Gatlin Oil Co. v. United States: a myopic view of OPA liability.

Author:Holmen, Brian Theodore
Position:Oil Pollution Act of 1990
 
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Under the cover of darkness on March 13, 1994, a vandal opened the fuel tanks on the premises of Gatlin Oil Company, a small fuel distribution business located in rural North Carolina.(1) The incident led to the discharge of approximately 20,000-30,000 gallons of oil.(2) Unfortunately, thousands of gallons reached ditches near a navigable river, a fire raged for several hours, and some of the oil reached the navigable river.(3)

The threat of an oil discharge into the navigable waterway, combined with the actual discharge of oil into the waterway, subjected the facility owner to the provisions of the Oil Pollution Act of 1990 (OPA or Act).(4) A North Carolina District Court, basing its holding on the language of the OPA, awarded Gatlin compensation from the OPA Trust Fund for its costs associated with the spill cleanup; the court found that Gatlin was not responsible for the incident.(5)

In Gatlin Oil Co. v. United States,(6) the Fourth Circuit vacated the district court holding. The appellate court took a much narrower view of recoverable costs than the one urged by Gatlin Oil and accepted by the district court, severely restricting the definition of qualifying damages under the Act. On the surface, the decision appears to be consistent with one of the stated purposes of OPA: increasing the financial responsibility of a polluting party.(7) A survey of the Act's language, legislative history, and OPA liability holdings, however, supports the conclusion that the Fourth Circuit engaged in an unsupportable analysis of OPA's liability scheme.

This Note suggests that the majority's interpretation of the OPA in Gatlin was inconsistent with the language and intent of the Act. To demonstrate this, the Note first briefly describes the history of some of the relevant oil pollution statutes that existed prior to the enactment of OPA and the circumstances surrounding the passage of the Act. The Note outlines the relevant portions of OPA and then summarizes the Fourth Circuit's holding. The Note evaluates the statute to demonstrate that the Fourth Circuit's holding was not consistent with the plain language of the text or with the legislative intent of the Act. A review of prior OPA liability holdings further reveals that Gatlin is inconsistent with the established interpretations of the statute, and, indeed, ultimately limits liability through a provision designed to expand liability of polluting parties. Finally, the Note recommends that courts employ a consistently broad interpretation of the Act's liability provisions. A court attempting to limit compensation from the Trust Fund should focus on the defense to liability provisions within the OPA.

HISTORY OF RELEVANT U.S. OIL POLLUTION LAWS

Prior to the enactment of the OPA, numerous disjointed federal statutes governed oil spill liability, creating a "patchwork" of legislation that often proved to be confusing and ineffectual.(8) Because these federal laws formed the backdrop against which the OPA was enacted, a brief summary of the pre-OPA laws in existence is warranted.

The Federal Water Pollution Control Act

The Federal Water Pollution Control Act Amendments of 1972(9) (FWPCA) provided an important oil pollution provision in section 311.(10) One of the important features of section 311 is that it allowed for an absolute defense to liability if a polluting party could show that a discharge resulting in pollution was caused by an act of God, an act of war, or an act or omission of a third party.(11) Unlike the OPA, section 311 provided a fourth defense to liability: negligence on behalf of the United States.(12) The nearly identical formulation of defenses under the FWPCA and OPA makes judicial interpretation of defenses under FWPCA a good source of interpretation for OPA liability defense cases.(13) Another noteworthy feature of the Act is that it established a 35 million dollar Trust Fund to assist in administration, recovery, and removal costs associated with an oil spill. Years later OPA would follow this model.(14)

Prior to the enactment of OPA, Congress passed three important Acts to supplement section 311 of the FWPCA: the Trans-Alaska Pipeline Authorization Act of 1973 (TAPAA),(15) the Deepwater Port Act of 1974 (DWPA),(16) and the Outer Continental Shelf Lands Act Amendments of 1978 (OCLSA).(17)

Trans-Alaska Pipeline Act

TAAPA provided a strict liability scheme for vessels carrying oil transported via the Trans-Alaska Pipeline and loaded at the pipeline terminal facility.(18) The Act capped a vessel's absolute liability for a spill at 100 million dollars and created a Trust Fund to pay the balance of uncompensated claims up to that limit.(19) TAAPA, similar to FWPCA, provided for specifically enumerated defenses to liability.(20)

Deepwater Port Act

DWPA provided liability for an oil discharge "from a vessel within any safety zone, from a vessel which has received oil from another vessel at a deepwater port, or from a deepwater port."(21) The Act limited liability for discharges and also provided for enumerated defenses to liability.(22)

Outer Continental Shelf Lands Act Amendments

The OCSLA Amendments of 1978 provided for joint, several, or strict liability for oil pollution, or threat of oil pollution, from a vessel(23) (not including a vessel owned, chartered, or operated by the United States)(24) or an offshore facility(25) covered under the Act.(26) The Amendments also established defenses to liability(27) and a Compensation Trust Fund.(28)

Along with the patchwork of Acts enacted to supplement the FWPCA, an antiquated Act remained (and still remains) in the U.S. Code that serves to limit liability of polluting vessels. The Limitation of Liability Act of 1851(29) (1851 Act) restricts the liability of sea-going vessels for a variety of incidents, including maritime accidents. At the time of passage of the 1851 Act, it served to stimulate growth in both shipbuilding and the employment of ships.(30) An important feature of the 1851 Act was that it could be invoked to limit the liability of vessels involved in accidents to "the amount or value of the interest of such owner in such vessel, and her freight then pending."(31) This effectively allowed owners of vessels lost in an accident to invoke the 1851 Act to escape most, if not all, of the financial liability of the accident.(32) Although the 1851 Act is not applicable under the FWPCA,(33) at least two courts held that in federal cases in which an owner invoked the limitation to liability under the 1851 Act, the 1851 Act could be invoked to limit oil pollution liability under applicable state laws, even in a strict liability regime.(34)

Against the backdrop of this "patchwork" of oil pollution laws, the Exxon Valdez, an oil tanker bound for Long Beach, California, collided with a reef in Alaska's Prince William Sound on March 24, 1989.(35) The ecological impact of the spill proved to be disastrous: 11 million gallons of oil spread into the sound.(36) Oil company officials failed to take measures to contain the spill in the first hours after the accident, further compounding the effects of the spill.(37)

Unfortunately, the "patchwork" of oil pollution laws in existence at the time of the spill could have been grossly inadequate for such a disaster.(38) For example, if the spill had occurred off the coast of New Jersey, the government would have had access to only the 35 million dollar Trust Fund available under FWPCA to assist in cleanup operations, rather than the 100 million Trust Fund that was available under TAAPA.(39) With 80 to 91 million gallons spilled in U.S. waters between 1980 and 1986 alone,(40) available resources for cleanup literally depended on the factual fortuity of where the spill occurred. In the wake of "the nation's largest oil spill" and other similar spills closely following the Exxon incident,(41) Congress unanimously passed the Oil Pollution Act of 1990(42) to eliminate the pre-OPA "patchwork" liability scheme.(43) OPA's liability provisions were intended to accomplish this goal.(44)

OPA PROVISIONS

OPA's liability scheme is succinctly contained in section 2702 of the Act:

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) of this section that result from such incident.(45) Definitions pertaining to the Act are detailed in section 2701, including "responsible party,"(46) "damages,"(47) "removal costs,"(48) and "incident."(49)

If enumerated defenses are met,(50) section 2702 also allows a responsible party to shift liability to a third party and to seek subrogation to the rights of the United States to collect from third parties for payments made by the responsible party.(51) OPA also supersedes the Limited Liability Act of 1851 and does not limit liability for oil discharges under either federal or state liability regimes.(52)

Defenses to Liability

Section 2703 allows a responsible party to avoid liability for removal costs and damages if that party successfully establishes the discharge of oil, or substantial threat of discharge, was caused by an act of God, an act of war, or an act or omission of a third party.(53) A party who fails to report the incident, cooperate with officials in removal activities, or to follow enumerated procedures within the FWPCA loses the available defenses under the section.(54)

Section 2704 provides limitations on the liability of responsible parties, as well as third parties found liable under section 2703.(55) Total liability for tank vessels responsible under the Act is capped at the greater of $1200 per gross ton, or $10,000,000 for vessels over 3000 tons, or $2,000,000 for vessels under 3000...

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