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October 1990
Vol. 1, No. 3
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Contents
Activities of Healy & Baillie Lawyers
1990 Admiralty League Softball.
The Healy & Baillie softball team concluded its most successful season in several years under rookie manager Richard Singleton, assisted by LeRoy Lambert. In the regular season, it won 6 games and lost 2. In the playoffs, the team avenged its two regular season losses to Bigham Englar and Hill Rivkins to win the division championship. Then, disappointingly, it lost the championship game by a score of 3-1 to Freehill, Hogan & Mahar. The team had defeated Freehills in the regular season by a score of 4-3.
The team won the championship in 1981 and 1983 and last reached the finals in 1984. Everyone is looking forward to next year and another chance at regaining the championship.
The Admiralty League is now entering its second decade. This year ten maritime law firms in New York participated in the League.
Mr. & Mrs. Nicholas J. Healy Honored in Ireland and London.
Mr. & Mrs. Nicholas J. Healy were guests of honor at a dinner of the Gjensidige Skibsassuranse Foreningers Kommité (The Mutual Hullinsurance Committee) at the magnificent Dunraven Arms Hotel in Limerick, Ireland on June 13, 1990. Mr. Healy gave the traditional "tak for matten speech" - in English! Among the guests were: Mr. & Mrs. Stromberg, Gard; Mr. & Mrs. Wiik, Bergen; Mr. & Mrs. Hystad, Bergen; Mr. & Mrs. Hambro, Nordisk; Mr. & Mrs. Lindfelt, SAAF; Mr. & Mrs. Poulsson, Skuld; Mr. & Mrs. Lunde, Unitas; Mr. & Mrs. Huus-Hansen, Unitas; Mr. & Mrs. Michelet, Krigs; Mr. & Mrs. Kjelland-Mordre, Krigs; Mr. & Mrs. Frydenbo, Chr.s.; Mr. & Mrs. Svae, Samvirke; Mr. & Mrs. Wise, SMCO; Mr. & Mrs. Sonnevald, SCUA; Mr. & Mrs. Stang Lund, GSK; Mr. & Mrs. Kverndal; Mr. & Mrs. Telford.
On Friday evening, September 7, 1990, Mr. Healy was the Guest of Honor at a dinner in London, England in honor of his half century of representation of members of the London Group of P & I Insurers. Mr. Healy started his representation of the P & I insurers in 1939 when he was associated with the firm of John C. Monroe in New York, and has continued his representation through the years.
Electronic Mail.
E-Mail (electronic mail) is a lesser-known cousin of the universally popular facsimile machine, even though in many instances it is more useful than fax. Documents received by E-Mail can be edited or printed on a laser printer without re-keying. E-Mail saves several steps in sending messages too. Documents can be created on screen and sent. Whereas, a fax document is first created on screen, then converted to paper form by a printer. It is then put into a fax machine that converts it back into electronic form of transmission.
When more offices become truly paperless - a development that is surely just over the horizon - E-Mail will be the preferred method of receiving documents, because minimal processing will be required to route and file them electronically.
There are two ways to reach the firm E-Mail, both of which require some advance arrangements. The simplest method is to use one of the commercial providers of E-Mail service. We subscribe to Western Union's EasyLink service. Our mailbox is 62 82 92 62. To reach us through EasyLink (or MCI to which we will be subscribing) you must also be a subscriber.
If you send us E-Mail by EasyLink, it will be collected automatically and sent through our internal E-Mail system to our receptionist. She will then forward the mail to the individual addressee (or to his or her secretary depending on the lawyer's level of computer skills).
The second way to reach us by E-Mail is to obtain a "guest" mailbox directly on our E-Mail system. For those of you who are interested, we will provide you with a user name and a floppy disk that will enable your computer to dial ours. You will need a PC that has a modem that is connected to a telephone line.
Once these arrangements are made, you will be able to send and receive documents by designating their file names as "attachments" to mail messages. Give it a try. All kinds of things come over our E-Mail . . . even tickets to the Mets!
Hans E. Liljeblad of Stockholm, Sweden, who was a trainee with the firm in 1984-1985 is presenting with Messrs. Styrbjore Gardes Advokatbyra in Stockholm, principally in the fields of contract law, maritime law and taxation.
He served as a junior judge in the District Court of Uppsala and the Stockholm Taxation Court. He was graduated from the University of Stockholm in 1985 and was a student at the Scandinavian Institute of Maritime Law in 1983.
Search for missing addresses.
We are currently updating our address list and would appreciate information as to the current addresses and telephone numbers of the following named persons who are past trainees or summer associates of this firm:
J. Adams, M. P. Bailey, F. Bontekoe, P. Brickfield, T. Brinkmann, J. Brundell, T. Buchanan, G. Buxton, D. L. Corbin, E. Davies, M. J. Eisele, A. Felonis, T. E. Francis, D. Galloway, J. R. Gray, E. C. Gregor, D. Johnson, W. W. Knight, H. Kvaerne, H. Landwehr, P. G. Lindfelt, S. Liu, R. Lynch, Y. Masumoto, M. Muller, D. P. Murnane, E. R. Newitt, E. Thyness, J. Welsh, G. Wigg, K. Yoo, P. Y. Zhang, D. Zhang.
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The United States Oil Pollution Act of 1990
Nicholas J. Healy, Gordon W. Paulsen and Matthew A. Marion
INTRODUCTION
The May 1990 (Vol. 1, No. 2) issue of Mainbrace included an article by Mr. Paulsen (republished in the July/August 1990 issue of the BIMCO "Bulletin") discussing prior legislation in the United States and legislation then pending in Congress concerning liability for oil pollution and related matters. Shortly after that article was published, the pending legislation passed both houses of Congress and, on August 18, 1990, was signed into law by President Bush. This update summarizes some important aspects of the new legislation, as it amends and supplements existing U.S. law regarding oil pollution and as it affects the shipping industry. We do not discuss the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §9601, et seq., as amended, which governs water pollution caused by hazardous waste spills.
The Oil Pollution Act of 1990 ("OPA") represents the most comprehensive oil pollution legislation ever enacted in the United States. The all-inclusive new law, which is effective immediately, amends and supplements prior U.S. laws, including the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C. § 1251 et seq., and other statutes.
Unlike the FWPCA, which covered only claims by the federal government for cleanup costs and preventive measures, the OPA imposes on the owners and operators of tankers and oil terminals a comprehensive regimen of law governing the prevention of, liability for, and removal of oil spills within U.S. waters and the exclusive economic zone. The new pollution statute covers a broad range of federal, state and private interests previously governed by the general maritime law (i.e., the maritime law based on judicial decisions), and by various federal and state statutes.
Many of the significant changes effected by the OPA --vastly increased liability for spills, private damage claims, greatly increased requirements for parties providing evidence of financial responsibility for payment of pollution claims, the phase-out of single-hulled vessels, and potentially unlimited liability under state pollution laws--directly affect the daily operations of oil tankers. We discuss the most important of these changes below.
I. LIABILITY, DAMAGES AND CIVIL PENALTIES
A. Liability
The cornerstone of liability under the new pollution law is § 1002, which provides:
(a) IN GENERAL--Notwithstanding any other provision or rule of law, and subject to the provisions of this Act, each responsible party for a vessel or a facility from which oil is discharged, or which poses the substantial threat of a discharge of oil, into or upon the navigable waters or adjoining shorelines or the exclusive economic zone is liable for the removal costs and damages specified in subsection (b) that result from such incident.
The OPA defines "responsible party" in part as "any person owning, operating, or demise chartering [a] vessel", and "any person owning or operating [an onshore] facility." § 1001(32). Each person or corporation defined as a "responsible party" under the OPA is strictly and jointly liable for removal costs and damages caused by such spills or threatened spills, subject to certain statutory exceptions that we will discuss below. § 1001(17). In the past, federal law permitted the owners and operators of tank vessels or terminals, absent "willful negligence or willful misconduct within the privity and knowledge of the owner," to limit their liability for federal government cleanup costs to the higher of $150 per gross ton or $250,000. 33 U.S.C. § 1321(f). The new law, by contrast, increases such "limited liability" eightfold.
Under § 1004(a)(1) of the OPA, a responsible party is now liable for damages up to the greater of $1200 per gross ton or $10 million for tankers larger than 3,000 gross tons and the greater of $1200 per gross ton or $2 million for smaller ones. The new limit for vessels other than tankers is the greater of $600 per gross ton or $500,000. § 1004(a)(2). Onshore facilities and deepwater ports now face liability limits of $350 million. § 1004(a)(4). Offshore facilities may be liable up to $75 million, plus unlimited removal costs. § 1004(a)(3). These liability limits are, of course, subject to certain statutory defenses discussed below. Moreover, liability may be unlimited in specified situations.
The enormous increase in a shipowner's potential liability can be illustrated by using a 100,000 gross ton oil tanker as an example. Under the FWPCA, a vessel of this size would have been liable for a maximum of $15,000,000 in cleanup and removal costs (100,000 g.t. x $150), assuming that the responsible party had not been guilty of willful negligence or willful misconduct, and that no statutory defenses applied. Under the new law, the vessel would now be liable for federal cleanup costs up to $120,000,000 (100,000 g.t. x $1200) for a comparable spill.
Significantly, under the OPA the $1200 per gross ton/$10 million liability limit does not apply where a party's pre-spill or post-spill conduct is sufficiently culpable to warrant unlimited liability, or where one of three defenses applies to preclude any liability against the responsible party.
A responsible party faces unlimited liability for federal government cleanup costs if the spill was proximately caused by the party's "gross negligence or willful misconduct", or where the responsible party (or its "agent or employee") violated "an applicable Federal safety, construction or operating regulation." § 1004(c)(1). A responsible party may also face unlimited liability for failing "to report [a spill] as required by law" when he "knows or has reason to know" of its occurrence, or if he fails "to provide all reasonable cooperation and assistance requested by a responsible official" or to follow all official directives during the cleanup. § 1004(c)(2)(A), (B) and (C). At this point, it is uncertain how broadly the courts will interpret these grounds for imposing unlimited liability. Presumably, a court would require that a responsible party's, or its agent's, noncompliance with an applicable "safety, construction or operating regulation" must be the proximate, material cause of the spill before it would impose unlimited liability. Nonetheless, the Act neglects to specify the types of "applicable" regulations that, if ignored, would justify the imposition of unlimited liability, nor does it define what type of "agent[s]" will subject a party to liability. Absent some court decisions interpreting the unlimited liability provision, it is therefore difficult to predict the extent of a responsible party's liability under the Act.
Conversely, a "responsible party" can avoid liability entirely under the new statute if he can prove that the discharge was caused solely by: "(1) an act of God; (2) an act of war; (3) an act or omission of a third party, other than an employee or agent of the responsible party or a third party whose act or omission occurs in connection with any contractual relationship with the responsible party...." § 1003(a).
A party seeking to invoke one of the three defenses must prove that he "exercised due care with respect to the oil concerned", "took precautions against foreseeable acts or omissions of any such third party and the foreseeable consequences of those acts or omissions...", and met the other conditions discussed above regarding notifying and cooperating with government officials. § 1003(a)(3)(A) and (B).
It is also worth noting that a responsible party will not be liable to a potential claimant "to the extent that the incident is caused by the gross negligence or willful misconduct of the claimant." § 1003(b).
Under prior U.S. law, these three defenses to pollution liability were construed narrowly and they probably will be so construed under the new law. Likewise, their practical impact is considerably diminished because the immunity from liability applies only to the federal government's damages and cleanup costs; claims under state oil pollution statutes are governed by the defenses, if any, provided by those state laws. § 1018(c). In addition, the OPA requires a responsible party to pay all cleanup costs as a condition precedent to seeking redress from a culpable third party. § 1002(d)(1)(B). Thus, in certain situations--such as where the third party is bankrupt--the otherwise blameless "responsible party" must bear the burden of cleanup costs.
B. Damages
Paralleling the significant increase in liability limits, § 1002 of the new Act also specifies numerous types of damages that can be claimed by entities such as the federal government, state and local governments, Indian tribes and private claimants for oil spills. Besides cleanup and restoration costs, a responsible party may be liable to some or all of these claimants for the following:
(A) NATURAL RESOURCES--Damages for injury to, destruction of, loss of, or loss of use of, natural resources, including the reasonable costs of assessing the damage, which shall be recoverable by a United States trustee, a State trustee, an Indian tribe trustee, or a foreign trustee; § 1002(b)(2)(A) (B) REAL OR PERSONAL PROPERTY--Damages for injury to, or economic losses resulting from the destruction of, real or personal property, which shall be recoverable by a claimant who owns or leases that property; § 1002(b)(2)(B)
(C) SUBSISTENCE USE--Damages for loss of subsistence use of natural resources, which shall be recoverable by any claimant who so uses natural resources which have been injured, destroyed, or lost, without regard to the ownership or management of the resources; § 1002(b)(2)(C)
(D) REVENUES--Damages equal to the net loss of taxes, royalties, rents, fees or net profit shares due to the injury, destruction, or loss of real property, personal property, or natural resources, which shall be recoverable by the Government of the United States, a State, or a political subdivision thereof; § 1002(b)(2)(D)
(E) PROFITS AND EARNING CAPACITY--Damages equal to the loss of profits or impairment of earning capacity due to the injury, destruction, or loss of real property, personal property, or natural resources, which shall be recoverable by any claimant; § 1002(b)(2)(E)
(F) PUBLIC SERVICES--Damages for net costs of providing increased or additional public services during or after removal activities, including protection from fire, safety, or health hazards, caused by a discharge of oil, which shall be recoverable by a State, or a political subdivision of a State. § 1002(b)(2)(F).
The OPA expands the types of pollution damages for which responsible parties are potentially liable and the types of claimants who have a right to assert claims under federal law. Prior to the enactment of the OPA, the federal government was entitled to recover its costs for cleanup and preventative measures under the FWPCA, and certain other damages under the general maritime law. Now, the new U.S. law permits the federal government to recover a broad range of damages in its capacity as "the United States trustee" or "claimant" under § 1002(b)(2) (A), (B), (C), (D) and (E). These potential damages include the cost of assessing injury to natural resources, lost tax revenues, impaired earning capacity, and economic loss for damage to federal lands. § § 1002(b)(2)(A)-(D). The OPA also represents a significant departure from existing federal law regarding state and private claims. Section 1002(b)(2)(F) of the new law permits states and local subdivisions to claim a potentially vast range of "public services" damages that previously were available to states only when their own laws so provided.
Similarly, the Act grants private claimants a right to recover from responsible parties for damages which formerly were available only under limited circumstances, based upon the general maritime law. Section 1002(b)(2)(B) of the Act affords private claimants a right of recovery in federal court for purely "economic losses" resulting from a spill. Under prior U.S. law, a claimant could obtain compensation for economic losses only after proving actual physical damage to his property. The OPA abolishes this burden for private claimants who own or lease property. Finally, as discussed further below, the new Act also permits states to impose additional types of damages upon responsible parties and deprives defendants of the right to limit liability under the Limitation Act of 1851, as amended. [n.1] § 1018 (c).
In general, damage claims under the OPA must be filed within three years of "the date on which the loss and the connection of the loss with the discharge in question are reasonably discoverable with the exercise of due care...." § 1017(f). Claims for damage to natural resources, however, must be brought within three years after the natural resources damage assessment is completed by the federal or state trustee appointed by the President under § 1006 of the Act to oversee pollution cleanup operations. § 1017(f).
C. Penalties
Finally, in addition to damages, the OPA significantly increases the civil, administrative and criminal penalties for discharges of oil. The Act amends the penalty provisions of the FWPCA to provide that resp onsible parties who fail to notify the proper officials of an oil spill face up to three years in prison and fines of $250,000 for individuals or $500,000 for organizations. § 4301(b). Responsible parties are also subject to administrative penalties of up to $10,000 for failing to comply with vessel or facility response plans. § 4301(b). Both the Administrator of the Environmental Protection Agency and the Secretary of Transportation are authorized to impose such penalties. § 4301(b).
The new law also imposes civil penalties of up to $25,000 per day or $1,000 per barrel of discharged oil upon parties responsible for discharges. § 4301(b). Parties failing or refusing to comply with any government regulation or removal orders issued by the President may be liable for penalties of up to $25,000 per day or three times the government's cleanup cost under its liability trust fund. § 4301(b). Moreover, if a party's failure to carry out a Presidential Order is willful or grossly negligent, these penalties can be increased to at least $100,000, but not more than $3,000 per barrel of discharged oil. § 4301(b). As discussed further below, parties failing to comply with the Act's new financial responsibility requirements are subject to fines of $25,000 per day after receiving notification, and following a hearing. § 4303.
The Act provides that the civil and administrative penalties described above, and any other penalties imposed for such spills will vary in size according to the seriousness of the spill, the responsible party's prior pollution record, his culpability regarding the spill, the extent to which he attempted to mitigate the damages, and any other factors deemed relevant by the Secretary or the Administrator. § 4301(b)(8).
II. EVIDENCE OF FINANCIAL RESPONSIBILITY
The OPA, like the FWPCA, requires vessels of more than 300 gross tons trading in U.S. waters (and those transshipping or lightering oil within the exclusive economic zone) to provide evidence of financial responsibility to meet the statutory liability limits. § 1016. Vessels found in U.S. waters without the required evidence of financial responsibility are subject to civil and administrative penalties of up to $25,000 per day after notice and a hearing. § 4303. Additionally, they can be detained, denied entry, seized or even forfeited, along with their cargoes. § 1016(b). The Act expressly authorizes states to enforce these financial responsibility requirements against vessels found within their waters, and to impose additional requirements. § § 1018, 1019.
Importantly, the OPA permits claimants to bring a direct action against the "guarantor," i.e., the insurer or other party providing evidence of financial responsibility. § 1016(f). The guarantor is permitted to invoke any defenses that would be available to the responsible party, as well as the defense that the responsible party was guilty of willful misconduct in causing the spill. § 1016(f). Under § 1016(f) of the Act, a P & I club providing evidence of financial responsibility for a vessel could, therefore, be held liable directly to the federal and state governments, and to private claimants, for an amount not exceeding the amount of the evidence of financial responsibility it has provided.
The financial responsibility requirements under the prior legislation will remain valid "until superseded by a new regulation issued" by the government under § 1016(h). Therefore, currently valid certificates issued by the Coast Guard, showing that evidence of financial responsibility was furnished pursuant to the FWPCA, will remain in effect until new regulations enter into force. Thus, for so long as the current certificates remain in effect, the direct liability of a P & I club to the federal government will be limited to the amount of the certificate of insurance issued by the club to the government, which is based on the liability limits of the FWPCA, and not the liability limits imposed by the new law. The responsible parties, however, will be liable to the government, and to other parties damaged by a spill, up to the limits specified in the new Act, but will be entitled to look to the club for protection in accordance with the terms of entry, including the current limit on the amount of coverage provided in respect of oil pollution claims.
In response to the legislative freedom afforded states under the OPA, a number of states have proposed, or are already enacting additional evidence of financial responsibility requirements under their own laws. The International P & I Group responded to this anticipated proliferation of state laws in its July 1990 circular, stating:
Members will be aware that the Clubs will not issue certificates of financial responsibility for pollution by oil or other substances to enable Members to comply with the requirements of individual States...In the past, the Clubs in the International Group have been prepared to provide a letter in standard wording to the charterers confirming to the charterers that the Member's ship is covered for pollution risks, and that the Club will respond under certain circumstances to claims made under the certificate of financial responsibility. In view of the anticipated proliferation of similar requests, we now give notice that the Clubs will no longer be prepared to provide a letter in these terms to the party providing the required evidence on the Member's behalf. It is understood that the Clubs will not fashion undertakings to satisfy the various demands imposed by particular states on oil tankers trading in their waters, and will not provide certificates of financial responsibility covering liabilities up to the OPA's vastly increased liability ceilings.
III. DOUBLE HULLS AND PROSPECTIVE COAST GUARD REGULATIONS
One of the most publicized and controversial aspects of the OPA is the double hull requirement for all vessels and barges of more than 5,000 gross tons that carry oil as cargo. § 4115(a). In general, the Act institutes a gradual, 25-year phase-out of single-hulled vessels carrying "oil in bulk as cargo or cargo residue", based upon the age and tonnage of the vessel. All such tankers operating in U.S. waters must be equipped with double hulls no later than the year 2015. § 4115(a). The earliest compliance is required of older vessels of over 30,000 gross tons, which must be equipped with double hulls by 1995. Ships already equipped with double bottoms or sides will receive five more years of grace than their single-skinned counterparts, but must still meet the 2015 deadline. The only vessels excepted from the interim deadlines are those discharging at the Louisiana Offshore Oil Port and those lightering in specified zones at least 60 miles off the U.S. coasts. § 4115(a). Such vessels need only meet the 2015 deadline.
Vessels of less than 5,000 gross tons are exempted from the double hull requirements, provided they are equipped with approved "double containment" systems by 2015. § 4115(a). A vessel "for which a building contract or contract for major conversion was placed before June 30, 1990, and that is delivered under that contract before January 1, 1994" must install a double hull by a certain date, which varies according to the age and size of the vessel. § 4115(a).
The OPA also authorizes the Coast Guard to issue regulations concerning various aspects of ship construction and equipment, crew hours, and navigation. See generally, § § 4101-4118. For example, the Coast Guard is empowered to set requirements for oil tankers during the phase-out period, such as possible requirements for hydrostatic load lines, spill rails, and various pollution equipment to be carried on board. See Statement Accompanying Conference Report, at 48. The Coast Guard is also authorized to set requirements for pressure and over-fill gauges on oil cargo tanks, plating thickness and inspection requirements for vessels more than 30 years old, and maximum tanker crew hours (15 hours on duty in any single day, and 36 hours in any three day period). §§ 4110, 4109, and 4114(b). Additionally, owners and operators of tanker vessels and facilities eventually will be required by federal regulation to submit pollution "response plans" covering the "worst case discharge" or threatened discharge of oil. § 4202.
As discussed above, a responsible party who fails to comply with government regulations risks unlimited liability for federal cleanup costs and federal government damages. § 1004(c)(1). Thus, an intimate familiarity with these regulations (when they are issued) will be vitally important to vessel owners and operators.
IV. STATE POLLUTION LAWS UNDER THE OPA
The OPA effects a critically important change in the application of state law to pollution incidents. In the past, under the "supremacy clause" of the U.S. Constitution, federal pollution statutes automatically overrode state laws when their provisions were in conflict. Thus, when vessel owners were sued by states or private citizens in state courts, they could invoke the lower liability limits specified in the federal Limitation of Liability Act, rather than those provided under state pollution laws. Heretofore, the Limitation of Liability Act permitted a shipowner in some circumstances to limit the amount of his liability to states and private parties to the post-casualty value of his vessel, plus the freight earned on the casualty voyage. Under the OPA, however, this is no longer allowed. § 1018(c). Section 1018(c) of the OPA provides:
(c) ADDITIONAL REQUIREMENTS AND LIABILITIES--Nothing in this Act, [or] the Act of March 3, 1851 [the Limitation of Liability Act],...shall in anyway affect, or be construed to affect, the authority of the United States or any State or political subdivision thereof-- (1) to impose additional liability or additional requirements; or (3) to impose, or to determine the amount of, any fine or penalty (whether civil or criminal in nature) for any violation of law; relating to the discharge, or substantial threat of a discharge, of oil.
Thus, the new law expressly precludes responsible parties from limiting their liability under the Limitation of Liability Act for cleanup costs and damages incurred by states and their political subdivisions § 1018(c). Hence, a responsible party's liability to each state affected by a spill is determined by that state's law. A shipowner whose vessel spills oil in a state such as Maine, which imposes unlimited liability for spills within its waters, therefore faces unlimited liability, whereas under prior U.S. law, he would, in the absence of "privity," have been able to limit his liability for Maine's claim for damages and cleanup costs.
In addition, the OPA now permits states "to impose additional liability or additional requirements or to impose, or to determine the amount of, any fine or penalty (whether civil or criminal in nature) for any violation of law." § 1018(c). States may therefore impose additional, more stringent standards with respect to liability, damages and spill prevention upon responsible parties without fear of preemption by federal law.
The importance of this federal accommodation of state law cannot be overestimated. It is not inconceivable, for example, that a state which makes available liability defenses different from those under the OPA--or which allows no defenses at all--might require a responsible party to pay state cleanup costs and damages even though the responsible party would not be liable for such costs under federal law. Furthermore, as noted above, states may impose additional requirements concerning proof of financial responsibility on vessels operating in their waters.
Twenty-three states have some type of oil pollution compensation laws. Recently, California's legislature passed a comprehensive oil pollution bill which would create a $100 million emergency response fund, tough spill penalties, tanker inspection and safety programs, spill contingency programs, and a vessel control system overseen by the Coast Guard. Some of these new measures would be financed by vessel and oil import surcharges. The Governor of California is expected to sign the bill into law shortly. Other states are following suit.
CONCLUSION
As this article has attempted to show, the OPA sets new legal requirements affecting many aspects of the shipping industry, from ship construction, equipment and operation to liability for oil spills and cleanup obligations with respect to these spills. Under the new law, responsible parties now face:
--pollution liability of up to the greater of $1200 per gross ton or $10 million (for vessels of at least 3,000 gross tons);
--a broad range of possible damage claims by federal, state and private claimants;
--civil and criminal penalties of up to three years in prison and fines of $100,000 or $3,000 per barrel of discharged oil;
--the financial burden of equipping tankers with double hulls by 2015, and possibly much sooner;
--potentially unlimited pollution liability to states under state law. It is imperative that shipping interests become familiar with the basic requirements of the Act, and examine their daily operations to ensure compliance. In addition, it is essential that owners of tankers trading to the United States familiarize themselves with the statutory requirements of each state at whose ports the vessels may call.
Perhaps the most flagrant shortcoming
of the new statute is its rejection of the 1984 Protocols to the CLC and
the Fund Convention. President Bush, while describing the Act as "in
most respects...a responsible system", stated his concern that the
bill's "failure to ratify the Protocols may weaken long-standing U.S.
leadership in the development of international maritime standards."
Describing pollution as a "global challenge", President Bush
concluded by urging the Senate "to give immediate consideration to
the international Protocols and give its advice and consent to ratification
of these treaties." However, there is little likelihood that the Protocols
will be ratified in the near future, or that the "global challenge"
of preventing and responding to oil pollution will be addressed by international
consensus. It would be impossible to substitute the liability limits of
the Protocols for those in the OPA without revising many aspects of the
new law and, in particular, restricting the autonomy accorded to states
by the Act. Given Congress's unanimity in passing the new law, these changes
are unlikely. Thus, at least for the moment, the United States will be
acting alone.
_______________
1 46 U.S. Code §§ 183-189.
NOTE: This is the third issue of "Mainbrace", a new publication which we hope our friends will find interesting and informative. We plan to include articles of general interest; items concerning the work of the firm and activities of its members and associates; discussions of cases in which we have been involved and brief reports of recent cases. "Mainbrace" is our firm's cable address. According to Webster's Dictionary, in nautical terminology it means the brace or rope sustaining the main yard on a ship.
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NOTE: "Mainbrace," our Firm's cable address, in nautical terminology means the brace or rope sustaining the main yard on a ship. The Staff of "Mainbrace" consists of Nicholas J. Healy, Gordon W. Paulsen, John C. Koster, Matthew A. Marion, Betty M. Waterman and Renee Kintzer.
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