Oil Pollution Regulation: OPA 90
May 5, 2017
Maritime Regulation Post-9/11
May 18, 2017
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Oil Spills

The United States has seen its share of oil spills over the years. Those spills have caused much environmental damage and cost the oil companies billions of dollars in clean-up fees. This article discusses legislation aimed at charging oil companies for those spills and payments designed to punish oil companies who put ecology at risk and defenses to such acts.

Punitive Damages

OPA 90, which regulates pollution, and other statutes prescribe a scheme of compensatory damages, but the U.S. Supreme Court determined that those statutes do not preempt the possibility of punitive damages under the general maritime law. The statutes, such as the Clean Water Act, typically include a “savings clause” that preserve remedies otherwise available under other law, such as the general maritime law. Punitive damages may be available where the spill was caused by reckless or willful and wanton misconduct on the part of the responsible party.

Corporate Responsibility

Whether a corporate responsible party can be exposed to punitive damages for the misconduct of an employee is unclear. U.S. Circuit Courts of Appeal are split on this issue. The common approach is not to hold the corporation strictly liable for its employee’s behavior; instead, if it is demonstrated that the corporate owner had some direct fault, e.g. authorizing the acts of misconduct by the managerial employee, then the corporate owner would be at fault.

Potential Costs

Moreover,  OPA 90 contains financial responsibility requirements whereby the owner or operator or guarantor must be able to establish and maintain evidence of the financial ability to pay the statutory cost and damage amounts contained in OPA 90 in the event of an environmental disaster. To accomplish this, the owner or operator can show proof of insurance, surety, self insurance, financial guarantee, or other evidence. If satisfactory, the Coast Guard will issue a Certificates of Financial Responsibility (COFRs) as evidence of financial responsibility.

Criminal Sanctions

Criminal sanctions may apply to companies responsible for oil spills. Federal statutes such as the Migratory Bird Treaty Act, the Marine Mammal Protection Act, the Ports and Waterways Act and the Refuse Act contain criminal sanctions. In addition, many state statutes impose criminal penalties for oil spills. Typically, these statutes do not require the prosecution to demonstrate the oil spill was intentional, only that it happened. Practically, such prosecutions tend to affect situations involving significant harm.

Defenses to Liability

The responsible party may have defenses, but those defenses are limited. The potential defenses include proof that the oil spill and resulting damages were caused by:

  • An “act of God” (such as a hurricane or tornado);
  • An act of war;
  • An act or omission of a third party (other than an employee, agent, or contractual counterparty) but only if the responsible party exercised due care, and took precautions against foreseeable acts or omissions of any such third party and the foreseeable consequences of such acts or omissions.

In addition, a responsible party is not liable to a particular claimant, to the extent that an incident may have been caused by the gross negligence or willful misconduct of that claimant. This is similar to the tort theory of contributory negligence.

If you are involved in maritime commerce, contact the Kolodny law firm, experienced maritime attorneys.

(image courtesy of Jens Rademacher)

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