THE U.S. OIL POLLUTION ACT OF 1990 AND YOU
(Published April 1992)
The enactment of the Oil Pollution Act of 1990 ("OPA 90") will forever change the manner in which oil products are stored, transported and handled in United States territorial waters. OPA 90 implements a comprehensive scheme for prevention, removal, liability, compensation and penalties relating to any oil spill. Any vessel owner, including a cruise line, may be subject to the very harsh provisions contained within the Act.
Running afoul of the provisions of OPA 90 is not as difficult as one may think. Take, for example, the following hypothetical:
On December 23,1991 the cruise ship DIONYSEUS arrives in Los Angeles Harbor after completing a seven day voyage to the Mexican Riviera. Meanwhile, the bunker barge ODYSSEY arrives alongside DIONYSEUS to transfer 1,500 metric tons of bunker fuel to the cruise ship. During the transfer, the ship's Greek Chief Engineer, who is standing at the bunker station, uses his radio to order a Polish crew member stationed in the engine room to open full the number two fuel tank which had been opened half way. The language barrier, coupled with a weak radio signal, cause the oiler to misunderstand the order and he closes the number two fuel tank, leaving open only the number one tank which is already full. Due to the volume of fuel flowing into the already full number one tank, fuel oil is accidentally discharged through the tank's sounding tube and air vents before the flow can be shut off. The fuel oil escapes overdeck through an unplugged deck drain into the navigable waters below.
Welcome to OPA 90
What started out as a routine shipboard operation has now subjected the owners of DIONYSEUS to the provisions of OPA 90. More than ever before, it is now extremely important that the owners and crew of DIONYSEUS be intimately familiar with all notice requirements of US state and Federal law. This article will concentrate only on the provisions of OPA '90 and the mandatory contingency plan all ships must have in place to deal with spill situations and clean-up requirements.
Notice to the US Coast Guard
The vessel's first task is to ensure the transfer procedures are stopped and remaining fuel oil on the vessel is contained. Immediately thereafter, the crew must contact the local US Coast Guard Agency to notify them of the spill. The US Coast Guard is the administering authority of the OPA 90 regulations. A shipowner's failure to notify the Coast Guard and cooperate in cleanup efforts has significant adverse ramifications. First, the shipowner waives its right to claim benefit of the Limitation of Liability provisions within the Act. Additionally, the shipowner's conduct after the spill is considered in the imposition of civil and criminal penalties.
Responsible Party Designated
Upon arrival at the scene of the spill, the US Coast Guard will designate the offending shipowner as the "Responsible Party" for the spill. The term "Responsible Party" is defined in OPA 90 as any person owning or operating a vessel or facility from which oil is discharged. If the Responsible Party disputes its designation, it must object in writing within five days. Otherwise, as the Responsible Party, the vessel owner becomes responsible for all removal costs and consequential damages.
Removal Costs
Since the enactment of OPA 90 there have been numerous cleanup contractors advertising their services. Vessel owners should be familiar with the reputable contractors in the ports in which they call. The retention of a cleanup contractor should occur at the earliest possible stage after the spill. Most often the contractor is called upon by either the vessel, barge operator or US Coast Guard. The Responsible Party is ultimately responsible for the cleanup costs, regardless who contacts the cleanup contractor. While not required by OPA 90, shipowners should consider retaining a reputable cleanup contractor prior to any spill to be available for emergency consultation in the event of a spill. Typically, shipowners lose bargaining power when attempting to hire a cleanup contractor after the fact, and will most likely encounter inflated cost estimates.
Oil Spill Management
Depending on the size of a spill, shipowners may wish to hire an on-scene coordinator to manage the cleanup operations. In medium to large spills, several cleanup contractors may be required to control the spread of an oil slick and perform the cleanup work. Each of the contractors will supply crews around the clock, various types of booms, small boats and skimmers to clean the spill. In addition to cleanup contractors, environmental agencies such as the Bird Rescue Center and Waste Disposal Management will have to be retained to deal with the environmental impact of larger spills. An on-scene coordinator will monitor the efficiency and quality of the various contractors' work. In addition, the coordinator can monitor the materials and supplies purchased and used, consult with government agencies involved and conduct necessary public relations.
Liability
OPA 90 sets forth a comprehensive liability scheme for oil spills in navigable waters. In addition to liability, regardless of fault, for removal costs, the Responsible Party may also be held strictly liable for the following types of damages:
- Damages to natural resources: These include injury or damage to land, fish, wildlife, biota, air and water belonging to the United States, any State or Indian Tribe;
- Damage to real or personal property: These include the destruction of or injury to real or personal property owned or leased by any claimant. OPA 90 also provides for recovery of economic loss arising from damage to real or personal property.
- Damages for subsistence use of natural resources: These include any loss sustained by a claimant who uses natural resources for a livelihood. The claimant need not have any possessory right to the natural resources in order to state a claim.
- Damages for loss of revenues: These include lost profits, rents or fees due to injury or damages to natural resources, real or personal property. These damages are only recoverable by the United States, any State or Indian Tribe and are not recoverable by private individuals or concerns.
- Damages for loss of profits or earning capacity: These include loss of profits due to injury or damage to natural resources, real or personal property; and
- Damages for net cost of providing additional public services during or after removal activities.
OPA 90 greatly expands the pool of potential claimants in an oil spill. Prior to OPA 90, general maritime law held that in situations where a spill caused by negligence did not result in any physical harm, the claimant could not recover for any pecuniary loss. OPA 90 arguably changed that rule by allowing recovery of economic damages even in the absence of actual physical damage.
The Shipowners Defenses
The Act provides limited defenses to the strict liability scheme. In order to prevail on one of the statutory defenses the Responsible Party must show the discharge of oil was caused by one or more of the following:
- An act of God;
- An act of war; or
- An act or omission of a third party.
The most common defense is that the discharge of oil resulted from an act or omission of a third party. It must be noted, however, that the Act defines third party to exclude any employee or agent of the Responsible Party or any party who acts pursuant to a contract with the Responsible Party. Further, as mentioned above these defenses are waived if the Responsible Party fails or refuses to report an incident or fails to cooperate with government agencies involved in the cleanup efforts.
Limitation of Liability
A vessel owner's liability may be limited under OPA 90. The limitation provisions within the Act limit the Responsible Party's liability for removal costs and damages in the following amounts:
a. The greater of $1,200 per gross ton or $10 million for tank vessels of more than 3,000 gross tons;
b. The greater of $1,200 per gross ton or $2 million for tank vessels of less than 3,000 gross tons;
c. The greater of $600 per gross ton or $500,000 for all other vessels.
Shipowners should note there are no limits if the oil discharge resulted from the Responsible Party's gross negligence, willful misconduct, or by a violation of Federal Safety Standards. Once a Responsible Party has paid its limitation amount, the remaining claims, if any, are submitted to the Oil Spill Liability Trust Fund for payment.
Civil and Criminal Penalties
OPA 90 has substantially increased the civil and criminal penalties which may be assessed against the Responsible Party. These apply in addition to the damages discussed in the preceding sections. Under OPA 90 the mandatory civil penalty is $25,000 for each day that the offense occurs, or up to $1,000 per barrel of oil discharged. If there is evidence of gross negligence or willful misconduct the Act provides that the penalties shall not be less than $100,000 and not more than $3,000 per barrel of oil discharge. Moreover, a mere negligent discharge of oil may also result in criminal penalties of not less than $2,500 nor more than $25,000 per day for the violation, or imprisonment for not more than one year or both. A knowing discharge of oil will result in criminal penalties of not less than $5,000 nor more than $50,000 per day for the violation or imprisonment for not more than three years.
Conclusion
The enactment of OPA 90 has created many questions regarding the Act's interpretation and its practical effect in the event of a spill. At the very least, the Act requires that all shipowners, including cruise lines, be intimately familiar with the steps to be taken when a spill occurs. Immediate notification to the United States Coast Guard and appropriate state agencies as well as an early response aimed at containment and removal of the spill is always essential. In today's oil spill sensitive society, shipowners trading in the United States are well advised to take OPA 90 very seriously.
