Citgo must pay for a massive 2004 Delaware River oil spill, Supreme Court rules

The former owner of a Philadelphia area asphalt refinery is liable for a massive 2004 oil spill in the Delaware River and must pay back millions of dollars in cleanup costs, the U.S. Supreme Court ruled Monday.

In a 7-2 ruling, the court said that Citgo Asphalt Refining Co., the former owner of the refinery in Paulsboro, was responsible for cleanup costs after a vessel it had chartered struck a submerged, discarded anchor in the river as it nudged toward the Citgo refinery dock.

The puncture in the 748-foot vessel, the Athos I, released 264,000 gallons of heavy crude oil into the river, affecting hundreds of miles of shoreline and impairing shipping for days. The Salem Nuclear Power Plant, which draws cooling water from Delaware Bay, was temporarily shut down. More than 180 birds died, according to reports.

Frescati Shipping Co., which owned the vessel, and the U.S. Oil Spill Liability Trust Fund paid a total of $133 million to clean up the spill. Frescati also sought recovery of costs of repairing its vessel.

The majority decision, written by Justice Sonia Sotomayor, said a “safe-berth” clause in the charter contract should be interpreted as a warranty, requiring Citgo and others to make sure the tanker docked safely. The ruling resolves an inconsistency in maritime law about whether the safe-berth clause establishes a warranty or imposes a less rigorous responsibility of “due diligence” in selecting a safe berth.

“We conclude that the language of the safe-berth clause here unambiguously establishes a warranty of safety,” Sotomayor wrote.

Justices Clarence Thomas and Samuel Alito disagreed. Thomas argued in a dissenting opinion that the text of the contract’s safe-berth clause does not include a safety guarantee.

The decision ends an epic case, including a 41-day trial in 2010 and a 31-day re-hearing in 2016, after which U.S. District Judge Joel H. Slomsky ruled that Citgo had failed to provide a safe berth for the Athos I.

Slomsky ordered Citgo to pay Frescati, the ship owner, and Tsakos Shipping & Trading, the ship operator, $55.5 million plus $16 million in interest for a total of $71.5 million. The judge also ordered Citgo to pay about half of the federal government’s costs for the spill cleanup, or $48.6 million.

The court found that the Athos I pilots, captain, and crew maintained proper safety management, which made the vessel seaworthy. The U.S. Coast Guard determined that the crew and pilots did nothing wrong in their approach and had not violated any regulations.

The U.S. Court of Appeals for the Third Circuit upheld Slomsky’s decision, prompting Citgo to appeal to the Supreme Court.

“The many years of effort ... underscore our confidence in the rule of law while the Supreme Court’s decision underlines the importance and significance of safe, well-respected, understood and applied marine navigation practices, which have, for decades, safeguarded human life at sea, the protection and preservation of the marine environment as well as property,” the ship’s owner, Frescati, said in a statement released by Montgomery McCracken Walker & Rhoads, its Philadelphia law firm.

Citgo, which is a subsidiary of state-owned Petróleos de Venezuela (PDVSA), did not respond to a request for comment.

Citgo president and chief executive Carlos Jordá, in a statement to the Hill, expressed disappointment with the ruling, but said the company would abide by the court’s decision.

"While we obviously have different views regarding the merits of our case, we respect the court’s interpretation and can finally close this chapter on the Athos case,” Jordá said.

Citgo sold the Paulsboro refinery to NuStar Energy LP in 2008. The refinery changed hands again in 2014, and was renamed Axeon Specialty Products, before it was sold most recently, in 2018, to PBF Logistics LP. The facility no longer produces asphalt, but is used to store and produce a low-sulfur marine fuel.