Power Auth. of N.Y. v. M/V Ellen S. Bouchard

• Decision Date: 30 July 2020
• Docket Number: August Term, 2019,No. 19-1140-cv,19-1140-cv
• Parties: POWER AUTHORITY of the State of New York, Plaintiff-Appellant, v. M/V ELLEN S. BOUCHARD, and the Barge B No. 280, their engines, apparel, tackle, boats, appurtenances, etc., in rem, Bouchard Transportation Co., Inc., Motor Tug Ellen S. Bouchard, Inc., B. No. 280 Corp., Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

968 F.3d 165

POWER AUTHORITY of the State of New York, Plaintiff-Appellant,

v.M/V ELLEN S. BOUCHARD, and the Barge B No. 280, their engines, apparel, tackle, boats, appurtenances, etc., in rem, Bouchard Transportation Co., Inc., Motor Tug Ellen S. Bouchard, Inc., B. No. 280 Corp., Defendants-Appellees.¹

No. 19-1140-cv

August Term, 2019

United States Court of Appeals, Second Circuit.

Argued: April 17, 2020

Decided: July 30, 2020

Vincent J. Foley (James H. Hohenstein, on the brief), Holland & Knight LLP, New York, NY, for Plaintiff-Appellant.

Gina M. Venezia (Wayne D. Meehan, John J. Walsh, on the brief), Freehill Hogan & Mahar, LLP New York, NY, for Defendants-Appellees.

Jeffrey Bossert Clark, Assistant Attorney General, Eric Grant, Deputy Assistant Attorney General, Ellen J. Durkee, Jennifer Scheller Neumann, Katherine W. Hazard, United States Department of Justice, Washington, DC, for Amicus Curiae United States of America, in support of Plaintiff-Appellant.

Before: Livingston, Lohier, and Nardini, Circuit Judges.

William J. Nardini, Circuit Judge:

This appeal arises from the discharge of several thousand gallons of oil into Long Island Sound from a "submarine cable" — that is, an underwater system that transmits electricity, and through which dielectric fluid is pumped as a lubricant and coolant. The plaintiff-appellant, the Power Authority of the State of New York ("the Authority"), alleges that the dropped anchor of the Barge B. No. 280, which was being towed by the tugboat M/V Ellen S. Bouchard , ruptured the cable, which the Authority owns and operates. Following the containment and remediation of the oil discharge, the Authority sought compensation for its expenditures by suing the defendants-appellees: the two vessels and their corporate owners (collectively, "Bouchard"). The Authority brought claims pursuant to the federal Oil Pollution Act ("OPA"), 33 U.S.C. § 2701 et seq. , and the New York Oil Spill Law ("NYOSL"), N.Y. Nav. Law § 170 et seq. The corporate defendants-appellees, meanwhile, initiated parallel proceedings pursuant to the Limitation of Liability Act ("Limitation Act"), 46 U.S.C. §§ 30505, 30511.

The Authority now appeals from an order and judgment of the United States District Court for the Southern District of New York (Crotty, J. ), which determined that the OPA's statutory definition of a "facility," 33 U.S.C. § 2702(9), did not encompass the submarine cable because it was not "used for" any of the "purposes" enumerated in the definition. As a result, the Authority did not have a viable claim under the OPA to recover its costs related to the discharge. The district court entered partial summary judgment in favor of Bouchard on the OPA claims, denied the Authority's cross-motion for summary judgment, and transferred the Authority's remaining state-law claims to the parallel Limitation Act proceeding.

We hold that the submarine cable is indeed "used for" one of the enumerated "purposes" in the statute's definition of "facility." It was therefore error for the district court to dismiss the Authority's OPA claims and to conclude that the Authority's NYOSL claims had to be brought in the parallel proceeding on that basis. Accordingly, we vacate the order of the district court and remand for further proceedings consistent with this opinion.

I. Background²

A. The Submarine Cables

The Authority owns and operates the Y-49 Cable System, a power transmission cable system that spans Long Island Sound. The cable system runs from the Sprain Brook Substation in Westchester County, which Consolidated Edison ("Con Edison") operates, to the East Garden City Substation in Nassau County, which the Long Island Power Authority operates.

There are four submarine cables spanning Long Island Sound, with two self-contained fluid-filled ("SCFF") pressurization plants located at the two ends of the cables. The four submarine cables are high-voltage transmission cables consisting of multiple layers, including the electrical conductor and a layer of "fluid-impregnated paper insulation." Joint App'x 479. Additionally, a central duct in each cable is filled with dielectric fluid, which is a "hydrocarbon, petroleum-based oil" that "acts as a coolant and lubricant to the electrical components of the submerged cables." Id. at 603–04. The four cables combined hold approximately 10,000 gallons of the dielectric fluid at any given time.

The SCFF pressurization plants, meanwhile, are comprised of storage tanks holding reserve dielectric fluid, as well as equipment to monitor and regulate the pressure in the submarine cables. The plants are required to keep a constant static pressure in the cables to ensure the cables function properly. To do that, the plants increase or decrease the volume of dielectric fluid stored in the cables. Because the maintenance of constant pressure requires differing amounts of fluid depending on, among other things, the temperature of the water surrounding the cables, the dielectric fluid regularly flows through the plants and cables.

B. The Discharge

On January 6, 2014, the defendant Barge B. No. 280, in the course of being towed by the M/V Ellen S. Bouchard through Long Island Sound, dropped anchor. Shortly thereafter, Submarine Cable No. 3 experienced an electrical fault; at the same time, the system's monitors reported a sudden pressure drop in the cable, which indicated a leak of dielectric fluid was underway. The Authority alerted local and federal authorities, while also working with Con Edison and the Long Island Power Authority to initiate a response. Over the next several weeks, these entities, along with the Authority's environmental response contractor, Miller Environmental Group, took efforts to contain and then clean up the spill, in consultation with the U.S. Coast Guard and New York officials. Among the required containment steps was the continued pumping of dielectric fluid into Cable No. 3, to maintain pressure and prevent water from entering the cable and potentially destroying it. Because of this ongoing need to pump fluid into the cable, the total discharge from Cable No. 3 was well above the cable's capacity of 2500 gallons. On February 27, 2014, the cable was finally capped and set back on to the sea floor. The Authority claims that it paid $9,848,087.12 for the costs of the remediation.

C. Statutory Framework

Congress enacted the OPA in 1990 in the aftermath of the Exxon Valdez disaster, with an aim to unify and supplement the then-existing patchwork of federal regulations governing oil pollution. See Pub. L. No. 101-380, 104 Stat. 484 (codified at 33 U.S.C. § 2701 et seq. ); see also S. Rep. No. 101-94, at 2–3 (1989), reprinted in 1990 U.S.C.C.A.N. 722, 723–24 (discussing the need for comprehensive federal legislation in light of the "unreasonably slow, confused, and inadequate response by industry and government that failed miserably in containing the [Valdez ] spill and preventing damage"). Among its provisions, the OPA establishes a framework of liability and compensation for the costs of remediating oil spills. 33 U.S.C. §§ 2702 – 2712. Under this framework, "each responsible party for a vessel or a facility from which oil is discharged ... into or upon the navigable waters or adjoining shorelines or the exclusive economic zone is liable for the removal costs and damages ... that result from such incident." Id. § 2702. The responsible party is defined by reference to the source of the oil discharge in question (e.g. , a vessel, an onshore facility, or an offshore facility). See id. § 2701(32). However, the OPA also provides a mechanism for shifting liability to third parties: If the responsible party can establish that the discharge and resulting liability "were caused solely by an act or omission of one or more third parties," then those parties become the responsible parties for purposes of OPA liability. Id. § 2702(d)(1)(A).

Of central importance to this appeal, the OPA defines a "facility" as follows:

[A]ny 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.

Id. § 2701(9). The OPA also provides separate definitions for an "offshore facility" and an "onshore facility." See id. § 2701(22), (24).³

Finally, the OPA contains a savings clause, which governs the effect of the statutory scheme on state law. See id. § 2718. The clause states:

Nothing in this Act or the Act of March 3, 1851 [the Limitation Act] shall ... 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.

Id. § 2718(a).

The Limitation Act effectively caps the liability of vessel owners for claims for certain damages caused by their vessels, limiting recovery to the value of the vessel in question and its freight. See 46 U.S.C. § 30505.⁴ To enforce this cap, vessel owners may launch proceedings under the Limitation Act, in which all prospective claimants must bring their claims. Once such proceedings are initiated, the Limitation Act provides that any other proceedings to recover from the vessel owner "related to the matter in question shall cease." Id. § 30511.

II. Procedural History

Shortly after the rupture, on February 26, 2014, the corporate defendants in this case⁵ started a Limitation Act proceeding in the United States District Court for the Southern District of New York. See In re Bouchard Transp. Co. , No. 14-cv-01262-PAC. The Authority and its insurers filed claims in the Limitation Act proceeding in April 2014 but expressly reserved the right (and...