Am. S.S. Owners Mut. Prot. & Indem. Ass'n, Inc. v. United States

Decision Date24 September 2020
Docket Number18-CV-02652 (KAM)(ST)
Citation489 F.Supp.3d 106
Parties AMERICAN STEAMSHIP OWNERS MUTUAL PROTECTION AND INDEMNITY ASSOCIATION, INC., as Subrogee of Boston Marine Transport, Inc., Plaintiff, v. UNITED STATES of America, U.S. Department of Homeland Security, U.S. Coast Guard and U.S. Coast Guard National Pollution Funds Center, Defendants.
CourtU.S. District Court — Eastern District of New York

489 F.Supp.3d 106

AMERICAN STEAMSHIP OWNERS MUTUAL PROTECTION AND INDEMNITY ASSOCIATION, INC., as Subrogee of Boston Marine Transport, Inc., Plaintiff,
v.
UNITED STATES of America, U.S. Department of Homeland Security, U.S. Coast Guard and U.S. Coast Guard National Pollution Funds Center, Defendants.

18-CV-02652 (KAM)(ST)

United States District Court, E.D. New York.

Signed September 24, 2020


489 F.Supp.3d 110

Thomas M. Russo, William Howard Yost, III, William J. Pallas, III, Freehill, Hogan & Mahar LLP, New York, NY, for Plaintiff.

Jill Rosa, U.S. Department of Justice, Washington, DC, for Defendants.

MEMORANDUM & ORDER

MATSUMOTO, United States District Judge:

Before the court are cross-motions for summary judgment by plaintiff American Steamship Owners Mutual Protection and Indemnity Association, Inc. ("American Club" or "Plaintiff"), as subrogee of Boston Marine Transport, Inc. ("BMT"), and Defendants, United States of America, United States Department of Homeland Security ("DHS"), United States Coast Guard ("Coast Guard"), and U.S. Coast Guard National Pollution Funds Center ("NFPC"). Plaintiff seeks judicial review, under the Administrative Procedures Act ("APA"), 5 U.S.C. § 701, et seq. , of NFPC's final agency actions denying American Club's claim for reimbursement of alleged oil spill damages under the Oil Pollution Act of 1990 ("OPA").

BACKGROUND

I. Regulatory Framework

A. The Oil Pollution Act of 1990

The OPA is the primary federal legislation addressing oil spills into navigable waters of the United States and onto its shorelines. Enacted in the wake of the Exxon Valdez oil spill, the OPA amended the Clean Water Act and addressed the wide range of issues associated with preventing, responding to, and paying for oil pollution incidents. See 33 U.S.C. §§ 2701 - 2761. The OPA imposes an effective maritime oil spill regime by establishing "uniform and predictable rules that encourage prevention, quick cleanup, and reasonable compensation." Steven R. Swanson, Opa 90 + 10: The Oil Pollution Act of 1990 After Ten Years , 32 J. Mar. L. & Com. 135 (2001) ; see also S. Rep. No. 101-94, at 2-3 (1989).

B. Responsible Parties

Under the OPA, the Coast Guard must immediately be notified of an oil spill and is responsible for taking charge of cleanup operations. The Coast Guard designates the source of the discharge, known as the "responsible party," or "RP." 33 U.S.C. § 2714(a). If the source of discharge was a vessel, the responsible party is generally the vessel's owner or operator. Id. § 2701(32). Responsible parties are generally liable for removal costs and damages resulting from the spill, up to applicable limits of liability. Id. § 2704; see

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In re Settoon Towing Co. , 859 F.3d 340, 344 (5th Cir. 2017) (RPs are "strictly liable for cleanup costs and damages and first in line to pay any claims for removal costs or damages that may arise under OPA.") (citations and internal quotation marks omitted).

A responsible party's liability is capped at a dollar limit based on the gross tonnage of the RP's vessel. 33 U.S.C. § 2704(a)(1-2). If the cleanup costs exceed the statutory limit, the responsible party can seek to have those excess costs reimbursed by the Oil Spill Liability Trust Fund ("Fund"). Id. §§ 2708, 2713.

C. The Oil Spill Liability Trust Fund

The National Pollution Funds Center ("NPFC") was commissioned in 1991 to implement Title I of the OPA, 33 U.S.C. §§ 2701 - 2720. Among other duties, NPFC is responsible for administering the Fund. See id. § 2712, 26 U.S.C. § 9509. The Fund is a pillar of the OPA framework.1 One of its core purposes is to pay claims by any person or organization that has incurred uncompensated removals costs2 or suffered damages from an oil spill. 33 U.S.C. § 2712(a). In addition to paying claims for uncompensated removal costs and damages, the OPA enumerates five other types of expenses that the Fund may pay for: (1) oil removal consistent with the National Contingency Plan; (2) damages to natural resources; (3) cleanup following a discharge from a foreign offshore unit; (4) federal administrative costs necessary for enforcing OPA; and (5) loans to assist fishermen. Id. § 2712.

D. Compensable Claims

The OPA defines a "claim" as "a request, made in writing for a sum certain, for compensation for damages or removal costs resulting from an incident." 33 U.S.C. § 2701(3). Under limited circumstances, the Fund may reimburse a claim submitted by a responsible party for its uncompensated removal costs and damages. Id. § 2713(b)(1)(B). A responsible party must demonstrate that either an absolute defense or limited liability applies before the Fund can reimburse removal costs or damages. Id. § 2708(a). Moreover, the responsible party's recovery is limited to the extent its total removal costs and damages, plus the amounts paid to third parties for claims asserted under 33 U.S.C. § 2713, exceeds the statutory cap on the responsible party's liability. Id. § 2708(b).

The OPA also limits the types of damages for which a claimant or responsible party may seek compensation. Pursuant to 33 U.S.C. § 2702(b), damages are: (1) injuries to natural resources; (2) injuries to or economic losses from the destruction of real or personal property; (3) losses of subsistence use of natural resources; (4) Government losses of revenues; (5) losses of profits or earning capacity as a result of loss or destruction of real or personal property or natural resources; and (6) costs of increased public services. 33 U.S.C. § 2702(b). In addition, 33 U.S.C. § 2701(5) clarifies that the damages specified in § 2702(b) include, "the cost of assessing these damages."

Individuals and entities harmed by an oil spill may file claims against the responsible party for damages. However,

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to promote settlement and avoid litigation, the OPA establishes specific procedures, which claimants must follow. Generally, third-party individuals or businesses injured by an oil spill must first present their claims to the responsible party, 33 U.S.C. § 2713(a). To facilitate third-party claims adjudications, the OPA requires the responsible party to advertise its designation as the RP, and the procedures by which damages claims may be presented to it. Id. § 2714(b); 33 C.F.R. §§ 136.309 – 136.313. Once the responsible party pays the third-party claimant, the responsible party may seek reimbursement from the Fund as permitted by 33 U.S.C. §§ 2708(b) and 2713(b)(1)(B), and in the manner prescribed by applicable regulations. Under such circumstances, the responsible party, as a subrogee, stands in the shoes of the third-party claimant and accedes to the third party's rights.

E. Claim Procedures

NPFC is responsible for adjudicating claims made to the Fund. The specific manner of making claims to the Fund and making payments from the Fund are set forth in 33 C.F.R. Part 136, "Oil Spill Liability Trust Fund; Claims Procedures; Designation of Source; and Advertisement" ("Claims Regulations"); see also 33 U.S.C. § 2712(e)(1) ("The President shall ... publish proposed regulations detailing the manner in which the authority to obligate the Fund ... shall be exercised."); id. § 2713(e) ("The President shall promulgate ... regulations for the presentation, filing, processing, settlement, and adjudication of claims under this Act against the Fund.").

Each claim must be in writing for a "sum certain for each category of uncompensated damages or removal costs [ ] resulting from the incident." 33 C.F.R. § 136.105(b). The Claims Regulations further specify that each claim must include, at a minimum:

A general description of the nature and extent of the impact of the incident, the costs associated with removal actions, and damages claimed, by category as delineated in Subpart C of this part, including, for any property, equipment, or similar item damaged, the full name, street and mailing address, and telephone number of the actual owner, if other than the claimant.

(Id. § 136.105(e)(4).) Each claim must also state "[t]he reasonable costs incurred by the claimant in assessing the damages claimed." Id. § 136.105(e)(8). This "includes the reasonable costs of estimating the damages claimed, but not attorney's fees or other administrative costs associated with preparation of the claim." Id. Additionally, a claimant must provide any other information that NPFC deems "relevant and necessary to properly process the claim for payment." Id. § 136.105(e)(13). If NPFC initially denies a claim, a claimant may seek reconsideration. Id. § 136.115(d).

II. The Administrative Record

A. The Oil Spill and Removal

Shortly before midnight, on December 13, 2012, BMT's single-hulled tank barge, Boston No. 30 ("BOSTON 30"), arrived at the New York Terminal in Elizabeth, NJ, where it began loading over 20,000 barrels of fuel oil from the facility. (Administrative Record ("AR"), US013607.)3 Loading was

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completed late on the morning of December 14. (Id. ) Hours later, a tugboat towed BOSTON 30 through the Arthur Kill Waterway and Kill Van Kull Waterway to the Mayship Repair Contracting Corp. ("Mayship Repair" or "Mayship") shipyard in Staten Island. (Id. )

That evening, shortly after BOSTON 30 commenced transferring oil to another barge, a crewmember noticed oil in the water between the two vessels. (US013607.) Crews of both vessels immediately halted the oil transfer. (Id. ) A sorbent boom was placed around both barges. (Id. )4 The National Response Center ("NRC")5 was notified about the potential spill, but tank soundings onboard both ships did not immediately reveal the spill's source. (Id. ) Around midnight the next day, BOSTON 30 resumed the oil transfer, but ceased operations soon thereafter, once more oil was discovered in the water between the two barges. (Id. ) In all, the BOSTON 30 released approximately 30,000 gallons of oil into the water. (Id. )

Major oil response activities commenced immediately. (US000699.) Meredith Management Group ("Meredith...

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