Digital Extra

But the insurer of the North Cape barge says there is no evidence to support the state's estimates, which include lost tourism revenue.

By TOM MOONEY
Journal-Bulletin Staff Writer

How about a dead loon? A beach cottage that goes unrented for the summer? Or a fishing boat idled for months?

When these losses and costs associated with the North Cape oil spill are eventually tallied, they will easily surpass $15 million, insurance officials say.

They may exceed $50 million, says John O'Brien, chief planner at the state Economic Development Corporation.

That estimate includes the loss of about $30 million in tourism revenue this summer season - a figure based on a University of Rhode Island study done a week after the January spill, when national media coverage and fear of wide- spread contamination were at their greatest.

But insurance officials for the barge's owner, Eklof Marine, say they have seen no evidence so far to support such a costly tourism loss.

"I don't know where he (O'Brien) is getting his figures," says insurance adjuster Bruce Tillman. "I'm not aware of any actual loss to tourism."

Welcome to the high-stakes business of calculating the financial cost of an oil spill.

The North Cape barge is long gone. Where once hundreds of thousands of lobsters littered Moonstone Beach, now only a few bleached shells protrude from the warming sand. But the arduous task of placing a price tag on Rhode Island's worst oil spill is just beginning.

That sound you hear on the docks of Galilee and along the shore of Trustom Pond is the clatter of adding machines as economists and lawyers, accountants and scientists - representing various interests - perform their tabulations.

A final cost won't be known for months - perhaps years if some claims end up in court.

It took the state and owners of the World Prodigy four years to agree to final costs of the 1989 spill off Brenton Point: $2.1 million.

But two months after the North Cape disaster some hard figures have floated to the surface. For instance:

THE CLEANUP

About $8 million was spent attempting to recapture the 828,400 gallons of home heating oil that leaked from the grounded barge off Moonstone Beach.

So says Richard Hobbie, president of Water Quality Insurance Syndicate, a Wall Street company that insures the North Cape for its first $10 million of coverage. (Eklof is insured for another $500 million through an international cooperative of boat owners called West of England.)

Cleanup workers managed to recover 147,000 gallons (or about 17 percent) of the spilled oil. That's far above the industry average, according to Coast Guard Capt. Barney Turlo, who oversaw the cleanup operations.

"We were all surprised," Turlo says. "We expected to get much less than that . . . but everybody swore that was how much product they had."

Included in the $8 million estimate, Hobbie says, are the anticipated expenses of federal and state agencies that responded. (The Coast Guard says its bill alone is likely more than $3 million.)

Eklof owns a quarter interest in the consortium that ran the cleanup, Donjon Environmental Marine Services. Theoretically, as a partner Eklof could share in any profits the consortium makes from the spill.

But Jesse Lewis, a spokesman for Eklof, said in January that Eklof's profit would be "miniscule," if any, considering its own losses.

THE CLAIMS

Just under 1,000 people and businesses have so far filed claims against Eklof Marine, says Hobbie, representing at least $6 million in damages.

It could be the tip of the iceberg.

The vast majority of claims are open-ended, filed by fishermen and fish companies who say they may not know their actual losses for years.

Under the Oil Pollution Act of 1990, those who have suffered losses have three years to file a claim against the "responsible party," in this case Eklof.

But many Rhode Island lobstermen originally delayed submitting claims, wary that they might jeopardize claims in the future, when their losses will be better known.

Though that concern has been allayed, Robert D. Smith, president of the Rhode Island Lobstermen's Association, says members may still wait until scientists hired by the assocation have quantified the short- and long-term damage to the industry.

Assessing long-term damage to the lobster industry is a complicated process that federal and state officials are also struggling with.

Between 300,000 and 1 million lobsters were killed in the spill, estimates O'Brien, ranging from thumb-size to baked-stuffed dimensions.

What damage figure is finally assigned to the lobster industry is one of the largest variables in the oil spill equation - and one insurance adjusters aren't particularly looking forward to.

Said adjuster Tillman: "They charge you for every little dinky lobster and the fish that could of eaten them."

Eklof's insurers have distributed about $1 million so far in interim payments, says Tillman.

Most of the money has gone to fishermen knocked out of work by the closure of 250 square miles of Block Island Sound. (The grounds reopened conditionally to certain fin-fishermen earlier this month and on Friday a 15- square-mile area offshore from Newport was opened to all fishing.)

More than 300 self-employed fishermen filed claims. More than half were ineligible for unemployment compensation.

State expenses as of March 19 - $568,017.51.

That to-the-penny figure represents every hour worked by state employees on the spill, from Department of Environmental Management conservation officers to food inspectors.

It also includes every boat rental, every containment boom purchase, even the electricity used to light some rented rooms, said Claire Richards, a lawyer in the governor's office who did the tabulation.

"Of all the jobs," says Richards, "mine seems to be the easiest."

She's working with hard figures - bills and timecards - not projections.

ENVIRONMENTAL ASSESSMENT

Federal law requires Eklof to pay for all scientific testing and information-gathering used to determine the overall natural resources damage assessment.

So far, says Hobbie, Eklof's insurer has spent between $500,000 and $1 million in gathering and analyzing water and fish samples and other surveys.

But placing a final dollar value on the environmental damage is still months away, Hobbie says.

And it's wrong, he says, to look at other spills for comparisons.

Each oil spill is different, depending on the type of oil, where it spills and the time of year.

For instance, had the North Cape leaked in heavily commercial New York Harbor, the environmental damage would be far less than on the doorstep of the Trustom Pond National Wildlife Refuge.

Similarly a small crude oil spill washing onto a beach populated with rare sea turtles would be far more expensive than if twice as much crude spilled into the open ocean.

It all depends.

"I'm not sure anybody has a real good handle on any of this yet," says O'Brien.

"The greatest problem with this kind of litigation is trying to come up with an accurate way of calculating cleanup costs and the longer-term cost of the environment," says Dennis Nixon, a maritime lawyer who helped the state after the World Prodigy spill, and director of URI's Marine Affairs graduate program.

"I know back with the World Prodigy we fought over every penny, even in terms of how many cents-a-mile a state employee got for driving his car. It was really down to the minutia."

Just weeks before the North Cape spill, Nixon says, the federal government came out with 80 pages of new regulations on how to assess natural resource damages.

If Eklof's insurers decide to challenge these regulations, or are unhappy with the state's bottom line on losses, Nixon says, "I would not be surprised if we encountered the same sort of struggle."

ALTHOUGH Rhode Island's seafood is perhaps the safest it has ever been (considering the extent of testing) and South County beaches suffered no long-term damage from the spill, O'Brien says Rhode Island's biggest battle is fighting negative perception.

Immediately after the spill, some fish companies reported losing millions of dollars in overseas contracts for mackerel, herring and squid.

But Ralph Boragine, executive director of the Rhode Island Seafood Council, said few people brought up the oil spill during the recent International Boston Seafood Exhibition at Hynes Auditorium. The annual show, the largest of its kind, is where seafood wholesalers, retailers and importers gather to drum up business.

THE EFFECT on tourism remains a big unknown.

Timothy Tyrrell, an economics professor with URI's Department of Environmental and Natural Resource Economics, estimated in January that the spill would cost Rhode Island between $30 million and $60 million in lost tourism revenue.

Tyrrell based his findings on a formula his office has used for years to track Rhode Island's $1 billion tourist industry and the experience of similar public relations disasters, such as when medical waste washed ashore in New Jersey in 1988 and the Exxon Valdez oil spill a year later.

"Historical evidence about the impacts of oil spills and other pollution suggests that the Rhode Island tourism industry should expect significant impacts from the North Cape spill," Tyrrell wrote in his report, issued Jan. 25.

O'Brien stresses the preliminary nature of the report, which is why he uses the lower end of the scale when estimating tourism loss.

The state won't likely know what effect the spill had on tourism until the summer is over, he says.

But results of a recent telemarketing survey of 500 people in Philadelphia, New York City and Boston found that, "yes, there has been some damage.

"People have heard about the oil spill and some of those who may have considered Rhode Island may not this year."

But Eklof's insurers are hopeful that the spill will be just a dim memory by the time the beach season arrives.

Says insurance company president Hobbie: "Our experience has shown us that the public's memory is very short and that people, once (the oil) is cleaned up, tend to go where they wanted to go anyway. Most people aren't wary, especially if there have been no adverse damages."

Peter Conn is finding that to be true at Breakwater Village in Narragansett.

The cluster of small cottages overlooks the Harbor of Refuge, one of the areas hardest hit by the spill.

Conn rents out 17 cottages and 37 trailer park sites. So far "business has been booming," the park manager says.

"I'm way ahead of where I was at this time last year. I'm surprised. I was expecting just the opposite."

Conn says people occasionally ask about the spill. "I just tell them it never really affected our beach. We didn't have anything washing up."

"With people cooped up in the house all winter, I don't think anyone is thinking about the oil spill.

"They're thinking about getting to the beach."