D&B Boat Rentals, Inc. v. United States, CIVIL ACTION NO. 18-623

Decision Date21 December 2020
Docket NumberCIVIL ACTION NO. 18-623
Citation508 F.Supp.3d 87
Parties D&B BOAT RENTALS, INC. v. UNITED STATES of America, National Pollution Funds Center, and American Pollution Control Corp.
CourtU.S. District Court — Eastern District of Louisiana

Harry E. Morse, Martin S. Bohman, Bohman Morse LLC, New Orleans, LA, for D&B Boat Rentals Inc.

Michael A. DiLauro, U.S. Department of Justice, Washington, DC, for United States of America.

SECTION D (5)

ORDER

WENDY B. VITTER, UNITED STATES DISTRICT JUDGE

Before the Court are D&B Boat Rentals, Inc.’s and the Federal DefendantsCross-Motions for Summary Judgment.1 The parties have filed Oppositions2 and Reply Memoranda.3 The parties also filed supplemental memoranda addressing the United States Supreme Court's decision in Kisor v. Wilkie .4 After careful review of the parties’ memoranda, the record, and the applicable law, the Court finds that Federal Defendants’ interpretation of the relevant regulation does not merit Auer deference and fails to pass muster under Skidmore deference. It therefore denies Federal Defendants’ Motion, grants the Plaintiff's Motion, and remands this matter for further administrative proceedings consistent with this Order.

I. FACTUAL BACKGROUND

This case involves an issue of administrative law arising from the sinking of a vessel. D&B Boat Rentals, Inc., ("D&B"), is a Lafayette, Louisiana based company that owned the M/V RICKY B.5 On May 30, 2013, the M/V RICKY B sank.6 To assist in removing the sunken vessel and to monitor for pollution, D&B hired various companies, including American Pollution Control Corporation (AMPOL), a Louisiana Corporation.7 D&B did not find AMPOL's work satisfactory. Among other issues, D&B claims that AMPOL failed to adequately perform the work by leaving the site of the wreck and by not adequately marking the sunken vessel.8 When AMPOL charged D&B for its services, D&B paid only $164,629.51 of the $240,488.51 bill.9

Seeking payment for the $78,859.00 that D&B would not pay on its invoice, AMPOL submitted a claim to the National Pollution Funds Center ("NPFC").10 As explained in more detail below, the NPFC is the division of the U.S. Coast Guard which administers the Oil Spill Liability Fund (the "Fund"), and pays claimants, including spill responders, under certain circumstances when they are not paid by the responsible party. The NPFC is authorized to recoup payments made from the fund for oil spill cleanup from other entities, including the party responsible for the spill.11 But such authorizations are premised on certain requirements. For example, the removal activities must either fall within the National Contingency Plan ("NCP") or be directed by a Federal On Scene Coordinator ("FOSC").12

During its investigation into whether AMPOL should be paid, NPFC emailed Commander Keith Smith of Morgan City's Coast Guard office. NPFC claims manager stated: "I am sending you this email with a request for further information about the incident. The claimant states that FOSC coordination was provided by Sector Morgan City and gave me your name as a point of contact."13 Commander Smith responded with his point of view on the events giving rise to the dispute and specifically stated: "There was no Coast Guard direction to AMPOL."14

Over D&B's objection,15 NPFC paid out AMPOL's claim in full on April 29, 2014.16 In its "Claim Summary/Determination," NPFC acknowledged that the claimant, AMPOL, must establish:

(a) That the actions taken were necessary to prevent, minimize, or mitigate the effects of the incident;
(b) That the removal costs were incurred as a result of these actions;
(c) That the actions taken were determined by the FOSC to be consistent with the National Contingency Plan or were directed by the FOSC.17

In its Findings of Facts, the NPFC stated "these actions were indeed reasonable and allowable under OPA [The Oil Pollution Act] and 33 CFR § 136.205 as set forth below."18 NPFC then sought reimbursement from D&B. On February 24, 2017, almost three years after the NPFC paid the AMPOL claim, NPFC sent a letter to D&B seeking reimbursement for the amount paid to AMPOL.19 D&B responded by arguing that (1) the statute of limitations had run on any reimbursement claim NPFC may have; (2) that the lack of a Federal On Scene Coordinator, as required by statute, meant the NPFC could not seek reimbursement from D&B and (3) that NPFC's finding that AMPOL was entitled to payment was arbitrary and capricious.20 The NPFC treated D&B's letter as an administrative appeal.21 After review, the NPFC affirmed its original findings.22 In doing so, the Review Officer specifically stated "[w]hile there was no FOSC [Federal On Scene Coordinator] involved in this incident, the NPFC determined that the removal actions were consistent with the NCP."23

This suit followed. On January 1, 2018, D&B sued the NPFC, the United States, and AMPOL.24 Specifically, D&B sought a declaratory judgment that the NPFC was arbitrary and capricious in its determination that D&B is responsible for costs owed to AMPOL. In support of its claim, D&B asserts, among other things, that NPFC's decision to reimburse AMPOL was arbitrary and capricious since there was no Federal On Scene Coordinator as required by law, and, therefore, the work was not compensable.25

D&B and the NPFC and the United States (NPFC and the United States, together, "Federal Defendants") now move for summary judgment.26 Each has filed an Opposition to the other's cross-motion,27 and each has also filed a Reply.28 In their Motion, Federal Defendants argue that the decision to reimburse AMPOL was based on substantial evidence, as the record supports a finding that D&B's complaints regarding AMPOL's performance are misplaced. They also argues that it may seek an administrative offset from D&B notwithstanding the statute of limitations and that D&B received due process. In its Motion for Summary Judgment and Opposition, D&B argues that because the pollution response was never federalized, NPFC should not have paid AMPOL in the first place. Specifically, it argues that under the relevant regulation, only in "exceptional circumstances"—which it contends are not present here—may NPFC pay out a claim if there was not a Federal On-Scene Coordinator. D&B further argues that Federal Defendants should be given little deference in their interpretation of the relevant regulation. D&B also reiterates its arguments for not paying AMPOL the full amount of its invoice, including that AMPOL failed to mark the sunken vessel and did not properly observe the vessel, thus creating additional work and costs for D&B. In response, Federal Defendants argue that the lack of an FOSC presence made this an "extraordinary circumstance" warranting intervention under the relevant regulation and that it should be awarded significant deference in interpretation of the relevant regulation.

Following the United States Supreme Court's decision in Kisor v. Wilkie ,29 the parties submitted supplemental briefing on what level of deference should be afforded to the NPFC's interpretation of the regulation at issue.30 D&B submits that nothing more than Skidmore deference applies, as Kisor cabins the applicability of Auer deference to circumstances not present here. Federal Defendants submit that Chevron deference applies to the delegation of authority by the Coast Guard and that Auer deference properly applies to the NPFC's interpretation of the relevant regulation, notwithstanding Kisor .

II. LEGAL STANDARD

This case involves the appeal of an administrative adjudication. As such, it is governed by the Administrative Procedure Act ("APA"). Under the APA, any "person adversely affected or aggrieved by agency action" is entitled to judicial review "of agency action made reviewable by statute and final agency action for which there is no adequate remedy."31 The APA authorizes the Court to "hold unlawful and set aside agency action, findings, and conclusions found to be arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with the law."32 This standard is "highly deferential" and courts must "limit our review to whether the agency articulated a rational connection between facts found and the decision made."33 Importantly, though, "[i]t is well-established that an agency's action must be upheld, if at all, on the basis articulated by the agency itself."34

III. ANALYSIS
A. The Oil Pollution Act and Subsequent Regulations

The primary disagreement between the parties focuses on the appropriate level of deference to offer Federal Defendants’ interpretation of the regulation at issue. To understand that issue, it helps to explore the statutory and regulatory schemes at play in the background of this dispute. In 1990, Congress passed the Oil Pollution Act ("OPA") as an amendment to the Clean Water Act. The OPA gave the Coast Guard "primary responsibility for directing oil spill cleanup in the coastal zone."35 The Coast Guard identifies "responsible parties" who are strictly liable for cleanup in the first instance, and usually are "any person owning, operating, or demise chartering the vessel."36

The OPA also established the National Pollution Funds Center which administers the Oil Spill Liability Trust Fund. "The Fund is authorized both to (1) pay outstanding cleanup costs and damages when a responsible party can limit its liability or establish a complete defense (or where no party is ever identified), see [ 33 U.S.C.] § 2712(a)(4), and (2) to guarantee that particular OPA claimants, including spill responders, are paid quickly, see id. § 2713."37 On July 27, 1992, the Coast Guard delegated authority to the NPFC to determine whether uncompensated removal costs are consistent with the National Contingency Plan under the OPA.38

A claimant must first present its claims to the responsible party, but if that party has not paid the claim within ninety days, then "the claimant may elect to commence an action in court against the responsible part...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT