Transcript OPA: Oil Polluters’ Alleviation?

OPA: Oil Polluters’ Alleviation?
October 8, 2010
David Ashton
Assistant General Counsel
OPA: Oil Polluters’ Alleviation?
• This
is an OPA Update
• We will cover:
– Limitation and Exoneration Actions & Oil Pollution
– Liability under OPA
• Responsible Parties
• Facilities
• Preemption
• Limitation of Liability
– Late Breaking Legislative Developments
OPA: Oil Polluters’ Alleviation?
• Personal
Background:
– Portland Harbor Superfund Site RIFS consent order
negotiation 2001
– Marine Terminals Corporation Terminal 6 diesel oil spill
2003
– 2006 Deskbook Chapter on OPA
– Portland Harbor Superfund Site Litigation, Arkema v.
Anderson (D.Or. 2009)
OPA: Oil Polluters’ Alleviation?
•
After the April 20, 2010 Deepwater Horizon disaster we saw a
flurry of attempted legislative action
– You might well ask why?
• Big Oil Bailout Prevention Acts (e.g., HR 5212) proposed to:
– Increase liability of offshore facilities from $75 MM
damages to $10 Billion
– Direct President to promulgate regulations for advance
payments from OSLTF to help states and local
governments deal with oil spills
– Remove $1 Billion per incident expenditure limitation on
use of, and on borrowing authority of, OSLTF fund
– Retroactive to April 15, 2010
OPA: Oil Polluters’ Alleviation?
•
Recent proposed Spill Victims Redress Act to:
– Clarify that victims of oil spills could seek damages from all
persons involved in the incident
– Victims would not simply be limited to recourse against
those considered “responsible parties” under OPA
– When victims sue for state law remedies in state court,
defendants cannot automatically remove to federal court
– Allows for more timely resolution of claims
• Would allow for suits against parties like Transocean, the well
driller, and Halliburton, the well cement grouter
• Who, according to sponsor Senator Whitehouse, “are trying to
evade responsibility by arguing that current law only allows
BP to be held accountable”
Perceived Flaws with OPA: Background
•
Limitation and Exoneration Actions
• In re Triton Asset Leasing, 2010 WL 2487939 (S.D. Tex 2010)
– April 20, 2010 MODU Deepwater Horizon exploded into
flames, killing 11 crew and injuring many others.
– May 13, 2010 Transocean filed limitation action in SD Tex
seeking to limit its liability to $26,764,083
• value of the vessel and its freight.
– Limitation Actions under the Limitation Act of 1851 are
designed to shield vessel builders and operators from large
claims that would deter investment in marine shipping
• Court addressed 3 key preliminary issues
Perceived Flaws with OPA: Background
•
Issue 1: can you move to dismiss or transfer Limitation Action
without first filing a claim or an answer to the limitation
complaint?
• Court held transfer motions seeking an alternative venue in
which to assert claims do not challenge exoneration or
limitation claims and are thus not governed by FRCP F(5)
• Court held nonetheless the “non-party” movants must
demonstrate Article III standing
• Court held demonstrated because “non-parties” are affected
by Court’s limitation action injunction enjoining further
prosecution of any action against petitioner regarding any
claim subject to the limitation proceeding.
Perceived Flaws with OPA: Background
Court required “non-party” movants to prove necessary
personal stake by refilling their motions attaching copies of
complaints against Transocean filed elsewhere or
declarations that such claim was intended to be filed.
• Issue 2: How should the Court rule on properly filed motions
to transfer and motions for expedited discovery re death and
personal injury claims?
• Court held: would be deferred to allow JPML to rule on most
appropriate place to try case
– any earlier ruling, given number of actions filed across 5
Gulf states and elsewhere, would create potential for
turmoil of conflicting court rulings; JPML in best position to
select best location.
•
Perceived Flaws with OPA: Background
– early
discovery would undermine very purpose of a
maritime concursus – i.e., all claims handled together to
ensure prompt and economical disposition of all
controversies involving a multitude of claimants.
• Issue 3: Motions to Dismiss the Limitation Action entirely?
– Court would not dismiss limitation action based on
movants’ assertion that there was plenty of evidence of
negligence and privity in public record (Congress and
media)
– too early in this 1 month old fact intensive claims-driven
process
• claims were still being filed and no discovery had
occurred.
Perceived Flaws: Subject Matter of
Limitation Action
•
In re Triton Asset Leasing GMBH, 2010 WL 2541825 (S.D.
Tex 2010)
• Limitation Action Plaintiff Transocean sought protective order
re US subpoena requiring delivery of 50 ft section of riser cut
from top of Deepwater Horizon BOP and all recovered debris
in connection with CG and MMS Marine Board of
Investigation into explosion of MODU Deepwater Horizon
•
Recognizing importance of not impeding government investigation, Court
nonetheless took jurisdiction because subpoenaed debris from the sunken
vessel is the very asset of central importance to Limitation Action
• Based on Government assurance it would only conduct non-destructive testing
on the debris and on condition the Court be informed in advance if
Government proposed to conduct invasive testing on these assets of central
importance to the Limitation Action, Court declined to issue an order limiting
the type of testing that could be conducted.
Perceived Flaws: Multiple Deepwater Horizon
Lawsuits Removed & Stayed Pending JPML
•
Nguyen v. BP Exploration & Production, Inc. 2010 WL
3169316 (S.D. Tex. Aug. 9, 2010)
• State lawsuit removed to federal court
• BP then moved to stay pending JPML decision
– citing as of that time 78 scheduled actions and 135 tagalong actions relating to Deepwater Horizon disaster
potentially subject to transfer and consolidation in MDL.
– Relying on its inherent power to stay based on a balancing
of competing interests and hardships and considerations of
judicial efficiency, Court granted temporary stay.
Perceived Flaws: JPML
•
Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of
Mexico, April 20, 2010, 2010 WL 3166434 (US Judicial Panel
Multidistrict Litigation August 10, 2010)
• 77 actions considered: 31 in ED La, 23 SD Ala, 10 in ND Fla,
8 in SD Miss, 2 in WD La, 2 in SD Tex, 1 in ND Ala
• Court held centralizing the litigation will allow consistent
handling of common factual issues relating to cause of the
explosion and fire and the role of each defendant, eliminate
duplicative discovery, prevent inconsistent pre-trial rulings
(e.g., on class certification), and conserve resources.
Perceived Flaws: JPML
•
Personal injury/wrongful death actions should be included due
to the factual overlap
– individualized discovery needs different from economic
damages claims found to be manageable through separate
discovery and motion practice tracks to maximize
efficiency.
• Found no strong reason for separate treatment of OPA claims
– leaving individual actions in different jurisdictions risked
inconsistent rulings on presentation of claims requirement.
• S.D. Tex limitation action was identified as a potential tag
along action and was ordered to be conditionally transferred
• transferred subject to parties’ right to seek some different
treatment by motion to new court.
Perceived Flaws: JPML
•
Selected Judge Carl J. Barbier based on his maritime
experience, MDL experience, and immersion in many DH
claims to date.
– a recusal motion had recently been rejected for mandamus
appeal by 5th Circuit.
– Best to transfer to one judge and have judge draw upon
additional resources like magistrate judges and ability to
appoint special masters and other case management tools
identified in the Manual for Complex Litigation.
Perceived Flaws: Who is a RP?
–
In re Settoon Towing, LLC, 2010 WL 2545270 (E.D.La
June 16, 2010)
– M/V Cathy M. Settoon while pushing a barge struck ExPert
Oil’s oil well in Bayou Perot. While oil well was owned and
operated by ExPert, it was on a state lease held by Alpine
Explorations,Co. Alpine subsequently assigned the lease
to ExPert and others retroactive to a date before the spill.
– Essence of OPA liability - Section 2702(a):
•
“Notwithstanding any other provision or rule of law, and subject to the
provisions of this Act, each responsible party for a vessel or a facility from
which oil is discharged, or which poses the substantial threat of a
discharge of oil, into or upon the navigable waters or adjoining shorelines
or the exclusive economic zone is liable for the removal costs and
damages specified in subsection (b) of this section that result from such
incident.”
Perceived Flaws: Who is a RP?
•
Responsible Party is defined by Section 2701(32):
–
–
–
In the case of a vessel, any person owning, operating or demise chartering the
vessel
In the case of an onshore facility … any person owning or operating the
facility, except a Federal agency, State, municipality, commission, or political
subdivision of a State, or any interstate body, that as the owner transfers
possession and right to use the property to another person by lease,
assignment or permit.
In the case of an offshore facility … the lessee or permittee of the area in
which the facility is located or the holder of a right of use and easement
granted under applicable State law or the Outer Continental Shelf Lands Act
for the area in which the facility is located (if the holder is a different person
than the lessee or permittee), except a Federal agency, State, municipality,
commission, or political subdivision of a State, or any interstate body, that as
the owner transfers possession and right to use the property to another person
by lease, assignment or permit.
Perceived Flaws: Who is a RP?
• Definition of Responsible Party Cont’d:
• In the case of a deepwater port licensed under the Deepwater
Port Act of 1974, the licensee.
• In the case of a pipeline, any person owning or operating the
pipeline.
• In the case of an abandoned vessel, onshore facility,
deepwater port, pipeline, or offshore facility, the persons who
would have been responsible parties immediately prior to the
abandonment of the vessel or facility.
• What about former owners/operators? Arrangers for
disposal? Causers, contributors & exacerbators?
Perceived Flaws: Who is a RP?
In Re Settoon: “offshore facility” RPs defined by Section
2701(32)(A) as:
– “lessee or permittee of the area in which the facility is
located …
• At the time of spill Alpine was lessee of the area in which the
offshore facility from which the oil leaked was located.
• Court held: there can be more than one RP under OPA &
when there is, liability is joint and several.
• Alpine could be adjudicated an additional RP:
– Section 2702(a) liability for removal costs and damages
extends to “each responsible party”
•
–
While OPA Section 2710 permits indemnity agreements it prohibits
them from transferring liability from one person to another.
Perceived Flaws: Who is a RP?
•
A non RP Third Party can be treated as the RP for purposes
of OPA liability when a RP establishes Third Party is the Sole
Cause
• Gabarick v. Laurin Maritime (America) Inc., 2010 WL 147216
(E.D. La. Jan. 11, 2010)
• M/V Tintomara heading down river on the Mississippi in New
Orleans Harbor collided with the tank barge DM-932 being
pushed by tug M/V Mel Oliver.
• Owner of tug M/V Mel Oliver was designated RP by CG
• Tug owner asserted claims against owners of M/V Tintomara
under OPA
Perceived Flaws: Who is the RP?
•
Owners of M/V Tintomara moved to dismiss on the basis that
as a non discharging party (in the collision the oil leaked from
the oil barge DM-932) it was not an RP and thus had no OPA
liability (for direct cost recovery (2702) or contribution (2709))
– Court held that a non-discharging party that was not a
defined RP could only be held liable as an RP under OPA
under a provision for substitution of a third party causing
the discharge as the RP
•
Section 2702(d)(1)(A) provides “… in any case in which a responsible
party establishes that a discharge … and the resulting removal costs
and damages were caused solely by an act or omission of one or more
third parties … the third party or parties shall be treated as the
responsible party or parties for purposes of determining liability under
this subchapter.”
Perceived Flaws: Who is the RP?
• Court
reasoned M/V Tintomara entitled to summary
judgment because at least some fault was attributable
to the owner or operator of the tug
• because of the contract between the owner of the
tug and the owners of the discharging oil barge
• undisputed evidence from tug steersman pushing
the barge reflecting that at least some fault
attributable to tug
• M/V Tintomara could not be “solely” at fault and as
such there was no basis for it being an OPA RP.
• Court said don’t worry, pursue them under GML or
state contribution remedy.
Perceived Flaws: Who is the RP?
“Facilities” Subject to OPA Liability are structures or devices
for managing oil and “onshore facilities” are defined differently
from “offshore facilities”
• US v. Viking Resources, Inc., 607 F.Supp.2d 808 (S.D.Tex.
2009)
• Oil leaked from a land-based tank battery (collection of tanks
used to store oil) into a wetland in Galveston County and then
into Highland Bayou, a navigable tributary to Galveston Bay in
December 2004
• CG funded all costs from OSLTF
•
Perceived Flaws: Who is the RP?
•
Brought cost recovery action against Viking & Chambers
– last known lessee and operator of a subdivided portion of a
leasehold underlying the land containing the old tank
battery
– president, sole officer, sole director and sole owner of
Viking.
• First element of OPA liability is that defendant must be a
responsible party for the “facility” or “vessel”
• Court noted that viewed in isolation, the definition of “facility”
supported an expansive aggregate definition
Perceived Flaws: Who is the RP?
Section 2701(9) defines “facility” as “any structure, group of
structures, equipment, or device (other than a vessel) which is
used for one or more of the following purposes: exploring for,
drilling for, producing, storing, handling, transferring,
processing, or transporting oil. This term includes any motor
vehicle, rolling stock, or pipeline used for one or more of these
purposes.”
• Court however looked to the definition of RP and the
distinction in definition of “onshore” versus “offshore” facilities
to adopt narrow view that “facility” was the tank battery from
which the oil discharged
•
Perceived Flaws: Who is the RP?
Court rejected an aggregate definition of “facility”
• RP of an Abandoned Onshore Facility is the Person Who
Would Have Been the RP immediately prior to Abandonment
– Intensely Factual Inquiry
• US v. Viking Resources, Inc., 607 F.Supp.2d 808 (S.D.Tex.
2009)
• Viking and Chambers sought summary judgment on ground
that US could not prove they ever owned the old tank battery
• US’s position was they became owners by virtue of the
assignment of the lease to extract oil
•
Perceived Flaws: Who is the RP?
•
Dispute turned on the meaning of an undefined term in the
assignment
• Transfering the “Lease” (defined) and the “Property”
(undefined).
• US came up with plausible factual information to suggest that
before Viking’s new tanks were installed, Defendants
continued to use the old tank battery for production of oil
• for perhaps up to four years before the new tanks were
installed.
–
No Summary Judgment for Defendants
Perceived Flaws: Claim must be Presented to RP
•
Gabarick v. Laurin Mar. (Am.) Inc., 2009 WL 1022549 (E.D.
La. 2009) (M/V Tintomara collision + oil barge DM-932)
• Motion to dismiss claims based on failure to meet 33 USC
2713’s claims presentation requirements
• Section 2713(a): “Except as provided in subsection (b) of this
section, all claims for removal costs or damages shall be
presented first to the responsible party or guarantor of the
source designated under section 2714(a) …”
• Claimant has an election between claim in court or to OSLTF
when:
– Person to whom claim presented denies all liability, or
– Claim is not settled by payment within 90 days of
presentation. 33 USC 2713(c).
Perceived Flaws: Claim must be Presented to RP
•
One claimant was held to have failed to present a claim by
tendering an invoice of costs incurred because:
– Did not satisfy the 33 USC 2701(2) definition of a “claim”
as “a sum certain for damages or removal costs resulting
from an incident” when invoice did not describe manner in
which oil spill impacted it; and
• Other claimants could not rely on language of RP’s limitation
complaint declaring it was not at fault and had valid defenses
as necessary denial of liability.
• Relying prior cases, court held the claim presentation
requirement is jurisdictional warranting dismissal without
prejudice rather than a stay to allow presentation.
•
But see Arbaugh v. Y & H Corp., 546 U.S. 500, 516 (2006) (bright line)
Perceived Flaws: Claim must be Presented to RP
• Similar
result to Gabarick in Russo v. M/V Dubai Star,
2010 WL 1753187 (N.D. Cal. April 29, 2010)
– Claim by commercial fishermen and a seafood
processor on behalf of putative class of fishermen,
vessel owners, seafood processors and commercial
boat charterers
• Release of Bunker C fuel during fueling the Dubai Star
in San Francisco Bay which plaintiffs alleged was
caused by the negligence of the owners, operators or
crew of the Dubai Star
• Presentation requirement held jurisdictional & unmet.
Perceived Flaws: Claim must be Presented to RP
There was no discussion if the Dubai Star was “designated”
the RP by CG, as is required for applicability of the
presentation requirement
• Court rejected an argument based on a letter from Dubai
Star’s counsel that it would not set up the required claims
processing system [a requirement an otherwise designated
RP must satisfy] because
• Inappropriate to consider it on a motion to dismiss
• Waiver of requirement argument of no avail relating to a
subject matter jurisdiction matter (*3 fn3)
• No discussion of Arbaugh v. Y & H Corp., 546 U.S. 500, 516
(2006) (Congress must declare a limitation “jurisdictional”)
•
Perceived Flaws: Claim must be Presented to RP
•
No Presentation Requirement, However, When the Claim is
For Removal Costs
• United States v. M/V Cosco Busan, 557 F.Supp.2d 1058
(N.D. Cal. May 9, 2008)
• November 7, 2007 Cosco Busan allided with the Bay Bridge,
San Francisco Bay discharging more than 50,000 gallons into
the Bay
• Government sued the vessel, owner, operator and pilot
• Defendants claimed failure to satisfy the claim presentation
requirements was fatal to government’s claims
• Court held, Section 2717 trumps Section 2713
Perceived Flaws: Claim must be Presented to RP
•
Section 2717: Except as otherwise provided in this
paragraph, an action may be commended under this
subchapter for recovery of removal costs at any time after
such costs have been incurred.” 33 USC 2717(f) (emphasis
added)
• Defendants’ claims of nullification of statutory requirement of
presentation of “all claims” were wrong because Section
2717(f)(2) only applies to “removal costs referred to in Section
2702(b)(1)” and such removal costs are limited to “removal
costs incurred by the United States, a State, an Indian tribe,
or a person acting pursuant to the National Contingency
Plan.” 33 USC 2702(b)(1)
• Damages claims still presented
Perceived Flaws: Claim must be Presented to RP
•
Specificity of 2717 trumps generality of 2713
– Congress likely recognized need for flexibility for
recovering removal costs versus other damages claims
– One can imagine situations when size of the spill and
scope of cleanup and complexity of the legal issues or
intransigence of RPs makes it preferable to proceed
directly to court to seek removal costs.
– Simpler claims can be handled through presentation
process
– This harmonizes with Congressional notion that OPA is
intended “to eliminate to the extent possible, the need for
an injured person to seek recourse through the litigation
process.”
Perceived Flaws: What Claims are Left?
•
General Maritime Law is Unavailable for the Recovery of
Removal Costs or Damages Covered by OPA
• In re Settoon Towing, 2009 WL 4730971 (E.D. La. 2009)
• M/V Cathy M. Settoon towing a barge struck an oil well owned
and operated by ExPert Oil & Gas causing uncontrolled spray
of crude oil into Bayou Perot, Jefferson Parish, La
• Settoon moved for summary judgment on grounds OPA
preempts general maritime claims for recovery of removal
costs
• 33 USCA 2751 states: “[e]xcept as otherwise provided in this
Act, this Act does not affect … admiralty and maritime law …”
Perceived Flaws: What Claims are Left?
•
Court nonetheless found GML claims preempted by OPA:
GML applies only in the absence of a relevant federal statute –
East River SS Corp. v. Transamerica Delaval, 106 S.Ct. 2295,
2298-99 (1986)
– OPA 1990 provides a comprehensive damages remedy in 33 USC
2702
– Such remedy is preemptive through its operative language
“[n]otwithstanding any other provision or rule of law, and subject to
the provisions of this Act”
– Following E.D. La. authorities such as Gabarick v. Laurin Mar.
(Am.) Inc., 623 F.Supp.2d 741, 746 (E.D. La. 2009)
–
Perceived Flaws: What Claims are Left?
 Preemption
intended by language of modifier to the
applicability of admiralty and maritime law:
• “[e]xcept as otherwise provided in this Act,” 33 USCA 2751
 In addition, 33 USC 2718(a)’s language
 “[n]othing in this Act … shall in any way affect, or be
construed to affect, the authority of the United States … (1)
to impose additional liability or additional requirements …
relating to the discharge, or substantial threat of discharge,
of oil”
 not change outcome because GML claim did not seek to
impose liability additive to the damages liability sought
under OPA
• both claims sought recovery of the identical damages.
Perceived Flaws: What Claims are Left?
•
State Claims are Available: Russo v. M/V Dubai Star, 2010
WL 1753187 (N.D. Cal. April 29, 2010)
• Dubai Star also argued existence of OPA claims preempted
ability to rely on state law claims for damages re discharge of
oil, e.g., public nuisance
– OPA has not one but two requirements regarding
discharge of oil or oil removal activities:
– Section 2718(a): “Nothing in this Act … shall (1) affect, or
be construed or interpreted as preempting, the authority of
any State or political subdivision thereof from imposing any
additional liability or requirements with respect to (A) the
discharge of oil or other pollution by oil within such State;
or (B) any removal activities in connection with such a
discharge ….”
Perceived Flaws: What Claims are Left?
•
•
•
•
•
Section 2718(c): “Nothing in this Act … shall in any way affect, or be construed to
affect, the authority of the United States or any State or political subdivision thereof
(1) to impose additional liability or additional requirements; or (2) to impose, or to
determine the amount of, any fine or penalty (whether criminal or civil in nature) for
an violation of law; relating to the discharge, or substantial threat of discharge, of
oil.”
Taken together these non-preemption provisions mean that nothing in OPA
prevents a state or political subdivision imposing additional liability or requirements
regarding a substantial threat of oil discharge, an oil discharge or other pollution
from oil.
Thus plaintiffs could bring state law statutory or common law claims against Dubai
Star regarding the Bunker C discharge
Note: non OPA state law remedies are severely constrained by the Economic
Loss Rule (economic loss unrecoverable without physical property damage)
Similar: United States v. M/V Cosco Busan, 557 F.Supp.2d 1058 (N.D. Cal. May 9,
2008) (US remedies)
Recent Legislative Developments
•
Coast Guard Authorization Act of 2010, HR 3619
•
< http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h3619eah.txt.pdf>
Sent to President for Signature – October 4
TITLE VII—OIL POLLUTION PREVENTION
Sec. 701. Rulemakings.
Sec. 702. Oil transfers from vessels.
Sec. 703. Improvements to reduce human error and near miss incidents.
Sec. 704. Olympic Coast National Marine Sanctuary.
Sec. 705. Prevention of small oil spills.
Sec. 706. Improved coordination with tribal governments.
Sec. 707. Report on availability of technology to detect the loss of oil.
Sec. 708. Use of oil spill liability trust fund.
Sec. 709. International efforts on enforcement.
Sec. 710. Higher volume port area regulatory definition change.
Sec. 711. Tug escorts for laden oil tankers.
Sec. 712. Extension of financial responsibility.
Sec. 713. Liability for use of single-hull vessels.
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Legislative Developments – Additions
•
SEC. 708. USE OF OIL SPILL LIABILITY TRUST FUND.
(a) IN GENERAL.—Section 1012(a)(5) of the Oil Pollution Act of 1990
(33 U.S.C. 2712(a)(5)) is amended—
(1) by redesignating subparagraphs (B) and (C) as subparagraphs (C)
and (D), respectively; and
(2) by inserting after subparagraph (A) the following:
“‘(B) not more than $15,000,000 in each fiscal year shall be available to
the Under Secretary of Commerce for Oceans and Atmosphere for
expenses incurred by, and activities related to, response and damage
assessment capabilities of the National Oceanic and Atmospheric
Administration;’’.
Legislative Developments – Additions
•
SEC. 712. EXTENSION OF FINANCIAL RESPONSIBILITY.
• Section 1016(a) of the Oil Pollution Act of 1990 (33 U.S.C. 2716(a)) is
amended—(1) by striking ‘‘or’’ after the semicolon in paragraph (1); (2)
by inserting ‘‘or’’ after the semicolon in paragraph (2); and (3) by
inserting after paragraph (2) the following:‘‘(3) any tank vessel over
100 gross tons using any place subject to the jurisdiction of the United
States;’’.
Legislative Developments – Additions
•
SEC. 713. LIABILITY FOR USE OF SINGLE-HULL VESSELS.
• Section 1001(32)(A) of the Oil Pollution Act of 1990 (33 U.S.C.
2701(32)(A)) is amended by inserting ‘‘In the case of a vessel, the
term ‘responsible party’ also includes the owner of oil being
transported in a tank vessel with a single hull after December 31, 2010
(other than a vessel described in section 3703a(b)(3) of title 46, United
States Code).’’ after ‘‘vessel.’’.
Conclusions
• Limitation
Actions are hugely frustrating in mass
tort situations like Deepwater Horizon
• OPA remedies are very different from CERCLA
and some State law remedies for pollution
• There is tremendous variability in the case law
and the district where the incident happens to
occur is very important
• E.D. La appears to be protective of its maritime
stakeholders
• Battle will continue in Congress