United States v. Ira S. Bushey & Sons, Inc.

• Decision Date: 21 August 1973
• Docket Number: Civ. A. No. 6380.
• Court: U.S. District Court — District of Vermont
• Parties: UNITED STATES of America v. IRA S. BUSHEY & SONS, INC., et al.

363 F. Supp. 110

UNITED STATES of America v. IRA S. BUSHEY & SONS, INC., et al.

Civ. A. No. 6380.

United States District Court, D. Vermont.

August 21, 1973.

George W. F. Cook, U. S. Atty., George R. Ciampa, Atty., Enforcement Branch, Rutland, Vt., for plaintiff.

Ryan, Smith & Carbine, Rutland, Vt., and Christopher E. Heckman, McHugh, Heckman, Smith & Leonard, New York City, for defendants Ira S. Bushey & Sons, Inc., Spentonbush Transport Service, Inc., and Tanker Hygrade No. 8, Inc.

Donald E. O'Brien, Burlington, Vt., for defendants Northern Oil Co., Inc., and Northern Terminals, Inc.

FINDINGS, OPINION and ORDER

OAKES, Circuit Judge (Sitting by Designation as District Judge).

FINDINGS

1. Defendant Ira S. Bushey & Sons, Inc. (hereinafter "Bushey"), is a New York corporation having offices at 764 Court Street, Brooklyn, New York.

2. Spentonbush Transport Service, Inc. (hereinafter "Spentonbush"), is a wholly-owned subsidiary of Bushey and a New York corporation having offices at 500 Fifth Avenue, New York, New York.

3. The directors of Bushey and the directors of Spentonbush are the same persons, Francis B. Bushey, Ira S. Bushey and Raymond J. Bushey. The officers of Bushey and Spentonbush are substantially the same.

4. Defendant Bushey wholly owns approximately 40 corporations, each of which owns vessels used in the transportation of liquid cargoes; of these approximately 25 tugs and barges are capable of operating in the Vermont waters of Lake Champlain, a navigable water of the United States, and most of these vessels do in fact operate in Vermont waters. Among such vessels are Tanker Hygrade No. 8, owned by defendant Tanker Hygrade No. 8, Inc., and the tug Carmelite owned by defendant Tug Carmelite Corporation.

5. Spentonbush is and has been for a number of years engaged in the business of the solicitation of orders for transportation of liquid cargoes by water, and of arranging for performance of such transportation by vessels, and it gives preference to vessels of Bushey subsidiaries in arranging water transportation contracts.

6. Spentonbush collects transportation charges for such water transportation, deducts a commission and remits the balance to the owners of the particular tank barge and tug boat involved.

7. Since December, 1970, crews used by vessels owned by Bushey subsidiaries have been hired and employed either by Spentonbush or by Hygrade Operators, Inc., a wholly-owned subsidiary of Bushey.

8. None of the wholly-owned, vessel-owning, corporate subsidiaries of Bushey operating in Lake Champlain employs its own crew, its own accounting personnel, or any other employees except for its officers. The officers and directors of each subsidiary corporation, except Spentonbush, are identical to the officers and directors of defendant Bushey.

9. The net profit or surplus from the operations of Spentonbush and other wholly-owned Bushey subsidiaries are remitted to Bushey by way of corporate dividends.

10. Navigation on Lake Champlain is governed by the Navigation Rules for Inland Waters, 33 U.S.C. §§ 151-295, and by such other Navigation Rules as the United States Coast Guard has promulgated pursuant to the authority given it by 33 U.S.C. § 157.

11. Each of the vessels operated by the defendants on the waters of Lake Champlain, particularly in the Burlington and Shelburne area, is an enrolled vessel of the United States and is duly licensed to carry on the coastwise trade; each of the barges operated by the defendants on the waters of Lake Champlain, particularly the Burlington and Shelburne area, has been inspected by the United States Coast Guard and issued a Certificate of Inspection. The Federal Maritime Commission has issued to the operators of each of the barges of the defendants using the waters of Lake Champlain, particularly the Burlington and Shelburne area, a Certificate of Financial Responsibility (Oil Pollution), attesting that the operator has evidenced financial responsibility to meet the liability to the United States of America which may result from the discharge of oil into or upon the navigable waters of the United States, adjoining shore lines, or into or upon the waters of a contiguous zone. Much damage may occur, however, from oil spills in Lake Champlain that is not reimbursable in money.

12. During the period from May 1 to December 1 each year, or thereabouts, petroleum products are transported by tank barges and tugboats from the Hudson River locks to the Burlington and Shelburne harbors. In 1970, 1971 and 1972 over 500,000 tons of diesel fuel, fuel oil, gasoline, jet fuel and kerosene was thus transported.

13. In 1970 Bushey subsidiaries transported into Lake Champlain and delivered about 45 million gallons of petroleum products to unloading points on Vermont shores, ten of which are in Burlington Harbor.

14. In 1971 alone, approximately ten barges of wholly-owned Bushey subsidiaries and one barge of a partly owned corporation, the barge Erie, plus a number of tugs owned by other Bushey subsidiaries, transported 175 barge-loads of petroleum products into Lake Champlain, 53 of which delivered approximately 125,000 tons, or about 36 million gallons of petroleum to Vermont shores.

15. In 1972, Bushey subsidiaries transported into Lake Champlain and delivered about 43 million gallons of petroleum products to Vermont shores.

16. In each of the years 1970, 1971 and 1972, Bushey subsidiaries transported into Lake Champlain and delivered to Vermont shores approximately 25 per cent of the total amount of petroleum delivered to Vermont shores during each of said years. All of this was shipped from points or places outside Vermont and thus this was entirely interstate transportation.

17. From April, 1967, through December, 1970, the Army Corps of Engineers investigated a total of ten oil spills in the Burlington-Shelburne harbors. Vessels of Bushey subsidiaries were involved in five of these oil spills.

18. During 1971 and 1972, vessels of Bushy subsidiaries have been involved in four additional oil spills affecting Vermont waters of Lake Champlain, or a total of nine such spills during the period April 1967-December 1972.

19. The effect of an oil spill on water varies with the kind of spill — jet fuel evaporates quickly while heavy heating oil does not — and environmental conditions; with certain kinds of oil under certain conditions, as those of turbulence, shear forces at the oil-water interface may prevail causing an influx of oil into the water column rather than mere confinement of it to the surface where it may be more easily contained.

20. The basic steps for reducing the environmental effects of an oil spill include surrounding the spill with an oil containment boom, that is, a floating barrier with skirt and sail, and then removing the oil by oil-skimming machines and "sorbents" (either ab- or ad-) or both. The art of oil spill clean-up is not very advanced and is less effective in certain areas, as for example those of marsh-grass which sustain life for many creatures and organisms, than in others.

21. On April 30, 1967, tank barge Hygrade No. 30, owned by Tanker Hygrade No. 30, Inc., a wholly-owned subsidiary of Bushey, pumped approximately 14,500 gallons of jet fuel into the waters of Lake Champlain while discharging its cargo at the Northern Oil Terminal or dolphin in Burlington harbor.

(A) The Tanker Hygrade No. 30, Inc., started pumping around midnight.

(B) The pumping took six or seven hours but the strong odor of gasoline remained on the lake front for about 12 hours. A sticky petroleum product was present on the shore line and had entered several small bays. The petroleum product from the spill remained visible on the shore for several days.

(C) The spill was due to a leak in Northern Oil's pipe coming from the dolphin to the shore.

(D) But it may be inferred that the Tanker Hygrade No. 30 continued to pump jet fuel into Vermont waters of Lake Champlain for some time after the tankerman had reason to know of the leak, since the smell of vapor was strong enough to awaken a nearby resident.

22. On August 27, 1967, tank barge Hygrade No. 28, owned by Tanker Hygrade No. 28, Inc., a wholly-owned subsidiary of Bushey, ran aground at Proctor Shoal while approaching Shelburne Harbor, Vermont, causing a spill of an estimated 1,600 gallons of gasoline into Vermont waters of Lake Champlain.

(A) The tank barge Hygrade No. 28 was being pushed by tug Colleen Kehoe at the time of the grounding. The Colleen Kehoe was under the hire of Spentonbush which had selected the tug, and Spentonbush received a commission for this service, which commission was a financial benefit to Bushey. The negligence of the Colleen Kehoe caused the spill.

(B) A gas spill of this type presents a risk of damage by fire to lake front property.

(C) The grounding resulted in a rupture of the starboard bow of the Tanker Hygrade No. 28, Inc., from which came a steady flow of gasoline. It was necessary for the Coast Guard to lay out foam over a large area covered by the spill. The Coast Guard, as a safety measure, sealed off the area of the spill from Lake traffic.

23. On June 26, 1969, tank barge Hygrade No. 30, owned by Tanker Hygrade No. 30, Inc., delivered a cargo of jet fuel at Northern Oil Terminal dolphin in Burlington harbor; caps or flanges were not placed on the ends of the pipe lines at the dolphin by the crew of the Tanker Hygrade No. 30, causing an oil or jet fuel spill into Vermont waters of Lake Champlain. The Northern Oil personnel were also negligent in not discovering that the caps or flanges were missing.

24. On October 5, 1969, tank barge Hygrade No. 26, owned by Tanker Hygrade No. 26, Inc., a wholly-owned subsidiary of Bushey, while under tow by the tug Champlain, owned by New York Scow Corporation, a wholly-owned subsidiary of Bushey, ran aground at Proctor Shoal as it was approaching Shelburne Harbor, Vermont, causing at least 10,000 gallons of...