten a 
dime. Victims deserve more from a process specifically created to 
compensate them.
                               __________
                Statement of J. William W. Harsch, Esq.
    The Oil Spill Liability Trust Fund (``Fund'') is generally 
understood to have been set up to reimburse those suffering losses as a 
result of oil spills. There is no question that the massive Rhode 
Island oil spill which occurred on January 19, 1996 caused enormous 
damage and resulted in great financial loss.
    The process which was set up after the spill to assess and 
reimburse claims became a problem almost at once. it appeared that 
those handling the reimbursement process, or at least some of them, 
felt that their role was an adversarial one and one in which they 
should seek to settle claims for the lowest possible dollar amount. 
Anyone who felt that their claim was not being treated fairly had 
recourse to an intimidating and drawn-out court process or to 
submitting a claim to the Fund.
    Reports on the experiences of individuals and business entities in 
seeking to collect damages from one of these three sources vary 
considerably. However, the bottom line is that the claims processing 
mechanism set up by the owners and their insurers, quite naturally, 
had, as one of its objectives, keeping the claims payment numbers as 
low as possible and therefore resisting claims or settling for reduced 
amounts.
    The court process is by definition adversary. While the law does 
provide avenues for recovery, this is generally not a speedy or ``user-
friendly'' process.
    The question then presented is whether the third alternative, the 
Oil Spill Liability Trust Fund, would represent a somewhat different 
and more accessible relief and recovery process. It is my belief, from 
a review of the statute and its background material, that the Fund was 
basically set up to provide a speedier and more impartial relief 
mechanism.
    On the one hand, this would be helpful to those seeking recovery in 
that the process would be less burdensome, hopefully more prompt, and 
less adversarial. On the other, it would serve to aggregate claims and 
generally develop more clout in seeking eventual recovery from those 
responsible for the damages and their insurers.
    Either as a result of administrative misunderstanding of 
congressional intent, or conservative administration of the Fund, or 
difficulties with the present statutory language as drafted, this does 
not appear to have turned out to be the case. You will hear a good deal 
of testimony, I am sure, on the subject of the Fund's handling of 
direct damage claims. This is one area which merits the committee's 
attention. I would like to put before the committee another area of 
difficulty as follows.
    I believe that the Fund has considerable difficulty, both 
conceptually and operationally, in dealing with indirect and 
consequential damages occasioned by a spill such as this one. I believe 
that there can be no question that oil spills, certainly larger oil 
spills, create injuries and damages far beyond the area of immediate 
and direct impact. Like ripples on a pond, the impact spreads to 
secondary and tertiary businesses and activities.
    It is my belief that the U.S. Congress intended the Fund to be 
capable of handling the entirety of damages reasonably attributable to 
an oil spill. If this were not the case, the result would be that those 
responsible for the spill would escape a portion of the damages which 
they inflicted, and would in effect transfer the cost of those damages 
from themselves to those who were in fact injured.
    A typical insurance company will use an adverse and skeptical 
process to resist all claims. The less direct the claim, the more the 
skepticism and hostility. The area of consequential damages then 
becomes one which I believe should be of particular concern to the 
Fund. The job of the Fund, in addition to handling promptly and with 
reasonable sympathy those damages which are direct and relatively easy 
to establish, should also be to respond to damage claims in the 
category of indirect injury.
    Such claims would include reduced access to resource supplies 
because of contamination, loss of market, loss of income from those 
normally involved in providing product or services in the area (and to 
the resource) affected by the oil spill. Naturally, at some point, the 
indirect and consequential impacts of an oil spill will become distant, 
relatively small, and difficult to ascertain. That should not mean that 
the Fund should not have a well-established mechanism for dealing with 
indirect, partial and consequential damages. Further, it should not 
mean that the process for dealing with such damages becomes very time-
attenuated.
    On the plus side, there is no question that having the Fund 
available is an enormous positive contribution to dealing with the 
impacts of an oil spill and to requiring those responsible for damages 
to pay for them. Further, the contacts which I have had with the Fund's 
staff have been uniformly courteous, and the staff has certainly 
attempted to be helpful and responsive.
    However, it would be my impression that the Fund legislation 
requires further attention to clarify the intent that there be coverage 
of indirect and consequential damages, just as there is of direct 
damages. Perhaps above all, I urge this committee to consider whether 
the Fund is adequately defined and directed so as to provide what the 
insurance companies and the representatives of ship owners do not 
provide, and the court system cannot provide, which is a program 
directed to full recovery of damages by each and every business and 
individual affected by an oil spill. The Fund should, in my opinion, be 
clearly directed that it avoid behaving like an insurance company, 
avoid undue skepticism, inappropriately complex processes and over-
concern with the question of whether it, in turn, will be able to 
recover its payouts from the insurance companies covering the generator 
of the spill. I believe that Congress intended, and those affected by 
the spills clearly need 1) a process which will allow individuals and 
business enterprises to recover their damages and get back on their 
feet as promptly as possible; and 2) a process which is fully committed 
to the principle of seeing that there is full recompense and that, to 
the extent possible, those responsible for a spill pay for the damages 
caused.
                               __________
                       Statement of Raymond Nally
    My name is Raymond Nally and I appreciate the opportunity to 
address you today. My testimony is presented as an officer and 
shareholder of Betsy Enterprises, Inc. which owns and operates the 
Fishing Vessel Betsy. I will briefly describe my claim.
    The F/V Betsy is used for lobstering and uses circulating sea water 
to keep the lobsters alive. On or about January 19, 1996, the North 
Cape Barge ran aground and spilled oil into Block Island Sound. Due to 
the environmental contamination caused by the North Cape Barge oil 
spill (the ``Spill''), on or about January 20, 1996, a large portion of 
Block Island Sound was closed to lobstering (hereinafter referred to as 
the ``closed area'').
    At the time of the Spill I had about 40 trawls with a total of 960 
pots in the water in various locations around Block Island Sound, with 
the majority located outside of, but within one mile of the closed 
area. After the Spill I was unable to tend these traps because my 
crewhand quit on account of the Spill. I normally remove my traps at 
this time of the year from areas that I knew to be conflicted, since I 
knew that my pots would not be safe if left in place. I could not 
remove the pots however, since I was unable to retain another crewhand 
because of the situation created by the Spill. The market for crewhands 
had been effectively cornered by Eklof Marine the party responsible for 
the Spill--who supplied crewhands with partial payments as compensation 
for damages from the Spill and who also employed many of these 
deckhands in conducting response actions due to the Spill.
    I would have had to spend twice the time and energy to look for my 
gear without the assistance of a crewhand. It was simply not practical 
from a business or personal safety standpoint to attempt to retrieve my 
pots alone. Even if I had been able to secure a deckhand, I would have 
had to travel through the closed areas to tend my traps and any 
lobsters I caught would have to be kept alive without the assistance of 
my water tanks, since I could not use the contaminated sea water in my 
circulating sea water system. It is my belief that any lobsters caught 
would have died during transportation without the use of circulating 
sea water.
    When I was finally able to get someone to help me tend my gear, I 
discovered that 11 of my trawls were missing. I strongly suspect that 
the 264 pots on these 11 trawls were destroyed by draggers who were 
forced outside the closed area following the Spill. I valued the cost 
of these lost trawls to be 510,736.00.
    After my claim was denied outright by Turnaboat, the insurance 
adjuster for Eklof, my claim was submitted to the Fund on March 19, 
1998. I have been told by my lawyers from Kirkpatrick & Lockhart that 
my claim was the only claim they submitted to the Fund that wasn't 
assigned to an adjuster for resolution. My claim was instead handled by 
NPFC Legal who denied my claim in its entirety in a letter dated August 
6, 1998. Their reason for the denial, if I may quote, was:
    ``. . . the proximate cause of the damage to your client's fishing 
equipment would not be the oil spill incident; rather it would be 
intervening action of the draggers which proximately caused the 
damage.''
    This is wrong. My pots were in perfectly good condition before the 
Spill. Because of the Spill, and its effect on manpower, its closure of 
the port, its restriction on use of water over a wide area and its 
forcing of all fishermen out of a wide area--my pots were destroyed or 
disappeared. Was it some draggers? I don't really know because I wasn't 
there and they did not leave any evidence. There is one thing I do 
know: If there had not been an oil spill, I would not have lost 
$10,736.00 worth of gear. And if it was actually the actions of some 
draggers that caused me to lose my gear, I can tell you now that were 
it not for the Spill, I would have removed my gear before the damage 
could occur, just like I did in previous years.
    I thank you for this opportunity to speak.
                               __________
              National Pollution Fund Center News Release
       coast guard provides information on t/b north cape claims
    Washington--The U.S. Coast Guard National Pollution Funds Center 
(NPFC) announced today the availability of information concerning the 
methodology that it is utilizing to adjudicate or measure lost profit 
claims from lobstermen that occurred from damages arising from the T/B 
North Cape oil spill of January 19, 1996. The information will be 
available as a hand out at the hearing held on December 10, 1998 by the 
Committee on Environment and Public works of the U.S. Senate in 
Narragansett, Rhode Island.
    The NPFC is also providing information concerning the impact of the 
3-year statute of limitations on potential claimants that were damaged 
by the oil spill.
    Copies of both documents are appended. They will also be available 
on NPFC's web site at http:/www.uscg.mil/hq/npfc/npfc.htm.
    Both documents are provided in an effort to address questions which 
have arisen concerning these issues. For additional information 
concerning the documents please contact, Ms. Linda Burdette, Chief 
Claims Adjudication Division, National Pollution Funds Center, (703)-
235-4801.
 information concerning statute of limitations and the t/b north cape 
   spill provided by the u.s. coast guard's national pollution funds 
                        center 10 december 1998
    The U.S. Coast Guard National Pollution Funds Center (NPFC) 
announced today that any person who plans to present an OPA oil spill 
incident claim for damages arising from the T/B North Cape oil spill of 
19 January 1996, is advised that the claim must be presented to the 
NPFC within 3 years after the date on which the injury and its 
connection with the spill were reasonably discoverable with the 
exercise of due care. This does not mean that the timeframe for 
submitting claims to NFPC ends on 19 January 1999, however potential 
claimants do need to know the general conditions that start the clock 
for the 3-year statute of limitations.
    All OPA damage claims arising from the T/B North Cape oil spill 
must be first presented to the responsible party, Eklof Marine. If the 
responsible party denies the claim or fails to settle the claim within 
90 days, the claimant may present the claim to the NPFC. While the 
responsible party may choose to accept and settle claims after the 3-
year period has elapsed, the NPFC cannot waive the 3-year statutory 
limit for claims presented to the NPFC for payment from the Oil Spill 
Liability Trust Fund.
    The circumstances of each claim will determine when the 3-year 
period starts. It is possible that a given claimant may have more than 
one injury from a spill, each of which is discovered or reasonably 
discoverable at a different time. So a claimant may have separate 
claims with different 3-year periods for submission.
    OPA damages for which claims may be submitted include loss of 
profit damages. In general, a loss of profit injury is reasonably 
discoverable no later than when, in the course of its normal business 
accounting practices, or otherwise as required by law, the claimant 
determines, or is required to determine, business losses for a given 
period. But if a business in fact discovers it suffered a loss at an 
earlier date, that date will control. In the absence of other 
information as to when a loss of profit or earning capacity was in fact 
discovered, the NPFC may rely on the date of relevant income tax 
filings to establish the date the loss was reasonably discoverable.
    The connection of the injury to the oil spill also will be 
determined by the circumstances. The connection may be reasonably made 
when the injury is discovered or discoverable. For example if your boat 
was oiled by the spill and you had it cleaned the next week and have 
not submitted a claim, the statute of limitations is quickly coming to 
an end. However in some circumstances the connection may be reasonably 
discoverable only at a later time because, for example, information 
about the spill or its impact was not available until a later time.
    Because the circumstances of each claim will determine when the 3-
year period starts for that claim, the NPFC cannot provide a single 
date to begin the 3-year period that will apply to any particular claim 
or class of claims. The only certainty is that the period begins no 
sooner than the initial date of the spill; therefore any claim 
submitted within 3 years after the initial date of the spill will 
certainly be timely. Beyond that, the best guidance the NPFC can offer 
to potential claimants is that they not delay submitting a claim for a 
period of years. Such delays will only increase the risk that an 
otherwise valid claim may be denied in whole or in part solely because 
it is submitted late.
    Presenting a claim to the NPFC does not preclude a claimant from 
continuing to pursue settlement with the responsible party. So 
claimants may submit a claim to the NPFC to meet the 3-year requirement 
while still pursuing a settlement with the responsible party. Of 
course, the claimant cannot be paid twice for the same damage.
                                 ______
                                 
Measurement of Lost Profits Claims by Lobstermen Arising from the North 
                             Cape Oil Spill
    us coast guard national pollution funds center--10 december 1998
    The following is an explanation of the National Pollution Funds 
Center's (NPFC) methodology for measurement of lost profits claims 
filed by lobstermen in Point Judith, Rhode Island. The lobstermen were 
prevented from fishing during part of 1996 after the oil spill from the 
North Cape impacted their fishery. NPFC has concluded that damages did 
occur to the lobster industry as reflected by statistics indicating 
substantially reduced catch levels after the spill and into late summer 
of 1996 at which point statistics indicate that catch levels returned 
to previous year levels. This methodology is intended to measure the 
lost profits and earning capacity suffered by lobstermen during the 
period from the spill until late summer 1996 by taking into account the 
seasonal nature of the lobster industry, a benefit for additional 
effort expended by some individuals during 1996, and the varying levels 
of success among lobstermen in the area historically. Essentially, the 
methodology applies 1995 performance of claimants to 1996 effort to 
calculate an expected 1996 profit. Claims paid are the difference 
between expected profit and lower actual profit, adjusting for saved 
expenses.
Methodology: (Example attached)
    (1) The methodology uses Rhode Island DEM statistics and quarterly 
catch historical data to calculate the Average pounds of marketable 
lobster in each trap haul (average catch per trap-haul) on monthly 
basis. The average catch per trap-haul is calculated on a monthly basis 
to account for the seasonality of lobster fishing.
    (2) The average catch per trap-haul is then multiplied by the 
Number of traps that are checked or ``hauled'' on any given trip. This 
number will vary for each fisherman; our example uses 300 traps per 
trip. The number of trap-hauls in 1996 will be revised to consider 
traps retired, sold or purchased. If additional traps are proven to 
have been purchased in 1996, we will detente the maximum number of 
traps that can be hauled per trip for each claimant. The number of 
trap-hauls is multiplied by the 1996 seasonally adjusted average catch 
per trap-haul to derive the 1996 Expected Catch per trip.
    (3) To determine the 1996 Total Expected Catch the 1996 Expected 
Catch per trip is multiplied by the number of trips. During the fishing 
closure due to the spill, the number of trips for 1996 is based on the 
actual number of trips made for the same period in 1995 as the 
determined loss period. However, for periods when the fishing areas 
were no longer closed due to the oil spill, the number of trips is 
based upon settlement sheets or receipts provided by the claimant.
    (4) The 1996 Total Expected Catch is then compared to the 
lobstermen's previous years catch in relation to the average 
lobsterman's catch, to account for the experience of the individual 
lobsterman, to calculate the 1996 Projected Catch. Expected catch for 
1995 is compared with the actual catch in 1995 to calculate the 1995 
Monthly Catch Variance Percentage. Expected catch for 1995 is 
calculated in the same manner as expected for 1996. We consider that 
the claimant's 1995 catch percentage variance will be the same for 
1996. For example, if the claimant's settlement sheets or receipts show 
that they normally exceed this calculation (variance greater than 100 
percent), we will adjust their expected catch upward to calculate 
projected catch.
    (5) The 1995 Quarterly Average Price Per Pound for Point Judith was 
provided by a New England scientific expert.
    (6) The 1996 Projected Monthly Stales is calculated by multiplying 
1996 Projected Catch by the corresponding 1995 Pt. Judith quarterly 
average price per pound.
    (7) Actual Sales for 1996 are subtracted from projected sales for 
1996 to calculate Total Lost Rules for 1996.
    (8) Saved Expenses (for example, fuel, bait and crew-share) are 
calculated as a percentage of sales. Amounts are based on the 
claimant's 1995 Income Tax Return. During the closure due to the spill, 
we calculate saved expenses as a percentage of lost sales. Any 
additional expenses incurred during that time will also be considered.
    (9) Saved Expenses are subtracted from 1996 lost sales and 
additional expenses are added to calculate 1996 Lost Profits.
Documentation Requirements
    Specific information is needed from the claimant in order to 
utilize this methodology to calculate 1996 lost lobster income. We do 
not require that the information be provided in a specific form or 
format. We are willing to assist the claimant in assembling the 
necessary information in order to adjudicate claims. The information 
requirements and the rationale for the requested information is 
provided below:
    (1) FISHING LICENSE: Establishes a claimant's eligibility and 
fishing area during the period of loss.
    (2) VESSEL DOCUMENTATION & CREW INFORMATION: For 1996 establishes 
where the vessel can legally fish and how crewmembers are compensated.
    (3) FEDERAL INCOME TAX RETURNS: For 1993, 1994, 1995, 1996. 
Establishes non-continuing expenses (bait, fuel, etc.), and confirms 
that fishing income reported on the returns corresponds with settlement 
sheets or receipts.
    (4) DOCUMENTATION ON NUMBER OF TRAPS, TRAPS HAULED PER TRIP AND 
POUNDS CAUGHT MONTHLY FOR 1994, 1995 & 1996: Shows where claimant's 
traps were located during the course of the year, and whether fishing 
losses resulted from the oil spill. This information is used to project 
the amount of lost income due to the spill, and to account for 
increased effort, seasonality and new equipment, etc.
    (5) DOCUMENTATION FOR NEW TRAPS FOR 1996: Demonstrate claimant's 
intent to expand his business prior to the oil spill.
    (6) A MEETING WITH THE CLAIMANT: Once we and our contractor have 
the above information and have had an opportunity to review it, our 
contractor will meet or perform a telephone interview, if necessary, 
with the claimant to resolve any questions regarding the information 
provided.

                                                                                 NATIONAL POLLUTION FUNDS CENTER
                                                                          Example 1996 Lobster Lost Profits Calculation
                                                                                        December 8, 1998
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Sample Calculation of Lost Lobster 1996 Income
              Description               --------------------------------------------------------------------------------------------------------------------------------------------    Total
                                          January    February    March      April       May        June       July      August    September     October      November     December
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(1) 1996 Seasonally Adjusted Average         0.262      0.262      0.262      0.877      0.877      0.877      3.364      3.364        3.364        1.461        1.461        1.461
 Catch (in Pounds) Per Trap-Haul.......
  (2) Multiplied by: The Number of Trap-       300        300        300        300        300        300        300        300          300          300          300          300
   Hauls...............................

1996 Expected Catch Per Trip...........      78.72      78.72      78.72     263.01     263.01     263.01   1,009.11   1,009.11     1,009.11       438.35       438.35       438.35
  (3)Multiplied by: Number of Trips....          4          4          4          6          6          6         12         12           12            8            8            8

1996 Total Expected Catch..............     314.90     314.90     314.90   1,578.07   1,578.07   1,578.07  12,109.31  12,109.31    12,109.31     3,506.83     3,506.83     3,506.83
  (4) Multiplied by: 1995 Quarterly         104.00     104.00     104.00      95.00      95.00      95.00     120.00     120.00       120.00        75.00        75.00        75.00
   Catch Variance Percentage...........    percent    percent    percent    percent    percent    percent    percent    percent      percent      percent      percent      percent

1996 Projected Catch...................     327.50     327.50     327.50   1,499.17   1,499.17   1,499.17  14,531.17  14,531.17    14,531.17     2,630.12     2,630.12     2,630.12
  (5) Multiplied by: 1995 Quarterly          $4.02      $4.02      $4.02      $4.02      $4.02      $4.02      $3.01      $3.01        $3.01        $3.16        $3.16        $3.16
   Average Price Per Pound.............

1996 Projected Sales...................     $1,317     $1,317     $1,317     $6,027     $6,027     $6,027    $43,739    $43,739      $43,739       $8,311       $8,311       $8,311     $178,180
  (6) Less: 1996 Actual Sales..........         $0         $0         $0         $0     $1,000     $2,400    $25,000    $44,500      $44,500       $8,500       $8,500       $8,500     $142,900
                                        --------------------------------------------------------------------------------------------------------------------------------------------------------
(7) Total Lost Sales...................     $1,317     $1,317     $1,317     $6,027     $5,027     $3,627    $18,739    No Loss      No Loss      No Loss      No Loss      No Loss      $37,368
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(8) Less Saved Expenses................                  Fuel       5.00       $499
                                                         Bait    percent       $798
                                                                    8.00
                                                                 percent
                                                                         ------------
    Total Saved Expenses...............                                      $1,267
================================================================================================================================================================================================
(9) Total Lost Profits.................  .........  .........  .........  .........  .........  .........  .........  .........  ...........  ...........  ...........  ...........      $36,071
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

                               __________
      Statement of Barry M. Hartman, Kirkpatrick and Lockhart, LLP
    Good Afternoon, Senator Chafee. Thank you for the opportunity to 
appear today.
    My name is Barry M. Hartman. I am a partner in the law firm of 
Kirkpatrick & Lockhart, LLP. I am here today my capacity as counsel to 
over 100 lobstermen and women, small businesses, and crew. MOST of 
these people have yet to be fully compensated for the severe economic 
losses Hat they suffered as a result of the North Cape Oil Spill on 
January 19, 1996.
    You will hear testimony today from four of our clients. Two are 
lobstermen, one used to run a small business on shore, and one operates 
a charter and daily fishing boat business. All share the common injury 
caused by the oil spill--their livelihoods were interrupted. They also 
share the characteristic of having tried and tried to recover for their 
losses, only to be turned down for no reason, or thwarted by 
unreasonable and some cases irrational demands by the responsible party 
and the Oil Pollution Act (OPA) Trust Fund.
    My testimony today will not address any individual clients. Rather, 
it will focus on the broader pattern and practices governing how the 
compensation system under the Oil Pollution Act of 1990 is functioning. 
Having now over 100 claimants for 3 years as a result of this spill I 
can sum up the compensation system in four words.

    ``It does not work.''

    Also, the process will not work unless the attitudes of the 
responsible parties and the administrators of the The Fund can be 
adjusted. By ``work'' I mean what Congress said when it passed OPA in 
1990:

    Finally, we make it easier for victims of oil spills to recover for 
    economic damages, natural resource damages, subsistence loss, and 
    others. They can seek reimbursement from the spiller or directly 
    from the $1 billion Federal Trust Fund. The 1978 Amoco Cadiz spill 
    off the coast of France was the biggest spill in history to come 
    ashore. The litigation on that spill is still going on after 12 
    years. and not one penny in damages has been paid. This bill will 
    make sure that that doesn't happen.

136 Cong. Reg. H6935 (August 3, 1990). Today, 3 years after the spill, 
    precious few have been fully compensated.
    Before explaining why this is the case, let me give you my 
perspective. I served as Acting Assistant Attorney General for the 
Environment Division in the United States Department of Justice during 
the Exxon Valdez spill. I was responsible for prosecuting that company. 
I was also the representative of the Justice Department in connection 
with the development of the Oil Pollution Act of 1990.
    One of the issues we focused on as of fleers of the court as well 
as law enforcers, was how to assure that victims of the spill were made 
whole wisdom having to fight well paid insurance company lawyers for 
years and years in court proceedings. The legislation that was crafted 
included an administrative process that was supposed to assure the 
quick and full payment of claims. I believed it would work. I was 
wrong.
    The OPA compensation process is not working for a number of 
reasons. First, it is not providing full compensation to injured 
parties in the timeframe established by law, and in many cases not at 
all. The regulations call for a decision by the responsible park within 
6 months. The Trust Fund is supposed to decide claims within 90 days. 
Of the claims that my Fox filed with the responsible patty for 
documented losses suffered by fishermen near the closed area, almost 
none have been decided, let alone decided within the 6-month time 
period. We have had claim pending with the Fund now for more than 1 
year. Not a sole one has been decided within 90 days.
    Second, both the responsible party and the Fund administrators are 
requiring more proof of losses than would be required in a court room. 
For example, if we went to court, we could use routine business records 
to show our losses. Neither the Fund nor the responsible party accepts 
these records. In some cases, they even made us create new ones. 
Similarly, if we went to court, we could use the sworn statements of 
our clients to prove their losses. Neither the responsible parry nor 
the Fund accepts These. If we went to court we could use copies of our 
tax returns as filed with the IRS to prove our losses. After some 
persuasion, the adjusters stopped rejected copies of these reins. If we 
went to court and the responsible park Nought that something over Man 
the spill caused our losses, the responsible party would have to prove 
that. Here, the responsible party and the Fund ignore our losses and 
demand Bat we prove beyond any doubt that nothing else could possibly 
or remotely have caused our documented losses. If we went to court we 
could prove future losses by projections based on historical 
experience. The responsible party and the Fund refuse to accept this. 
They take a ``wait and see'' attitude and have indicated that they mill 
nor pay any claim for any future time period. This is inconsistent with 
the regulations and the law.
    Third, the Fund is not providing the function that it is supposed 
to provide. The whole purpose of this compensation system is to get the 
responsible parry to pay. If it will not meet its obligations then the 
Fund is supposed to pay, and dozen sue the responsible party for what 
the Fund paid on its behalf. The fact that the law gives the Fund half 
the time that it gives the responsible party to make a decision (90 
days v. 6 months) reflects the notion that it should not start from 
scratch. Here, the Fund has admitted that it does start from scratch, 
functions exactly like an insurance company, and applies the same or 
higher standards of proof than what the responsible party applies. The 
insurance adjuster who considers claims for the responsible party has 
no obligation to claimants--only to the insurance company. The Fund may 
have a fiduciary duty to preserve the Fund for proper claims, but it 
also has a statutory duty to compensate victims when the responsible 
party fails to. In reality, it only preserves The Fund. Not a single 
one of the claims we have filed has been paid by the Fund. The people 
considering the claims for the Fund are insurance company adjusters. 
They work for a responsible party one week, and the Fund another.
    Fourth, the responsible party and the Fund are not adjudicating 
individual claims. They are applying secretly created legislative rules 
to all claims, regardless of the facts. Specifically, the responsible 
party has decided that no one with documented losses from fishing near 
but not in the closed area deserves more than 3.1 percent of their 
losses, regardless of the facts. My letter to the Director of the Fund 
outlining the absurd nature of this secret rule is attached as Exhibit 
A.
    Fifth, the delays in deciding claims are occurring because the 
responsible park and the Fund have erected barriers to payment, and 
have camouflaged them behind pretextual claims of not having sufficient 
documentation. (In one case, two bankers boxes of documents was 
insufficient). The law requires that the responsible party decide a 
claim within 6 months of receipt of the complete claim. It requires 
that the Fund do the same within 90 days of receipt of the complete 
claim. To avoid this, each routinely, upon receipt of the claim, writes 
a lever saying that it is missing information, and therefore is not 
complete. We submitted thousands of documents for our clients and few 
were considered complete. That occurred even though we provided EXACTLY 
what we were told to provide. In fact, before we filed our first claim 
we submitted a Freedom of Information Request to the Fund asking for 
specific examples of information that was used for approving a claim. 
Although the Fund initially refused to give us this, we ultimately got 
some information. We followed exactly what they told us to. It was not 
enough.
    Sixth, the responsible party and the Fund do not even look at what 
we provide before asking for more information. There have been 
literally dozens of instances when, after making a submission, we get a 
call asking for more information. We tell the caller he already has it.
    Seventh, are being asked for the same information in two, three and 
four forms. We provide tax returns that show actual net income. They 
ask for our books that were used to prepare the tax returns. We provide 
our books. They ask for documents and receipts to show our costs. We 
provide receipts and they ask for names of people mentioned on those 
receipts and other documents. We provide names, and they ask for phone 
numbers. It is ridiculous.
    Eighth, for 1996 and 1997 the claims process has apparently 
proceeding to adjudicate claims without regard to the draft Natural 
Resource Damage Assessment estimates of losses. While we think those 
estimates are woefully low (as explained below) the claims adjusters 
seem to think that there were and will be no losses at all.
    The attached Exhibit B documents the change in Gross Lobster Sales 
during 1995 through 1997 for 33 different RILA claimants represented by 
Kirkpatrick and Lockhart LLP (``K&L''). Each of these 33 have filed for 
lost profits during those years. These 33 claimants presented herein 
are a subset of all K&L clients, which in in turn is a subset of all of 
the lobstermen who fish the waters off Rhode Island. The following 
summarizes the lobster losses experienced by this small group of 33 
claimants:
      Using the analysis of Gibson et al. \1\ losses from the 
Spill in 1996 and 1997 for adult equivalents is projected as 45,847 and 
165,493 adult equivalents, respectively, for a total of 211,340 adult 
equivalents during 1996 and 1997.
---------------------------------------------------------------------------
    \1\ Gibson, et al., Estimation of Lobster Stranding Following the 
North Cape Oil Spill in Block Island Sound and Equivalent Adult 
Estimates and Stock Status of lobster Involved in the North Cape Oil 
Spill in Block Island Sound.
---------------------------------------------------------------------------
      Using the actual lobster catch figures of the 33 
claimants (converted from adult equivalents by applying an estimated 
$3.25/lb. and 1.25 lb./lobster) losses for the Spill are calculated as 
190,902 lobsters in 1996 and 243,912 lobsters in 1997, a total of 
436,814 lobsters lost. This total figure of actual lobster loss exceeds 
the projected loss by 225,474 lobsters or 107 percent.
      Moreover, during 1997 there were no closures of fishing 
grounds and the above 3 claimants demonstrably increased fishing 
efforts in an attempt to mitigate damage losses in 1997 amounted to an 
estimated 78,419 lobsters (+47 percent) more than projected by the 
NRDA.
    Finally, the adjusters are trying to make us prove negatives, and 
wholly ignoring what caused the damage. We show documented losses from 
lobstermen who fished quite close to the closed area. They say that we 
have to prove that nothing else caused the losses. They ignore the fact 
that the responsible party pled guilty to criminal conduct that caused 
the spill, and That:

    The National Transportation Safety Board determines that the 
    probable cause of fire damage aboard the tug Scandia and subsequent 
    grounding and pollution from the barge North Cape was the Eklof 
    Marine Corporation's inadequate oversight of maintenance and 
    operations aboard those vessels, which permitted a fire of unknown 
    origin to become catastrophic and eliminated any realistic 
    possibility of arresting the subsequent drift and grounding of the 
    barge. Contributing to the accident was the lack of adequate Coast 
    Guard and industry standards addressing towing safety.

    Our clients are fed up. We are probably going to reluctantly 
abandon the OPA process and file a lawsuit in court. I regret This 
course of action, and am frankly embarrassed to say that the process I 
helped create, and that I endorsed and convinced my clients to follow, 
just does not work--at least not the way it should.
    We to request that that the rules be changed to force the 
responsible party and the Fund to pay more promptly and without the 
improper resistance that exists today.
    Thank you.
                               __________
                                    Kirkpatrick & Lockhart,
                               Washington, DC 20036, July 13, 1998.

Daniel Sheehan, Director,
National Pollution Funds Center,
4200 Wilson Boulevard, Suite 1000,
Arlington, VA 22203-1804.

Re: North Cape Oil Spill

    Dear Mr. Sheehan: When the North Cape barge discharged its toxic 
cargo into the waters off of Moonstone Beach in Rhode Island on January 
19, 1996 (the ``Spill''), few sensed the awesome significance of that 
event. Experts from varied fields have made measurements, taken 
samples, counted populations, and generally worked to obtain a full 
understanding of the consequences of the Spill. Reports have been 
written and a Natural Resources Damage Assessment will one day be 
released for public scrutiny. However, at this point in time--over 2\1/
2\ years after the Spill--many of the Rhode Island fisherman have not 
been compensated at all for the harm they have suffered.
    We have represented well over 100 fishermen and businesses that 
were impacted, to one degree or other, by the Spill. In a frustratingly 
tedious process, we have pursued claims with Turnabout Services, Ltd 
(``Turnabout'') on behalf of these claimants. Although every claim has 
been fully and consistently documented, few have been settled quickly 
and equitably. Many had to be resubmitted to the National Pollution 
Funds Center (the ``Fund'' or ``NPFC'') for payment after being denied 
or offered ridiculously unfair and wholly unjustified offers by 
Turnaboat. Still others have been recently subsumed to Turnaboat or 
will be submitted soon. The dollar value of claims submitted to date to 
Turnaboat and the Fund that are still awaiting resolution is well over 
$3 million.
    We learned early on that there was no ``book'' or guidance from the 
Federal Government or private fisheries that could tell the lobstermen 
who fished the Rhode Island waters just what he should do after the 
Spill to save his livelihood. Each responded with his individual 
fashion, based upon what he thought would allow him to make a living at 
lobstering. After the closed areas were reopened, some lobstermen 
stayed in their historic fishery within the coastal waters that were 
closed after the Spill. Despite best efforts, the catch of many of 
these lobstermen plummeted by a third to a half of their pre-Spill 
catch.
    Other inshore fishermen, when they saw that their lobster traps 
produced a greatly reduced, or nonexistent catch, pulled their traps 
and went to areas outside the closure zone so at they could, in effect, 
find new grounds or ``chase'' surviving lobsters that might have 
migrated from the impacted area, and obtain at least some sort of 
catch. Of course, these fishermen had to compete with others who were 
also displaced by the Spill, and with those whose traditional fishing 
grounds were located outside the closure boundaries to begin with. In 
most every case, these displaced fishermen caught far fewer lobsters 
than before the Spill.
    The final group of fishermen, who were located outside the closure 
boundaries in the first place, were now faced with increased 
competition from the displaced fishermen, and consequently saw their 
catch become greatly reduced as well.
    Here is what we do know: The lobstermen who have stayed within the 
closure area; the lobster who have gone out of the closure area in 
whole or in part, and the lobstermen who have remained outside the 
closure area and now must compete with the displaced fleet, all have 
and are experiencing real losses in their livelihood because of the 
Spill. Nothing else explains why their catches have drastically 
decreased since January 19, 1996. Under the Oil Pollution Act of 1990 
(``OPA'') each is entitled to be made whole. In fact, instead of 
recognizing the probable causal relationship between the 1996 spill and 
the demonstrable 1996, 1997, and now 1998 losses, our clients are being 
required to prove their losses beyond doubt and to prove a negative--
that nothing else could possibly account for these losses.
    In this regard, while we recognize and accept the responsibility 
for documenting these losses, OPA does not require that losses be 
proved beyond a reasonable doubt, or otherwise to the degree required 
by a court of law. fact, that is exactly what the process was designed 
to avoid:
  Finally, we make it easier for victims of oil spins to recover for 
    economic damages, natural resource damages, subsistence loss, and 
    others. They can seek reimbursement from the spiller or directly 
    from the $1 billion Federal Trust Fund. The 1978 Amoco Cadiz spill 
    off the coast of France was the biggest spill in history to come 
    ashore. The litigation on that spill is still going on after 12 
    years, and not one penny in damages has been paid. This bill will 
    make sure that doesn't happen.

136 Cong. Rec. H6935 (Aug. 3, 1990) (statement of Rep. Jones during 
    adoption of conference report accompanying the Oil Pollution Act of 
    1990) (emphasis supplied).
Our Approach
    At the initial stages of our involvement with the claims process, 
our approach was straightforward. For each claimant we asks the 
following questions:
    What would a claimant have made if not for the Spill?
    What amount of damages would make that claimant whole?
    In answering these questions, we compiled the income of each 
claimant after the Spill, and then compared it with a ``base year, 
usually 1995 or an adjust version of 1995, that would stand as the 
income standard before the Spill. So if a claimant had earned net 
income of $100,000 before the Spill, and then experienced lower catches 
that resulted in a net income reduced to $80,000 after the Spill, we 
could conclude that the party had been damaged In the amount of 
$20,000, more or less, during that time period. Each claim was 
different and on some occasions we would factor in the historic growth 
trends of a business or an increase in lobster pots fished. But 
overall, the analysis was straightforward.
Turnabout's Approach
    Unfortunately, this simple analysis has been unduly complicated by 
Turnabout, the adjuster hired by the responsible party (Eklof Marine) 
to handle and minimize payment of claims. In a meeting at Turnaboat 
offices on June 11, 1998, after more than 2 years of repeated and 
duplicative demands that we document losses, Turnaboat disclosed for 
the first time that it was only authorized to pay claims for damages 
incurred outside the former closed areas at the rate of 3.1 percent 
regardless of individual proof of loss. Accordingly, a fisherman who 
has been forced out of his traditional fishing grounds by the Spill, 
and who attempts to mitigate damages (i.e., feed his family and pay the 
bills) by fishing outside the imaginary line drawn in the water in 
January or February 1996, and who can show that his income has 
decreased by $100,000 after the Spill, will be offered only $3,100 by 
the representatives of those who have caused this great harm to our 
waters.
    How does Turnabout justify this 3.1 percent rule? At the 
aforementioned June 11, 1998 meeting, Turnabout representatives cited 
the Cobb/Clancy report \1\ as establishing that about 107,000 adult, or 
near-adult, lobsters were killed in the immediate aftermath of the 
Spill. We have found no reference whatsoever to a lobster mortality 
rate of ``107,000'' in the Cobb/Clancy report. In any event, Turnabout 
then applies a ``harvest rate'' of 9.5 percent to to arrive at an 
adjusted figure of 101,650 lobsters lost. Next it multiplies this 
figure by 1.25 lbs./unit to arrive at 127,062 lbs. of lobster lost. 
Turnabout divides this lost lobster figure by what it deems to be the 
local 1996 lobster catch in Area 539 during 1996 to arrive at the 3.1 
percent figure. This approach is based on spurious me of data deigned 
solely to pay the injured fisherman the least amount possible.
---------------------------------------------------------------------------
    \1\ North Cape Oil Spill: An Assessment of the Impact on Lobster 
Populations. J.S. Cobb; M. Clancy January 5, 1998.
---------------------------------------------------------------------------
NPFC Approach
    In this same vein, the NPPC, through and with its adjuster Hull & 
Cargo Surveyors, Inc., has finalized a settlement offer on one claim to 
date. In that claim, the final 5 months of damages have been totally 
denied by applying information that is as faulty and counterintuitive 
as the Turnaboat 3.1 percent position. Attached as Exhibit A is a table 
that purports to show the ``Summary of Monthly Lobster Landings 
(pounds)--Point Judith'' for the years 1995 and 1996. This information, 
the Table states, was obtained from the National Marine Fisheries 
Service, and alleges that landings at Pt. Judith have increased by 15.9 
percent after the Spill. Based on this, Hull & Cargo chose to ignore 
tax returns and other data that show our clients have actually incurred 
great losses, concluding that if the landings at Pt. Judith increased, 
the availability of lobsters to inshore lobstermen must have increased 
as well. As explained below, that is simply nor the case.
    While we may infer that the intent of adjusters working for the 
Responsible Party is to pay the absolute bare minimum on all claims, we 
are greatly concerned that the Fund appears to be adopting the same 
approach and deciding, claims by ``rule'' rather than on their merits.
Impartial Analysis
    We believe the best and most accurate approach remains that which 
the law and regulations contemplate: each claimant documents his own 
losses. However, if one is to even consider general data to consider 
claims, at the very least relevant data should be considered and it 
should be impartial, and reasonably accurate. For example, there is an 
ongoing assessment of the Rhode Island lobster fishery that culminates 
each year in a report by the Rhode Island Division of Fish and Wildlife 
(the ``RIDFW'') titled ``Rhode Island Lobster Research and Management 
Project Annual Report/Completion Report.'' This report results from the 
work of Thomas E. Angell, a lobster biologist with the RIDFW. \2\ Mr. 
Angell has produced a table that breaks out the Area 539 Landings from 
the Total Rhode Island Landings. This table is attached as Exhibit B. 
Attached as Exhibit C is a chart delineating the boundaries of Area 
539.
---------------------------------------------------------------------------
    \2\ W. Angell is the project leader and coordinator for the Rhode 
Island Marine Fisheries Council (RIMFC) Lobster Industry Advisors' 
Committee and a member of the Atlantic States Marine Fisheries 
Commission (ASMFC) Lobster Plan Development Team (PDT), ASMFC Lobster 
Technical Committee, and participates in the Stock Assessment Workshop/
Stock Assessment Review Committee (SAW/SARC) process. Moreover, Mr. 
Angell's job objectives as defined in the above-referenced Annual 
Report are: (1) to process, analyze, and report on biological and 
population statistics collected during this project, and to 
characterize the Rhode Island commercial fishery for lobsters; and (2) 
to continue a data collection program to obtain biological and 
population statistics on Rhode Island lobster resources and to 
characterize the Rhode Island commercial lobster fishery.
---------------------------------------------------------------------------
    The table at Exhibit B shows two distinct trends:

    1. The Total Rhode Island Landings have increased after the Spill; 
    and
    2. The Area 539 Landings (Inshore) have decreased by about 33 
    percent in each of the years after the Spill.

    By and large, the claimants we represent attempt to earn their 
livelihood in or very near Area 539. As stated, many have documented 
real losses from 25-50 percent within this area. Yet Turnaboat ignored 
their documented losses, ignored this study, and instead has decided to 
pay only 3.1 percent of any damages within Area 539 that are outside 
the former closure areas. Turnaboat bases this position on an 
``analysis'' indicating that only 101,650 adult, or soon to be adult, 
lobsters were killed by the Spill in Area 539. This ``analysis'' cannot 
stand the light of day when contrasted with losses suffered by 
lobstermen and the actual catch figures contained in Exhibit B, which 
reveal an overall reduction in adult, caught lobsters of one million 
pounds per year in Area 539 during 1996 and 1997. We fear that similar 
results will occur in 1998.
    The reason that the total Rhode Island Landings have increased is 
easily explained by the fact that the offshore fishing fleet, whose 
catch does nor occur in Area 539 but which are brought to Pt. Judith, 
has experienced a remarkably productive 1996 and 1997. \3\ Their 
success is being used by Turnabout to deny the severe damages 
experience by the inshore fishermen.
---------------------------------------------------------------------------
    \3\ Of course, inshore fishermen do not have the equipment or 
resources to ``compete'' with the offshore fleet.
---------------------------------------------------------------------------
    More than 2\1/2\ years after the Spill, little has changed. 
Contrary to the stated intent of OPA to ``make it easier for victims of 
oil spills to recover'' our clients have been forced into a defensive 
and adversarial position. Accordingly, on our side of the fence are 
lobstermen with damages that are easily provable using tax returns, 
financial data and affidavits. Some of these victims have had to 
declare bankruptcy in the aftermath of the Spill. Others have 
drastically curtailed expenditures necessary to maintain or upgrade 
their livelihood. On the other side of the fence are those found by a 
court of law to be responsible for the Spill and liable for their 
negligent and criminal behavior; those adjusting for the damages claims 
resulting from the negligent and criminal behavior; and those 
specifically directed by Federal law to avoid a repeat of the Exxon 
Valdez oil spin claims process. All these parties have ignored the 
unmistakable evidence of massive damage caused by the North Cape oil 
spill.
Conclusion
    The unequivocal factual data submitted for claimants and compiled 
by the Rhode Island Division of Fish and Wildlife and Thomas E. Angell, 
demonstrate actual losses well in excess of 3.1 percent. It is 
inconsistent with OPA for the Responsible Party and the Fund so demand 
detailed and extensive proof of losses, and then decide every claim 
based on demonstrably irrelevant data, and a 3.1 percent rule that is 
illegal and wrong. We request that the Fund reconsider the settlement 
posture it has taken to date regarding the Spill, and demand that the 
Responsible Party do the same. Otherwise, our clients may be forced to 
forego the demonstrably ineffective OPA process, and bring suit in 
court.
            Respectfully submitted,
                                          Barry M. Hartman,
                                        Thomas F. Holt, Jr.
                                           Peter N. McIsaac
                               EXHIBIT A
     ABC Lobster, Inc. North Cape Oil Spill Loss--January 19, 1996

                           SUMMARY OF MONTHLY LOBSTER LANDINGS (POUNDS)--POINT JUDITH
                                (Mandatory reportings by dealers to port agents)
   Information provided by John Spavins of the U.S. Department of Commerce--National Marine Fisheries Service
----------------------------------------------------------------------------------------------------------------
                                                                  Zone
                                   -----------------------------------------------------------------
               Month                                                          2 3-12       3 > 12       Total
                                      Unknown     0 Coastal   1 < 3 miles     miles        miles
----------------------------------------------------------------------------------------------------------------
1995:.............................
  January.........................       27,522                    11,613       14,002       19,718       72,855
  February........................        9,403                    10,245        7,239       13,430       40,317
  March...........................       56,590                     8,014        9,272       14,634       88,510
  April...........................       41,445                    42,112       16,071       23,909      123,537
  May.............................       68,342                    18,100       15,778       21,175      123,395
  June............................       54,639                    65,922       55,288       77,778      253,627
  July............................      235,298                   202,865      109,903       43,960      592,026
  August..........................      242,952                   125,060      130,821       55,046      553,879
  September.......................      304,094                   104,801      162,719       81,385      652,999
  October.........................      169,001                   101,273      127,163       71,825      469,262
  November........................      128,721                    93,240       50,593       10,119      282,673
  December........................       73,458                    49,054       12,962        2,592      138,066
                                   -----------------------------------------------------------------------------
Total 1995........................    1,411,465            0      832,259      711,811      435,571    3,391,146
================================================================================================================
1996:.............................
  January.........................       41,405        1,448        6,981        7,386        1,476       58,696
  February........................       35,090        2,142        2,754        3,178          632       43,796
  March...........................       46,438                     2,136        2,638          527       51,739
  April...........................       94,079                     6,750        6,115       26,207      133,151
  May.............................       63,413                   107,006       13,634        3,635      187,688
  June............................       96,218                    52,270       24,176        9,154      181,818
  July............................      224,293                    64,208      109,972       34,730      433,203
  August..........................      578,189                   150,049      207,499       82,998    1,018,735
  September.......................      217,559                   204,856       96,187       46,912      565,554
  October.........................      164,297                   197,495       59,422       23,767      444,981
  November........................      130,552                   101,259       41,858        8,371      282,040
  December........................       72,891                   413,220       35,585        7,118      528,814
                                   -----------------------------------------------------------------------------
Total 1996........................    1,764,424        3,590    1,309,024      607,650      245,527    3,930,215
----------------------------------------------------------------------------------------------------------------

                               EXHIBIT B

          Rhode Island Lobster Research and Management Project
                   NMFS Statistical Area 539 Landings
                      Rhode Island Inshore Landings
         (Data Source: NMFS Weighout/Canvass Landings Data base)
------------------------------------------------------------------------
                                    Area 539 Landings     Total Rhode
               Year                     (Inshore)       Island Landings
------------------------------------------------------------------------
1991..............................          4,388,120          7,445,169
1992..............................          3,010,084          6,763,086
1993..............................          3,246,286          6,229,001
1994..............................          3,577,553          6,474,399
1995..............................          3,151,915          5,363,810
1996..............................          2,104,604          5,579,874
1997..............................          2,135,065          5,587,678
------------------------------------------------------------------------

                                                       
                                                       
                                                       
                                                       
                                                       
                                                       
                                                       
                                                       
                                                       
                                                       
                                                       
                                                       
                                 ______
                                 
                                  Kirkpatrick and Lockhart,
                          Washington, DC 20036, September 16, 1997.

Daniel Sheehan, Director,
National Pollution Funds Center,
United States Coast Guard,
4200 Wilson Boulevard, Suite 1000,
Arlington, Virginia 22203-1804.

Re: 1996 North Cape Oil Spill Claim on Behalf of ABC Lobster, Inc. for 
    Damages

    Dear Mr. Sheehan: On behalf of ABC Lobster, Inc. (``ABC Lobster''), 
and pursuant to the Oil Pollution Act of 1990, 33 U.S.C. 
Sec. Sec. 2701-2761 (Supp. 1997), Kirkpatrick & Lockhart, LLP 
(``Kirkpatrick & Lockhart'') hereby submits the enclosed claim for 
damages suffered in the 1996 North Cape Oil Spill. Specifically, ABC 
Lobster seeks damages of $207,250.25 for lost profits and earnings 
capacity, embargoed lobsters and property rental for the period of 
January 19, 1996 through December 31, 1996. This claim does not include 
claims for long-term profits and earnings. Also, it does not include 
claims for the reasonable costs of assessing damages. ABC Lobster 
reserves the right to bring such claims in the future.
    The damages sought by ABC Lobster are the result of a 1996 oil 
spill off the coast of Point Judith, Rhode Island. Point Judith is the 
third largest fishing port on the east coast and generates millions of 
dollars of revenue. On January 19, 1996, the North Cape Barge, a barge 
operated by Eklof Marine Corporation, ran aground and spilled at least 
800,000 gallons of oil into Block Island Sound, located at Point 
Judith. The spill required that the entire port be closed. The local 
fishing community suffered significant property damage and loss of 
earning capacity as a direct result of the spill. The impact of the 
spill extended far beyond this direct area and is expected to impact 
the lobster and related populations for years to come. ABC Lobster 
seeks compensation for lost profits suffered by its seafood dealership 
caused as a result of the spill. Because of the spill, ABC Lobster was 
unable to purchase lobsters from fishermen to sell, either in wholesale 
or retail markets, and thus suffered severe losses.
    This claim was presented to Turnaboat Services, Ltd. 
(``Turnaboat''), the insurance company for Eklof Marine Corporation, in 
two parts. On May 31, 1996, ABC Lobster initially submitted a claim for 
$50,248.00 for its lost profits, embargoed lobsters and property rental 
from January 19, 1996 to April 30, 1996. Subsequently, on September 3, 
1996, ABC Lobster provided supporting information (settlement tickets, 
retail sales records, etc.) for its claim and extended it until June 
25, 1996. ABC Lobster's claim for January 19, 1996 to June 25, 1996 
totaled $71,784.25. Turnaboat made an insufficient offer on this claim 
of $49,699.88. Turnaboat refused to increase the amount of this offer 
because it disputed the amounts ABC Lobster claimed it was owed for its 
sales of lobsters in the wholesale market. ABC Lobster considers 
Turnaboat's insufficient offer a denial of its claim.
    Later, on May 14, 1997, ABC Lobster submitted its claim for lost 
profits from June 26, 1996 to December 31, 1996 for $135,466.00, making 
ARC Lobster's total claim $207,250.25. Turnaboat refused to evaluate 
this claim for the latter part of 1996, which ABC Lobster considers a 
denial of its claim. Thus, pursuant to 33 U.S.C. Sec. 2713(c), ABC 
Lobster now elects to present its claims to the Oil Spill Liability 
Trust Fund (``Fund'').
    In support of this claim and pursuant to 33 C.F.R Sec. 136.105, 
please find enclosed the following documents and information:

    1. A copy of the representation letter granting Kirkpatrick & 
    Lockhart the authority to file this claim on behalf of ABC Lobster 
    (Exhibit A);
    2. A copy of the National Pollution Funds Center Standard Claim 
    Form (Exhibit B);
    3. Affidavit of Albert B. Christopher, Jr. (officer and shareholder 
    of ABC Lobster) (Exhibit C);
    4. Identification information for ABC Lobster (Exhibit D);
    5. List of witnesses (Exhibit E);
    6. Copies of the May 31, 1996 and May 14, 1997 claims submitted to 
    Turnaboat on behalf of ABC Lobster (Exhibit F);
    7. Copies of all written communications between ABC Lobster and 
    Turnaboat (Exhibit G); and
    8. A summary of all oral communications between ABC Lobster and 
    Turnaboat (Exhibit H)
    As discussed in detail in these materials, ABC Lobster provided 
significant supporting documentation (settlement tickets, retail sales 
records, etc.) to Turnaboat in support of its claims. At the Coast 
Guard's request, we would be happy to supply copies of any or all of 
these materials. However, because these materials are quite lengthy, we 
have not provided copies herewith.
    Please do not hesitate to contact the undersigned if you have any 
questions. Thank you for your prompt attention to this matter.
            Respectfully submitted,
                                          Barry M. Hartman,
                                       Thomas F. Holt, Jr.,
                                           Linda L. Raclin,
                                        Elizabeth L. Smith,
                                        Kirkpatrick & Lockhart, LLP
                                 ______
                                 
                         U.S. Department of Transportation,
                                          U.S. Coast Guard,
                           National Pollution Funds Center,
                              Arlington, VA 22203, 27 October 1997.

Kirpatrick & Lockhart,
1800 Massachusetts Avenue NW
Washington, DC 20036.

    Dear Ms. Raclin: This is in response to the $207,250.25 claim 
submitted by ABC Lobster, Inc. for loss of profits and earning 
capacity, arising from the 19 January 1996 T/B North Cape oil spill. 
Before the National Pollution Funds Center (NPFC) adjudicates this 
claim, we request the following information from the claimant:
    (1) Monthly financial statements for the claimant's period of loss, 
and for the years 1995, 1994 and 1993.
    (2) According to Exhibit C of the claimant's submission, ABC 
Lobster states that it buys lobsters from ``inshore lobstermen'' and 
not from ``offshore lobstermen''. Please explain the difference between 
these two types of lobstermen. In addition. please explain and document 
why ABC Lobster considers lobster from ``offshore lobstermen'' 
unprofitable.
    (3) Accord to Exhibit C of the claimant's submission, ABC Lobster 
states that because of the oil spill, it shut down its retail counter 
on 11 March 1996 to undertake renovations on the counter that were 
completed sometime in mid-April. When did ABC Lobster intend to make 
these renovations. and what impact did it expect to have on the 
company's profits?
    (4) Regarding the ``mark-up'' of $1.50 per pound on lobster in ABC 
Lobster's analysis of lost lobster profits, please explain the purpose 
of the ``markup'', and how the claimant derived this figure.
    (5) The claimant asserts that estimated daily lobster sales 
Averaged $1,893 per day from January through April 1996. What were ABC 
Lobster's actual January lobster sales just prior to the oil spill?
    (6) Please provide the amount of lobster by pounds sold by ABC 
Lobster on monthly basis for 1996.
    (7) Please provide the dollar amount of lobster sales by ABC 
Lobster on a monthly basis for 1996.
    (8) Does ABC Lobster purchase lobster or any other types of seafood 
outside the State of Rhode Island? If not, why not?
    (9) Please provide the amount of fish and shellfish by pounds sold 
by ABC Lobster on a monthly basis for 1994, 1995, and 1996.
    (10) Please provide the dollar amount of fish and shellfish sales 
on a monthly basis for 1994, 1995 and 1996.
    (11) After the finfishing and shellfishing bans were lifted, how 
did the oil spill result in continue lost profits into the summer, fall 
and winter of 1996? Please provide with this explanation with 
supporting documentation.
    (12) Finally, we request all information ABC Company provided to 
the responsible party in support of this claim, that has not already 
been provided to the NPFC. We believe that it is in the best interest 
of the claimant, the responsible party and the NPFC that all parties 
have available all information used to adjust this claim.
    The claimant is in the best position to provide sufficient, 
supporting documentation needed to demonstrate that his losses resulted 
from an oil spill subject to the Oil Pollution Act (OPA). Pursuant to 
the Claims Regulations (33 CFR 136.105(a)), the claimant bears the 
burden to provide all evidence to support his claim. Generally, it has 
been our experience that the greater removed the claim time period of 
an alleged loss is from the date of an OPA incident, the greater the 
documentation needed to demonstrate that the alleged loss resulted from 
the incident.
    We ask that your client provide this information within sixty days 
of the date of this letter. The NPFC may have additional questions or 
request more information based upon the responses to these questions. 
If you have any questions would like to discuss the matter, you may 
write me at the above address or contact me by phone at (703) 235-4793.
            Sincerely,
                              Ernie Worden, Claims Manager.
                                 ______
                                 
                                  Kirkpatrick and Lockhart,
                             Washington, DC 20036 November 11, 1997

Ernie Worden, Claims Manager,
National Pollution Funds Center,
United States Coast Guard,
4200 Wilson Boulevard, Suite 1000,
Arlington, Virginia 22203-1804.

Re: T/B NORTH CAPE oil spill Claim Number 016203-007

    Dear Mr. Worden: We are writing on behalf of ABC Lobster, Inc. 
(``ABC Lobster'') in response to your letter dated October 27, 1997, 
and as a followup to our telephone conversation of Friday, November 7, 
1997.
    First, enclosed please find copies of ABC's settlement tickets and 
other financial documents previously submitted to Turnaboat Services, 
Ltd. (attached hereto as Exhibit ``J''). We believe this information 
should suffice to answer your requests numbered 1,5,6,7,9,10 and 12 
from your October 27, 1997 letter. Note that these copies comprise the 
entirety of documents maintained by ABC Lobster. The remaining 
information requests can be addressed in the following manner:
    Item 2: Inshore and offshore lobstermen differ for the most part 
from the point of view of equipment (offshore requires larger, more 
sturdy boats, longer lines for pots which are set at much greater 
depths, greater storage facilities to preserve catch, etc.), and length 
of trips (inshore trips last a day, at most; offshore trips are in 
multiple day segments). More importantly, for this claim, inshore 
lobstermen were prevented from fishing in their normal area due to 
closure of the fishery by State and Federal officials, and after the 
areas were reopened, were faced with a lobster population substantially 
depleted by the toxic effects of the oil spill. Offshore lobstermen, on 
the other hand, suffered chiefly through an inability to pass through 
closure areas, and by being unable to use (potentially contaminated) 
waters for recirculating purposes.
    As discussed in the Affidavit of Albert B. Christopher, Jr., which 
was provided as Exhibit C in our September 16, 1997 submittal to the 
Fund, ABC Lobster has only bought lobsters from a select group of 
inshore lobstermen since its founding. This developing relationship 
with the inshore lobstermen has allowed ABC Lobster to acquire 
sufficient lobsters at a reasonable price in order to be profitable. 
ABC Lobster does not yet have this relationship with any of the 
offshore lobstermen who have chosen to enter into business 
relationships with other wholesale operations. It should also be noted 
that few offshore boats were coming into port after the spill due to 
the contamination of inshore waters.
    Attached for your information please find Exhibit I which reflects 
the timing and substance of correspondence and conversations between 
Booka Smith and Turnaboat concerning the ABC Claim. This Exhibit should 
clarify some of your questions and concerns.
    Item 3: Concerning the renovations of the retail counter, please 
see Exhibit I on the entry dated August 30, 1996.
    Item 4: Please see the August 22, 1996 entry in Exhibit I.
    Item 8: Please see Item 2, above, and the October 22, 1996 and 
November 6, 1996 entries in Exhibit I.
    Item 11: Please see the entry dated September 11, 1996 in Exhibit 
I. Note generally that the high mortality rates to the lobster and to 
species that the lobster relies upon as a food source resulted in a 
much smaller population class of lobsters that could be caught by the 
lobstermen serviced by ABC Lobster.
    Please do not hesitate to contact the undersigned with any further 
questions regarding ABC's claim for damages.
            Respectfully submitted,
                                  Elizabeth L. Smith, Esq.,
               Gregory P. Grimes, Environmental Consultant,
                                       Kirkpatrick & Lockhart, LLP.
                                 ______
                                 
                                  Kirkpatrick and Lockhart,
                            Washington, DC 20036, December 18, 1997

Ernie Worden, Claims Manager,
National Pollution Funds Center,
United States Coast Guard,
4200 Wilson Boulevard, Suite 1000,
Arlington, Virginia 22203-1804.

Re: T/B NORTH CAPE oil spill Claim Number 016203-007

    Dear Mr. Worden: Thank you for responding to my inquiry regarding 
the status of ABC Lobster Inc.'s (ABC's'') claim for damages incurred 
in connection with the North Cape Barge oil spill. It is my 
understanding that you are in the process of completing the paperwork 
needed to secure an outside accounting firm to review RBC's claim and 
that ABC can expect to receive an update on its claim on January 15, 
1998.
    Please understand that ABC has already experienced great difficulty 
in dealing with Eklof Marine Corporation (the party responsible for the 
North Cape Barge oil spill) and does not wish to repeat the experience 
with the United States Coast Guard. Accordingly, I am requesting that 
you contact me on January 15, 1998 to discuss the status of ABC's 
claim. I look forward to hearing from you.
            Very truly yours,
                                        Elizabeth L. Smith,
                                 ______
                                 
                             Hull and Cargo Surveyors, Inc.
                             San Rafael, CA 94901, January 6, 1998.

Ms. Elizabeth Smith,
Kirkpatrick & Lockhart LLP
One International Place
Boston, Massachusetts 02110-2637

RE: 1996 North Cape Oil Spill Claim on Behalf of ABC Lobster, Inc. for 
    Damages--NPFC File No.: 016203-007

    Dear Ms. Smith: We wish to advise you that we are the 
subcontractors for the United States Coast Guard National Pollution 
Funds Center on the above-referenced claim. We are currently reviewing 
the documentation you have previously submitted to the NPFC. After we 
have completed our review, we will contact you to set up a meeting to 
discuss the details of your claim and any additional information we may 
require.
    If you have any questions, please feel free to contact me.
            Sincerely,
                      Albert F. Dugan, Jr., Vice President.
                                 ______
                                 
                                Kirkpatrick and Lockhart,  
                                   One International Place,
                                Boston, MA 02110, January 22, 1998.

Albert B. Christopher, Jr.
Anne Christopher,
606 Shannock Road,
Wakefield, RI 02879.

Re: North Cape Barge Oil Spill

    Dear Anne and Al: I am writing as a followup to our January 20, 
1998 meeting with Hull & Cargo. In order to push along the process of 
settling ABC Lobster Inc's (``ABC's'') claim for damages, I need you to 
forward to me the following documentation:
      a copy of ABC's tax return for 1997:
      copies of ABC's settlement tickets for the period 
December 31, 1996 to October 1, 1997;
      a copy of the State's offer to purchase ABC for $500,000; 
and
      copies of any documents evidencing the purchase of 
additional tanks immediately prior to the Spill (for example, check 
receipts).
    Thank you in advance for your cooperation. Please do not hesitate 
to contact me with any questions, comments, or concerns.
            Very truly yours,
                                        Elizabeth L. Smith.
                                 ______
                                 
                                Kirkpatrick and Lockhart,  
                                   One International Place,
                                Boston, MA 02110, January 22, 1998.

Richard H. Miner,
Neil G. Stoddard,
Hull & Cargo Surveyors, Inc.,
Raynham Woods Executive Building,
175 Paramount Drive,
Raynham, MA 02767.

Re: 1996 North Cape Oil Spill ABC Lobster, Inc. Claim for Damages
H&CSI File No.: SF 980006 OS
NPFC Claim No.: 016203-007

    Gentlemen: Thank you for taking the time to meet with Al 
Christopher and me yesterday to discuss ABC Lobster Inc.'s (``ABC's'') 
claim for damages incurred in connection with the North Cape Barge oil 
spill. I hope that Al and I were able to alleviate any concerns or 
doubts you may have had regarding ABC's claim.
    It is my understanding that at this juncture, you will have your 
accountants review ABC's claim and will make a recommendation of 
settlement to the National Pollution Funds Center within the next 
thirty days. As you know, almost 2 years have passed since Mr. 
Christopher filed this claim and justifiably, his patience is wearing 
thin. Accordingly, if there is anything I can do to speed the 
processing of ABC's claim, please let me know.
            Very truly yours,
                                        Elizabeth L. Smith.
                                 ______
                                 
                             Hull and Cargo Surveyors, Inc.
                                Raynham, MA 02767, 23 January 1998.

Ms. Elizabeth L. Smith, Esq.,
Kirkpatrick & Lockhart LLP,
One International Place,
Boston, MA. 02110-2637.

Re: 1996 North Cape Oil spill
ABC Lobster Claim
Your File No: 505715.701
H&CSI File No: SF 980006 OS
NPFC Claim No: 016203-007

    Dear Ms. Smith: We acknowledge receipt of your facsimile letter of 
22 January 1998, and thank you for same.
    In case there was any misunderstanding during our meeting, I want 
to clarify one point. As I told you at the meeting we, and our 
accountants, are in the process of reviewing the claim documentation at 
this time. We will, as soon as possible, advise you in writing of any 
additional documentation required, and of any questions that may arise 
an a result of our review of the documents. Following receipt of any 
requested additional documentation we will strive to complete our 
analysis of the claim, and submit a claim summary to the National 
Pollution Fund Center within thirty (30) days.
    As we discussed, two (2) items that we will be requesting are 
copies of the original dealer slips with the boat name shown, and 
receipts and documentation supporting the installation of the increased 
storage capacity at the claimant's facility. As soon as we have 
finished reviewing the documents we will advise you of any other 
required information that we need to complete our analysis of your 
client's claim.
            Yours truly,
                                          Richard R. Miner,
                                       Hull & Cargo Surveyors, Inc.
                                 ______
                                 
                                Kirkpatrick and Lockhart,  
                                   One International Place,
                                Boston, MA 02110, January 23, 1998.

Richard H. Miner
Hull & Cargo Surveyors, Inc.,
Raynham Woods Executive Building,
175 Paramount Drive,
Raynham, MA 0276.

Re: 1996 North Cape Oil Spill ABC Lobster, Inc.
Claim for Damages H&CSI File No.: SF 980006 OS
NPFC Claim No.: 016203-007

    Dear Mr. Miner: I am writing in response to your facsimile dated 
January 23, 1998.
    As I mentioned in our meeting on January 20, 1998, ABC Lobster, 
Inc. (``ABC'') plans to produce to you documentation evidencing the 
installation and increased capacity of the shore-side facility. Also, I 
discussed with Mr. Christopher the issue of producing original dealer 
slips with the boat name shown and he has agreed to produce these 
documents on the grounds that such information not be released into the 
public domain. If you agree to keep this information confidential, then 
I will forward the aforementioned documentation to you just as soon as 
I receive it from Mr. Christopher.
    As I also indicated in our meeting, ABC has already produced all 
other documentation in support of its claim for damages. Accordingly, 
while Mr. Christopher would be happy to answer any specific questions 
your accountants may have, any requests for additional documentation 
will be fruitless. ABC has presented a complete claims package and Mr. 
Christopher has been kind enough to spend almost 2 hours of his time 
with you answering questions about his former business. It would shock 
the conscious to think that you would be unable to make a 
recommendation on ABC's claim within the next thirty days. For Mr. 
Christopher's sake and for his wife's sake, I urge you to make every 
effort to come to closure on ABC's claim.
    Thank you for your attention to ABC's claim.
            Very truly yours,
                                        Elizabeth L. Smith.
                                 ______
                                 
                             Hull and Cargo Surveyors, Inc.
                            San Rafael, CA 94901, February 9, 1998.

Ms. Elizabeth L. Smith, Esq.
Kirkpatrick & Lockhart LLP
One International Place
Boston, MA 02110-2673

RE: ABC Lobster Inc.
1996 NORTH CAPE Oil Spill
Our File No. SP. 980006 OS
NPFC Claim No. 016203407

    Dear Ms. Smith: Our accountants have completed their review of the 
documents previously submitted by your office. I have enclosed their 
listing of the documents that were previously submitted. I have 
received a copy of your letter dated February 5, 1998 outlining the 
additional documents you have sent. The accountants will begin their 
review of these documents.
    Although I acknowledge you have stated that we have received all of 
the documentation Mr. Christopher has, please provide the following 
documentation or provide an explanation of why this documentation does 
not exist:
    1) The previous redacted settlement sheets did not include the 
periods April 1994 through December 1995 or May 1995 through December 
of 1995. We have not had time to determine if the settlement sheets for 
these time periods are included in your February 5, 1998 submission. If 
they were not, please either provide the settlement sheets for these 
dates or provide art explanation of why they cannot be provided.
    2) Monthly summary of sales: 1996, 1997
    3) Monthly summary of purchases (pounds): May and June 1996, 1997
    4) Monthly of purchases ($): 1994, 1996, 1997
    5) Monthly retail sales: May through December 1996, 1997
    6) Rental income for temporary rental of tanks.
    7) 1997 U.S. Tax return (We will need this for your unspecified 
fixture claim.)
    Please provide answers or explanation to the following:
    1) Provide explanation for the decline, from prior months, in 
pounds of lobster purchased in December 1995 and January 1 through 18, 
1996.
    2) Explain relationship of F/V Miss Stacie with ABC Lobster.
    3) Explain the difference between summary of monthly purchases of 
$1,483,235 and purchases per the tax return for 1995 of $1,808,274 
Please provide any corresponding support with your explanation.
    Thank you for your assistance in this matter.
            Sincerely,
                      Albert F. Dugan, Jr., Vice President.
                                 ______
                                 

                                   Summary of Documents Provided as of 2/4/98
                                            Source: ABC Lobster, Inc.
----------------------------------------------------------------------------------------------------------------
                    Item                                                  Description
----------------------------------------------------------------------------------------------------------------
1)..........................................  Tax Returns
                                                1933
                                                1994
                                                1995
                                                1996
2)..........................................  Monthly sales ($) Summary
                                                1994
                                                1995
3)..........................................  Monthly Purchase (pounds) Summary
                                                1994
                                                1985
                                                January though April 1996
                                                June 28 through December 31, 1996
4)..........................................  Monthly Purchase ($) Summary
                                                1995
5)..........................................  Daily Retail Sales
                                                1993
                                                1994
                                                1995
                                                January through July 15, 1998
6)..........................................  Monthly Retail Sales Summary
                                                1993
                                                1994
                                                1985
                                                January through April, 1898
7)..........................................  Settlement Tickets for Lobster Purchases
                                                December 24, 1993 through April 6, 1994
                                                January 8, 1995 through May 4, 1995
                                                January 2, 1996 through March 27, 1996 (includes 2 tickets dated
                                               12/15/95 and 12/23/95)
                                                May 2, 1996 through June 25, 1996 (includes 1 ticket dated 4/17/
                                               1996)
                                                June 28, 1996 through August 1, 1996
                                                July 28, 1996 through September 22, 1996
                                                September 14, 1996 through January 2, 1997
----------------------------------------------------------------------------------------------------------------

                                 ______
                                 
                             Hull and Cargo Surveyors, Inc.
                           San Rafael, CA 94901, February 12, 1998.

FAX TO: Ms. Elizabeth L. Smith,
Kirkpatrick & Lockhart LLP

Subject: ABC Lobster, Inc.

    We have received the box of documents sent under your cover letter 
of February 5, 1998 and we wish to acknowledge that all settlement 
tickets in the timeframe that were previously missing have been 
received. Thank you for your assistance on this matter.

                                       Albert F. Dugan, Jr.
                                 ______
                                 
                               Kirkpatrick & Lockhart LLP  
                                   One International Place,
                               Boston, MA 02110, February 20, 1998.

Albert F. Dugan, Vice President,
Hull and Cargo Surveyors, Inc.,
2175 E. Francisco Boulevard, Suite A-5,
San Rafael, CA 94901.

Re: ABC Lobster, Inc.
1996 North Cape Oil Spill
Your File No. SF 980006 OS
NPFC Claim No. 016203-007

    Dear Mr. Dugan: Thank you for taking the time yesterday to speak 
with Greg Grimes and me about issues raised in a request for additional 
documentation in your letter to Elizabeth Smith dated February 9, 1998.
    As a result of our conversation, it is our understanding that in 
your request for certain summaries of data (sales, purchases, etc.) you 
are not asking us to create anything that is not kept in the normal 
course of business. As long as we provided the underlying business 
records from which such a summary can be created, we will have 
fulfilled our responsibility under OPA. You indicated that you had no 
problem creating such summaries from our data, but wanted to make sure 
we had not done so already, so that when the Fund seeks reimbursement 
from Eklof; Eklof cannot claim that your doing this work duplicated 
that which we already did.
    As I indicated to you, Eklof has been insisting that we create new 
documents summarizing business data. To the extent we have done so, we 
will, of course provide this to you. We may not, however, continue to 
do so in the future, particularly when Eklof denies that our costs of 
doing so are recoverable. We do not see why Eklof can insist on us 
creating new documents, when the Fund itself does not insist on it.
    In addition, we understand that we need not provide 1997 tax 
returns to support our 1996 claim. As we indicated, when this claim was 
filed (in 1996) no such returns existed. Therefore we did not include 
it in our claim filed with Eklof. You have indicated that under these 
circumstances, and since the claim before you is only that which was 
denied by Eklof, no ``new'' data not previously submitted to Eklof 
needs to be submitted to you.
    Finally, you indicated that other than the published guidelines on 
claims (in the CFR) you have no handbook or other written materials 
(including your contract with the Fund) that govern your evaluation of 
claims for the Fund, or contain criteria or other instructions 
affecting your consideration of the claims.
    We look forward to working with you on the claims that are being 
submitted to the Fund for resolution. Please continue to direct your 
correspondence to Mr. Grimes.
            Sincerely,
                                     Barry M. Hartman, Esq.
          Gregory P. Grimes, Environmental Project Manager.
                                 ______
                                 
                                      Hull and Cargo, Inc.,
                           San Rafael, CA 94901, February 25, 1998.

Mr. Barry Hartman, Esq.,
Kirkpatrick & Lockhart LLP
One International Place
Boston, MA 02110-2637

RE: ABC Lobster, Inc.
1996 NORTH CAPE Oil Spill
Our File No.: SF 980006 OS
NPFC Claim No.: 016203-007

    Dear Mr. Hartman: Thank you for your facsimile letter of February 
20, 1997. Your letter reflects our conversation, except for two points 
that require clarification.
    First, I did not indicate ``. . . no new data not previously 
submitted to Eklof needs to be submitted . . .'' for our review of your 
client's claim. I only agreed that the 1997 tax return would not be 
required for the current claim submission. As I mentioned, our review 
is not limited to the information that was provided to Eklof, or their 
claims representative Turnaboat. We are completing an independent claim 
review and measurement.
    Secondly, you asked if I had guidelines from the NPFC on what to 
pay and not pay, and I referred you to the published guidelines on 
claims (in the CFR). Your letter is a much broader statement. Our 
contract of course provides some general guidelines that ``govern'' our 
evaluation of claims, but with regard to what is paid and not paid, we 
are guided by the published guidelines on claims (in the CFR).
    We look forward to working with you and Mr. Grimes to resolve your 
client's claim as soon as possible.
            Sincerely,
                      Albert F. Dugan, Jr., Vice President.
                                 ______
                                 
                             Hull and Cargo Surveyors, Inc.
                           San Rafael, CA 94901, February 25, 1998.

Mr. Gregory Grimes,
Environmental Project Manager,
Kirkpatrick & Lockhart LLP,
One International Place,
Boston MA 02110-2673.

    Dear Mr. Grimes: We have finished our preliminary review of the 
settlement sheets for which the claimant did not have summaries. 
Accordingly we have the following questions.
    1) Please indicate the reason the following vessels stopped 
deliveries in 1995 and 1996.
      Spirit of Peace
      Ellen June
      Ziggy
      Whillden
      Ray Carr
      Hohn Keiper
      Steve Crandall
      H.T.
      Miss Nancy

    2) Please indicate how deliveries from the following new vessels 
were obtained in 1996, and please indicate any other new vessels 
contacted to increase business.
      Fun Yet
      Cancel Bay
      Spud Mack
      Roy Carr
      Walter Kowal

    3) Explain the difference of $325,039 between the summary of 
monthly purchases of $1,483,235 and purchases per the tax return for 
1995 of $1,808,274. Please provide any corresponding support with your 
explanation. Please note that the purchases based on settlement sheets 
were $1,472,280.
    4) Explain the difference of $353,750 between the purchases based 
on settlement sheets of $948,914 and purchases per the tax return for 
1996 of $1,302,664. Please provide any corresponding support with your 
explanation.
    We also await your response to our February 9, 1998 letter, and we 
would also recommend any assessment cost you may wish to submit for 
this claim at this time.
    Thank you for your assistance in this matter.
            Sincerely,
                      Albert F. Dugan. Jr., Vice President.
                                 ______
                                 
                             Hull and Cargo Surveyors, Inc.
                               San Rafael, CA 94901, March 4, 1998.

Mr. Gregory Grimes,
Environmental Project Manager,
Kirkpatrick & Lockhart LLP,
One International Place,
Boston MA 02110-2673.

    Dear Mr. Grimes: We completed on review of the settlement sheets 
and financial information you provided to date. Accordingly, we have 
the following questions.
    1) Please explain the reduction in deliveries from 1995 to 1996 in 
the months of May through December (except August) for the vessels of 
the fishermen listed below. Were any of the vessels or fishermen 
selling lobsters to sources other than ABC Lobster Inc.?
    1. Mason Ann
    2. Undertaker
    3. Amelia Ann (no deliveries after August 1996)
    4. Rachel & Henry
    5. Jayne Sue
    6. Heather Rose
    7. Select Fisheries
    8. Eider
    9. Gillian (no deliveries after March 1996)

    2) Please provide the explanation for the reduced lobster catch for 
Miss Stacie from 1995 to 1996 in the months of June through August. 
Please also provide the explanation of why there was none or minimal 
catch during the months of September through December 1996.

    3) Please provide the daily retail sales summary for July 1996.

    4) Our accountant needs to discuss purchases and sales with Mr. or 
Mrs. Christopher. Please have the individual who would best be able to 
discuss this aspect of the business contact Dawn Dunne, CPA of RGL 
Gallagher, at (415) 956-8323.
    Thank you for your assistance in this matter.
            Sincerely,
                      Albert F. Dugan, Jr., Vice President.
                                 ______
                                 
                             Hull and Cargo Surveyors, Inc.
                               San Rafael, CA 94901, March 4, 1998.

Mr. Gregory Grimes,
Environmental Project Manager,
Kirkpatrick & Lockhart LLP,
One International Place,
Boston MA 02110-2673.

    Dear Mr. Grimes: This is to confirm our conversation regarding the 
submission of your assessment costs for ABC Lobster Inc., which I 
requested in my facsimile of February 25, 1998. You have advised that 
you had not yet submitted these costs to the Responsible Party (RP), 
but you planned to submit them to the RP in the future.
    I reviewed this information with the NPFC, and based on this 
information, you should not submit your assessment costs to our office 
or the NPFC until you have followed the necessary procedures per 33 CFR 
136.103. Furthermore, the NPFC has advised that under 33 USC 
2712(h)(2), no claim may be presented for recovery of damages ``unless 
the claim is presented within 3 years after the date on which injury 
and its connection with the discharge in question were reasonably 
discoverable with the exercise of due care. . . .''
            Sincerely,
                      Albert F. Dugan, Jr., Vice President.
                                 ______
                                 
                               Kirkpatrick & Lockhart LLP  
                                   One International Place,
                                  Boston, MA 02110, March 20, 1998.

Albert F. Dugan, Vice President,
Hull and Cargo Surveyors, Inc.,
2175 E. Francisco Boulevard, Suite A-5,
San Rafael, CA 94901.

Re: ABC Lobster, Inc.
1996 North Cape Oil Spill
Your File No. SF 980006 OS
NPFC Claim No. 016203-007

    Dear Mr. Dugan: This letter is in response to your letters dated 
February 25, 1998 and March 4, 1998, requesting additional information 
and clarification about the claim of ABC Lobster Inc.
I. February 95, 1998 letter
    Item 1: Why certain vessels stopped deliveries in 1995 and 1996

    The Spirit of Peace did not have dock space at the State docks in 
Point Judith. The boat was on the waiting list for dockage, but often 
times space opens only after an existing space-user dies or goes out of 
business. Since a space did not open up, the Spirit of Peace eventually 
made arrangements to dock at the Snug Harbor Marina. As a condition of 
this dockage, the Spirit of Peace was required to sell its catch to Al 
Conti at the Snug Harbor Marina.
    For their own personal business reasons, the Ellen June made the 
decision to switch its catch to Champlin's.
    The owner of Ziggy came down from Connecticut and worked part time. 
He stopped bringing lobsters to ABC due to illness (he is now 
deceased).
    The Whillden is based in Block Island and normally offloads the 
lobster catch at that location.
    Ray Carr worked lobstering part-time while seeking full-time 
employment. He stopped deliveries after finding a full-time job.
    Keiper stopped hauling his own traps at this time.
    Steve Crandall, Harry Towne and Walter Kowal sold small amounts to 
ABC during those times when their usual shore side facilities were 
closed.

    Item 2: How deliveries from new vessels were obtained

    For each party listed, the answer is the same: They simply didn't 
like where they were previously selling and decided to move their catch 
to ABC. ABC Lobster did not solicit their business and has not 
solicited the business of other fishermen. The business of ABC had 
grown from its inception due to the favorable treatment of fishermen by 
the Christophers. In other words, word of mouth accounted for their new 
business.
    Item 3 and 4: Differences in purchases per tax returns and 
summaries in 1995 and 1996
    Joseph Mansour of the accounting firm of Sansiveri, Kimball & 
McNamee addressed these issues with your accountant, Dawn Dunne, via 
telephone conversation on March 19. 1998.
II. March 4. 1998 letter
    Item 1: Reduction in deliveries for certain vessels

    All of the listed vessels experienced lower catches due to the Oil 
Spill. The Oil Spill resulted in the temporary closure of their fishing 
grounds, the loss of fishing time due to the need to remove (and later 
re-set) their gear, and to reduced catches when fishing resumed (stocks 
were virtually wiped out in many areas).
    The Amelia Anne made a business decision to stop deliveries to ABC 
Lobster in August. 1996. This vessel made another business decision in 
1997 and resumed deliveries to ABC.
    Before starting deliveries to ABC Lobster, the Gillian had a 
relationship with the former Point Judith Lobster Company. After that 
company went out of business, the Gillian moved to ABC. The Point 
Judith Lobster Company later, under new ownership, became the Ocean 
State Lobster Company. The Gillian was owed money by the Point Judith 
Lobster Company and in order to recover as much as possible of the 
former Point Judith Lobster Company business, Ocean State agreed to pay 
to the Gillian the money owed by the Point Judith Lobster Company, as 
long as the Gillian agreed to re-start deliveries to Ocean State. The 
Gillian made the business decision to recover the moneys owed to them 
and moved from ABC to Ocean State on. or about, March 1996.

    Item 2: Reduced catch for Miss Stacie

    Five (5) lobster boats fished the area to the immediate western 
portion of Rhode Island waters, near the (Connecticut line. Three (3) 
of those boats, the Undertaker, Amelia Anne and Miss Stacie, delivered 
to ABC Lobster. This area was particularly hard hit by the Oil Spill, 
forcing these boats to move elsewhere. The Miss Stacie, which was owned 
by Al Christopher, was captained by a younger captain who was leery of 
competing with the larger vessels in the heavily fished eastern fishing 
grounds. Accordingly, the Miss Stacie was forced out onto less 
productive areas. This accounted for the reduced catch from June 
through August in 1996.
    In September, the crewman on the Miss Stacie quit. It was also 
about this time that Al Christopher decided to sell the Miss Stacie. 
Since he had no crewman, and fishing had been poor, the captain spent 
much time in Maine hunting. This explains why there was no catch in 
September, 1996.
    The low figures for October and November (and the zero figure for 
December) resulted from the necessity to remove all of the gear from 
the water to allow for the closing on the Miss Stacie (which was 
completed in November).

    Item 3: Retail sales for July 1996

    Attached please find the ``Analysis of Monthly Retail Sales--
1996'', which should provide the necessary information in summary form.

    Item 4: Purchase and sale information

    Joseph Mansour of the accounting firm of Sansiveri, Kimball & 
McNamee addressed these issues with your accountant, Dawn Dunne, via 
telephone conversation on March 19, 1998.
    If further clarification of any of the above information is 
necessary, please call me at your earliest convenience. I look forward 
to the speedy resolution of this claim.
            Cordially,
          Gregory P. Grimes, Environmental Project Manager.
                                     Peter N. McIsaac. Esq.
                                 ______
                                 
                             Hull and Cargo Surveyors, Inc.
                               San Rafael, CA 94901, June 11, 1998.

Mr. Gregory Grimes,
Environmental Project Manager,
Kirkpatrick & Lockhart LLP,
One International Place,
Boston MA 02110-2673.

    Dear Mr. Grimes: The National Pollution Funds Canter (NPFC) has 
completed their review of our recommendation for ABC Lobster, Inc. 
Before we send it to you, we wanted to review a procedural issue avid 
you regarding this claim.
    We have recommended a settlement offer for the claim period of 
January 19, 19 through July 31, 1996. For the period of August 1, 1996 
through December 31, 1996 we cannot yet reasonably attribute the 
reduced deliveries of the fishermen who supplied your client to be the 
result of the oil spill based on the information and documentation you 
have provided. You claimed the reduced deliveries were due to the feet 
that ``stocks were virtually wiped out in many areas.'' Although this 
may be true, the enclosed ``Summary of Monthly Lobster Landings 
(Pounds)--Point Judith'' for 1995 & 1996 indicates that significantly 
more pounds of lobster, approximately 743,245 pounds, were landed in 
1998 than in 1996 in the time period of August 1 through December 31, 
1996. Thus, we need to evaluate the fishermen who supplied your client 
to determine if their reduced deliveries to ABC Lobster, Inc. during 
the period of September through December 1996 were the result of the 
oil spill. (Your claim acknowledged that significantly more lobster 
were caught in August 1996 then in August 1995.) We would expect claims 
by the fishermen, if their reduced catch were due to the oil spill. (We 
currently have the claim submission of John. J. Swoboda win the F/V 
Karen Ann.) If we determine that their reduced catch and subsequent 
reduced deliveries to your client are due to the oil spill we would be 
able to address ABC Lobster, Inc.'s loss of profits claim during this 
period.
    Considerlng the above, we can split the ABC Lobster claim into two 
time periods to facilitate a settlement to your client. We can make the 
claim period from January 19, 1996 through July 31, 1996 one claim, 
designated the 007-001, for which a settlement offer would be offered. 
The claim period of August 1, 1998 through December 31, 1996 would be 
designated 007-002.
    Please let me know if you wish us to proceed in this manner. It 
not, we can provide you with one claim measurement for the period of 
January 19, 1996 through December 31, 1996.
    I await your written response to this matter.
            Sincerely,
                      Albert F. Dugan, Jr., Vice President.















































































































































                                 ______
                                 
                                  Turnaboat Services, Ltd.,
                                   Oil Spill Claims Center,
                                              P.O. Box 558,
                               Narragansett, RI 02882, May 9, 1997.

Kirkpatrick & Lockhart, LLP,
1800 Massachusetts Avenue, NW,
Second Floor,
Washington, DC 20036-1800.

RE: IN NORTH CAPE Oil Spill at Pt. Judith, Rhode Island
Bruce Kopf
Claim No. 4013-96422
Your file No. 3524-325

    Dear Ms. Raclin: We have reviewed the above claim file, received at 
our office on March 27, 1997.
    The documentation provided does not support that Mr. Kopf sustained 
a loss as a result of the spill. Specifically, Mr. Kopf is an offshore 
lobsterman and the area where he fishes was never closed. Mr. Kopf was 
not precluded from mitigating his loss by landing his catch at other 
nearby fishing ports (e.g. Montauk, NY; Stonington, CT; Sakonnet, RI or 
Westport, MA).
    Further, the records provided indicate that Mr. Kopf stopped 
fishing on December 31, 1995 as he shows no earnings for the first 3 
weeks of January 1996. This appears to be consistent with his 
historical fishing practices since at least 1994.
    Based on the above, we are not in a position to proffer a 
settlement at this time. If further information becomes available, we 
will gladly review it for possible reconsideration.
    Thank you for your cooperation and patience.
            Very truly yours,
                        Michael L. Collyer, Staff Adjuster,
                                           Turnaboat Services, Ltd.
                                 ______
                                 
                               Kirkpatrick & Lockhart LLP  
                                   One International Place,
                                  Boston, MA 02110, March 26, 1997.

Mike Collyer,
Turnaboat Services, Ltd.
Oil Spill Claims Center,
P.O. Box 558,
7 Pier Market Place,
Narragansett, RI 02882.

Re: Rhode Island Oil Spill

    Dear Mr. Collyer: As you know, Kirkpatrick & Lockhart LLP 
represents Bruce Kopf with respect to his claim for damages arising out 
of the oil spill which occurred on or about January 19, 1996 in Block 
Island Sound, Rhode Island.
    Enclosed please find a partial claims package for Mr. Kopf 
containing all of the information necessary to state a valid claim for 
certain damages directly relating to the Rhode Island oil spill for the 
period January 19, 1996 through March 39, 1996, together with all the 
documentation and information Eklof Marine Corp. has requested to 
support a claim for partial damages. This partial claim does not 
include claims for reimbursement of the reasonable costs of assessing 
damages (e.g. accounting fees), attorneys' fees or, in some cases, 
certain other costs resulting from the oil spill. Mr. Kopf reserves the 
right to bring such claims in the future, as appropriate.
    Included in this package you will find a form indicating that we 
have provided all the information Eklof Marine Corp. requires to 
support a claim for partial damages. As with all previous partial 
claims we submitted, we consider the information and documentation 
provided in these packages to be complete so as to trigger the 90 
settlement period required by the Oil Pollution Act of 1990. See 33 
U.S.C. Sec. 2713 (c)(2)(claims not settled within 90 days after the 
date presented to the responsible party may be submitted to the Oil 
Spill Liability Trust Fund).
    Please process this partial claim and then forward to us a 
breakdown sheet outlining the terms of your initial partial settlement 
offer.
    If you have any comments or questions, please direct them to the 
undersigned at the address and phone number listed on this letter. We 
look forward to working with you to assure the prompt and efficient 
processing and payment of these partial claims.
    Thank you for your anticipated cooperation.
            Very truly yours,
                                     Thomas L. Crotty, Jr.,
                                        Elizabeth L. Smith.
                                 ______
                                 
                                    Kirkpatrick & Lockhart,
                             Washington, DC 20036, January 30, 1998

Daniel Sheehan, Director,
National Pollution Funds Center,
4200 Wilson Boulevard., Suite 1000,
Arlington, VA 22203-1804.

Re: Claim on Behalf of Bruce E. Kopf for Damages from 1996 Rhode Island 
    Oil Spill

    Dear Mr. Sheehan: Kirkpatrick & Lockhart, LLP (``Kirkpatrick & 
Lockhart'') submits this claim pursuant to 33 U.S.C. Sec. 2713 (Supp. 
1997) on behalf of Mr. Bruce E. Kopf for dear ages suffered in the 1996 
Rhode Island Oil Spill. Mr. Kopf seeks partial damages of $23,762 for 
lost profits and earning capacity for the period January 19, 1996 
through March 31, 1996. This claim does not include claims for lost 
long-term profits and earnings. Mr. Kopf reserves the right to bring 
such claims in the future.
    The damages sought by Mr. Kopf are the result of a 1996 oil spill 
off the coast of Point Judith, Rhode Island. Point Judith is the third 
largest fishing port on the east coast and generates millions of 
dollars of revenue annually. On January 19, 1996, the North Cape Barge, 
a barge operated by Eklof Marine Corporation, ran aground and spilled 
over 800,000 gallons of oil into Block Island Sound, near Point Judith. 
The spill required that the entire port be closed and millions of 
lobsters died as a result of the spill. The impact of the spill 
extended far beyond this direct area and is expected to impact the 
lobster and related population for years in the future. The local 
fishing community suffered significant property damage and loss of 
earning capacity as a direct result of the spill. Many of the fishing 
boats and other equipment have been damaged or destroyed. Mr. Kopf 
seeks partial damages for the lost profits and earnings for the period 
January 19. 1996 through March 29, 1996.
    Mr. Kopf presented this claim for short term lost earnings, to 
Turnaboat Services, Ltd. (``Turnaboat''), the insurance company for 
Eklof Marine Corporation on March 26, 1997. On May 9, 1997, Turnaboat 
denied Mr. Kopf s claim for partial damages.
    In accordance with 33 C.F.R. Sec. 136.215, enclosed are the 
following documents in support of Mr. Kopf's claim for property 
damages:

    3    . A copy of representation letter granting Kirkpatrick it: 
Lockhart the authority to file this claim on behalf of Mr. Kopf 
(Exhibit A);
    2. A copy of the National Pollution Funds Center Standard Claim 
    Form (Exhibit B);
    3. Affidavit of Bruce E. Kopf (Exhibit C);
    4. Identification information for Mr. Kopf (Exhibit D);
    5. A copy of the 1996 tax returns for Bruce E. and Dorothy M. Kopf 
    (Exhibit E);
    6. A copy of the claim submitted to Turnaboat on March 26, 1997, 
    including tax returns and other financial statement (Exhibit F); 
    and
    7. A copy of communications between Mr. Kopf and Turnaboat 
    Services, Ltd. (Exhibit G).

    Please do not hesitate to contact the undersigned if you have any 
questions regarding this matter. Thank you for your prompt attention to 
this matter.
            Respectfully submitted,
                                     Barry M. Hartman, Esq.
                                  Thomas F. Holt, Jr., Esq.
          Gregory P. Grimes, Environmental Project Manager.
                                        Kirkpatrick & Lockhart, LLP
                                 ______
                                 
                         U.S. Department of Transportation,
                                 United States Coast Guard,
                           National Pollution Funds Center,
                        Arlington, VA 22203-1804, 25 February 1998.

Bruce E. Kopf,
One International Place,
Boston, MA 02110-2637.

RE: Claim Number 016203-003
T/B NORTH CAPE oil spill

    Dear Mr. Holt: This is in response to the loss of profits and 
earning capacity claim submitted by Mr. Bruce E. Kopf, arising from the 
T/B North Cape oil spill. The National Pollution Funds Center (NPFC) 
intends to hire, in accordance with Federal Government contracting 
regulations, a private claims adjusting company to adjust this claim. 
Once the NPFC has hired a claims adjusting company, I will immediately 
notify you of the name of the company and a point-of-contact person.
    The Claims Regulations requires that each claim must be signed in 
ink by the claimant certifying to the best of the claimant's knowledge 
and belief that the claim accurately reflects all material facts (33 
CFR 136.105(c)). The standard claim form signed by Mr. Kopf appears to 
be a copy and not the signed original. Please provide the NPFC with the 
signed, original standard claim form. We also note that Mr. Kopf's 
claim package includes unsigned Federal tax returns. As we noted in a 
letter to Kirkpatrick & Lockhart on 11 September 1997, we require 
copies of tax returns that have been signed by the claimant.
    If you have any questions or would like to discuss this matter, you 
may write me at the above address or contact me by phone at (703) 235-
4793.
            Sincerely,
                              Ernie Worden, Claims Manager.
                                 ______
                                 
                                    Kirkpatrick & Lockhart,
                                Washington, DC 20036, March 9, 1998

Ernie Worden, Claims Manager,
National Pollution Funds Center,
4200 Wilson Boulevard, Suite 1000,
Arlington, VA 22203-1804.

Re: T/B NORTH CAPE Oil Spill

    Dear Mr. Worden: Per your request in letters dated February 25 and 
26, 1998, please find the signed, original, standard claim forms to the 
NPFC for the following:

    1. Claim Number 016203-008, Mr. Bruce E. Kopf
    2. Claim Number 016203-009, Mr. Charles Follett dba Cindy-Bet, Inc.
    3. Claim Number 016203-010, Mr. James D. Patterson
    4. Claim Number 016203-011, Fran Dek, Inc.

    If additional information or clarification is needed, please do not 
hesitate to contact the undersigned.
            Sincerely,
                                     Barry M. Hartman, Esq.
                                  Thomas F. Holt, Jr., Esq.
          Gregory P. Grimes, Environmental Project Manager.
                                 ______
                                 
                                John P. Kelly & Associates,
                                       117 Kentucky Street,
                                 Vallejo, CA 94590, March 25, 1998.

Gregory P. Grimes, Environmental Project Manager,
Kilpatrick & Lockhart, LLP
One International Place
Boston, MA 02110-2637

Re: Bruce Kopf
North Cape Oil Spill
NPFC 016203-008
    Dear Mr. Grimes: We have been asked by the National Pollution Fund 
Center to investigate Bruce Kopf's claims for damage as a result of the 
North Cape Oil Spill.
    As we discussed, please provide the all the claims document that 
were sent to Turnaboat Services, Ltd. Also, please provide any other 
information you feel will document your client's claim.
    We look forward to working with you in this matter.
            Regards,
                                             John P. Kelly,
                                       John P. Kelly and Associates
                                 ______
                                 
                               Kirkpatrick & Lockhart, LLP,
                                         Boston MA, March 26, 1998.

John P. Kelly & Associates
117 Kentucky Street
Vallejo, CA 94590.

    Re: North Cape Oil Spill Bruce E. Kopf NPFC Claim Number 016903-008

    Dear John: Per our conversation of March 95, 1998, it is my 
understanding that your firm will be evaluating the Fund submittal of 
Bruce E. Kopf for the National Pollution Fund Center. Per your request, 
please find enclosed a copy of the entire Fund submittal for Mr. Kopf.
    I look forward to working with you on this matter.
            Cordially,
          Gregory P. Grimes, Environmental Project Manager.
                                 ______
                                 
                                John P. Kelly & Associates,
                                       117 Kentucky Street,
                                 Vallejo, CA 94590, March 25, 1998.

Gregory P. Grimes, Environmental Project Manager,
Kilpatrick & Lockhart, LLP
One International Place
Boston, MA 02110-2637

Re: Bruce Kopf
North Cape Oil Spill
NPFC 016203-008

    Dear Mr. Grimes: We have reviewed the documents provided by Berry 
Kopf through you.
    After reviewing The Affidavit of Bruce E. Kopf, we believe it 
necessary to request additional information from Mr. Kopf.
    1. We wish to request documentation that Mr. Kopf's vessel actually 
needed to use circulating sea water.
    2. We need to determine and confine Mr. Kopf's normal fishing area 
with maps or charts.
    3. We need documentation of the amount and value of Mr. Kopf's 
landings by month for 1993-94-95.
    4. We need documentation of the type of repairs to Mr. Kopf's 
vessel, the location of the repair facility and when the repairs were 
to be completed.
    5. We need documentation of Mr. Kopf's intention to resume fishing 
in late January 1996.
    6. We need documentation of the areas closed.
    7. We need to know why the water circulation system could not be 
turned off while heading to Mr. Kopf's fishing areas.
    8. We need to know why it was necessary to pass through the closed 
areas to deliver caught lobsters to an open port.
    9. Please provide documentation of the sale of the Fishing Vessel 
Spartan.
    After we receive this information, we may have further questions. 
We believe that these questions will provide essential information 
regarding this claim.
    If you have any questions please contact us.
            Regards,
                                             John P. Kelly,
                                        John P. Kelly & Associates.
                                 ______
                                 
                                    Kirkpatrick & Lockhart,
                                   One International Plaza,
                                  Boston, MA 02110, April 27, 1998.

John P. Kelly & Associates,
117 Kentucky,
Vallejo, California 94590.

Re: TIB North Cape Oil Spill
Claim No. 01690-008
Claimant: Bruce E. Kopf

    Dear Mr. Kelly: The following information is provided in response 
to your letter request for additional information dated April 10, 1998, 
and is answered by numbered paragraph.
    1. It is the understanding of Mr. Kopf that circulating sea water 
is used on all lobster boats on the East Coast. It is the only way that 
lobsters are kept other than some boats which have refrigerated salt 
water systems. This occurs maims on vessels fishing lone trips or 
vessels catching red crabs.
    The F/V Spartan is outfitted with three salt water pumps. The main 
pump is 4 inches and runs organ auxiliary engine. The other two smaller 
pumps run off the main engine. It is especially necessary to have 
circulating seawater in sub-freezing temperatures as the lobsters drop 
their claws under those conditions. Attached at Exhibit A please find 
documentation regarding the sale of the F/V Spartan to Violet Fish & 
Trap Corporation. If additional information to verify the existence or 
use of the circulating system is necessary. please feel free to contact 
the existing owner.
    When there were lobsters on board from fishing. the circulating 
system served the following functions.
    (a) It provided for a constant replenishment of oxygen for the 
lobsters and allowed for the dispersion of wastes (primarily: 
nitrogenous compounds) from the lobsters stored on board: these 
lobsters were caught at a considerable distance off-shore and were 
densely packed and subjected to a long period of transport; the 
recirculating system was essential for their survival:

    (b) In the winter. it provided an environment for the successful 
    storage and transport of the lobsters without freezing; and
    (c) The water served to cushion the impact of the massed lobsters 
    on each other.

    2. As stated in the Affidavit of Bruce E. Kopf, which was part of 
the Fund submittal. the fishing area for Mr. Kopf for the past 10 years 
was in an area about 80 miles south/southwest of Block Island to just 
north of Hudson's Canyon. See Exhibit B. which is a chart outlining the 
fishing grounds of the F/V Spartan, and Exhibit C, which is Mr. Kopf s 
trip log of his last trip to the ``dumping grounds'' prior to the 
Spill.
    3. Exhibit D contains the following information responsive to this 
request:
    (a) 1993 and 1994 Statement of Accounts for the F/V Spartan; and
    (b) 1995 settlement sheets
    (Note: Mr. Kopf was unable to locate all of the bank statements and 
settlement sheets responsive to your request [namely, 5/93, 12/93 and 
8194 Statement of Accounts, and 3/95-6/95 settlement sheets]. However, 
the underlying claim submitted to Turnaboat, provided as Exhibit F in 
the claim to the Fund, is for damages solely for the period of January 
19, 1996 to March 99. 1996. That submittal included the financial 
information required by Turnaboat, namely, bank statements for January, 
February, March, October, November and December, 1995).
    4. As stated in his Affidavit, Mr. Kopf was making the repairs to 
his boat in early January 1996. The repairs were made at dockside and 
included replacing all deck lighting, plumbing and main pump 
replacement with spare, wiring upgrades, engine repairs and general 
maintenance. These repairs were made by Mr. Kopf and Carr Marine. See 
Exhibit E for copies of repair receipts. Note that Mr. Kopf effected 
the repairs prior to the Spill and was awaiting a favorable weather 
forecast to resume fishing.
    5. Documents provided in the underlying claim clearly evidence that 
Mr. Kopf had fished in January 1995 and January 1994, as well as 
December 199 . The only reason Fir. Kopf was not fishing in January 
prior to the Spill was the aforementioned need to perform some 
maintenance on his boat. Said repairs were completed prior to the 
Spill.
    6. The following information documenting the areas closed to 
fishing as a result of the Spill can be found at Exhibit F
    (a) Barge North Cape Incident Fisheries Closures Prepared by Rhode 
Island Department of Environmental Management, Department of Health 23 
January 1996.
    (b) Federal Register Closure Notices dated 2/1/96, 3/19/96, 4/15/
96, 5/6/96, 6/3/96 and 6/05/96.
    7. At the time of the Spill on January 19, 1996 Mr. Kopf's Fishing 
Vessel Spartan was docked at Point Judith. In order to reach his off-
shore fishing grounds after the Spill, Mr. Kopf would have had to 
travel through polluted waters which were closed to fishing. 
Theoretically, Mr. Kopf's vessel could operate with, or without. the 
use of circulating sea water. However, that is theory. In practice Mr. 
Kopf would only travel with the catch hold full of water since the 
weight of the water was necessary for the proper stabilization of the 
vessel. If Mr. Kopf had attempted to travel from port and through the 
closed waters with an empty catch hold. he would have been bounced 
around and experienced a particularly uncomfortable ride. Furthermore. 
if successful in traveling through the closure areas with a dry hold, 
Mr. Kopf would then have had to fill the system at sea a practice which 
could have damaged the baffles within the hold.
    8. When Turnaboat denied the Kopf claim. they noted that he could 
have landed his catch at Montauk, NY, Stonington, CT. Sakonnet. Ri or 
Westport. MA. This was simply not the case for the following reasons:
    Montauk, NY was closed for the winter; more importantly. Mr. Kopf 
no longer possessed a valid New York Landing Permit which would have 
allowed him to offload his vessel in a New York port;
    Stonington, CT is over 90 miles south of Mr. Kopf's home port at 
Point Judith; in addition to this port being unreasonably out of the 
way (extended travel time and fuel costs), Mr. Kopf had never sailed to 
this port, had no knowledge of the shoreside facilities. indeed, did 
not even know if a shoreside facility at this location would be geared 
to handle his volume or if he could be fairly compensated for his catch 
at this location. Most importantly, Mr. Kopf did not possess a Landing 
Permit to be able to offload in Connecticut:
    Westport, MA could only be reached by traversing completely around 
the closure area. a course unreasonably far removed from his fishing 
grounds. In addition. Mr. Kopf did not possess a Landing Permit for 
Massachusetts; and
    Sakonnet, RI could only be reached by traversing completely around 
the closure area. a course unreasonably far removed from his fishing 
grounds and his home port. Furthermore, Mr. Kopf does not believe that 
the port facilities in Sakonnet, RI would have been able to accommodate 
his 70-foot vessel.
    9. See Exhibit A.
    Please call if you need further clarification on any of the above.
            Cordially,
                                     Peter N. McIsaac. Esq.
          Gregory P. Grimes, Environmental Project Manager.





































                                   
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