Water Quality Ins. Syndicate v. United States

• Decision Date: 22 December 2016
• Docket Number: Civil Action No. 15–789 (BAH)
• Citation: 225 F.Supp.3d 41
• Parties: WATER QUALITY INSURANCE SYNDICATE, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — District of Columbia

225 F.Supp.3d 41

WATER QUALITY INSURANCE SYNDICATE, Plaintiff,

v.UNITED STATES of America, Defendant.

Civil Action No. 15–789 (BAH)

United States District Court, District of Columbia.

Signed December 22, 2016

Paul Mark Honigberg, Victoria Ortega, Blank Rome LLP, Washington, DC, James E. Mercante, Rubin, Fiorella & Friedman LLP, New York, NY, for Plaintiff.

Sharon K. Shutler, U.S. Department of Justice, Washington, DC, for Defendant.

MEMORANDUM OPINION

BERYL A. HOWELL, Chief Judge

The plaintiff Water Quality Insurance Syndicate ("WQIS") brings this action against the defendant United States of America challenging a decision by the National Pollution Funds Center ("NPFC") of the United States Coast Guard ("USCG"), under the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 551, et seq . The challenged NPFC decision, issued on June 30, 2014, pursuant to the Oil Pollution Act of 1990 ("OPA"), 33 U.S.C. § 2701, et seq. , denied plaintiff's claim for reimbursement of the costs for cleaning up an oil spill in Cook Inlet, Alaska, that resulted from a supply vessel, the MONARCH, colliding with an offshore oil and gas production platform. See Administrative Record ("AR") US003494 (Letter from NPFC Claims Manager to plaintiff (June 30, 2014) ("First Denial Decision")).¹ The NPFC's denial decision turned on a finding that the oil discharge was proximately caused by the MONARCH Captain's gross negligence, which is a statutory ground for denial of reimbursement.² Id .

Pending before the Court are the parties' cross-motions for summary judgment. See Pl.'s Mot. Summ. J. ("Pl.'s Mot."), ECF No. 19; Def.'s Cross–Mot. Summ. J. & Opp'n Pl.'s Mot. Summ. J. Cross–Mot. ("Def.'s Opp'n"), ECF No. 20. For the reasons set out below, the plaintiff's motion is granted in part and denied in part, and the defendant's cross-motion is denied.³

I. BACKGROUND

Following review of the applicable statutory framework under the OPA, the relevant factual and procedural background is summarized below.

A. STATUTORY FRAMEWORK

The policy of the United States, as expressly articulated by the Congress, is "that there should be no discharges of oil ... into or upon the navigable waters of the United States" or other waters under federal jurisdiction. 33 U.S.C. § 1321(b)(1). In the wake of the massive spill in 1989 of eleven million gallons of oil from supertanker EXXON VALDEZ into the Prince William Sound in Alaska, Congress determined that then-existing laws provided inadequate remedies for addressing the damage caused by oil spills and therefore enacted, in 1990, the OPA. See Hornbeck Offshore Transp., LLC v. United States , 569 F.3d 506, 511 (D.C. Cir. 2009) ; Water Quality Ins. Syndicate v. United States , 522 F.Supp.2d 220, 226 (D.D.C. 2007) ; United States v. Bodenger , 2003 WL 22228517, at *2 (E.D. La. Sept. 25, 2003) ; Apex Oil Co. v. United States , 208 F.Supp.2d 642, 651–652 (E.D. La. 2002). The "OPA was designed ‘to streamline federal law so as to provide quick and efficient cleanup of oil spills, compensate victims of such spills, and internalize the costs of spills within the petroleum industry.’ " Hornbeck Offshore Transp. , 569 F.3d at 511 (quoting Rice v. Harken Expl. Co ., 250 F.3d 264, 266 (5th Cir. 2001) ).

To meet these goals, the OPA established a comprehensive system of strict liability for the removal of oil discharges, subject to liability caps and funding support paid for by the oil industry. Specifically, under the OPA, a "responsible party" for a vessel or a facility that discharges oil into the navigable waters of the United States is strictly "liable for the removal costs and damages ... that result from such incident." 33 U.S.C. § 2702(a). The OPA defines a "responsible party" to include vessel owners, operators, and demise charterers. See 33 U.S.C. § 2701(32)(A).

At the same time, the OPA limits liability and removal costs based on vessel type and tonnage.⁴ See 33 U.S.C. § 2704(a). Responsible parties for vessels "from which oil is discharged" are authorized to submit a claim with supporting documentation to the NPFC to recover costs beyond the prescribed limits by demonstrating that the party "is entitled to a limitation of liability under section [33 U.S.C. § 2704 ]." 33 U.S.C. § 2708(a)(2) ; see United States v. Locke , 529 U.S. 89, 101–02, 120 S.Ct. 1135, 146 L.Ed.2d 69 (2000) (noting that OPA "imposes liability (for both removal costs and damages) on parties responsible for an oil spill" and "[o]ther provisions provide defenses to, and limitations on, this liability").

The OPA created the Oil Spill Liability Trust Fund ("the Fund") to pay such claims "for uncompensated removal costs determined by the President to be consistent with the National Contingency Plan [ ("NCP") ] or uncompensated damages." 33 U.S.C. § 2712(a)(4). The Fund is financed through a tax on the oil industry, see 33 U.S.C. § 2701(11) ; 26 U.S.C. § 9509, thereby "internaliz[ing] the cost of oil spills within the petroleum industry," Great Am. Ins. Co. v. United States , 55 F.Supp.3d 1053, 1064 (N.D. Ill. 2014). The NPFC is responsible for adjudicating claims to the Fund and determining whether the uncompensated removal costs are consistent with the NCP. A claimant "seeking recovery [from the fund] bears the burden of providing all evidence, information, and documentation deemed necessary by the Director [ ] [of the] NPFC, to support the claim.' " Smith Prop. Holdings, 4411 Conn. L.L.C. v. United States , 311 F.Supp.2d 69, 71 (D.D.C. 2004) (quoting 33 C.F.R. § 136.105 ) (alterations in original).

The limitation on liability for removal costs is subject to statutory exceptions that remove the liability cap and the concomitant authority for the responsible party to obtain reimbursement from the Fund. The liability limitation does not apply, for example, when the responsible party fails to report the incident as required or to provide all reasonable cooperation and assistance with removal activities. See 33 U.S.C. § 2708(c)(2)(A) and (B). In addition, as relevant here, the liability limitation on removal costs does not apply when the incident was "proximately caused by (A) gross negligence or willful misconduct of or, (B) the violation of an applicable Federal safety, construction, or operating regulation by, the responsible party, an agent or employee of the responsible party, or a person acting pursuant to a contractual relationship with the responsible party." 33 U.S.C. § 2704(c)(1). Thus, "[r]esponsible parties may face unlimited liability for, inter alia , acts of gross negligence or willful misconduct." Puerto Rico v. M/V EMILY S. (In re MetLife Capital Corp.) , 132 F.3d 818, 821 (1st Cir. 1997).

B. The MONARCH ALLISION AND OIL SPILL⁵

The MONARCH is owned by Ocean Marine Services, Inc. ("OMSI") and covered by an oil pollution insurance policy issued by plaintiff. AR US002603 (Letter from OMSI to USCG, Alaska Department of Natural Resources, and Alaska Department of Environmental Conservation (Feb. 26, 2010)); US000001–03 (Pl.'s Claim Letter to NPFC) (Jan. 10, 2012)). This vessel supplies oil and gasoline to offshore production platforms in Cook Inlet and provides backup oil spill response services. AR US002632 (Global Diving & Salvage Report & Recommendations ("GDS Report")).⁶

At the time of the incident, the MONARCH was seaworthy and suitable for service in the Gulf of Alaska. AR US002800–02 ( Certificate of Inspection (May 16, 2005, amended Nov. 8, 2010)).

In the winter, Cook Inlet has tidal fluctuations of 20 feet or more, with strong tidal currents that can reach estimated velocities of two to three knots at the entrance to the Inlet and increased velocities in particular areas, as well as ice packs that can reach up to 6.5 feet thick. AR US003764, 4095 (USCG's "Report of Investigation Into the Circumstances Surrounding the Incident Involving the Sinking of the OSV MONARCH" ("USCG Report") (June 25, 2009)). Despite these treacherous conditions, oil platforms operate continuously through the winter months, and "there is great pressure from the platform owners to have these [resupply] vessels operate regardless of the conditions." AR US003793 (USCG Report);⁷ see also AR US002627 (GDS Report).

On January 15, 2009, the MONARCH was under the command of Captain Jeremy Bucklin, "very experienced in Cook Inlet operations, having worked himself up from deckhand to mate to master." AR US002627 (GDS Report); see also AR US002486 (USCG Interview of Captain Bucklin (Jan. 21, 2009) ("USCG Captain Interview")). Captain Bucklin testified as part of the USCG's investigation that he has been operating in the Cook Inlet for eleven years: five years as a mate and then six years as Captain of the MONARCH.

AR US002486 (USCG Captain Interview).

At the time of the incident, the MONARCH had on board seven crew members, including the Captain and Chief Mate Walter Mitchell Hebb III. AR US002471 (USCG Interview of Chief Mate Walter Mitchell Hebb (Jan. 21, 2009) ("USCG Hebb Interview")). After servicing five platforms, with three more to go, the ship set out from the Monopod platform towards its sixth stop, approximately eight nautical miles north, to the Granite Point platform. AR US002466 (USCG Interview of crewmember Russell Tomlinson (Jan. 21, 2009) ("USCG Tomlinson Interview")). The Granite Point platform is a fixed production platform, currently owned by Chevron, and located on the west side of northern Cook Inlet. AR US003764 (USCG Report); AR US003827 (USCG Witness Statement)⁸ ; AR US002635 (GDS Report). While the platforms already serviced by the MONARCH were in open water, the Granite Point platform was located further north where there was a "bigger accumulation of ice." AR US002452 (USCG Interview of crewmember William James Kelley (Jan. 21, 2009) ("USCG Kelley Interview"). The platform is supported by four seventeen-foot diameter legs, which break up ice pans such that maneuvering around the platform is easier by approaching it against the current. AR US002635, 2638 (GDS...