K
Regulatory Framework

Just over one year after the Exxon Valdez ran aground on Bligh Reef, Congress passed, and President Bush signed, the Oil Pollution Act of 1990 (OPA). The Act was meant to be the primary federal legislation addressing oil spills into United States navigable waters and onto its shorelines. At the time of OPA’s passage, the major issues confronting the Congress included the interplay of federal and state law on the subject, United States participation in international efforts to deal with oil spills, the continuing viability of the Shipowner’s Limitation of Liability Act of 1851 (Limitation Act), and the nature and extent of recoverable damages, particularly for injured natural resources and purely economic losses.

There are numerous federal statutes dealing with oil discharge, but until the passage of the Oil Pollution Act of 1990 (the Act) none specifically addressed oil pollution to the nation’s waterways and coastlines. A partial listing of current laws under which oil spill cleanups are regulated include: The Clean Water Act, Deepwater Port Act, Outer Continental Shelf Lands Act, Trans-Alaska Pipeline Authorization Act, and the Limitation of Liability Act. While the need for a unified oil pollution code was debated in Congress for more than a decade, it was the Exxon Valdez grounding that provided the impetus to pass the Oil Pollution Act, which was then signed into law on August 18, 1990.

There are many provisions of the OPA that, when taken as a whole, set this law apart from other oil pollution legislation. These are:

  1. OPA’s purpose and intent was to provide a rapid legislative tool which would ensure a rapid and effective cleanup of oil spills to the nation’s waterways and coasts.

    Because of the many laws under which oil spill liability is regulated, the OPA was designed to be the legal framework of choice to direct the removal of oil spills on navigable waterways and to compensate affected parties. Toward this end, the OPA defines navigable waterways far more narrowly than the case law has defined such a waterway under the Clean Water Act. While the Clean Water Act can define a navigable waterway as wetlands, tributaries, and even groundwater, the OPA limits that definition directly to a discharge into a waterway that empties into a coastal region. Claimants seeking relief under the OPA for a discharge in an inland area, away from the coast and not within the exclusive economic zone (EEZ), have not been successful. Additionally, it should also be said that the OPA amends the Clean Water Act to allow the U.S. government to participate in removal, mitigation, and monitoring of discharge events.

    Only secondary to this primary purpose was to reduce the amount of litigation by the presence of a presentation requirement (33 U.S.C. § 2713)(OPA section 1013). Prior to the commencement of any legal action, those making OPA claims must first present them to the responsible party. The courts have upheld this requirement and have denied OPA relief if it has not been fulfilled. However, this presentation requirement should not be taken to mean that removal should not begin until this requirement has been met. Indeed, the courts have ruled that cleanup efforts may commence before a court has ruled on the presentation requirement.

  2. Responsible Parties

    Section 1002 (Elements of Liability) defines responsible parties as, “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 of the exclusive economic zone…”

    It is these responsible parties who must pay the costs associated with removal and monitoring efforts (monitoring efforts are included due to the language of section 1002(a), i.e., “…which poses the substantial threat



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Oil in the Sea III: Inputs, Fates, and Effects K Regulatory Framework Just over one year after the Exxon Valdez ran aground on Bligh Reef, Congress passed, and President Bush signed, the Oil Pollution Act of 1990 (OPA). The Act was meant to be the primary federal legislation addressing oil spills into United States navigable waters and onto its shorelines. At the time of OPA’s passage, the major issues confronting the Congress included the interplay of federal and state law on the subject, United States participation in international efforts to deal with oil spills, the continuing viability of the Shipowner’s Limitation of Liability Act of 1851 (Limitation Act), and the nature and extent of recoverable damages, particularly for injured natural resources and purely economic losses. There are numerous federal statutes dealing with oil discharge, but until the passage of the Oil Pollution Act of 1990 (the Act) none specifically addressed oil pollution to the nation’s waterways and coastlines. A partial listing of current laws under which oil spill cleanups are regulated include: The Clean Water Act, Deepwater Port Act, Outer Continental Shelf Lands Act, Trans-Alaska Pipeline Authorization Act, and the Limitation of Liability Act. While the need for a unified oil pollution code was debated in Congress for more than a decade, it was the Exxon Valdez grounding that provided the impetus to pass the Oil Pollution Act, which was then signed into law on August 18, 1990. There are many provisions of the OPA that, when taken as a whole, set this law apart from other oil pollution legislation. These are: OPA’s purpose and intent was to provide a rapid legislative tool which would ensure a rapid and effective cleanup of oil spills to the nation’s waterways and coasts. Because of the many laws under which oil spill liability is regulated, the OPA was designed to be the legal framework of choice to direct the removal of oil spills on navigable waterways and to compensate affected parties. Toward this end, the OPA defines navigable waterways far more narrowly than the case law has defined such a waterway under the Clean Water Act. While the Clean Water Act can define a navigable waterway as wetlands, tributaries, and even groundwater, the OPA limits that definition directly to a discharge into a waterway that empties into a coastal region. Claimants seeking relief under the OPA for a discharge in an inland area, away from the coast and not within the exclusive economic zone (EEZ), have not been successful. Additionally, it should also be said that the OPA amends the Clean Water Act to allow the U.S. government to participate in removal, mitigation, and monitoring of discharge events. Only secondary to this primary purpose was to reduce the amount of litigation by the presence of a presentation requirement (33 U.S.C. § 2713)(OPA section 1013). Prior to the commencement of any legal action, those making OPA claims must first present them to the responsible party. The courts have upheld this requirement and have denied OPA relief if it has not been fulfilled. However, this presentation requirement should not be taken to mean that removal should not begin until this requirement has been met. Indeed, the courts have ruled that cleanup efforts may commence before a court has ruled on the presentation requirement. Responsible Parties Section 1002 (Elements of Liability) defines responsible parties as, “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 of the exclusive economic zone…” It is these responsible parties who must pay the costs associated with removal and monitoring efforts (monitoring efforts are included due to the language of section 1002(a), i.e., “…which poses the substantial threat

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Oil in the Sea III: Inputs, Fates, and Effects of a discharge…”, and section 1001(31), i.e., …, the costs to prevent, minimize, or mitigate oil pollution…). Responsible parties may be exempt from the limits to liability, as defined in 33 U.S.C. § 2704(c), for such things as gross negligence, violation of Federal safety, failure of the responsible party to report the incident, or failure to provide reasonable cooperation with the removal activities. The Act established the Oil Spill Liability Trust Fund (33 U.S.C. § 2712) Affected parties may seek relief from this fund if full compensation is not first available from the responsible party. Non-preemption (Savings clause) The OPA makes clear that the Act will not preempt any state from imposing any additional liability or requirements with respect to the discharge of oil or the removal activities (33 U.S.C. § 2717)(OPA section 1018(a)). As such, OPA claims may be brought in state or federal court. While many numerous damage claims can be compensated under the OPA, punitive damages are not. However, due to the non-preemption of the OPA, these claims may be sought under applicable state laws. There have been several court cases which address the OPA’s savings clause. In Ray v. Atlantic Richfield Co (435 U.S. 151, 1978 AMC 527 (1978)) the U.S. Supreme Court held that the OPA’s savings provisions only applied to those state laws which involve Title I issues (liability rules and financial requirements) to recover damages from vessels “from which oil is discharged, or which pose the substantial threat of a discharge of oil” (120 S. Ct. 1146). Therefore, states were free to set forth additional requirements that related to the discharge of oil or the threat of discharge. However, state laws will be preempted in areas that do not relate specifically to the state’s or local concerns and responsibilities. For example, while a state may impose additional or stricter regulations to protect their waterways from oil discharges, a state is not within its jurisdiction to regulate tanker design or vessel personnel qualification. These matters will be regulated by federal statutes that seek to maintain uniformity throughout the states. Economic losses are recoverable under the OPA Due to the limitations of admiralty tort law, which provides no compensation to parties who suffer economic losses in the absence of physical harm, the OPA specifically address this deficiency through section 1002 of the OPA. This section states that “…economic losses resulting from destruction of, real or personal property… shall be recoverable…” (OPA section 1002(B)). OPA also allows for recovery of lost profits or loss of earning capacity as a result of the damage to real or personal property (OPA section 1002(E)). However, the Act does not make clear when these damages are recoverable. The case law on this subject has been somewhat inconsistent. In a Petition of Cleveland Tankers, Inc (791 F. Supp. 669, 1992 AMC 1727 (E.D. Mich. 1992)) the courts dismissed because Cleveland Tankers did not allege any injury, destruction, or loss to their real or personal property. Most other courts have interpreted section 1002 more broadly and have regularly awarded damages to parties who have suffered some economic loss due to a spill (Sekco Energy, Inc. v. M/V Margaret Chousest (820 F. Supp. 1008, 1994 AMC 1515 (E.D. La. 1993), Ballard Shipping Co. v. Beach Shellfish (32 F.3d 623, 1994 AMC 2705 (1st Cir. 1994)). This seems to be more in line with the intent of the OPA. OPA preempts the Limitation of Liability Act. For vessels, the Limitation of Liability Act limits the recoverable damages to the vessel’s value plus freight owing at the end of a voyage. The case law has demonstrated that the purpose of the OPA was to encourage rapid cleanup by responsible parties, and that any limitation of liability is at cross purposes to this goal. Therefore, the OPA preempts the Limitation of Liability Act under federal or state law. Natural resources losses may be assessed by active-use and passive-use. This is possibly the most debated of the OPA’s provisions due to the lack of specific guidelines directing the assessment of natural resource losses. Active-use resources are those that are used; passive-use describe those resources which may not be used, or even plan to be used by anyone, but are nevertheless valued as available. Trustees may use any manner of valuation techniques to assess natural resource loss including contingent evaluation. This process requires that a valuation measure be determined by surveying members of a hypothetical market and asking them how much they would pay to preserve that resource. While this technique seems subjective, the courts have given trustees great deference as long as the study is performed properly. It is likely that in the future such vague valuation processes will give rise to further litigation. Definition of reasonable recovery costs While the Act does define cleanup costs under sections 1012(a) and 1001(31), it was left to the courts to further define and uphold the clear language of those sections. Much of the controversy surrounding this section has centered on the inclusion of mitigation and monitoring costs associated with a spill, and whether those costs may be recovered from the Oil Spill Liability Trust Fund. In general, the courts have pointed to the language of section 1001(31) which states that removal costs means “the costs of removal that are in

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Oil in the Sea III: Inputs, Fates, and Effects curred after a discharge of oil has occurred or, in any case in which there is a substantial threat of a discharge of oil, the costs to prevent, minimize, or mitigate oil pollution from such an incident.” Monitoring is thus necessary to prevent, minimize, or mitigate a discharge. Additionally, while the Trust Fund is available for monitoring and mitigation costs, the responsible party is also liable for these as well. The case law has also further defined recovery costs associated with a discharge to include incremental costs. That is, salaries may also be figured into recovery costs for the time during which government employees (e.g., Coast Guard, attorney’s fees) spend monitoring a spill (United States v. Hyundai Merchant Marine Co (172 F.3d 1187, 1999 AMC 1521 (9th Cir.), cert. Denied, 528 U.S. 963 (1999)). Finally it is worth noting that nowhere in OPA does it define what “all removal costs incurred by the United States” means specifically. Therefore, the Ninth Circuit’s reading of the liability provisions, as applied to United States v. Hyundai, defines removal costs to include all costs that are “prudent, necessary, or reasonable,” and is limited to the extent that the government does not act arbitrarily or capriciously.

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