The lawsuit was filed by Maritrans Inc., which is seeking $200 million under a clause in the Fifth Amendment of the Constitution, which prohibits the government from taking private property without just compensation. The government must respond to the suit by October 7.
(The case) has some very major policy implications if they are successful, said Sean Connaughton, an attorney with law firm Eckert, Seamans, Cherin and Mellott. There are tens of thousands of barges and thousands of vessels that could potentially be affected by this.
Maritrans argued that the government devalued 37 of its oil-carrying barges when the Oil Pollution Act, passed in 1990 after the Exxon Valdez disaster, called for all tank vessels in US waters to have double hulls by 2015. The requirements were phased in from 1995 according to the size and age of vessels.
The company filed the lawsuit on August 7 but announced it only recently after the six-year statute of limitations expired for filing what is commonly known as a takings action.
After the law came into force, the company chose not to repair several barges when they came up for maintenance because their useful remaining lives were so limited that we didn't feel we'd get an adequate return, , said Arthur Volkle, a lawyer for Maritrans.
Industry officials said the justice department could raise several issues in response to the suit, including questions about whether the clock for damage claims had even begun ticking, how much value the vessels had lost and when they started losing value.
Justice department officials were unavailable for comment.
Maritrans believes that its barges started losing value from the time the law was passed, and hence a taking prohibited by the Fifth Amendment occurred.
It's the first time maybe since Prohibition (in the 1920s) that the federal government has wiped out the capital base of a whole industry, said Volkle.
If the court finds there was a taking and it began from the time the law was passed, other firms would be unable to sue for damages, since the six-year time limit for claims has passed.
But if the court finds the taking begins from the date when a ship must be double-hulled, then other owners could start lining up for compensation.
