The Cost of Doing Business: Corporate Vicarious Criminal Liability for the Negligent Discharge of Oil Under the Clean Water Act

• Jurisdiction: United States,Federal
• Citation: Vol. 84 No. 3
• Publication year: 2021

THE COST OF DOING BUSINESS: CORPORATE VICARIOUS CRIMINAL LIABILITY FOR THE NEGLIGENT DISCHARGE OF OIL UNDER THE CLEAN WATER ACT

Katharine A. Swanson

Abstract: In response to massive oil spills that damaged America's waters, devastated local economies, killed wildlife, and cost taxpayers millions in clean-up costs, Congress passed the Oil Pollution Act of 1990. The Act amended the Federal Water Pollution Control Act to allow for criminal prosecution of negligent oil discharges. This Comment argues that although the plain language of the Federal Water Pollution Control Act's negligent discharge provision is silent regarding corporate vicarious criminal liability, courts should give full effect to Congress's intent-to protect the health and safety of the public and the environment and to stop corporations from accepting oils spills as just another cost of doing business-and construe the negligent discharge provision to allow for vicarious liability. Doing so will not violate the due process rights of corporations because they are on notice of the stringent regulations surrounding oil pollution. Moreover, corporations are in the best position to prevent and deter negligent employee behavior that leads to oils spills in the first place.

INTRODUCTION

A thick layer of fog covered the San Francisco Bay area(fn1) on November 7, 2007(fn2) when a bay pilot, Captain John Cota, boarded the Cosco Busan, a container ship operated by Fleet Management, Limited (Fleet).(fn3) Cota and Fleet allegedly failed to prepare and review a passage plan prior to departure(fn4) and guided the vessel out of the bay in visibility of less than a quarter mile.(fn5) According to the third superseding indictment, the ship proceeded too quickly, and Cota and Fleet, in addition to making other navigational errors, failed to use the vessel's radar and electronic chart system properly.(fn6) As a result, they "failed to navigate an allision free course,"(fn7) and the vessel allided with a tower of the San Francisco-Oakland Bay Bridge,(fn8) splitting open fuel tanks and spilling more than 50,000 gallons of diesel fUel and oil into the bay.(fn9) The spill killed thousands of birds(fn10) and left forty miles of beaches and shore contaminated.(fn11) The National Transportation Safety Board estimated the cost of clean up at $70 million, ship repairs at $2.1 million and bridge repairs at $1.5 million.(fn12)

As a result of the spill, both Cota and Fleet were charged with negligent discharge of oil into navigable waters of the United States under the Federal Water Pollution Control Act, commonly known as the Clean Water Act (CWA).(fn13) In prosecuting Fleet, the U.S. Government has relied on the civil negligence standard-failure to take due care- applicable under the CWA negligent discharge provision in order to incorporate the agency principle of negligent supervision.(fn14) Trial is scheduled for September 2009.(fn15) Fleet originally faced a maximum $200,000 fine for its CWA violations or twice the gross gain or loss caused by the violations under the Alternative Fines Act.(fn16) Now, after a third superseding indictment alleging "approximately $20 million in pecuniary losses," Fleet faces a $40 million fine.(fn17)

Although the Government proceeded under a direct liability theory against Fleet, courts should also recognize a respondeat superior theory, which would hold corporations vicariously criminally liable for negligent oil discharges by their employees. The negligent discharge provision does not explicitly call for vicarious liability. However, the legislative intent behind the Oil Pollution Act of 1990 (OPA 90),(fn18) which amended the CWA, and the public welfare nature of the legislation support such an interpretation.(fn19) Allowing prosecution under vicarious criminal liability would mean that when employees, such as crew members, are found guilty of negligent discharge of oil under the CWA, corporations, such as ship management corporations, vessel owners, and demise charterers, could also be subject to liability.(fn20)

Part I of this Comment briefly describes the CWA negligent discharge provision and examines the legislative history of the provision, as amended by OPA 90, including its public welfare nature and Congress's interest in holding corporations liable for oil spills. Part II further explores the public welfare status of the CWA and how it affects statutory interpretation. Part III explains how the civil justifications for vicarious liability also apply in the criminal context and discusses how courts apply such principles, specifically when environmental statutes are at issue. Part IV argues that although the plain language of the CWA negligent discharge provision is silent regarding corporate vicarious liability, Congress's intent and the public welfare nature of the CWA should guide courts in interpreting the statute to permit the prosecution of corporations under such a theory.

I. CONGRESS PASSED OPA 90 TO HOLD CORPORATIONS CRIMINALLY LIABLE AND PROTECT THE PUBLIC AND ENVIRONMENT FROM MASSIVE OIL SPILLS

Congress adopted the CWA and its amendments to "restore and maintain the chemical, physical, and biological integrity of the Nation's waters" by eliminating discharges of pollutants.(fn21) Congress included different administrative, civil, and criminal penalties to encourage and enforce compliance.(fn22)

When Congress passed OPA 90, it amended the CWA's list of substantive criminal violations to include negligent discharge of oil.(fn23) As a result, section 1321(b)(3)(i) of the CWA, which prohibits unauthorized discharge of oil into the navigable waters of the United States,(fn24) works with the enforcement provision of section 1319(c)(1)(A)(fn25) to prohibit the negligent discharge of oil by any "person." "Person" includes individuals, corporations, partnerships, associations,(fn26) and responsible corporate officers.(fn27) Corporations found guilty of negligent discharge face fines between $2,500 and $25,000 for each day of violation,(fn28) and those fines may increase under the Alternative Fines Act.(fn29) Courts can also place corporations on probation and mandate restitution to victims or substitute restitution in lieu of criminal sanctions.(fn30)

Although Congress did not address the issue of vicarious liability in relation to the negligent discharge provision in the text of the statute, the legislative history of OPA 90 provides some guidance. First, Congress passed OPA 90 and amended the CWA in response to massive oil spills, such as the Exxon Valdez spill, because such spills threaten the health and safety of the public as well as the environment.(fn31) Second, Congress expressed particular concern that corporations were failing to take sufficient measures to prevent oil spills in the first place, and when spills did occur, corporations failed to adequately clean up and to compensate victims, including the government.(fn32)

A. Congress Expressed Deep Concern that Oil Spills Posed a Significant Danger to the Public and Environment

On March 24, 1989, the Exxon Valdez ran aground and spilled over 11 million gallons of oil into Prince William Sound, Alaska.(fn33) It was the largest oil spill in the history of the United States.(fn34) Crude oil covered hundreds of miles of coastline, killed over 26,000 birds, and harmed other sea life.(fn35) The company's and the government's slow and inadequate response to the spill only worsened the problem.(fn36) Later that year, three more oil spills occurred: one off the coast of Rhode Island, one in the Delaware River, and one in the Houston Ship Channel in Texas.(fn37) While the response to these spills proved better than the response to the Exxon Valdez, Congress did not find them "unqualified success[es]."(fn38)

To protect the public from the consequences of such spills, Congress passed the Oil Pollution Act of 1990.(fn39) The Senate Committee on Environment and Public Works (Public Works Committee) found that "oil pollution from accidental tanker spills [was] a real and continuing threat to the public health and welfare and the environment."(fn40) Congress adopted the legislation to prevent oil spills, improve clean-up responses, and increase liability for those causing spills.(fn41) Congress explicitly stated its policy to allow "no discharges of oil or hazardous substances into or upon the navigable waters of the United States, adjoining shorelines, or into or upon the waters of the contiguous zone."(fn42)

B. Congress Expressed Particular Concern that Corporations Involved in Oil Spills Evaded Their Responsibilities to Prevent Them and to Participate in Clean-Up Efforts

Congressional reports and debate surrounding the passage of OPA 90 focused heavily on corporations' failure to pay for oil spills, both in terms of prevention and clean up. The Public Works Committee stated in a report,(fn43) and Senator Baucus said in a statement from the floor, that companies accepted oil spills as part of the normal course of business.(fn44) The report noted:[S]pills are still too much of an accepted cost of doing business for the oil shipping industry. At the present time, the costs of spilling and paying for its clean-up and damage is not high enough to encourage greater industry efforts to prevent spills and develop effective techniques to contain them. Sound public policy requires reversal of these relative...