Responsible Party’s Efforts To Avoid Payment Of Clean Up Costs Denied

February 21, 2017
Eugene J. O'Connor

Types : Alerts

In U.S. v. American Commercial Lines,  the U.S. District Court for the Eastern District of Louisiana considered a 2008 oil spill in the Mississippi River resulting from a collision between the tanker M/T TINTOMARA and the tank barge DM 932, owned by American Commercial Lines (“ACL”).  The US Coast Guard designated ACL as the Responsible Party (“RP”) under the U.S. Oil Pollution Act of 1990 (“OPA”) because the oil spill came from its barge.  ACL hired a number of oil spill responders to clean up the spill.  At the conclusion of the clean up these responders invoiced ACL’s designated agent but ACL disputed some of the claims and did not pay or settle them within the 90 daytime period prescribed by OPA.  These responders then submitted claims for their uncompensated removal costs to the National Pollution Funds Center (“the Fund”), who paid them.

The US commenced this lawsuit against ACL to recover the Fund’s payments to these responders. In deciding a prior motion, the district court confirmed that ACL was a responsible party and held that it was not entitled to invoke either OPA’s complete sole third party fault or limitation of liability defenses to the government’s claim.

Subsequently, ACL then moved to dismiss the Fund’s claim on the grounds that the Fund improperly paid some of the responder’s claims because they were never presented to ACL, others were not properly presented, some were not caused by the spill, and one claim violated an applicable forum selection clause.

First addressing ACL’s “presentation” argument, the court, citing precedent set by the 5th Circuit in Nguyen v. American Commercial Lines L.L.C., 805 F. 3d 134 (5th Cir. 2105), held that the requirements for filing a claim with the Fund as opposed to filing a claim with an RP are not identical under the OPA – the Fund follows regulatory guidelines as to what constitutes a properly supported claim, not the arbitrary requirements of a private party.  Moreover, the fact that these responders may have presented supplemental documentation to the Fund, and not to ACL, did not render the presentation improper because ACL had means to obtain the same supplemental documents.  Thus, ACL’s presentation (or lack thereof) argument was denied.

ACL’s second argument was based on the fact that one of the responders presented its claim to ACL directly instead of to a third party administrator that ACL had designated to receive such claims.  The district court held that, although an RP could set up presentation of claims to a designated third party, it was not mandatory that a claimant do so and the OPA did not preclude presentment of a claim directly to an RP.

ACL’s third contention was that one claimant submitted revised invoices to the Fund charging higher rates than the agreed, discounted rates that were presented to ACL, i.e. the revised invoices were never presented to ACL.  The district court denied summary judgment in favor of ACL on the ground that genuine issues of fact remained regarding the presentation of this invoice.

ACL also challenged payment by the Fund to claimants whose losses were incurred solely because the Coast Guard closed sections of the Mississippi River during the oil spill clean-up operation. ACL argued that those claims should have been denied unless the claimant could prove that oil actually impacted its property, such as a dock.  The district court rejected this argument, holding that actual oiling of physical property was not a prerequisite for recover of damages under the OPA and that there were triable issues of fact as to whether a claimant had suffered damages for loss of business resulting from the loss of use of a natural resource such as a river.

Lastly, ACL contended that the Fund should not recover for payment to one contractor because it presented its claims to the Fund in violation of a forum selection clause in its contract with ACL that stipulated that the district court for the Eastern District of Louisiana was the exclusive forum for all disputes arising under the contract. The court noted that this contractor’s submission of its claim to the Fund did not purport to resolve the merits of its dispute with ACL but rather the Fund made its own evaluation of the claim and by paying it, essentially purchased the claim.  The district court concluded that the claimant’s assignment of its rights against ACL to the Fund did not violate the forum selection clause in the contract because in doing so, the contractor did not file suit or seek to have its claims adjudicated and the Fund did in fact file suit in the stipulated forum.

In sum, ACL’s motion for partial summary judgment was completely denied, and it is clear from the decision that, barring the right to limit or a viable defense, a responsible party will be held accountable for valid clean-up costs paid for by the Fund.


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