In an important decision of first impression construing the Oil Pollution Act of 1990 (“OPA,” 33 U.S.C. §§2701 et seq.), the Fifth Circuit has held the owner and operator (“Nature’s Way”) of a “dominant mind” tugboat liable under OPA as the “responsible party” for a spill emanating from a non-self-propelled “dumb” tank barge in its tow, even though the barge was owned by a third party (Third Coast Towing, “TCT”). Specifically, the Fifth Circuit conducted a res nova interpretation and application of 33 U.S.C. §2702(a), which provides that a designated “responsible party” shall be strictly liable, in the first instance and even without fault, for cleanup/removal costs and damages resulting from an oil spill; and further defines “responsible party” with respect to a “vessel” as “any person owning, operating or demise chartering the vessel.”
The underlying incident occurred in 2013 when a downbound Nature’s Way tugboat in pushing TCT’s two fully loaded “dumb” tank barges, pursuant to a towage contract, allided with a bridge over the Mississippi River. One of the two barges ruptured spilling over 7,000 gallons of oil into the river. Nature’s Way and TCT (and their respective pollution insurer) were all designated as OPA §2702(a) “responsible parties” during the United States Coast Guard’s response to the spill, and Nature’s Way/its insurers spent nearly $3 million in clean-up costs. Likewise the federal government incurred an additional $792,000 in additional cleanup costs.
Nature’s Way and TCT settled a lawsuit between themselves in 2014; and then in 2015 Nature’s Way submitted a claim to the National Pollution Funds Center (“NPFC,” which oversees the Oil Spill Liability Trust Fund, 26 U.S.C.§9509, an OPA-created mechanism, funded by inter alia OPA civil penalties, from which faultless or partially at-fault “responsible parties” can recoup, to the extent of their non-fault, clean-up costs paid out pursuant to their strict OPA liability, see 33 U.S.C. §2708(a), 26 U.S.C. §9509). Specifically, Nature’s Way argued that its OPA “responsible party” liability (if any) should have been limited pursuant to OPA’s limitation-of-liability provision at §2704(a), which allows a vessel “responsible party” to limit its liability based on the vessel tonnage. In turn, Nature’s Way argued that only its tugboat’s tonnage should be included in the OPA limitation-of-liability calculation, to the exclusion of TCT’s “dumb” oil barges (which would reduce Nature’s Way’s exposure by roughly $2.13 million). The NPFC rejected the request to decrease the limit of liability, concluding instead that Nature’s Way was the “operator” of the barges under §2702(a) and thus both barges were properly included in the limitation assessment.
In the wake of all these proceedings, the United States in 2016 sued Nature’s Way and TCT to recover the $792,000 in cleanup costs directly funded by the federal government. Nature’s Way denied liability, and in turn counterclaimed against the government asserting that the NPFC’s “operator” determination was wrong and violated the Administrative Procedure Act (“APA”) by erroneously applying §2702(a).
The district court granted the United States’ motion for partial summary judgment on the validity of the NPFC’s “operator” determination, holding that a “common sense” interpretation supports the conclusion that a “dominant mind” tug providing all motive power for “dumb” barges is “operating” those barges. Nature’s Way then took an appeal from the district court’s ruling (even though it was not a final judgment) as an interlocutory decree in admiralty establishing liability (pursuant to 28 U.S.C. §1292(a)(3)).
Initially, the Fifth Circuit avoided the fraught waters of whether Chevron deference standards (allowing deference to an agency’s interpretation of an ambiguous statute) should apply to the NPFC’s determination because the Court concluded any level of review would produce the same result based on the plain language of §2702(a).
Accordingly, the court moved on to the language of the statute itself, which unfortunately does not define “operating,” other than to circularly state that an “operator” is “any person … operating” a vessel (§2701(26)(A)(1)). Despite this non-defining definition, the court relied on Supreme Court jurisprudence construing the identical definition of “operator” in the Clean Water Act (“CWA,” a similar statutory pollution regime that actually overlaps with OPA to some extent) as any person “who directs the workings of, manages, or conducts the affairs of” the facility/equipment in question. United States v. Bestfoods, 524 U.S. 51, 66 (1998). Based on this “mechanical” definition, the Fifth Circuit concluded “that the ordinary and natural meaning of ‘operating’ a vessel under the OPA would thereby include the act of piloting or moving the vessel.” Thus, because “Nature’s Way had exclusive navigational control over the barge at the time of the collision, and, as such… was a party whose direction (or lack thereof) caused the barge to collide with the bridge,” Nature’s Way was an “operator” for purposes of the OPA limitation provisions. Likewise, the court rejected the argument that the tug’s “operation” of the barges was merely a “mechanical” task like pushing a button or operating a valve, activities the Bestfoods Court deemed insufficient to rise to the level of “operating, because “navigating a barge through a river entails a degree of discretion and judgment significantly different than that required for the mere mechanical activation” of a self-driven system.
Thus, the Fifth Circuit has now very clearly held that a “dominant mind” tug pushing loaded “dumb” barges can only limit under OPA to the full value of the entire flotilla. This decision will be radically important for both inland vessel operators and the petrochemical industry, as well as their respective pollution underwriters, because it definitively and expressly increases the potential liability for “unsmooth operators” who cause spills subject to OPA.
As a final very interesting point, the Fifth Circuit included an important evidentiary footnote. Specifically, the court pointed out that the NPFC’s determination of Nature’s Way’s OPA “operator” status was based solely, expressly and entirely on the USCG’s post-allision Marine Casualty Investigation Report (MCIR), despite the fact that 46 U.S.C. § 6308(a) very clearly states that “no part of [an MCIR], including its findings of facts, shall be admissible as evidence in ‘any civil or administrative proceedings.” The Court noted that, despite the plain unequivocal language of this statutes, the USCG (which administers the NPFC) has taken the regulatory position that NPFC claims are not subject to §6308(a) “on the bases that such claims are an ‘internal, informal agency process’ and that its prior interpretation of the statute—which it had read to exclude using [MCIRs] as evidence in NPFC claims—was resulting in delays and duplicative efforts.” That is, even though the USCG itself had previously excluded MIRCs from NPFC proceedings under the plain language of the statute, it purports to have changed its tack based on efficiency/practicalities of NPFC administration. The problem, of course, is that §6308(a) does not include any efficiency/practicality exception, as the Fifth Circuit very bluntly explained/warned the government:
The Coast Guard’s interpretation of 46 U.S.C. § 6308(a) as inapplicable to the administrative proceeding of an NPFC claim is puzzling to say the least. The most natural reading of a statute that states no part of [an MCIR] shall be admissible as evidence in “any civil or administrative proceedings” would be that such reports cannot be used as evidence in any civil or administrative proceedings—not that such reports cannot be used in any civil or administrative proceedings except for NPFC claims.
Ultimately, this significant evidentiary problem had no effect on the result in the case based on the court’s determination that Nature’s Way would qualify as an “operator” even without the MCIR. However, the court did expressly state that this apparent patent disconnect between §6308(a) and the USCG’s about-face position regarding how it applies to NPFC claims might “in an appropriate case” warrant closer scrutiny.