Petition for Writ of Certiorari — Hyundai Merchant Marine Co. v. United States
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Supreme Court of the United States
a —
HYUNDAI MERCHANT MARINE COMPANY,
LTD., and BRITANNIA STEAM SHIP
INSURANCE ASSOCIATION LIMITED,
Petitioners,
UNITED STATES OF AMERICA,
Respondent.
e —————
On Petition For Writ Of Certiorari
To The United States Court Of Appeals
For The Ninth Circuit
e ae
PETITION FOR WRIT OF CERTIORARI
—
Dawn M. ScCHOCK
Counsel of Record
MicHaet H. Woopett
Douctas R. Davis
KeesaAL, YOUNG & LOGAN
A Professional Corporation
400 Oceangate
Post Office Box 1730
Long Beach, California 90801-1730
Telephone (562) 436-2000
Attorneys for Petitioners
HYUNDAI MERCHANT MARINE
COMPANY, LTD. and BRITANNIA
STEAM SHIP INSURANCE
ASSOCIATION LIMITED
COCKLE LAW BRIEF PRINTING CO., (800) 225-6964
OR CALL COLLECT (402) 342-2831
N
QUESTIONS PRESENTED
Must a party which incurs its own costs in respond-
ing to and cleaning up an oil spill also pay for the
Coast Guard’s administrative costs incurred in mon-
itoring the party’s environmental response operation?
In National Cable Television Association v. United States
(NCTA), 415 U.S. 336 (1974), this Court held that in
order for a governmental agency to recover adminis-
trative oversight costs that did not inure directly to
the benefit of the regulated party, Congress must
clearly indicate its intention to delegate its taxing
authority to the executive agency. The Third Circuit
Court of Appeals has applied the NCTA doctrine to
preclude the Environmental Protection Agency from
recovering its costs incurred in monitoring the envi-
ronmental clean-up efforts of a private party under
the Comprehensive Environmental Response, Com-
pensation and Liability Act (“CERCLA”). The Fifth
Circuit Court of Appeals has refused to apply the
NCTA doctrine stating that environmental clean up
costs do not come within the purview of the doctrine.
In this case the Ninth Circuit joins the Fifth in refus-
ing to apply the NCTA doctrine to environmental
clean-up costs under the Oil Pollution Act of 1990
(“OPA”) creating a conflict among the circuit courts
of appeals that should be resolved to preserve unifor-
mity.
When the district court action is the first time that a
responsible party may challenge the costs charged to
it by the Coast Guard under the OPA, does the appli-
cation of the arbitrary and capricious standard of
review, without regard to whether a particular cost
was also “prudent, or necessary, or reasonable,” vio-
iate the responsible party’s constitutional right to due
process?
QUESTIONS PRESENTED - Continued
Was the Ninth Circuit correct in allowing the recovery
of all monitoring costs, all base costs and attorneys
fees in all actions by the Government, when Congress
has (a) included the term “monitoring costs” in one
section of the OPA but omitted it from the definition
of recoverable removal costs, (b) stated that only
those costs that “result from” an incident are recover-
able and indicated in the legislative history that such
costs are not to include the base costs for those assets
normally available for oil spill response, and (c)
expressly allowed for the recovery of attorneys fees in
a subrogation claim on behalf of the Oil Pollution
Trust Fund (“Fund”), but has omitted attorneys fees
from the list of recoverable removal costs in a direct
action against a responsible party?
iil
PARTIES’ DISCLOSURE STATEMENT
Petitioner Britannia Steam Ship Insurance Associa-
tion Limited has no parent or nonwholly owned subsid-
iaries. Petitioner Hyundai Merchant Marine Co., Ltd. has
three nonwholly owned subsidiaries: Hyundai Merchant
Marine (America), Inc., Hyundai America Shipping
Agency, Inc. and Hyundai Intermodal, Inc.
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT............----0ee eee: 1
yi) &. 8 (fe. Serer rerrrr rT errr tt 2
FURRISDICTION 6 vnc cecisdecdeweecececesseeseeensees 2
STATUTORY PROVISIONS INVOLVED............. 2
STATEMENT OF THE CASE... ..ccccccccncscsecess 3
REASONS WHY THIS PETITION SHOULD BE
CRIT vnc ec vse cs hetreecdccevewaeedieune dns 5
I. REVIEW IS NEEDED TO RESOLVE THE
CONFLICT AMONG THE CIRCUIT COURTS
OF APPEALS AS TO THE APPLICABILITY
OF THE “NCTA” DOCTRINE TO THE
RECOVERY OF THE GOVERNMENT'S
ADMINISTRATIVE COSTS OF MONITOR-
ING A PRIVATE PARTY’S ENVIRONMEN-
TAL RESPONSE OPERATION.............-.-. 5
A. The Third Circuit Court Of Appeals
Applies The NCTA Doctrine To Disallow
The Government’s Recovery Of Its
Administrative Costs Incurred In Mon-
itoring A Private Party’s Environmental
RESPONSE. ......--- see ee eee c cece crcccees 5
B. The Fifth Circuit And Now The Ninth
Circuit Have Refused To Apply The
NCTA Doctrine To The Government's
Recovery Of Its Administrative Costs
Incurred In Monitoring A Private Party's
Environmental Clean-up .............-.-- 6
i ee
II
Il
TABLE OF CON NTS —- Continued
Page
C. Resolution Of This Conflict Is Important
Because The Government’s Recovery Of
Its Administrative Costs Abrogates The
Intent Behind OPA To Encourage Respon-
sible Parties To Undertake Response
Operations And Provides No Incentive
For The Government To Act Economically
D. Resolution Of This Conflict Is Partic-
ularly Significant In Environmental Cases
Because The Government Has Been
Allowed To Recover Its Indirect Costs
Which Would Be Incurred Even In The
Absence Of A Pollution Incident .......
REVIEW IS WARRANTED BECAUSE THE
NINTH CIRCUIT’S AWARD OF ALL COSTS
TO THE GOVERNMENT REGARDLESS OF
WHETHER THEY ARE “PRUDENT, OR NEC-
ESSARY, OR REASONABLE” IS UNCON-
STITUTIONAL GIVEN THAT THE DISTRICT
COURT TRIAL IS THE FIRST OPPORTUNITY
A RESPONSIBLE PARTY HAS FOR A REVIEW
CF ee eee es oie sk ck dbdeekeveeee ee
THE NINTH CIRCUIT’S INTERPRETATION OF
THE OPA VIOLATES LONG-SETTLED AXIOMS
OF STATUTORY CONSTRUCTION ............
A. The Award Of Monitoring Costs Is Not
Supported By TRO UPA. 0. occ ce ccseecunns>
B. The Award Of Base Costs Is Not Supported
rer ee ey ere
10
13
TABLE OF CONTENTS - Continued
Pa ge
Cc. An Award Of Attorneys Fees Is Not
Allowed By The OPA In Direct Actions
Against The Responsible Party 15
CONCLUSION
Vii
TABLE OF AUTHORITIES
Page
CASES
Atlantic Richfield Co. v. American Airlines, Inc., 98
F.3d 564 (10th Cir. 1996)......-..- eee rece eee eee: 7
Chicago v. Environmental Defense Fund, 511 U.S. 328
SIGE . is cc ivenccccacccsenvecverasicveress ston 14, 16
Coluatti v. Franklin, 439 U.S. 379 (1979)......-++++5- 13
Concrete Pipe and Products of California, Inc. v. Con-
struction Laborers Pension Trust for Southern Cali-
fornia, 508 U.S. GOD (ISOS) onc seccvencsscuseovexess 12
Conoco, Inc. v. United States, 1994 WL 24249, *2
(E.D. La., 1994)..... cee cece creeccrcerrcccerecces 10
National Cable Television Association v. United States
(NCTA), 415 U.S. 336 (1974) ....--- eee eee reece: 5, 6
United States v. Attati & Goss, Inc., 900 F.2d 429 (1st
Cie FOI 5 vce dcncecccsseesacenees tener ts cer eaeen 10
United States v. Lowe, 118 F.3d 399 (Sth eg ee 6
United States v. Rohm and Haas Co., 2 F.3d 1265 (3d
Cie WO gnc count cdedsseeadewesessns ee eHeceeh ees 6, 8
Withrow v. Larkin, 421 U.S. 35 (1975) ......----+-+5>- 12
STATUTES
5 U.S.C. §§ 107, 706 ... 2... e cece cree reece ecereceree: 10
28 U.S.C. § 1254(1) «ccc c cece re ecereecercercccess 2
2B USC. © 1396S... ccc enn cccccecesceesccccesessess 2
33 U.S.C. § 1321(c)(1), (2) and (5)..---- +. eee eres 2. 3
33 U.S.C. § 2701(31) ....-- eee eee e cere errr e reece: 13
Vill
TABLE OF AUTHORITIES - Continued
Page
33 U.S.C. §§ 2701(32), 2702(a)....- eee eee eee eee 13
33 U.S.C. § 2701(4) ...-- eee cece eee eee eee eens 3, 13,
33 U.S.C. §§ 2702(a), (b)(1) and (2)........ 3, 13, 14, 19
33 US.C. © Z71DaMl)....--ccececccrcccescccvecreedy If
33 U.S.C. § 271F(c) .. 0. eee e cc r rer eer reece eerccerrces 15
33 U.S.C. § 2714(c) .. ccc cc ccc cree cece cence eee ceeees 16
33 U.S.C. § 2715(c) ...-. cece ccc err eeeeneccerccsceees 3
33 U.S.C. § 2717(D) ... cece rece cece ce eceereceneces 2
42 U.S.C. § 3001 (1988) .....--. cece creer eee e eters 8
42 U.S.C. § 6928(h)(1988) ...... 6. eee eee eee eee tees 8
42 U.S.C. § 9601 (1988) ....... cece eee eee teres 8
H.R. Rep. No. 653, 101st Cong. 2d Sess. at 112-114
(1990), reprinted in 1990 U.S.C.C.A.N. 779,
PRELIMINARY STATEMENT
As it is now interpreted by the Ninth Circuit Court of
Appeals, the OPA represents a significant erosion of the
constitutional due process rights of a vessel owner or
other responsible party whose assets spill or threaten to
spiil oil in the navigable waters.
Under the OPA, the responsible party is liable for
removal costs, including those incurred by the Coast
Guard. Yet, the responsible party has no effective and
meaningful opportunity to influence, challenge or appeal
the Coast Guard’s charges. There is no mechanism within
the governmental agency itself to do so. The first oppor-
tunity the responsible party has is in the district court.
There, however, the responsible party is limited to pro-
ving the costs were arbitrary and capricious. It cannot ask
whether the costs were “prudent, or reasonable, or neces-
sary.” That extraordinary level of review in the first adju-
dication of the costs is not meaningful and it is not
constitutional.
The constitutional deprivation inherent in this statu-
tory scheme is exacerbated by the ability of the Coast
Guard to pass on to the responsible party, virtually with-
out limit, its administrative costs - some of which would
have been incurred even in the absence of the spill or
threatened spill. Allowing an administrative agency to
pass on all of its response costs takes away any incentive
for that agency to act efficiently and responsibly.
OPINIONS BELOW
The decision of the Ninth Circuit Court of Appeals is
reported at 172 F.3d 1187 (1999) and is reproduced in the
Appendix beginning at page App. 1.
The orders of the United States District Court for the
District of Alaska are not officially reported and are
reproduced in the Appendix as follows: July 11, 1995
Order for Partial Summary Judgment disallowing the
recovery of monitoring costs (App. 15). January 26, 1996
Order of Reconsideration allowing the recovery of mon-
itoring costs (App. 24). January 29, 1996 Order for Partial
Summary Judgment requiring a nexus between recover-
able costs and the pollution incident (App. 29). The
March 31, 1997 Findings of Fact and Conclusions of Law
of the District Court (App. 39). The July 28, 1997 Order
granting the Government's attorneys fees (App. 72).
= —@ ———————— —
JURISDICTION
lhe jurisdiction of this Court 1s invoked under 28
U.S.C. section 1254(1). The decision of the Ninth Circuit
Court of Appeals was filed on April 20, 1999. The juris-
diction of the United States District Court for the District
of Alaska was based on 28 U.S.C. section 1345 and 33
U.S.C. section 2717(b).
<< | —
STATUTORY PROVISIONS INVOLVED
The following statutory sections are reproduced
in the Appendix beginning at App. 74: 33 USA.
§ 1321(c)(1), (2) and (5); § 2701(4), (30) and (31); § 2702(a)
and (b)(1); § 2712(a)(1); § 2715(c).
STATEMENT OF THE CASE
On October 2, 1991, the M/V Hyundai No. 12, owned
and insured_by the Petitioners, HYUNDAI MERCHANT
MARINE CO., LTD. and BRITANNIA STEAM SHIP
INSURANCE ASSOCIATION LIMITED (collectively
“Hyundai”) ran aground in an environmentally sensitive
area while seeking refuge during a storm. The cargo
vessel was successfully refloated by its owner on October
12. Only a small amount of the approximately 200,000
gallons of fuel oil leaked during the incident.
Hyundai immediately accepted responsibility under
the OPA and undertook a pollution response effort that
cost it approximately $4.5 million dollars, which were not
at issue below.
The Coast Guard initially responded through a
search and rescue mission and an investigation and
assessment by the Federal On Scene Coordinator
(“FOSC”). The Coast Guard’s role then consisted solely of
having additional removal and containment equipment
and personnel available and in monitoring and observing
Hyundai's efforts. The Coast Guard did no actual clean-
up and did not actively participate in the operations,
although they were consulted and approved Hyundai's
plans and actions.
The Government billed Hyundai $1,109,963 for its
costs in connection with Hyundai’s removal response
operation.
After filing suit against Hyundai to recover the Coast
Guard’s costs, the Government filed a motion for partial
summary judgment asserting that it was entitled to the
recovery of all costs incurred. The District Court initially
ruled that monitoring costs were not recoverable, but
later reconsidered that decision and allowed the recovery
of monitoring costs (App. 20; 24). The District Court also
ruled that to be recoverable removal costs must bear a
sufficient causal “nexus” to the pollution incident (App.
21). Later the Court issued further orders stating that
base costs are recoverable, including depreciation (App.
36; 64-66, J 59).!
The case was tried to the Court for five days. The
Court awarded the Government all of its requested costs,
penalties and administrative fees. Judgment in the
amount of $1,592,962.90 was entered. In a post-trial rul-
ing, the District Court also awarded the Government its
attorneys fees of $104,043.73.
Hyundai appealed to the Ninth Circuit which
affirmed all aspects of the award except for penalties
awarded under the Debt Collection Act. Hyundai does not
seek review of that portion of the Ninth Circuit’s opinion.
+
' The District Court also determined that base costs could
be recovered only if the “primary purpose” for which the costs
were incurred was monitoring or the containment and removal
of oil (App. 66, J 60). Hyundai did not appeal from this finding.
peal aia
Yl
REASONS WHY THIS PETITION
SHOULD BE GRANTED
This petition should be granted for four reasons that
this Court has traditionally found compelling. First, the
decision below and decisions by the Fifth Circuit Court of
Appeals are in conflict with decisions by the Third Circuit
with regard to the applicability the “NCTA” doctrine of
statutory construction to environmental clean-up laws.
Second, the decision below interprets the OPA, a statute
of nationwide importance. Third, the decision below,
because it applies the arbitrary and capricious standard
of review in what is the first neutral review of the Coast
Guard’s charges to a responsible party, violates the
responsible party’s due process rights. Finally, the Ninth
Circuit’s interpretation of OPA is at odds with settled
axioms of statutory construction.
REVIEW IS NEEDED TO RESOLVE THE CONFLICT
AMONG THE CIRCUIT COURTS OF APPEALS AS TO
THE APPLICABILITY OF THE “NCTA” DOCTRINE TO
THE RECOVERY OF THE GOVERNMENT’S ADMIN-
ISTRATIVE COSTS OF MONITORING A PRIVATE
PARTY’S ENVIRONMENTAL RESPONSE OPERATION
A. The Third Circuit Court Of Appeals Applies The
NCTA Doctrine To Disallow The Government's
Recovery Of Its Administrative Costs Incurred In
Monitoring A Private Party’s Environmental
Response.
The NCTA doctrine is a rule of administrative law
and statutory construction that takes its name from this
Court’s decision in National Cable Television Ass'n v. United
States, 415 U.S. 336 (1974). According to the doctrine, a
statute must clearly indicate Congress’ intent to delegate
its taxing power to an executive agency before that
agency may constitutionally charge administrative costs
against a regulated party if that charge does not inure to
the benefit of the party. Any ambiguity in a statute pur-
porting to delegate such authority must be resolved
against delegation. Id. at 1275.
The Third Circuit applied the doctrine in United
States v. Rohm and Haas Co., 2 F.3d 1265 (3d Cir. 1993) to
disallow the Government's recovery of its costs incurred
in overseeing a private removal action under the
Resource Conservation and Recovery Act (“RCRA”) and
CERCLA. The Third Circuit emphasized that the doctrine
applied to the levy of administrative costs regardless of
whether those costs were termed “taxes” or “fees”. The
determinative factor in applying the doctrine is that an
oversight agency requires a regulated party to pay a
share of the administrative costs of its own oversight. Id.
at 1274. In that case, the Third Circuit refused to impose
on the regulated party the EPA’s costs of monitoring that
party’s compliance with the law. Id. at 1276.
B. The Fifth Circuit And Now The Ninth Circuit Have
Refused To Apply The NCTA Doctrine To The Gov-
ernment’s Recovery Of Its Administrative Costs
Incurred In Monitoring A Private Party’s Environ-
mental Clean-up.
In United States v. Lowe, 118 F.3d 399, 401 (5th Cir.
1997), the Fifth Circuit Court of Appeals held that clean-
up costs under CERCLA, including monitoring costs,
were neither “taxes” nor “fees” and that, therefore, the
NCTA doctrine did not apply. In the case below, the
Ninth Circuit agreed with the holding in Lowe and
allowed the recovery of the Government’s administrative
costs — including monitoring costs - under the OPA.?
A conflict thus exists between the Third and Fifth
and now the Ninth Circuits as to the applicability of the
NCTA doctrine to costs incurred by the Government in
monitoring environmental response operations.
C. Resolution Of This Conflict Is Important Because
The Government’s Recovery Of Its Administrative
Costs Abrogates The Intent Behind OPA To Encour-
age Responsible Parties To Undertake Response
Operations And Provides No Incentive For The
Government To Act Economically.
The Third Circuit found the NTCA doctrine to be
particularly important in the interpretation of environ-
mental statutes. Emphasizing the need to ensure that
governmental agencies act in a cost-effective and efficient
manner, the Court refused to narrowly apply the doctrine
only to “fees” and “taxes” to the exclusion of environ-
mental removal costs:
2 The Tenth Circuit refused to adopt the Third Circuit's
analysis of CERCLA in Atlantic Richfield Co. v. American Airlines,
Inc., 98 F.3d 564, 568 (10th Cir. 1996). That decision, however,
was not a rejection of the NCTA doctrine. Rather, the Tenth
Circuit disagreed with the Third Circuit’s interpretation of
CERCLA.
The budget and appropriation process gives
executive agencies an incentive to operate effi-
ciently and makes them accountable to the Con-
gress. When an agency asserts the right to secure
financing of its activities by assessing its costs
against those whom it regulates, that incentive and
accountability are lost.
Rohmand Haas, 2 F.3d at 1274 (emphasis added).
Not only is the agency’s accountability lost, so is the
regulated party’s incentive to undertake its own response
to a spill under the OPA. If a responsible party will
ultimately be liable not only for its own response bills but
also for the Coast Guard’s bills in monitoring, what
incentive does that party have to undertake anything
other than a minimal response? Why wouldn't the
responsible party do only as much as it must to avoid the
imposition of penalties and then withdraw and let the
Coast Guard clean-up the spill? In that way, it will have
only one bill to pay — the Coast Guard’s - rather than
having to pay both for its own response costs and the
sometimes parallel and duplicative costs of the Coast
Guard in its monitoring function.
The resolution of this issue has implications beyond
this case and those cases interpreting the OPA. As the
Third Circuit has noted, many environmental statutes
anticipate and depend upon private parties’ undertaking
environmental removal actions. Id. at 1276. In fact, fore-
ing “private parties to undertake corrective action at their
”/
own expense is a favorite policy tool of Congress...“ as
evidenced by the RCRA, 42 U.S.C. § 6928(h)(1988); the
Safe Drinking Water Act, 42 U.S.C. § 3001 (1988); and
CERCLA, § 42 U.S.C. § 9601 (1988). Id. at fn. 18. To
continue to allow the Government a blank check in over-
seeing private clean-up operations is to undermine those
statutes which encourage private parties’ undertaking
their own environmental clean-up operations.
D. Resolution Of This Conflict Is Particularly Signifi-
cant In Environmental Cases Because The Govern-
ment Has Been Allowed To Recover Its Indirect
Costs Which Would Be Incurred Even In The
Absence Of A Pollution Incident.
In addition to its monitoring costs, the Government
has been allowed to recover its base costs from Hyundai
(App. 64-66, ¥ 57). Base costs are those costs, such as
personnel salaries, administrative overhead and deprecia-
tion costs that would have been incurred even in the
absence of a pollution incident. In allowing this item of
recovery, the Ninth Circuit articulated no limitation. The
danger such unlimited recovery poses is that a responsi-
ble party could, potentially, be liable not only for an
allocated portion of the salaries of the crew who in fact
attended to the incident, but also for the myriad on-shore
Supervisors and their staff —- conceivably all the way up
the chain of command to the executive office — who
oversaw even remote aspects of the pollution response.
In this way, the Government has been given free
reign to pass on significant administrative costs to a
responsible party with absolutely no budgetary incen-
tives to act efficiently.
10
II
REVIEW IS WARRANTED BECAUSE THE NINTH
CIRCUIT’S AWARD OF ALL COSTS TO THE GOV-
ERNMENT REGARDLESS OF WHETHER THEY ARE
“PRUDENT, OR NECESSARY, OR REASONABLE” IS
UNCONSTITUTIONAL GIVEN THAT THE DISTRICT
COURT TRIAL IS THE FIRST OPPORTUNITY A
RESPONSIBLE PARTY HAS FOR A REVIEW OF
EXPENDITURES.
The Ninth Circuit held that the Government need not
demonstrate that any particular cost is “prudent, or nec-
essary, or reasonable” in order to recover that cost from
the responsible party (App. 9). The only applicable stan-
dard is whether the actions taken by the Coast Guard
were nonarbitrary and not capricious under the Adminis-
trative Procedure Act (“APA”) (App. 10). Because Hyun-
dai had no prior opportunity to challenge the Coast
Guard’s cost bill, however, the application of the arbi-
trary and capricious standard by the District Court with-
out regard to whether the costs were necessary, deprived
Hyundai of meaningful review in violation of its constitu-
tional right to due process.
The Ninth Circuit adopted the arbitrary and capri-
cious standard of review from the APA (App. 10). The
APA, however, employs the arbitrary and capricious stan-
dard to describe the standard of review applied by a
reviewing court to final agency actions. 5 U.S.C. §§ 107,
706; United States v. Attati & Goss, Inc., 900 F.2d 429 (1st
Cir. 1990). The actions by the FOSC, however, are not
“final agency actions”. See, e.g., Conoco, Inc. v. United
States, 1994 WL 24249, *2 (E.D. La., 1994).
11
Most significantly, the OPA provides no mechanism
for a responsible party to seek Coast Guard review of the
FOSC’s decisions. Once the FOSC makes the decision to
incur a specific cost, the cost is passed on to the Pollution
Fund Center, which then formulates and presents the
demand for payment to the responsible party. A primary
concern of the Fund is to maximize the recoupment of
costs in order to replenish the Fund. See, H.R. Rep. No.
653, 101st Cong. 2d Sess. at 112-114 (1990), reprinted in
1990 U.S.C.C.A.N. 779, 790-92; National Pollution Funds
Center Annual Report FY94, 1995 at 20, n. 7. The lawsuit
by the Government against the responsible party to
recoup the costs incurred by the FOSC is the first time
that the FOSC’s actions are subject to review. Deferring to
the FOSC’s decisions by applying the arbitrary and capri-
cious standard during that initial review deprives the
responsible party of meaningful review.*
This Court has recognized the danger of undue defer-
ence to agency decisions during the first level of review
in cases outside of the environmental context. In the
context of a revocation of a medical license, for example,
this Court stated:
3 The Government has argued that Hyundai conceded to
the District Court that the FOSC’s actions should be reviewed
under an arbitrary and capricious standard. Hyundai, however,
did argue to the Ninth Circuit that the application of the
arbitrary and capricious standard without the further de novo
consideration of whether a cost was necessary was
unconstitutional.
12
Clearly, if the initial view of the facts based on
the evidence derived from nonadversarial proc-
esses as a practical or legal matter foreclosed
fair and effective consideration at a subsequent
adversary hearing leading to ultimate decision,
a substantial due process question would be
raised.
Withrow v. Larkin, 421 U.S. 35, 58 (1975).
Likewise, in Concrete Pipe and Products of California,
Inc. v. Construction Laborers Pension Trust for Southern Cali-
fornia, 508 U.S. 602 (1993), this Court explained that an
agency action that is essentially non-adjudicative in char-
acter cannot, as a constitutional matter, be afforded defer-
ence during the initial review by a neutral adjudicator.
Rather, in that circumstance, the action must be reviewed
de novo. Where the first neutral adjudicator to review the
agency action is required to defer to the agency, due
process is violated.
In the context of this case, the District Court should
have reviewed the FOSC’s actions for more than mere
arbitrariness and capriciousness. As urged by Hyundai to
the Ninth Circuit, the District Court should also have
determined whether each cost was also necessary.
13
Ill
THE NINTH CIRCUIT’S INTERPRETATION OF THE
OPA VIOLATES LONG-SETTLED AXIOMS OF STATU-
TORY CONSTRUCTION
A. The Award Of Monitoring Costs Is Not Supported
By The OPA.
A vessel that discharges oil or threatens to discharge
oil into national waters is strictly liable for removal costs
under the OPA as a responsible party. 33 U.S.C.
§§ 2701(32), 2702(a). The term “removal costs” as defined
in OPA does not include monitoring costs:
‘Removal costs’ means the costs of removal
that are incurred after a discharge of oil has
occurred or, in any case in which there is a
substantial threat of discharge of oil, the costs to
prevent, minimize, or mitigate oil pollution
from such an incident... .
33 U.S.C. § 2701(31) (emphasis added).
The term “removal” in turn is defined as:
‘Remove’ or ‘removal’ means containment and
removal of oil or a hazardous substance from
water and shorelines or the taking of other
actions as may be necessary to minimize or miti-
gate damage to the public health or welfare . . .
33 U.S.C. § 2701(30) (emphasis added).
Fundamental to statutory construction is the rule that
a statute’s “definition which declares what a term
‘means’ . . . excludes any other meaning that is not
stated.” Coluatti v. Franklin, 439 U.S. 379, 392, n. 10 (1979).
Because the term “removal costs” is not said to “mean”
14
monitoring costs, those charges should not have been
allowed
[his conclusion is mandated by the fact that the OPA
does distinguish between “removal costs” and “monitor-
ing costs” in another of its sections. Specifically, the sec-
tion outlining the uses of the Fund states that it may be
used for the payment of “removal costs, including the
costs of monitoring removal actions. ...” 33 U.S.C.
§ 2712(a)(1).
“ [I]t is generally presumed that Congress acts inten-
tionally and purposely’ when it ‘includes particular lan-
guage in one section of a statute but omits it in
another '"™ Chicago v. Environmental Defense Fund, 511
U.S. 328, 338 (1994). Where Congress intended to include
monitoring costs in the OPA, it did so. Because it did not
include monitoring costs in the list of recoverable
“removal costs”, it must be presumed to have intended to
exclude them
B. The Award Of Base Costs Is Not Supported By The
OPA.
[he OPA states that a responsible party is liable for
those removal costs that “result from” a pollution inci
dent. 33 U.S.C. § 2702(a). Those base costs which the
Coast Guard would incur even in the absence of an oil
spill, such as routine salaries and depreciation or capital
costs do not “result from” the incident and are not recov-
erable. The House Conference Report itself states that
“both incremental and base costs should be included,
15
except for persons normally available for oil spill response,
when calculating the costs of Federal efforts to respond to a
spill. H.R. Conf. Rep. No. 101-653, 101 Cong. 2d Sess. 114
(1990) (emphasis added).
C. An Award Of Attorneys Fees Is Not Allowed By
The OPA In Direct Actions Against The Responsi-
ble Party.
The OPA expressly allows for the recovery of attor-
neys fees in subrogation claims brought on behalf of the
Fund but does not expressly allow for the recovery of
attorneys fees in direct claims brought against a responsi-
ble party. The Ninth Circuit disregarded that express
distinction and allowed the Government to recover its
attorneys fees in the case below even though that case
was a direct action as opposed to a subrogation claim.
[he Ninth Circuit did so without any support in the
statute itself, instead allowing recovery simply because
the Coast Guard and the Fund are both part of the Gov-
ernment (App. 12)
Under the OPA, a claimant — defined as “any person
or government” ~ may sue the responsible party directly or
seek compensation from the Fund. 33 U.S.C. §§ 2701(4),
2713(c) (emphasis added). In a direct action, the claimant
may recover against a responsible party for “removal
costs” and “damages.” The definitions of “removal costs”
and “damages” do not include attorneys’ fees. 33 U.S.C.
§ 2702(b)(1) and (2).
A person or government as a “claimant” may also
elect to present the claim to the Fund. 33 U.S.C. § 2713(c).
In that case the secretary is authorized to commence an
16
action on behalf of the Fund to recover compensation
paid by the Fund to the claimant. It is in that action that
attorneys’ fees are expressly provided for:
At the request of the Secretary, the Attorney
General shall commence an action on behalf of
the Fund to recover any compensation paid by
the Fund to any claimant pursuant to this chap-
ter, and all costs incurred by the Fund by reason
of the claim, including interest (including pre-
judgment interest), administrative and adjudica-
tive costs, and attorneys’ fees. Such an action
may be commenced against any responsible par-
ty ... for the costs or damages for which com-
pensation was paid...
33 U.S.C. § 2714(c).
““[I]t is generally presumed that Congress acts inten-
tionally and purposely’ when it ‘includes particular lan-
guage in one section of a statute but omits it in
another...’ ” Chicago v. Environmental Defense Fund, 511
U.S. 328 (1994). The Ninth Circuit, therefore, should have
presumed that because Congress included the recovery of
attorneys fees in the subrogation claim but did not
include mention of attorneys fees in the direct claim, it
intended that in actions such as this one, the Government
was not entitled to recover attorneys fees.
+
17
CONCLUSION
For these reasons, Petitioners request that this Court
grant this Petition for Writ of Certiorari to the Ninth
Circuit Court of Appeals.
Respectfully submitted,
Dawn M. ScHock
Counsel of Record
MicHaet H. Woopeti
Doucias R. Davis
KeesaL, YOUNG & LOGAN
A Professional Corporation
400 Oceangate
Post Office Box 1730
Long Beach, California 90801-1730
Telephone (562) 436-2000
Attorneys for Petitioners
HYUNDAI MERCHANT MARINE
COMPANY, LTD. and BRITANNIA
STEAM SHIP INSURANCE
ASSOCIATION LIMITED
App. 1
APPENDIX
FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
Unitep States OF AMERICA,
Plaintiff-Appellee,
Nos. 97-35538
97-35820
D.C. No.
CV-94-00391-HRH
V.
Hyunpar MERCHANT Marine Co.,
Lrp.; BRITANNIA STEAM SHIP
INSURANCE ASSOCIATION, LtD., OPINION
Defendants-Appellants.
Appeals from the United States District Court
for the District of Alaska
H. Russel Holland, District Judge, Presiding
Argued and Submitted
July 9, 1998 - Seattle, Washington
Filed April 20, 1999
Before: William C. Canby, Jr. and A. Wallace Tashima,
Circuit Judges, and David A. Ezra,! Chief District Judge.
Opinion by Judge Canby
‘ The Honorable David A. Ezra, Chief United States
District Judge for the District of Hawaii, sitting by designation.
App. 2
COUNSEL
Dawn M. Schock, Keesal, Young & Logan, Long Beach,
California, for the defendants-appellants.
R. Michael Underhill, United States Department of Jus-
tice, Torts Branch, Civil Division, San Francisco, Califor-
nia, for the plaintiff-appellee.
OPINION
CANBY, Circuit Judge:
Hyundai Merchant Marine Co. appeals from a
$1,702,553.51 damage award to the United States pur-
suant to the Oil Pollution Act of 1990 (“OPA”), 33 U.S.C.
§§ 2701-2761. The OPA provides that a party responsible
for a vessel that discharges or threatens to discharge oil
into navigable waters is liable for “removal costs and
damages,” id. § 2702(a), including removal costs incurred
by the United States. Id. § 2701(b)(A). This appeal con-
cerns the permissible scope of the United States’ recovery
under the OPA for its response to a private party’s threat-
ened (and to a limited degree, actual) oil spill, a question
of first impression in this and all circuits. With but one
exception, we agree with the district court that the United
States is entitled to recover the amounts it claimed.
I. Facts
On October 2, 1991, the bulk carrier M/V Hyundai
No. 12 ran aground in the Shumagin Islands of Alaska, an
environmentally sensitive area approximately 260 miles
App. 3
west of Kodiak. The freighter was carrying almost 200,000
gallons of bunker oil in its bottom fuel tanks. This type of
oil has a molasses-like consistency and must be heated to
be pumped. It evaporates slowly, if at all, and disperses
poorly when exposed to the elements.
Hyundai’s crew soon discovered that each of the
ship’s tanks was fractured and open to the sea. On the
fifth and sixth days after the grounding, a gale force
storm twisted and swung the ship more than 100 degrees
around the rocks on which it was perched, leading to oil
leakage visible in a sheen over 2000 feet long. This oil
spill threatened several species of wildlife.
The Coast Guard responded to the initial emergency
at once. For eleven days immediately following the
grounding, it stood ready with men and equipment to
contain a major spill and monitored Hyundai's efforts to
free the ship. Hyundai, however, performed the actual
work of containing the spill and freeing the ship, at great
expense to itself. It consulted with the Coast Guard, and
the Coast Guard approved its plan of operation. For-
tunately, only minor spillage occurred before Hyundai
was able to free the ship and tow it to repair docks.
The United States sued under the OPA to recover its
costs from Hyundai for the Coast Guard’s response to the
emergency. The district court awarded the United States
$1,702,553.51. Hyundai and its insurer, although recog-
nizing a duty to reimburse the United States for certain
limited costs, appeal several aspects of that award. The
crux of Hyundai’s argument is that a responsible party
that spends millions of dollars in a successful prevention
and cleanup operation should not have to reimburse the
App. 4
United States for efforts that were duplicative and unnec-
essary. In this vein, Hyundai contends that (1) the United
States was not entitled to recover monitoring costs; (2)
only “necessary” costs are recoverable; and (3) “base”
costs are not recoverable. Hyundai also argues that (4)
penalties should not have been assessed under the Debt
Collection Act, 31 U.S.C. § 3717; (5) the United States was
not entitled to attorneys’ fees; and (6) the Coast Guard
improperly applied a later-imposed rate schedule when
calculating its costs. We agree with Hyundai that the Debt
Collection Act and its penalties do not apply in this case.
We reject, however, all of Hyundai’s remaining conten-
tions.
II. Costs of Monitoring
Hyundai contends that the OPA does not allow the
United States to recover the Coast Guard’s cost of mon-
itoring Hyundai's salvage operation, as opposed to the
cost of actual removal of oil. According to Hyundai, costs
of monitoring do not constitute “removal costs.” We
reject Hyundai’s interpretation of the statute; the defini-
tion of “removal” costs under 33 U.S.C. § 2702(a) includes
monitoring costs.
OPA § 2702(a) provides:
[EJach 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 . . . is liable for
the removal costs and damages specified in sub-
section (b) that result from such incident.
(Emphasis added.)
oe Ke ee Se
ee ee ee Ne
App. 5
Subsection (b) then provides:
The removal costs referred to in subsection (a)
of this section are
(A) all removal costs incurred by the United
States . . . under subsection (c), (d), (e), or (1) of
section 1321 of this title . .
33 U.S.C. § 2701(b). The reference to section 1321 is to the
Federal Water Pollution Control Act, 33 U.S.C.
§§ 1321(c)-(e) and (1). Section 1321(c) of that Act is of
particular relevance here. It directs the President to
“ensure effective and immediate removal of discharge,
and mitigation or prevention of a substantial threat of
discharge, of oil” into United States waters. 33 U.S.C.
§ 1321(c)(1)(A). It further provides that, in carrying out
those duties, the President may:
(i) remove or arrange for the removal of a dis-
charge, and mitigate or prevent a substantial
threat of a discharge, at any time;
(ii) direct or monitor all Federal, State, and pri-
vate actions to remove a discharge... .
33 U.S.C. § 1321(c)(1)(B)(i),(ii) (emphasis added). Finally,
subsection (c) provides that, when a “discharge or sub-
stantial threat of a discharge” of oil is of a size or charac-
ter to be a substantial threat to the health or welfare of
the United States (including a threat to fish or wildlife),
then:
The President shall direct all Federal, State, and
private actions to remove the discharge or to
mitigate or prevent the threat of the discharge.
33 U.S.C. § 1321(c)(2)(A).
App. 6
As we read these cross-referenced provisions of the
OPA and the Federal Water Pollution Control Act, they
entitle the United States to recover the costs incurred by
the Coast Guard in monitoring Hyundai's removal of its
stranded and leaking vessel holding 200,000 gallons of
bunker fuel. The Coast Guard’s actions were an attempt
to “mitigate or prevent a substantial threat of a dis-
charge,” § 1321(c)(1)(B), it was “monitoring . . . private
action to remove a discharge,” § 1321(c)(1)(B)(ii), and its
monitoring was a means of “direct[ing] private actions to
remove the discharge or to mitigate or prevent the threat
of discharge” of oil, § 1321(c)(2)(A).?
In addition to the cross-references to the Federal
Water Pollution Control Act, the general definition sec-
tion of the OPA supports our conclusion. That section
defines “removal costs” as:
“We reject Hyundai's contention that denial of
reimbursement for monitoring costs is supported by H.R. Conf.
Rep. No. 101-653, 10Ist Cong., 2d Sess. 145 (1990). That report
states:
With respect to removal of any discharge or
mitigation or prevention of any substantial threat of a
discharge, the President may assume responsibility
and costs of these actions subject to reimbursement
trom the responsible party; (i.e., “federalize the
effort”); direct or monitor all Federal, State and
private actions; and remove and, if necessary, destroy
a vessel discharging or threatening to discharge.
Hyundai contends that “subject to reimbursement” applies only
to the first clause. We do not read the statement that way; it is
more reasonable to apply the clause to the entire sentence. It is
doubtful, for example, that Congress intended not to permit
reimbursement for the removal or destruction of a vessel by the
United States.
App. 7
the costs of removal that are incurred after a
discharge of oil has occurred or, in any case in
which there is a substantial threat of a discharge
of oil, the costs to prevent, minimize, or mitigate oil
pollution from such an incident.
33 U.S.C. § 2701(31) (emphasis added). We reject Hyun-
dai’s contention that this definition excludes monitoring;
the Coast Guard’s monitoring activities are part of its
effort to prevent or minimize a threatened oil discharge.
Hyundai’s reliance on the narrower definition of
“removal” in § 2701(30) is of no avail; that definition does
not include prevention. The broader definition of “costs
of removal” in § 2701(32) includes costs of prevention.
Hyundai’s emphasis on actual removal unduly minimizes
the importance of the Coast Guard’s emergency stand-by
operation, which qualifies as an act of “prevention,” the
cost of which is clearly recoverable under the terms of the
definition as it applies to the liability imposed by § 2702.3
Finally, Hyundai challenges the assessment of mon-
itoring costs on the basis of National Cable Television Ass‘n.
v. United States, 415 U.S. 336 (1974). There, the Court
reminded Congress that it may not delegate away its
taxing power to an executive agency, see id. at 342. See also
Union Pacific R.R. v. Public Util. Comm'n, 899 F.2d 854, 860
* We reject Hyundai's contention that the explicit reference
to removal and monitoring costs in § 2712(a)(1) indicates that
removal cost ordinarily does not include monitoring cost.
Section 2712(a)(1) authorizes use of the Oil Spill Liability Trust
Fund for “the payment of removal costs, including the costs of
monitoring removal actions.” This section does not refer to
removal and monitoring as separate activities; indeed the term
“including” suggests that monitoring cost is a removal cost.
App. 8
(9th Cir. 1990). These cases do not apply here. The OPA
authorizes recovery of costs, not taxation. Cf. United
States v. Lowe, 118 F.3d 399, 401 (5th Cir. 1997) (recovery
of CERCLA clean up costs is neither a fee nor a tax).
Ill. “Necessary” Costs
Hyundai contends that the United States may not
recover costs unless the district court determines they
were “necessary” to mitigate or prevent a discharge of
oil. It bases its argument on § 2701(30), which defines
“remove” and “removal” for the OPA as follows:
‘Remove’ or ‘removal’ means containment and
removal of oil or a hazardous substance from
water and shorelines or the taking of other
actions as may be necessary to minimize or miti-
gate damage to the public health or welfare,
including, but not limited to, fish, shellfish,
wildlife, and public and private property, shore-
lines, and beaches.
(Emphasis added.) Hyundai concludes that actions other
than actual removal must be deemed “necessary” before
they are compensable. We reject this contention.
First, the words “as may be necessary” do not pur-
port to be a limitation on reimbursement. They are more
naturally read as an acknowledgment of executive discre-
tion in determining the steps a particular situation
requires. In any event, as we explained above, the rele-
vant term in § 2702(a) is “removal costs,” not “removal.”
The former is defined at subsection (31) as the “costs to
prevent, minimize, or mitigate oil pollution.” The word
App. 9
“necessary” is nowhere to be found in this more pertinent
definition.
Finally, if Congress were to establish a standard for
establishing which actions of the Coast Guard were reim-
bursable, one would expect to find it in the liability
portion of the statute, not in the definitions section. The
liability section, § 2702(b), specifies what removal costs
are recoverable under § 2701(a). It defines them as “al
removal costs incurred by the United States.” (Emphasis
added.) Nothing in the liability section limits the United
States to recovery of “necessary” removal costs.
Hyundai argues that the United States should not
have a blank check permitting it to undertake all kinds of
unnecessary and unreasonable actions at Hyundai's
expense. It is worth pointing out in passing, however,
that many of the actions that Hyundai now regards as
unreasonable or unnecessary appear so, if at all, only by
hindsight. The grounding of the Hyundai No. 12 con-
tained the seeds of a major ecological disaster. In the
circumstances, it was only prudent for the government to
rush personnel and equipment to the scene and maintain
them there until the threat was over. Be that as it may, the
OPA does not restrict the recovery of the United States to
costs that were prudent, or necessary, or reasonable.4
* Under the Federal Water Pollution Control Act,
incorporated in part by OPA § 2702(b), the government has been
held to be entitled to recover all of its costs of removal, with no
requirement of necessity or reasonableness. See Puerto Rico v. SS
ZOE COLOCOTRONI, 456 F.Supp. 1327, 1347 (D.P.R. 1978), aff'd
in part, vacated in part on other grounds, 628 F.2d 652 (1st Cir.
1980), cert. denied, 450 U.S. 912 (1981); Union Petroleum Corp. v.
United States, 651 F.2d 734, 744 (Ct. Cl. 1981).
App. 10
Recovery under the OPA is not wholly unlimited,
however. The government concedes that the general stan-
dard of the Administrative Procedures Act applies to its
actions in seeking to prevent or contain an oil-spill disas-
ter: the United States may recover its costs unless its
actions were arbitrary or capricious. See 5 U.S.C.
§ 706(2)(A). The district court held that the actions of the
United States for which it awarded recovery were not
arbitrary or capricious. Hyundai does not challenge these
rulings. The OPA does not authorize the imposition of
any higher standard.
IV. Base Costs
Hyundai contends that the Coast Guard’s base costs,
as opposed to its incremental costs, are not recoverable.
Base costs are those costs, such as the salaries of person-
nel, that the Coast Guard would have incurred even were
it not responding to the Hyundai No. 12’s distress. Hyun-
dai relies on the OPA’s language to the effect that the
government may recover costs that “result from” an oil
spill. 33 U.S.C. § 2701(a). It thus contends that paying the
personnel who respond to an incident, for example, is not
a cost that “results from” the incident.
We reject this interpretation of the OPA. The Coast
Guard’s allocable base costs did “result from” the inci-
dent. If personnel must be sent to monitor a potential
spill, they must be paid. The fact that, if this near-disaster
had not occurred, the personnel would have been paid to
perform some other task does not alter the reality that the
mishap did occur and Coast Guard personnel were paid
to monitor a potential spill. While they were monitoring
App. 11
operations for the Hyundai No. 12, Coast Guard person-
nel could not carry out their other duties, such as safety
inspections and drug interdiction. The same point may be
made with regard to other assets employed by the Coast
Guard in responding to this accident. Base costs represent
real costs to the United States and are recoverable to the
extent they are allocable to a response to an oil spill.
Nothing in the OPA provides to the contrary.
V. Debt Collection Act Penalties
The district court awarded the United States interest
prescribed by the OPA and penalties prescribed by the
Debt Collection Act, 31 U.S.C. § 3717. Hyundai contends
that when a statutory cause of action sets its own rate of
interest, the Debt Collection Act does not apply. We
agree.
It is undisputed that the OPA provides for interest,
but not penalties. 33 U.S.C. § 2705. On the other hand, the
Debt Collection Act provides for both interest and penal-
ties on a claim due the United States, 31 U.S.C.
§ 3717(a)(1),(e), but it also specifies that the section con-
taining those provisions “does not apply if a statute... .
explicitly fixes the interest or charges.” Id., § 3717(g)(1)
(emphasis added). We apply as written the disjunctive
“interest or charges.” Because the OPA fixes interest,
§ 3717 “does not apply” and neither interest nor penalties
may be collected under it. We therefore reverse this por-
tion of the district court’s award, and remand for mod-
ification of the judgment accordingly.
App. 12
VI. Attorneys’ Fees
Funds recovered for removal costs are paid to the Oil
Spill Liability Trust Fund, which is available to the Presi-
dent for the payment of removal costs. See 33 U.S.C.
§§ 2706(f), 2712(a)(1). Fees were awarded here pursuant
to § 2715(c), which provides in relevant part:
At the request of the Secretary, the Attorney
General shall commence an action on behalf of
the Fund to recover any compensation paid by
the Fund to any claimant pursuant to this chap-
ter, and all costs incurred by the Fund by reason
of the claim, including . . . attorney’s fees.
Although Hyundai does not dispute that the recovery in
this case will be paid into the Fund, it contends that the
government cannot recover fees because it is not clear
that the Fund itself is suing as a subrogee. Hyundai
latches onto the phrase “compensation paid by the
Fund,” arguing that no attorneys’ fees are due to the
United States unless the Coast Guard first was compen-
sated by the fund for its removal costs.
The Coast Guard and the Fund are both part of the
federal government. This action is necessarily brought on
behalf of the Fund because the recovery will go to the
Fund. It was clearly Congress’s purpose that the United
States be reimbursed its attorneys’ fees when it must sue
for such a recovery. That purpose would be frustrated if
recovery of fees was defeated by the happenstance that,
as a matter of accounting, the Fund paid for the removal
costs after, rather than before, the claim against the
responsible party was litigated. The district court did not
misread the statute in awarding the United States attor-
neys’ fees.
a ee
App. 13
VII. The Rate Schedule
The Coast Guard first billed Hyundai pursuant to
Commandant Instruction 7310.1D, but later applied the
higher rates of Commandant Instruction 7310.1E. The
government asserts that Instruction E superseded
Instruction D on July 13, 1991, over two months before
the Hyundai No. 12’s grounding on October 2.
Instruction E is stamped July 13, 1991, and it indi-
cates that it supersedes Instruction D. Hyundai points to
§ 4(a) of Instruction E, which states that “[t]he enclosed
rates are effective upon receipt.” Hyundai contends that
there is no proof that Instruction E actually was received
before the Hyundai No. 12 ran aground.
The Coast Guard argues that the routing block and
matrix at the bottom of the first page of Instruction E
proves that it was sent to the Juneau Coast Guard Station
(which responded to the Hyundai No. 12 accident) on or
about July 13. This documentation was sufficient to sup-
port the district court’s ruling that Instruction E was in
effect by the time of the grounding of Hyundai No. 12. Cf.
In re Buckmun, 951 F.2d 204, 206 (9th Cir. 1990) (properly
addressed and dispatched mail is presumed to be deliv-
ered).
VII. Conclusion
The district court did not err in awarding the United
States its removal costs, including both incremental and
base costs of monitoring the threatened and actual oil
spill of the Hyundai No. 12, calculated in accord with
Instruction E. The district court also properly awarded
App. 14
the United States its attorneys’ fees. The district court did
err, however, in assessing penalties under the Debt Col-
lection Act. We therefore affirm all of the award except
the penalties under the Debt Collection Act, which we
reverse. The matter is remanded to the district court for
correction of its judgment in that respect.
The United States is awarded its costs on appeal.
In No. 97-35820, the district court’s order awarding
attorneys’ fees is AFFIRMED.
In No. 97-35538, the judgment is AFFIRMED in part;
REVERSED in part; and REMANDED.
App. 15
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
UNITED STATES
OF AMERICA,
Plaintiff,
VS.
HYUNDAI MERCHANT
MARINE COMPANY, LTD.,
BRITANNIA STEAM SHIP
INSURANCE ASSOCIA-
TION, LTD., SHERBET
HOLDING CORP., and
EUROBAHIA OVERSEA
CORP., in personam, and
M/V HYUNDAI NO. 12, in
rem,
Defendants.
Plaintiff United States (“the government”) has moved
for partial summary judgment.' This motion is opposed.’
Ne me me ee ee ee ee ee ee ee ee ee et ee”
No. A94-0391 CV (HRH)
ORDER
(Motion for Partial
Summary Judgment)
(Filed Jul. 11,
Oral argument has been heard.
1995)
On October 12, 1991, the M/V HYUNDAI No
grounded near the Shumagin Islands. A tear developed in
the hull, leading to the possibility of a fuel spill. The
vessel was carrying 200,000 gallons of fuel. A federal
response was undertaken and various federal entities,
most notably the Coast Guard, were dispatched to the
' Clerk’s Docket No. 17.
2 Clerk’s Docket No. 22.
App. 16
scene. A small amount of fuel escaped the hull of the
M/V HYUNDAL
The government brought suit under the Oil Pollution
Act (“OPA”) of 1990. The parties differ over two issues
which involve interpretations of OPA. The first issue is
whether monitoring costs are recoverable by the United
States. The second issue concerns removal costs. This
court will first address the monitoring issue.
Monitoring
OPA definitions include the following:
(30) “remove” or “removal” means con-
tainment and removal of oil or a hazardous
substance from water and shorelines or the tak-
ing of other actions as may be necessary to
minimize or mitigate damage to the public
health or welfare, including, but not limited to,
fish, shellfish, wildlife, and public and private
property, shorelines, and beaches;
(31) “removal costs” means the costs of
removal that are incurred after a discharge of oil
has occurred or, in any case in which there is a
substantial threat of a discharge of oil, the costs
to prevent, minimize, OF mitigate oil pollution
from such an incident|.]
33 U.S.C. § 2701(30-31). OPA states in pertinent part:
(a) In general
Notwithstanding an other provision or rule
of law, and subject to the provisions of this
chapter, 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,
App. 17
into or upon the navigable waters or adjoining
shorelines or the exclusive economic zone is
liable for the removal costs and damages speci-
fied in subsection (b) that result from such inci-
dent.
(b) Covered removal costs and damages
(1) Removal costs
The removal costs referred to in subsection (a)
of this section are -
(A) all removal costs incurred by the
United States, a State, or an Indian tribe under
subsection (c), (d), (e), or (1) of section 1321 of
this title, as amended by this Act, under the
Intervention on the High Seas Act (33 U.S.C.
1471 et seq.), or under State law. .. .
33 U.S.C. § 2702(a), (b)(1)(A).
The Federal Water Pollution Control Act
(“FWPCA”),* subsection 1321(c) was amended as part of
OPA, see Pub. L. 101-380, it states in pertinent part:
(c) Federal removal authority
(1) General removal requirement
(A) The President shall, in accordance
with the National Contingency Plan and any
appropriate Area Contingency Plan, ensure
effective and immediate removal of a discharge,
and mitigation or prevention of a substantial
threat of a discharge, of oil or a hazardous sub-
stance -
(i) into or on the navigable waters;
* Also known as the “Clean Water Act”.
App. 18
(ii) on the adjoining shorelines to the navi-
gable waters;
(iii) into or on the waters of the exclusive
economic zone; or
(iv) that may affect natural resources
belonging to, appertaining to, or under the
exclusive management authority of the United
States.
(B) In carrying out this paragraph, the Presi-
dent may -
(i) remove or arrange for the removal of a
discharge, and mitigate or prevent a substantial
threat of a discharge, at any time;
(ii) direct or monitor all Federal, State, and
private actions to remove a discharge.
33 U.S.C. § 1321(c) (emphasis added).
The government asserts monitoring is a section
1321(c) activity and that such costs can be recovered
under OPA, § 2702(b). The government points to the
legislative history of OPA. The legislative history of sec-
tion 1321(c), section 4201 of OPA, states in pertinent part:
[This provision] establishes a general require-
ment under new section [1321(c)(1)] of the
FWPCA that the President ensure effective and
immediate removal of a discharge, and mitiga-
tion or prevention of a substantial threat of a
discharge, of oil or hazardous substances into or
on the navigable waters or the waters of the
Exclusive Economic Zone, on adjoining shore-
lines, or that may affect natural resources
belonging to, appertaining to, or under the
exclusive management authority of the United
4
;
ba OR ie
2 ye
App. 19
States. With respect to removal of any discharge
Or mitigation or prevention of any substantial
threat of a discharge, the President may assume
responsibility and costs of these actions subject
to reimbursement from the responsible party
(i.e., “Federalize” the effort); direct or monitor
all federal, State and private actions; and
remove and, if necessary, destroy a vessel dis-
charging or threatening to discharge.
H.R. Rep. No. 653, 101st Cong., 2nd Sess. at 145 (1990),
reprinted in 1990 U.S.C.C.A.N. 722, 824. The government
also points to Conoco Inc. v. United States, No. 93-3080
1994 WL 24249 (E.D. La. 1994).4
,
In Conoco, an oil company, Conoco, sought review
under the Administrative Procedures Act (“APA”) of
actions taken by the government under OPA. Id. at 1.
Conoco sought declaratory relief that certain costs were
not recoverable under OPA. Id.
The district court held review was not possible under
the APA since there was no final agency action. /d.
Despite having decided the matter on the grounds of the
APA, the district court discussed the merits of Conoco’s
claims. The district court stated:
[Conoco] contends that by including a defi-
nition of “removal” and “removal costs” in the
definitional provisions of the OPA, 33 U.S.C.
§§ 2701(30) & (31), “Congress was trying to pro-
tect responsible parties from arbitrary assess-
ments labeled as removal costs.” However, this
conclusory assertion fails to convince me that
* This document is found in the government's motion for
summary judgment, Appendix A, Clerk’s Docket No. 17.
App. 20
Congress, in enacting the definitional provi-
sions, intended to protect the interests of the
responsible party. Nor am | convinced that the
relevant definitions are insufficiently broad to
contemplate the interpretation urged by the
government or to preclude reference to other
provisions that more specifically define
“removal costs” which the United States govern-
ment, as a claimant, may recover.
Id. at 3 (footnotes omitted).
Defendants assert the above Conoco quotation is dicta
and claims allowing monitoring costs would expand the
definition of both removal and removal costs found at
sections 2701(30) & (31). Defendants assert monitoring
costs are not included in this definition and claim this
court should not read them into the definition. This court
agrees.
Congress clearly distinguished removal and monitor-
ing activities and costs. The definitions of sections
2701(30) & (31) address removal matters only and do not
include monitoring. Subsection 2702(a) states a responsi-
ble party “is liable for the removal costs .. . specified in
subsection (b). . . . ” 33 U.S.C. § 2702(a). Subsection
2702(b) states removal costs recoverable include subsec-
tion 1321(c) removal costs. Monitoring, like removal, is a
subsection 1321(c) activity, but that does not make mon-
itoring a “removal cost”. Congress limited the recovery to
removal costs. Other activities do not generate recover-
able costs merely due to their inclusion in subsection
1321(c).
Nothing in the legislative history suggests a contrary
result. The President has the power to “Federalize”
Lee ee ger
App. 21
potential spills, but only removal costs can be recovered.
This court is aware of the Conoco opinion and respectfully
disagrees. The portion of the government’s motion seek-
ing partial summary judgment on this issue is denied.
Removal
The parties agree that OPA, § 2702(b)(1)(A), allows
the government to recover all removal costs, not just
reasonable removal costs. See, United States v. Northeastern
Pharmaceutical & Chemical Co., Inc., 810 F.2d 726, 748 (8th
Cir. 1986). Defendants, however, wish to reserve
numerous issues about how the government determines
what should be a removal cost. The government seems to
assert that defendants can not contest any cost the gov-
ernment assigns to this spill. Government's reply at 1-4,
Clerk’s Docket No. 26.
Subsection 2702(b)(1)(A) states “all removal costs”
may be recovered, it does not state “all costs” may be
recovered. Surely if the Coast Guard were to claim its
entire operating budget for all its removal operations as
costs for this spill defendants could challenge that. Were
this court to accept the government's position, however,
defendants could not challenge those costs. The govern-
ment appears to take a “trust us” approach. There must
be some operating definition of “all removal costs”. There
must be some mechanism for challenging the inclusion of
certain costs as removal costs. Mere reliance on the gov-
ernment’s goodwill is not sufficient.
The court holds that there must be a nexus between a
claimed cost and the underlying oil spill. It is currently
App. 22
unclear to the court whether it should employ a proxi-
mate cause concept, a “some evidence” - arbitrariness
APA concept,> or something even less such as a “good
faith” assertion on the part of the government. This court
is not prepared to rule on this issue at this time as the
parties’ briefings on this issue did not adequately explore
the matter.
The portion of the government’s motion seeking clar-
ification that it is entitled to “all removal costs” 1s
deferred for further briefing from the government on or
before July 26, 1995, and from defendants on or before
August 10, 1995, unless this portion of the government's
motion is rendered moot by the court's ruling on the
monitoring issue.
5 In Conoco, the district court for the Eastern District of
Louisiana held there was no standing under the APA for an
entity which had admitted responsibility and was presented
with a bill by the Coast Guard. The District Court in Conoco
stated “the responsible party may challenge a claimant's
interpretation of the OPA in the event the claimant files an
action against the responsible party to recover removal costs
and/or damages.” Conoco inc. v. Linited States, No. 93-3080, 1994
WL. 24249 at 2 (E.D.La. 1994). The District Court held that sucha
remedy defeats a responsible party's standing to seek review
under the APA. Id.
A responsible party may claim an act of God, and act of war,
or an act or omission of a third party caused the spill and the
responsible party may therefore avoid paying removal costs. 33
U.S.C. § 2703. This provision, however, does not solve the
problem of providing an allegedly responsible party a
mechanism for challenging the inclusion of nonremoval costs in
a cost request.
App. 23
DATED at Anchorage, Alaska, this 11 day of July,
1995.
H. Russel Holland
United States District Judge
A94-0391-CV (HRH)
M. WOODELL
R. BUNDY (US-ATTNY)
App. 24
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
UNITED STATES OF )
AMERICA, ,
Plaintiff,
VS. )
HYUNDAI MERCHANT ? —
MARINE CO., LTD., ) No. A94-0391-CV (HRH)
et al., )
)
)
)
Defendants.
ORDER
(Filed Jan. 26, 1996)
Motion for Reconsideration
Plaintiff has moved for reconsideration! of that por-
tion of the court’s order of July 11, 1995,2 which dealt
with the recovery of monitoring costs under the Oil Pol-
lution Act of 1990 (“OPA”). The motion is opposed. Oral
argument has not been requested and is not deemed
necessary.
In the court’s order of July 11, 1995, the court in
substance held that recoverable costs under OPA did not
include monitoring costs.
The court has determined that reconsideration is nec-
essary on the basis of the additional briefing now
1 Clerk’s Docket No. 32.
2 Clerk’s Docket No. 31.
Lf eT NT OR es Ge
App. 25
received. Notwithstanding the superficial attraction of
defendants’ straightforward argument for the enforce-
ment of the statutory definitions of “remove” and
“removal costs” contained in OPA,* the court is now
convinced that the rather convoluted provisions of OPA
more probably than not were intended by Congress to be
interpreted in the fashion which the United States Coast
Guard has interpreted OPA, and as argued here by the
government.
As previously set forth at length in the July 11, 1995,
order, the statutory definitions of “remove” and “removal
costs”* make no express provision for the inclusion of
monitoring costs. Why Congress would go to the trouble
to define these terms and then bollix the definition by the
terms of other sections of OPA, is a frustrating mystery to
the court. In Section 1012 of OPA, it is provided that the
statutory fund created by Congress is available for “the
payment of removal costs, including the costs of monitor-
ing removal actions|[.]”° It would indeed be incongruous,
as suggested by the government, for Congress to imply as
quoted above that removal costs include monitoring
costs, to provide that both be paid out of the Fund, yet
limit the recovery of removal costs from responsible par-
ties by reference to the statutory definition of the same.
To put the same proposition somewhat differently, it is
incongruous to suggest that removal costs are recoverable
from a responsible party, but monitoring costs are not
thusly recoverable, even though both are payable out of
* 33 U.S.C. § 2701(30) and (31).
4 Id.
5 33 U.S.C. § 2712(a)(1).
App. 26
the Fund. That said, the court can conceive of reasons
why the latter sort of distinction might have been made
by Congress. Congress could have been of the view that
responsible parties should pay the actual costs of clean-
up, but that asking responsible parties to also absorb the
government’s cost of watching the clean-up was too
much. There is little indication that Congress was of this
view.
As the government points out, the court is required
to consider legislative acts as a whole when interpreting
them, Boise Cascade Corp. 2. EPA, 942 F.2d 1427, 1432 (9th
Cir. 1991), and, that done, the government's interpreta-
tion seems to the court now to be the one more likely
intended by Congress. In this latter regard, the court has
had specific reference to the fact that OPA states the
general proposition that responsible parties must pay
“damages specified in subsection (b) that result from
such incident.”® Subsection (b) states that recoverable
removal costs are “all removal costs incurred by the
United States . . . under subsection (c), (d), (e), or () of
section 1321 of this title[.}”7 The referenced subsection
1321(c) sets out federal removal authority, and speci-
fically authorizes the President or his designee to carry
out removal activities, arrange for removal activities and
“or monitor” removal activities.* The court’s original
view of the latter provision to the contrary notwithstand-
ing, the court is now persuaded that a fair reading of the
6 33 U.S.C. § 2702(a).
7 33 U.S.C. § 2702(b)(1)(A).
8 33 U.S.C. § 1321(c)(1)(B)().
2 RA Si te
App. 27
whole of OPA leads to the conclusion that Congress
intended monitoring costs to be recoverable.
The ambiguity which has been observed by the court
as between the statutory definition of “remove” and
“removal costs” in subsection 2701(30) and (31) on the
one hand, and subsection 2712(a)(1) on the other hand,
calls into play both the involved agency’s own interpreta-
tion of the statute as well as legislative history. As
already noted, the agency view is that monitoring costs
are recoverable. The legislative history to which the gov-
ernment points is not particularly helpful, for it appears
to focus on recovery of monies paid out of the Fund’
rather than upon direct reimbursement to an agency,
which appears to be the posture of this case. Neverthe-
less, the legislative history of OPA appears not to be
inconsistent with the government’s contention, and it
fails to support the court’s initial view that monitoring
costs were not included in recoverable removal costs.
Having reconsidered the matter, the court now concludes
that monitoring costs are included in removal costs which
the government may seek to recover from a responsible
party.
* The government refers the court to a conference
committee report found at H.R. Rep. No. 653, 101st Cong. 2d
Sess. at 112-114 (1990), reprinted in 1990 U.S.C.C.A.N. 779
790-92. Here we read, “[w]henever payments are made out of
the Fund for the purposes listed in categories (1) through (4),
vigorous efforts should be made by the Fund to seek prompt
and full reimbursement from the responsible parties[.]” The
“category (1)” referred to is that portion of OPA which makes
reference to removal costs as including the costs of monitoring
removal actions. 33 U.S.C. § 2712(a)(1).
App. 28
DATED at Anchorage, Alaska, this 26 day of January,
1996.
/s/ H. Russel Holland,
H. Russel Holland, Judge
District of Alaska
A94-0391-CV (HRH)
M. WOODELL
R. BUNDY (US-ATTNY)
App. 29
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
UNITED STATES OF )
AMERICA, )
Plaintiff . No. A94-0391-CV (HRH)
vs. )
HYUNDAI MERCHANT ?
MARINE CO., LTD., et )
al., ;
Defendants. )
ORDER
(Filed Jan. 26, 1996)
Motion for Partial Summary
Judgment / Removal Costs
Plaintiff United States of America (“the govern-
ment”) moved for partial summary judgment.' This
motion was opposed by defendants.? Oral argument was
heard. This court entered an order partially denying the
government's summary judgment motion? and requesting
further briefing on the issue of how to determine what
“all removal costs” entails and how defendant could chal-
lenge the inclusion of certain costs in the government's
! Clerk’s Docket No. 17.
2 Clerk’s Docket No. 22.
* The court denied the government's motion as to a claim
that monitoring costs are recoverable as removal costs. That
aspect of the government's motion is being reconsidered, and a
separate order on that subject is entered concurrently.
App. 30
computation of “all removal costs”. The government and
defendants have filed the requested briefs.4 The govern-
ment requested and was granted leave to file a reply.°
The government contends that the Oil Pollution Act
of 1990 (“OPA”) permits it to recover full, actual removal
costs in connection with an oil spill; that the person who
determines if an action is necessary is the federal on-
scene coordinator (“FOSC”) as designated by the Presi-
dent of the United States; that the FOSC’s actions can be
reviewed under an arbitrary and capricious standard;
that base costs are recoverable; that the Coast Guard uses
accepted accounting procedures; and that the “primary
purpose” test applies. Defendants contend: that the Coast
Guard can only recover actual removal costs, actual con-
tainment costs, and costs for actions necessary to mini-
mize or mitigate damages from an oil spill; that claimed
costs must result from the pollution incident, no day-to-
~ day costs (base costs) being allowed although incremental
costs are recoverable; that response costs should be calcu-
lated using accepted accounting procedures; and that
only costs incurred for the primary purpose of oil pollu-
tion removal are recoverable.
It is readily apparent that there are areas of agree-
ment between the parties and areas of disagreement.
Where there is agreement, little or nothing more need be
said. Moreover, it is the court’s perception that the prob-
lem before counsel and the court may by and large be a
semantic one.
4 Clerk’s Docket No. 36 and No. 38.
5 Clerk’s Docket No. 43 and No. 49.
App. 31
The basic framework of OPA is as follows. OPA
requires that all removal costs be originally presented to
the responsible party. 33 U.S.C. § 2713(a). The govern-
ment may bring an action against a responsible party for
removal costs within three years of the removal action. 33
U.S.C. § 2717(f)(2). A responsible party may defend by
showing by a preponderance of the evidence that the
discharge was caused by one of the following: (1) an act
of God; (2) an act of war; or (3) an act or omission of a
third party. 33 U.S.C. § 2703(a). A responsible party is not
liable to a claimant who engaged in gross negligence or
willful misconduct. 33 U.S.C. § 2703(b). OPA does not
provide for an express mechanism for evaluating or chal-
lenging what costs of removal are recoverable.
OPA states in pertinent part:
(a) In general
Notwithstanding any other provision or
rule of law, and subject to the provisions of this
chapter, 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 speci-
fied in subsection (b) that result from such inci-
dent.
(b) Covered removal costs and damages
(1) Removal costs
The removal costs referred to in subsection
(a) of this section are —
(A) all removal costs incurred by the
United States . . . under subsection (c), (d), (e),
App. 32
or (1) of section 1321 of this title, as amended by
this Act. . .
33 U.S.C. § 2702(a), (b)(1)(A).
Subsections (c) and (I) of Section 1321 of Title 33
provides in pertinent part that:
(c) Federal removal authority
(1) General removal requirement
(A) The President shall, in accordance
with the National Contingency Plan and any
appropriate Area Contingency Plan, ensure
effective and immediate removal of a discharge,
and mitigation or prevention of a substantial
threat of a discharge, of oil or a hazardous sub-
stance —
(i) into or on the navigable waters. . .
(B) In carrying out this paragraph, the
President may -
(i) remove or arrange for the removal of a
discharge, and mitigate or prevent a substantial
threat of a discharge, at any time;
(ii) direct or monitor all Federal, State, and
private actions to remove a discharge; and
(iii) remove and, if necessary, destroy a
vessel discharging, or threatening to discharge,
by whatever means are available.
(1) Administration
The President is authorized to delegate the
administration of this section to the heads of
ai Se aS
App. 33
those Federal departments, agencies, and instru-
mentalities which he determines to be appropri-
ate. Each such department, agency, and
instrumentality, in order to avoid duplication of
effort, shall, whenever appropriate, utilize the
personnel, services, and facilities of other fed-
eral departments, agencies, and instru-
mentalities.
For purposes of this case, the President’s designee is the
purp g
United States Coast Guard, herein the “FOSC”.
In the court’s previous order of July 11, 1995,° the
court held that:
[T]here must be a nexus between a claimed cost
and the underlying oil spill. It is currently
unclear to the court whether it should employ a
proximate cause concept, a “some evidence” -
arbitrariness APA concept, or something even
less such as a “good faith assertion on the part
of the government.[7]
Following up on this point, the court now concludes
that the government must establish in support of an OPA
claim that removal costs for which it seeks reimburse-
ment were caused in fact by the pollution incident or that
they would not have been incurred but for the incident as
to which the defendant is the responsible party. In this
regard, OPA expressly provides that the “responsible
party” must pay removal costs and damages which
“result from such incident.” 33 U.S.C. § 2702(a).
© Clerk’s Docket No. 31.
7 Id. at 7-8.
App. 34
The court now turns to the question of how costs
caused by a pollution incident are to be valued or evalu-
ated where there is disagreement as to whether a given
item qualifies as a part of “all removal costs”. 33 U.S.C.
§ 2702(b){1)(A). The court’s concern and question here
has been whether or not the actual expenditure of money
by authorization of the FOSC precludes any discussion of
the appropriateness or recoverability of a cost. The court
concludes that there is limited room for a defendant to
dispute the FOSC’s decision to authorize an expenditure.
United States v. Northeastern Pharmaceutical, 810 F.2d 726,
747-48 (8th Cir. 1986).
The court and the parties have had some discussion
about the use of an administrative procedure act type of
review of FOSC decisions. There are some difficulties
with this approach and the court has doubted the appro-
priateness of employing that standard. The decision of
the FOSC is not an administratively final, appealable
administrative decision. Rather, the FOSC’s decision
merely sets the stage for clean-up work and the incurring
of costs which involves no input from the responsible
party. There is no administratively final agency action.
See Conoco, Inc. v. United States, No. 93-3080, 1994 WL
24249 at 2 (E.D. La. Jan. 14, 1994). This litigation is the
potentially responsible party’s first meaningful oppor-
tunity to challenge the application and interpretation of
OPA and the decisions of the FOSC. Id. However, the
court is now persuaded that the absence of a final admin-
istrative ruling does not mean that it is inappropriate for
the court to use an arbitrary and capricious standard for
the appraisal of removal costs. Northeastern Pharmaceuti-
cal, 810 F.2d at 747-48.
App. 35
As noted above, the parties are in agreement as to
some aspects of a court’s analysis of FOSC decisions to
incur potentially recoverable removal costs. Perhaps most
importantly, the parties agree with the general proposi-
tion that the arbitrary and capricious standard be used to
evaluate the FOSC decisions. The parties are in agree-
ment that generally accepted accounting procedures
should be employed where appropriate, and the court
agrees. The parties also agree that a consideration in the
evaluation process is the use and application of the Coast
Guard's “primary purpose” rule for expense allocation.
Not surprisingly, the parties disagree as to the application
of the foregoing to the facts of this case. The court does
not address application issues here.
Finally, it appears that in some sense the parties are
in agreement about the recovery of actual removal costs.
It is at least clear that actual costs do not properly include
any sort of penalty, surcharge, or intangible assessment
which inflates monies actually expended for the removal
of oil. However, simply characterizing an item as an
“actual” cost because the Coast Guard spent money with
respect to a particular pollution incident does not, ipso
facto, make it recoverable. Such a characterization simply
begs the question which is at the heart of this discussion.
Similarly, the parties’ discussion of OPA’s use of the term
“necessary” in the definition of “remove” or “removal” as
regards costs incurred to minimize or mitigate damage is
somewhat circular. Simply characterizing an expense as
“necessary” does not answer the question: “Is the respon-
sible party liable for a particular expenditure under the
circumstances of a particular pollution incident.?”
nee
NEE LR TEN SS TORE ELM SLES CAS OTT NT eT aE Sa Me
App. 36
In evaluating a claim such as that asserted against a
potentially responsible party in this case, the court's
inquiry will of course begin with any questions which
may be raised as to whether the requisite nexus or causa-
tion exists as between a pollution incident and an
expense actually paid out by the Coast Guard. These
actual expenditures may be subject to some general
accounting analysis which the court will not now
endeavor to particularize. Directly related to the forego-
ing is the application to actual costs of the primary pur-
pose test which states that if the primary use of a specific
Coast Guard resource was for pollution control, then
those costs are recoverable. Any or all of the actual costs
are subject to scrutiny for arbitrariness.
The parties disagree as to whether so-called “base
costs” are recoverable. By “base costs”, the parties appear
to have reference to, for example, salaries of employees
who would have been paid irrespective of a particular
pollution incident. It is the court’s perception that such
costs are not per se recoverable. In other words, simply
showing the requisite causation and characterizing an
item as a base cost incurred during the effort to remove
an oil spill attributable to a particular responsible party
does not make that cost recoverable. It is the court's
current perception that the primary purpose rule must be
applied to base costs. Generally acceptable accounting
procedures must be employed. In the end, there must be
a non-arbitrary (rational) basis for base costs and, that
being established, base costs are recoverable as “all
removal costs incurred by the United States”. 33 U.S.C.
§ 2702(b)(1)(A).
Cito a oS Se
}
3
App. 37
It seems probable that from time to time issues will
arise as to whether a particular cost actually incurred in
the course of a chargeable pollution incident should have
been authorized at all by the FOSC. Questions may arise
as to whether costs incurred to minimize or mitigate
damage were actually “necessary” under the definition of
“remove” set forth in 33 U.S.C. § 2701(30). It is the court’s
perception that it is the claimant’s burden to demonstrate
that there was a non-arbitrary (rational) basis for authori-
zing the expenditures.
Although the “necessary” condition was not
appended to the definition of “remove” as regards con-
tainment and costs of removing oil from water, it is the
court’s view that such a condition is implicit and quite
necessary for two reasons. Firstly, one can hardly say that
the requisite nexus or causation exists as between a pollu-
tion incident and a cost authorized by an FOSC to, for
example, replace a piece of equipment which had failed
in the course of a prior, unrelated pollution incident.
Secondly, to suggest that a cost is recoverable if the
requisite causation exists simply because the FOSC
authorized it in substance deprives a responsible party of
any judicial review, and such a position would pose a
serious due process problem. The court’s example is of
course an extreme one. The more likely situation is one
where the FOSC has authorized an expenditure and the
potentially responsible party views it as significantly dis-
proportionate to the facts of the incident. As to such
questions, and as already suggested, fairness and propor-
tionality come into consideration as a part of the arbi-
trariness analysis. It is simply not rational to use a large
vessel to go after a spill of a few gallons of oily water
App. 38
from a frozen pipe which is known to have already been
repaired or sealed off. Here again, expert testimony may
very well be necessary in a seriously contested response
situation.
With the foregoing further amplification, the plain-
tiff’s motion for partial summary judgment? is granted in
part and denied in part in accordance with this order and
the court’s order of July 11, 1995.?
DATED at Anchorage, Alaska, this 26 day of January,
1996.
/s/ H. Russel Holland
H. Russel Holland, Judge
District of Alaska
A94-0391-CV (HRH)
M. WOODELL
R. BUNDY (US-ATTNY)
8 Clerk’s Docket No. 17.
® Clerk’s Docket No. 31.
.
App. 39
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
UNITED STATES
OF AMERICA,
Plaintiff,
Vs.
)
)
)
)
)
HYUNDAI MERCHANT ) No. A94-0391-CV (HRH)
MARINE CO., LTD., —-)-—- (Filed Mar 31, 1997)
et al.,
)
)
)
Defendants.
FINDINGS OF FACT
& CONCLUSIONS OF LAW
Commencing on December 9, 1996, the above-cap-
tioned case was tried to the court. Based upon the testi-
mony taken at trial and the exhibits admitted into
evidence, the court prepared its own proposed findings
of fact and conclusions of law which were circulated to
counsel for review. The court scheduled oral argument in
the case to follow distribution of its proposed findings
and conclusions, and, in connection therewith, solicited
the parties to file specific suggestions for revisions or
additional findings of fact and conclusions of law.!
Counsel have submitted stipulated technical correc-
tions which the court incorporated into its proposed find-
ings of fact and conclusions of law.? Both plaintiff and
1 Clerk’s Docket No. 91.
2 Clerk’s Docket No. 96.
App. 40
defendants submitted written suggestions for revisions
and additions to the court’s proposed findings of fact and
conclusions of law which have now been considered by
the court, and many of which have been incorporated
into the court’s proposed findings of fact and conclusions
of law on the basis of the court’s further evaluation of the
evidence and arguments of counsel. Oral argument was
heard on March 14, 1997, and the court now enters its
final findings of fact and conclusions of law.
Findings of Fact
A. The Grounding of the M/V Hyundai No. 12
(1) Plaintiff United States of America, on behalf of the
United States Coast Guard, seeks to recover from the
defendants the costs associated with the Coast Guard’s
monitoring of and participation in the activities which
followed the grounding of the M/V Hyundai No. 12 on
October 2, 1991.
(2) Defendant Hyundai Merchant Marine Co., Ltd., at
all relevant times was the owner and operator of the M/V
Hyundai No. 12. Defendant Britannia Steam Ship Insur-
ance Association, Ltd., insured Hyundai and the M/V
Hyundai No. 12 against marine oil pollution liabilities for
purposes of the Oil Pollution Act of 1990 (OPA 90), 33
U.S.C. § 2701, et seq. Plaintiff’s claims do not exceed the
limits of liability of Britannia’s insurance policy.
(3) Defendant’s Sherbet Holding Corporation and
Eurobahia Oversea Corporation, were dismissed from
this action by agreement of the parties. Plaintiff aban-
doned and the court has dismissed all claims of the
tina's et, Manama
App. 41
plaintiff except those arising under OPA 90. By agreement
of the parties at oral argument, the defendant vessel is
dismissed.
(4) On September 24, 1991, the M/V Hyundai No. 12
departed Portland, Oregon, with a cargo of approxi-
mately 24,000 metric tons of grain. The vessel was des-
tined for ports in the Far East by a Great Circle Route.
The vessel had intended to pass to the south of the
Shumagin Islands, Alaska; but, owing to the approach of
a storm, the vessel took refuge near the northeast coast of
Little Koniuji Island, on the evening of October 1, 1991.
(5) On the morning of October 2, 1991, the heavy
weather having passed, the vessel proceeded on her voy-
age on a course of 233 or 235 degrees which was intended
to transit 12 Fathom Strait, a relatively narrow passage
between Little Koniuji Island and Simeonoff Island. At
approximately 0830 hours, and near the midpoint of this
passage, and while travelling at approximately 10 knots,
the vessel unexpectedly (the court has been made aware
of no charted hazards) grounded and stranded. The situa-
tion was promptly reported to Hyundai representatives
and to the United States Coast Guard.
(6) The M/V Hyundai No. 12 was a double-hulled
vessel in the sense that all of the cargo holds of the vessel
were separated from the sea by either ballast tanks or fuel
tanks. Ballast water was carried in the tanks around the
perimeter of the vessel. Fuel was carried in three large
tanks in the bottom of the vessel underneath the cargo
holds.
App. 42
(7) It was known by the crew early on that at least
three forward ballast tanks were holed. By noon on Octo-
ber 3, 1991, it was learned that the forward (No. 3) center
fuel tank had been holed. In addition to her cargo, the
M/V Hyundai No. 12 carried approximately 650 metric
tons (between 180,000 and 200,000 gallons) of IFO-180
fuel oil and a small quantity of diesel fuel. The IFO-180
fuel oil is a residual type product short on volatile ele-
ments and requiring heat for purposes of pumping. It
evaporates slowly if at all, and disperses poorly when
exposed to the elements.
(8) The position at which the M/V Hyundai No. 12
anchored on the night of October 1, 1991, is inside the
three-mile territorial seas of the State of Alaska and in
close proximity to Atkins Island which lies just offshore
to the northeast of Little Koniuji Island. Atkins Island is a
protected sea lion rookery. All of the islands mentioned
herein (Little Koniuji, Simeonoff, and Atkins) are located
within the Alaska Maritime National Wildlife Refuge.
(9) The area where the vessel became stranded is one
of great environmental sensitivity. The Steller’s sea lion
which frequents the area is a threatened species under the
classifications of the Endangered Species Act. The islands
and surrounding seas are habitat for numerous other sea
mammals and sea birds. Streams flowing into 12 Fathom
Strait are spawning grounds for anadromous fish — prin-
cipally salmon.
(10) The stranding of the M/V Hyundai No. 12 was
timely reported to the chief of the staff of the Seventeenth
Coast Guard District headquartered at Juneau, Alaska. A
- ee eee
App. 43
search and rescue mission (SAR; the coast Guard acro-
nym for a search and rescue project) was promptly autho-
rized, and the Coast Guard cutter Sherman was
dispatched to the scene. Due to the nature of the incident
and the information conveyed concerning the location
and situation of the vessel and her cargo and fuel, the
captain of the port at the Marine Safety Office at Anchor-
age, Alaska, was also notified. The Marine Safety Office-
Anchorage, and in particular the captain of the port at
Anchorage, is the duly designated, federal on-scene coor-
dinator (FOSC) for pollution events occurring in the
Shumagin Islands. The FOSC promptly began gathering
information and planning for a marine environmental
project (MEP; the Coast Guard acronym for an oil spill).
Simultaneously, representatives of the vessel owner and
representatives of her insurer began inquiries and prepa-
ration for the saivage of the M/V Hyundai No. 12 and a
potential pollution response.
(11) The Coast Guard cutter Sherman arrived at the
scene at approximately 1720 hours* on October 2, 1991.
Using both a helicopter and a small vessel carried by the
Sherman, a survey of the situation was promptly under-
taken. The court finds* that by 2030 hours on October 2,
3 For convenience, the court will, as have the parties
generally, employ a 24-hour clock. All times will be local Alaska
Time, which the court understands to be eight hours earlier
(ahead of) Greenwich Mean Time which is employed by the
Coast Guard in its communications.
4 Heretofore the court has recited facts which it believes to
be undisputed. There is much more information relevant to this
case which is also undisputed and will be set out below.
However, where the court precedes its statements by the words
App. 44
1991, it had been determined that there was no immediate
threat to life or property, and the SAR project of the
Sherman was terminated.
(12) The court further finds that the Coast Guard
cutter Sherman stayed on scene until October 4, 1991; and
that during this time period, she was involved in an MEP
under the command of the Seventeenth Coast Guard Dis-
trict with pollution operations input from the FOSC. The
court finds that, given the very sensitive nature of the
location, the frequency of heavy weather during October,
the volume of bunker fuel carried by the vessel, and the
fact that at least one fuel tank was known to have been
holed, there was a very great risk of serious environmen-
tal damage. The court finds that the decision to maintain
the presence of the Sherman on scene was based upon
non-arbitrary and rational considerations and that the
primary purpose of her presence on scene was to monitor
the situation while all of the Coast Guard, the vessel
owner, and her insurers formulated a plan to salvage the
vessel and recover any spilled fuel should it escape from
the vessel.
(13) Unlike the Coast Guard, neither the vessel owner
nor her insurers had any vessel, equipment, or supplies
“the court finds”, it is making a decision on the basis of facts
which & believes to be disputed; and, in so doing, the court is
»wplving the preponderance of the evidence rule as to the party
(the United States) having the burden of proof. In the instance
here under consideration, there is some evidence which would
suggest that the SAR project was not concluded until long after
October 2, 1991; however, for purposes of the plaintiff’s claim,
the court finds that the SAR was ended at 2030 hours on October
2, 1991.
ae
eee 0 te ce let owl cats pe teres:
App. 45
anywhere in the vicinity of the grounding. The court
finds that during the first three days of the incident, the
Coast Guard was in a superior position to monitor and
assist in response to the grounding.
(14) In addition to dispatching the Sherman, the Coast
Guard, on October 3, 1991, called upon the Pacific Strike
Team (PST) to provide assistance and called upon the
cutter Acushnet to load equipment at Kodiak, Alaska, and
proceed to the M/V Hyundai No. 12. The PST is a group
within the Coast Guard expressly tasked to provide men
and equipment on an emergency basis in response to a
pollution incident. Owing to the remote and sensitive
nature of the location of the grounding in question, the
decision to activate the PST for service in connection with
the M/V Hyundai No. 12 MEP was based upon non-arbi-
trary and rational considerations. PST personnel assisted
throughout this project, providing labor, technical assis-
tance, and equipment. The PST brought a plane-load (a
C130 Hercules, capable of carrying four heavy pallets, the
crew, and their baggage) of men and equipment to the
scene, landing at Sand Point, Alaska, some 50 miles from
the grounding scene. The court finds that, by and large,
the personnel and equipment® brought to Alaska by the
PST was reasonably necessary as a part of the Coast
Guard’s response to the pollution incident and the deci-
sion to bring PST personnel equipment to the MEP was
based upon non-arbitrary and rational considerations. No
*> Some of the equipment flown to Alaska (in particular,
some of the pumps and hoses) were not usable; but the court
understands that no billing has been made for this equipment.
App. 46
other party or entity was in a position to put vessels,
men, and equipment on scene so quickly.
(15) The court finds that the decision to employ a
government C130 aircraft to transport the PST and equip-
ment to Alaska was based upon non-arbitrary and ratio-
nal considerations. The court finds that use of commercial
aircraft would not have been feasible, nor could the
response have been achieved as quickly. The court finds
that the decision to employ government aircraft to return
personnel and equipment to the California base of the
PST was based upon non-arbitrary and rational consider-
ations.
(16) On October 4, 1991, the Coast Guard vessel
Acushnet arrived on scene. The Sherman was released.
The Acushnet is a former salvage vessel capable of provid-
ing crew and extra crew space and communications
equipment. The court finds that the Acushnet was highly
useful to the MEP as a floating command post or base of
operations for the MEP from which the monitoring activ-
ity could be conducted. The court finds that this monitor-
ing activity was not just a technical requirement nor a
passive role. United States Coast Guard personnel partici-
pated actively, providing positive, useful input to the
salvage plans of the vessel owner, her insurer, and their
contractors.
(17) While planning was underway for the salvage of
the M/V Hyundai No.12, the vessel continued to work on
the rocky ledge on which she was stranded, especially
with the changing of the tide. Additional tanks were
holed. On the evening of October 4, 1991, the No. 2
bottom fuel tank was determined to be open to the sea.
litt aived hie
F
App. 47
From time to time, small leaks of oil and sheen were
observed.
(18) Not until October 5, 1991, did the first owner-
provided 65-foot fishing vessel, the Annette, arrive on
scene. The court finds that this vessel alone was of little
value as regards either the salvage of the M/V Hyundai
No. 12 or control of pollution.
(19) Also on October 5, 1991, the Coast Guard cutter
Sweetbriar arrived on scene with equipment called the
“open water oil containment and recovery” (OWOCR)
system. The latter equipment had been pre-positioned by
the PST on Kodiak Island. As its name implies, this
equipment is designed to retrieve oil spilled at sea. It
takes three vessels to operate the OWOCR system: two on
either end of a containment boom, and a third positioned
at the midpoint behind the catenary formed by the boom
equipment. The third vessel holds power equipment that
operates a hydraulic pump which, through a manifold
and hoses, draws oil from sumps at various points built
into the containment boom. The recovered oil and water
is discharged into a tank of some form. In this instance,
the Coast Guard supplied two dracones (large floating
bladders which are designed to hold oil and water on a
temporary basis for subsequent disposal) .
(20) The court finds that there was at all times a
moderate risk that the M/V Hyundai No. 12 would break
up. It was both non-arbitrary and rational, given the
sensitive nature of the area in question and the
unavailability of owner/insurer provided equipment in
the early stages of the project, for the Coast Guard to plan
and equip for a “worst case” scenario. The court finds
App. 48
that a realistic, worst case scenario was that much or all
of the 180,000 to 200,000 gallons of IFO-180 fuel would be
spilled into 12 Fathom Strait. In such an incident, it
would be necessary to simultaneously deal with a broken
vessel, one or both parts of which might continue to float,
as well as an oil spill. The court finds that the presence of
both the Acushnet and the Sweetbriar with the OWOCR
system, assisted by the PST, were non-arbitrary and ratio-
nal responses to the real risks presented by the grounding
of the M/V Hyundai No. 12. The primary purpose of these
vessels, men, and equipment was to respond to an MEP.
(21) The court finds that, from October 2 until on or
about October 9 (eight days into the incident), the vessel
owners and their insurers, although they had assumed
responsibility for the salvage and any necessary cleanup
and were proceeding diligently with planning and sal-
vage arrangements, had no vessel on scene capable of
dealing with a catastrophic situation. The court finds that
the decision of the Coast Guard to plan and equip the
MEP project as found herein rather than waiting to see
what would come of the owners’ and insurers’ acceptance
of responsibility for salvage and pollution abatement was
rational and not arbitrary. The court finds that it must
have been clear to all concerned that it would be a
number of days before the owners and insurers could
arrange for and have vessels and other equipment
brought to the remote scene, whereas, the Coast Guard
generally and the PST in particular are tasked with being
ready and making themselves available for such inci-
dents. The court finds that it would have been irrespons-
ible for the Coast Guard not to have undertaken the
actions which it took, even though the owners and
ee ee ee ee ee
App. 49
insurers assumed responsibility for the incident. The
court finds that the owners and insurers, even with the
exercise of all due diligence, were simply not in a posi-
tion to respond as quickly as the exigencies of this inci-
dent required given the precarious position of the M/V
Hyundai No. 12, her heavy load of IFO-180 fuel and the
close proximity of sensitive environmental areas and fish
and wildlife. The court finds that the continued presence
of the Sherman on scene, the early deployment of the PST
and its equipment, and the arrangements for the early
presence of the Sweetbriar and her equipment were
entirely non-arbitrary and rational responses to the
apparent pollution risk.
(22) Very early in the development of the MEP, and in
timely fashion, the vessel owner and her insurers entered
into a contract with Crowley Maritime Services for ves-
sels and equipment necessary to salvage the M/V Hyundai
No. 12. Soon after the arrival of Crowley Maritime per-
sonnel and before the first effort to free the M/V Hyundai
No. 12, all concerned had devised a plan for refloating the
vessel which included pressurizing the ballast tanks and
unloading all or as much as possible of the IFO-180 fuel
and as much cargo as was necessary to allow the vessel to
float free at high tide. It was initially estimated that the
vessel was aground by 1,900 metric tons. This figure was
later reduced to 1,660 metric tons. Because the vessel was
holed, and because oil floats on water, it was possible to
endeavor to remove fuel off the top of the tanks; but in
the process, hydrostatic pressure from outside the vessel
resulted in water flowing into the fuel tanks. Thus the
removal of fuel did not lighten the vessel. Indeed, it made
the vessel heavier because water is heavier than oil. Thus,
App. 50
in addition to removing fuel, the salvors devised a plan to
pressurize ballast tanks, employing compressed air, to
force water from these tanks and thereby providing buoy-
ancy. It appears to the court that all concerned had hoped
that simply blowing the ballast tanks might provide suffi-
cient buoyancy to allow a powerful tug, assisted by the
M/V Hyundai No. 12 engines which were still functional,
to pull the vessel from what divers reported to be a rock
shelf upon which the vessel had grounded. As set out
below, this effort failed. Information provided by divers
and other information acquired as the situation pro-
gressed suggest that the forward momentum of the vessel
quite probably carried her up upon, and potentially over
top of a sort of pinnacle rock or rocks, upon which the
vessel could pivot during high tides and storms but from
‘which she could not be removed without significant
unladening.
(23) The tug Oliktok and Barge 160-4 arrived on scene
on October 7, 1991. On this same day, the owners and
their insurers also provided three additional fishing ves-
sels. The four fishing vessels now on scene with the
equipment provided with them were variously employed
in the placement of protective booms around streams and
managing the “Goodyear” boom supplied by the Coast
Guard for purposes of trapping oil in the immediate
vicinity of the M/V Hyundai No. 12 for removal with the
OWOCR system in the event of a serious spill. These
vessels and their equipment were all necessary and use-
ful; however, the court finds that these vessels could not
have managed both a break-up of the M/V Hyundai No. 12
and a spill of fuel in a storm.
App. 51
(24) On the evening of October 7/8, 1991, the acci-
dent scene was struck by a storm. The storm prevented
removal of any fuel from the M/V Hyundai No. 12. Prior to
the storm, the M/V Hyundai No. 12 was Headed at 214.
During the storm of October 7/8, 1991 the vessel pivoted
on the rocks which held her fast. After the storm, the M/V
Hyundai No. 12 was headed at 105° and was found to have
suffered additional damage to her bottom.
(25) By October 9, 1991, the storm had abated. Opera-
tions for removal of fuel employing the Oliktok and Barge
160-4 commenced. Also on October 9, 1991, the contractor
supplied, salvage tug Geronimo arrived on scene and
undertook an initial effort to free the M/V Hyundai No. 12
from her strand. The effort failed.
(26) On October 10, 1991, the Crowley Maritime ves-
sels Avenger, an additional tug, and Arctic Salvor, a sal-
vage vessel, arrived on scene. With ballast tanks
pressurized and some grain cargo® removed, a second
effort at pulling the M/V Hwundai No. 12 free was under-
taken. This effort also failed.
(27) Meanwhile, efforts had been underway to locate
and obtain the use of large, heavy grain evacuators. This
© Permission to dump grain overboard had been obtained
in order to lighten the vessel. The means of accomplishing this
unloading were crude. Some grain was loaded by hand by PST
crewmen into makeshift bins which were then dumped, using
the ship’s tackle. A pumping operation employing Coast Guard
supplied equipment was somewhat more effective; however,
this arrangement appears to have been makeshift and incapable
of moving anything like the volume of grain necessary to
sufficiently lighten the vessel.
App. 52
equipment did not arrive on scene until approximately
2200 hours, October 11, 1991. This equipment was put to
good use within a matter of a few hours, and was capable
of moving large volumes of grain from the forward hold
of the M/V Hyundai No. 12. This operation continued on
October 12, along with the removal of fuel which was
completed that day.” The court finds that until the large
grain elevators arrived and were put to use, the possi-
bility that the M/V Hyundai No. 12 might not be salvaged
and might break up, spilling some or all of the fuel
remaining on board, remained a real, significant risk.
(28) The court finds that the vessel owner, her
insurers, and their contractors responded with reasonable
promptness, diligence, and competency in carrying out
their responsibilities under OPA 90 in light of the difficult
circumstances and remote location of the grounding of
the M/V Hyundai No. 12. As reflected by the foregoing
findings, the latter circumstances necessitated a major
commitment of resources by the United States Coast
Guard pending the arrival of resources arranged by the
vessel owner and her insurers. Once the latter had a full
complement of vessels and equipment including the large
grain evacuators on scene, the Coast Guard began to scale
back its presence on scene. The Acushnet was released on
October 11, 1991.
(29) On October 12, 1991, the Coast Guard cutter
Sedge arrived on scene, picked up the OWOCR, and
relieved the cutter Sweetbriar.
? Approximately 100,000 gallons of fuel (50% to 60% of the
total on board) were ultimately removed from the vessel.
RP
App. 53
(30) On October 12, 1991, having calculated that the
combined removal of fuel and cargo had sufficiently
lightened the M/V Hyundai No. 12 to permit her to float
free at high tide, a third effort to tow the vessel was made
and was successful. The M/V Hyundai No. 12 proceeded
under her own power to Sand Point. She was accom-
panied by the cutter Sedge. Inspection by divers at Sand
Point disclosed a total of 133 cracks in the hull of the
vessel, one of which was 6 feet wide and 42 feet long.
(31) From October 5, 1991, until the departure of the
Acushnet on October 11, 1991, the Coast Guard continu-
ously had two substantial vessels on scene: the Acushnet
and the Sweetbriar. The court finds that the primary pur-
pose of both was to attend the MEP. The decision to retain
both of these vessels on scene was non-arbitrary and
rational, for they had different purposes and capabilities.
The principal role of the Acushnet was to provide a com-
mand post and base of operations for the Coast Guard
monitoring of the salvage efforts. The Acushnet could not
deploy the OWOCR system which was aboard the Sweet-
briar. The Sweetbriar, a buoy tender, was fitted to effi-
ciently deploy the OWOCR system and assist in its
operation. The Acushnet was also capable of assisting in
the operation of the OWOCR system after its deployment.
In the event of weather which the fishing vessels could
not handle, or in the event of one or more of them being
disabled, the second Coast Guard vessel could and would
have provided assistance. In particular, and in addition to
deploying OWOCR system, the Sweetbriar provided a
necessary level of insurance against disaster between
October 4 and October 9 when Crowley Maritime tug
Geronimo arrived. Even after the arrival of the Geronimo,
App. 54
the decision to keen the Sweetbriar on scene for possible
deployment of the OWOCR system was non-arbitrary
and rational. The court finds that there was not an exces-
sive dedication of assets to the M/V Hyundai No. 12 MEP.
(32) The court finds that the Coast Guard timely
withdrew the Acushnet, when it became apparent that
successful salvage was imminent by reason of the opera-
tion of the large grain evacuators and the near comple-
tion of fuel removal from the M/V Hyundai No. 12.
(33) Temporary repairs were made on the M/V Hyun-
dai No. 12 at Sand Point, Alaska; and, on November 15,
1991, she was taken in tow by the tug Hyundai 1003 and
moved to Korea for permanent repairs.
B. Billings for Coast Guard Costs
(34) The standard rates which were employed by the
United States Coast Guard in billing the defendants for
costs in connection with the grounding of the M/V Hyun-
dai No. 12 were expressly published for the purpose of
“establish[ing] standard rates to be used in computing
reimbursable charges.”*
(35) This rate structure is employed for the purpose
of billing other federal agencies and all third parties who
by agreement, statute, or treaty are responsible for reim-
bursing the United States Coast Guard for services ren-
dered by it. There are minor variants in the rates,
8 Plaintiff's Exhibit 59, COMDT INST 7310.1.E at 1.
Ar Bo
2
5 Mg a
Lf
a
2
nN
App. 55
depending upon whether the responsible party is a gov-
ernment agency or a third party. These variants are not in
dispute.
(36) The court finds that the standard rates are in fact
based upon actual costs incurred by the United States
Coast Guard for personnel and equipment which it pro-
vides in the service of others. The United States Coast
Guard has employed generally accepted accounting prac-
tices, including Government cost accounting procedures
which were extant at the time Commandant Instruction
No. 7310.1.E was developed.
(37) Generally, the court finds that Commandant
Instruction No. 7310.1.E was not arbitrary, capricious, or
unreasonable, nor inconsistent with any generally
accepted accounting practices. More specifically, the court
finds that:
(a) Generally accepted government accounting prac-
tices extant at the time in question advocated the concept
of full cost recovery.
(b) Standard rates properly include both payroll costs
and the capital or acquisition costs of facilities, even
though these costs were already incurred and/or would
have been incurred by the United States Coast Guard
irrespective of the grounding of the M/V Hyundai No. 12.
(c) Standard rates are not limited to incremental
costs. Were the United States Coast Guard to bill only for
incremental costs, the concept of full cost recovery would
by and large be defeated where, as in the instance of the
United States Coast Guard and the grounding incident in
question, the great bulk of the services rendered were
App. 56
with extant personnel and equipment, all of which were
on call for search and rescue (SAR) and marine environ-
ment pollution (MEP) incidents such as that at issue here.
(d) The standard rate for facilities (for example, a
Coast Guard cutter) are constructed employing a meth-
odology which depends upon the number of hours of use
of the facility to compute a divisor which is employed in
spreading total costs. (As a matter of pure mathematics,
the larger the divisor, the lower the resultant hourly rate
will be for a facility.) The methodology employed by the
Coast Guard assumes and uses for this purpose 185
away-from-home-port days per year in computing the
standard rates for Coast Guard cutters. Similarly, this
methodology assumes a 21-hour day for purposes of con-
verting rates to an hourly rate. (Here again, use of a 24-
hour day would result in a lower hourly rate.) This
methodology is consistently applied by the Coast Guard
as to all cost reimbursement situations. This methodology
is not inconsistent with any generally accepted govern-
ment accounting policy or practice. This methodology is
consistent with a concept of full cost recovery. It is not
arbitrary, capricious, or unreasonable for the United
States Coast Guard to assume for purposes of construct-
ing standard rates for full cost recovery that its vessels
will be effectively engaged 185 days a year and 21 hours
per day. The court acknowledges that there is conflicting
testimony on this point, and further acknowledges that
reasonable and rational arguments for different assump-
tions can be made. However, such does not render unrea-
sonable or arbitrary the assumptions which the Coast
Guard has made.
App. 57
(e) Commandant instruction No. 73-10-1.E makes
express provision for the inclusion of “a factor for admin-
istrative support”.? The instruction further provides:
This essentially represents the cost relation-
ship of Headquarters, area, MLC and district
offices to other Coast Guard activities. The fac-
tor is applied to charges for federal agencies and
private parties to recover operating costs not
directly identifiable to the effort performed.[!°]
The subject instruction further provides, as regards
hourly standard rates for cutters, aircraft, and pollution
clean-up equipment as regards “administrative support”:
Relationship of administrative support to
benefitting activities, currently 30% Rate
applied to total of facility costs and field opera-
tional support.[!!]
In billing the defendants as described above, the United
States Coast Guard enhanced total facility costs and field
operational support costs by this 30% factor.
(f) The court finds that the administrative overhead
methodology employed by the United States Coast Guard
in fact accomplishes what Commandant Instruction No.
7310.1.E intended, that is, the recovery of Coast Guard
operating costs which are not directly identifiable to (for
example) the grounding of the M/V Hyundai No. 12.
9 Id. at 1, ¥ 3.c.
10 [d.
11 [d., enclosure 1 at 1. The language quoted in the text is
varied somewhat as regards aircraft and pollution cleanup
equipment, but the court perceives no substantive difference in
terms of the issues in this case.
App. 58
(g) The court finds that there are other formulations
which might have been employed by the United States
Coast Guard which would also have reasonably
approached full cost recovery as regards operating
expenses not directly identifiable to a particular effort
performed. Such finding does not, however, render the
Coast Guard methodology unreasonable, arbitrary, or
capricious. The Coast Guard has undertaken a compari-
son of actual costs versus standard rates for various
facilities employed in the subject incident (the vessels
Sherman, Acushnet, Sweetbriar, and Sedge, and a C130 Her-
cules and an HH-3F aircraft) . This analysis demonstrates
that some facilities (for example, the Sherman) may have
been underbilled employing standard rates, whereas the
Acushnet was slightly overbilled and the Sweetbriar and
Sedge were overbilled to a somewhat greater extent. On
balance, however, this analysis showed that overall,
vessels were underbilled employing standard rates. Sim-
ilarly, the analysis suggests that aircraft were signifi-
cantly underbilled by the use of standard rates when
comparing actual costs as computed for this study with
standard rates as constructed by the methodology
employed in billing the defendants.'
(h) As regards both the employment of away-from-
home-port days, etc., and a 30% factor for administrative
overhead, neither plaintiff's nor defendants’ witnesses
nor the exhibits establish a right or wrong methodology
12 The court puts little weight on this finding on the
assumption that the actual cost analysis, like the standard rate
analysis, loaded in the 30% overhead factor which is itself the
subject of a dispute.
—e
So i RE
ni het ST ARMADA. oe
Seen ha eae ne. Cen ee
et
App. 59
for accounting for costs. Both the methodology employed
by the United States Coast Guard, as well as that urged
by defendants’ expert, employ assumptions; and the
court finds that the assumptions employed by the Coast
Guard are not arbitrary or capricious, nor are they unrea-
sonable or not in accordance with general accounting
practices.
(38) On April 8, 1992, by direction of the Commander
of the United States Coast Guard, National Pollution
Funds Center, Hyundai Merchant Marine Co., Ltd., and
the Britannia Steamship Insurance Association, Ltd., were
billed $975,636.68 (exclusive of interest, penalties, and
administrative costs or attorney’s fees) on account of
costs incurred by the United States Coast Guard in con-
nection with the grounding of the M/V Hyundai No. 12.
(39) On May 4, 1992, by direction of the Commander
of the United States Coast Guard, National Pollution
Funds Center, Hyundai Merchant Marine Co., Ltd., and
the Britannia Steamship Insurance Association, Ltd., were
billed $18,084.13 (exclusive of interest, penalties, and
administrative costs or attorney’s fees) on account of
additional costs incurred by the United States Coast
Guard in connection with the grounding of the M/V
Hyundai No. 12.
(40) On May 28, 1992, by direction of the Commander
of the United States Coast Guard, National Pollution
Funds Center, Hyundai Merchant Marine Co., Ltd., and
the Britannia Steamship Insurance Association, Ltd., were
billed $480.00 (exclusive of interest, penalties, and admin-
istrative costs or attorney’s fees) on account of additional
App. 60
costs incurred by the United States Coast Guard in con-
nection with the grounding of the M/V Hyundai No. 12.
(41) On September 14, 1992, by direction of the Com-
mander of the United States Coast Guard, National Pollu-
tion Funds Center, Hyundai Merchant Marine Co., Ltd.,
and the Britannia Steamship Insurance Association, Ltd.,
were billed $2,253.00 (exclusive of interest, penalties, and
administrative costs or attorney’s fees) on account of
additional costs incurred by the United States Coast
Guard in connection with the grounding of the M/V
Hyundai No. 12.
(42) The court finds that the foregoing invoices were
calculated in accordance with Commandant Instruction
No. 7310.1.D. Except as hereinafter set forth in paragraph
(45), the foregoing invoices accurately applied the rates of
Commandant Instruction No. 7310.1.D. Except as here-
inafter set forth in paragraph (45), the invoices accurately
reflected the out-of-pocket costs incurred by the Coast
Guard as well as accurately reflected the personnel and
equipment and hours of usage associated with each
which were devoted to the monitoring of and assistance
in the salvage of the M/V Hyundai No. 12.
(43) Commandant Instruction No. 7310.1.D had been
superseded by Commandant Instruction No. 7310.1.E on
July 13, 1991. The court finds that the Seventeenth Coast
Guard District (Alaska) received and the latter instruction
became operative for the Seventeenth Coast Guard
:
:
i
Pe ae ee ee ee ee
App. 61
District (Alaska) on or about July 13, 1991, a date preced-
ing the grounding of the M/V Hyundai No. 12.'°
(44) On August 13, 1996, by direction of the Com-
mander of the United States Coast Guard, National Pollu-
tion Funds Center, Hyundai Merchant Marine Co., Ltd.,
and the Britannia Steamship Insurance Association, Ltd.,
were billed an additional $202,899.71 (exclusive of inter-
est, penalties, and administrative costs or attorney’s fees).
This invoice revised all of the prior billings which were
affected by the cancellation of Commandant Instruction
No. 7310.1.D and its replacement by Commandant
Instruction No. 7310.1.E. The court finds that this invoice
accurately reflects the rate changes effected by the revi-
sion of Commandant Instruction No. 7310.1.D. Comman-
dant Instruction No. 7310.1.E changed the applicable
rates but did not change the methodology for calculating
standard rates. Commandant Instruction No. 7310.1.E
should have been employed in the initial billings, and the
additional bill was proper subject to paragraph (45).
(45) Also on August 13, 1996, the National Pollution
Funds Center authorized a credit against the foregoing
invoices in favor of the defendants in the amount of
$89,390.52. The court has not found in the record any
discrete itemization of this credit; however, Commander
Crampton testified generally that final bills were adjustec
13 The court finds that in effecting this change in policy, the
United States Coast Guard employed an outdated standard
distribution list; however, the court finds that Commandant
Instruction No. 7310.1.E was distributed to the Seventeenth
Coast Guard District (Alaska) so as to become effective prior to
the date of the grounding of the M/V Hyundai No. 12.
App. 62
downward in the foregoing amount so as to “back out”
some charges for a buoy tender, the Coast Guard cutter
Sherman, so as to delete overlapping charges when both
the Sedge and the Sweetbriar were on scene and for the
purpose of correcting some rates, etc. With this correc-
tion, the court finds that the above described billings
include only vessels, equipment, personnel, and out-of-
pocket costs reasonably necessary, actually used or useful
for, and the primary purpose of which was, the Coast
Guard's response to the discharge or threat of a discharge
of oil from the M/V Hyundai No. 12.
(46) The court finds that the Coast Guard has not
overbilled the time of the Acushnet by 62 hours as con-
tended by defendants’ witness Gallagher.'4
(47) The court finds that the Coast Guard has not
billed defendants for SAR time of the cutter Sherman.
(48) The court finds that the Coast Guard’s removal
costs and the decisions of the FOSC which led to those
costs being incurred were neither arbitrary nor capri-
cious, and, under the extreme and sensitive circum-
stances of this MEP project, were also reasonable and
necessary costs.
Conclusions of Law
(49) This court has “exclusive original jurisdiction
over all controversies arising under [Oil Pollution Act of
1990, herein OPA 90], without regard to the citizenship of
the parties or the amount in controversy.” 33 U.S.C.
14 See Exhibit C.1.
:
;
:
i
t
App. 63
2717(b). Venue lies “in any district in which the discharge
or injury or damages occurred... . ” Id.
(50) Plaintiff’s complaint in this case was timely filed.
33 U.S.C. § 2717(f)(2).
(51) Title 33, United States Code, Section 2702 (a) ,
provides:
Notwithstanding any other provision or
rule of law, and subject to the provisions of this
chapter, 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 speci-
fied in subsection (b) that result from such inci-
dent.
The parties agree that under the foregoing provision of
OPA 90, the Coast Guard is entitled to recover all removal
costs, not just reasonable removal costs.!5 33 U.S.C.
§ 2702(b)(1)(A).
(52) OPA 90 defines “removal costs” as:
the costs of removal that are incurred after a
discharge of oil has occurred or, in any case in
which there is a substantial threat of a discharge
of oil, the costs to prevent, minimize, or mitigate
oil pollution from such an incident{.]
33 U.S.C. § 2701(31).
15 Order of July 11, 1995, Clerk’s Docket No. 31 at 6.
App. 64
(53) Under OPA 90, monitoring costs incurred by the
United States Coast Guard are recoverable as a part of
“removal costs”.'®
(54) OPA 90 requires that all removal costs be origi-
nally presented to the responsible party. 33 U.S.C.
§ 2713(a).
(55) There is no contention in this case by the defen-
dants that the discharge was caused by an act of God, an
act of war, or the act or omission of a third party. 33
U.S.C. § 2703(a).
(56) There is no contention by the defendants that the
plaintiff engaged in gross negligence or willful miscon-
duct. 33 U.S.C. § 2703(b).
(57) The requirement of OPA 90 that removal costs
and damages must “result from” an incident injects a
causation concept into the cause of action to recover
costs. The court holds that there must be a nexus between
a claimed cost and the underlying pollution incident.'”
The court held before trial that the Coast Guard must
establish in support of an OPA 90 claim that removal
costs for which it seeks reimbursement were caused in
fact by the pollution incident or that they would not have
been incurred but for the incident as to which the defen-
dant is the responsible party.'® This case presents no
difficulty as regards the application of the “but for”
branch of the court’s causation test as to out-of-pocket
16 Order of January 26, 1996, Clerk’s Docket No. 55 at 3-4.
17 Order of July 11, 1995, Clerk’s Docket No. 31 at 7.
18 Order of January 26, 1996, Clerk’s Docket No. 54 at 5.
App. 65
expenses incurred by the Coast Guard and billed to
defendants. The “cause in fact” branch of the test has
presented difficulty. Defendants in essence argue that
costs such as permanent personnel and depreciation or
capital costs (characterized sometimes by the parties as
“base” costs) although incurred by the Coast Guard are
not in fact caused by the grounding of the M/V Hyundai
No. 12. The argument is a fair one, and it points up the
difficulty of the court’s endeavoring to articulate legal
principles outside of the context of resolving a particular
dispute. The latter is in a sense what this court did when
it was asked to and announced the foregoing causation
test. The court spoke with neither the full factual back-
ground for this case nor a full appreciation of the concept
of full cost recovery which is implicit in OPA 90 and
explicit in Executive Branch cost accounting policy. In its
initial approach to this subject, the court simply held that
there must be a nexus between a claimed cost and the
underlying oil spill.!? That holding now appears to be the
more appropriate and useful one, although certainly the
Government may establish the required nexus by show-
ing either “cause in fact” or “but for” causation. The
court now holds that, for purposes of OPA 90, it is suffi-
cient for purposes of proof of causation for the Govern-
ment to demonstrate that Government facilities
(including crew) have been devoted to a particular pollu-
tion incident. As to such costs, the court holds that it is
quite appropriate to bill as removal costs the expense
associated with permanent Coast Guard personnel as
19 Order of July 11, 1995, Clerk’s Docket No. 31 at 7.
~
App. 66
well as an allowance for depreciation which reflects capi-
tal investment. When facilities are devoted to a particular
MEP, such application of resources bears a sufficient
nexus to a pollution incident that the associated costs are
deemed to have resulted from a pollution incident for
purposes of OPA 90. Due to the grounding of the M/V
Hyundai No. 12, personnel, vessels, and other equipment
which might have been employed elsewhere, were in fact
applied to monitoring of and assisting in the salvage of
the M/V Hyundai No. 12, and that is sufficient for pur-
poses of the element of causation.
(58) With respect to administrative overhead, no
additional showing of nexus or causation need be made
by the Coast Guard over and above that required of it
with respect to facilities actually devoted to a pollution
incident and as to which the requisite causation has been
demonstrated. Administrative overhead is inherent in the
ownership and operation of the physical assets.
(59) Defendants have argued that plaintiff wrong-
fully sought to collect “assessment” costs. 40 C.F.R.
§ 300.300-315. Presently, it is not at all clear to the court
what these assessment costs are or where they have been
identified in plaintiff’s billings. Moreover, it appears that
the regulations in question postdate this incident.
(60) A finding of the requisite nexus or causation
between costs and an MEP such as the grounding of the
M/V Hyundai No. 12 does not end the court’s inquiry into
j
9
ee oe
App. 67
the recoverability of costs. In particular, the Govern-
ment’s base costs discussed above are not per se recover-
able.2° In addition to causation, to establish a right to
recover removal costs, the Government must establish
that the primary purpose of assets for which costs are
sought was monitoring or containment and removal of oil
in connection with the MEP in question. Generally
accepted accounting procedures must be employed.
There must be a non-arbitrary, rational basis for costs.
Fairness and proportionality are considered by the court
as a part of its analysis of whether or not costs incurred
are non-arbitrary and rational. As set out in the foregoing
findings of fact, the Coast Guard billings for costs associ-
ated with monitoring the grounding of the M/V Hyundai
No. 12 met this standard.
(61) The court concludes that the costs reflected by
plaintiff’s billings to Hyundai Merchant Marine Co., Ltd.,
and Britannia Steam Ship Insurance Association, Ltd., are
legally recoverable from them as “removal costs” associ-
ated with a pollution incident — that is, a situation involv-
ing a “substantial threat of a discharge of oil”. 33 U.S.C.
§ 2702(a).
(62) Pursuant to 3 3 U.S.C. § 2705, Hyundai Merchant
Marine Co., Ltd., as the responsible party, and Britannia
Steam Ship Insurance Association, Ltd., as its insurer, are
liable to the Coast Guard for interest on the removal
costs. 33 U.S.C. § 2705(a). Interest is payable:
20 Order of January 26, 1996, Clerk’s Docket No. 54 at 8.
21 Jd. at 8-9.
App. 68
beginning on the 30th day following the date on
which the claim is presented to the responsible
party or guarantor and ending on the date on
which the claim is paid.
33 U.S.C. § 2705(b)(1). It is clear that accrued interest is
not subject to liability limits. 33 U.S.C. § 2705(b)(5) Sub-
sections 2705(a) and (b) are worded rather curiously in
that they seem, by reason of using the past tense “paid”,
to contemplate that interest will be calculated and paid
after the principal cost recovery amount has been paid.
Perhaps Congress in fact anticipated the difficulties in
calculating interest to which the parties have called atten-
tion.
(63) Subsection 2705(b)(4) provides, as regards the
calculation of interest:
The interest paid under this section shall be
calculated at the average of the highest rate for
commercial and finance company paper of
maturities of 180 days or less obtaining on each
of the days included within the period for which
interest must be paid to the claimant, as pub-
lished in the Federal Reserve Bulletin.
Subsection 2705(b)(4) contemplates that rates will be
derived from both commercial and finance company
paper. The paper to be used as the benchmark is that
paper having maturities “of 180 days or less”. The court
takes the latter provision to mean that all of the rates for
such paper having maturities of less than 180 days will be
reviewed for purposes of the calculation, not just that
paper with 180 days before maturity. In focusing upon a
rate, subsection 2705(b)(4) requires use of the “highest”
rate for the paper in question. The court understands the
App. 69
Federal Reserve Bulletin in question to carry out what
subsection 2705(b)(4) requires: survey the rates for all
classes of commercial and finance company paper with
180 days or less maturity and average the highest of
these. However, Congress appears to have contemplated
that interest rates might vary as to any day for which
interest was due. Apparently, the Federal Reserve Bulle-
tin does not calculate and publish daily rates; only
weekly and monthly rates are available.
(64) In Exhibit 87, the United States Coast Guard sets
out its methodology for calculating interest in connection
with this matter. It appears to the court that the interest
rate which the plaintiff proposes to charge is not the rate
which obtained on each of the days included within the
period for which interest must be paid, but, rather, is the
single highest rate which occurred during the months
included in the period for which interest is to be calcu-
lated. The text of plaintiff’s Exhibit 87 confirms that the
Coast Guard proposes using a single rate, not a daily rate
or (what is available in the record) a monthly rate. The
court holds that plaintiff must at least apply the various
monthly rates for the period for which interest is due as
to each bill.?5
22 Plaintiff’s Exhibit 87.
23 Because interest does not start to accrue under Section
2705(b)(1) until the 30th day following the date on which the
claim is presented to the responsible party or its insurer, there
must necessarily be different interest calculations for each of the
several separate billings presented to the defendants in this
case. That is, interest does not accrue from a date of loss or some
initial billing date. The interest calculation on all bills will cease
when the particular bill is paid; and, if all bills are not paid on
App. 70
(65) Defendants Hyundai Merchant Marine Co., Ltd.,
and Britannia Steam Ship Insurance Association, Ltd., are
liable to plaintiff for a 6% penalty for failure to pay
plaintiff within 120 days and monthly administrative fees
under the Debt Collection Act.
(66) The court concludes that defendants Hyundai
Merchant Marine Co., Ltd., and Britannia Steam Ship
Insurance Association, Ltd., are indebted to plaintiff for
removal costs in the total sum of $1,109,963.00, plus
accrued interest through March 15, 1997, in the amount of
$212,186.75, penalties in the amount of $270,213.25 as of
November 25, 1996, and administrative fees of $600.00.
(67) Plaintiff is also entitled to recover from Hyundai
Merchant Marine Co., Ltd., and Britannia Steam Ship
Insurance Association, Ltd., taxable costs and attorney’s
fees as provided by local rules and OPA 90.
DATED at Anchorage, Alaska, this 31 day of March,
1997.
/s/ H. Russel Holland
H. Russel Holland, Judge
District of Alaska
the same date, there will be different interest cut-off dates for
the several bills. Because of the structure of the rate
computation and, more particularly, the delay in publishing
rates, it is not possible for the plaintiff to quote in advance a full
payoff figure inclusive of all accrued interest. Interest can be
estimated to within three to five days of the preparation of a
combined statement which is inclusive of accrued interest.
SE TOTO
App. 71
A94-0391-CV (HRH)
M. WOODELL
R. BUNDY (US-ATTNY)
R. UNDERHILL
App. 72
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
UNITED STATES OF AMERICA, )
Plaintiff,
VS. )
HYUNDAI MERCHANT ae
MARINE CO., LTD., ) No. |
ae ) A94-0391-CV
| ) (HRH)
Defendants. )
)
ORDER
(Filed Jul. 28, 1997)
Motion for Attorney’s Fees
The United States moves for an award of attorney’s
fees.! The motion is opposed. Oral argument has not been
requested and is not deemed necessary.
For the reasons and upon the authorities relied upon
by the United States, principally in its reply memoran-
dum,? the court conciudes that an award of attorney’s
fees in the amount of One Hundred Four Thousand,
Forty-Three Dollars and Seventy-Three Cents (104,043.73)
is both lawful and reasonable. The clerk of court shall
endorse the foregoing award on the judgment heretofore
entered.
1 Clerk’s Docket No. 101.
2 Clerk’s Docket No. 111.
App. 73
DATED at Anchorage, Alaska, this 26 day of July
1997.
/s/ H. Russel Holland
H. Russel Holland, Judge
District of Alaska
App. 74
FEDERAL WATER POLLUTION CONTROL ACT
33 U.S.C. § 1321.
Oil and hazardous substance liability
(c) Federal removal authority
(1) General removal requirement
(A)
(B)
The President shall, in accordance with the
National Contingency Plan and any appro-
priate Area Contingency Plan, ensure effec-
tive
and immediate removal of the
discharge, and mitigation or prevention of
the substantial threat of a discharge, of oil
or a hazardous substance -
(i)
(11)
(iii)
(iv)
into or on the navigable waters;
on the adjoining shorelines to the
navigable waters;
into or on the waters of the exclusive
economic zone; or
that may affect natural resources
belonging to, appertaining to, or
under the exclusive management
authority of the United States.
In carrying out this paragraph, the Presi-
dent may -
(i)
(ii)
(iii)
remove or arrange for the removal of
the discharge, and mitigate or pre-
vent a substantial threat of a dis-
charge, at any time;
direct or monitor all Federal, State,
and private actions to remove a dis-
charge; and
remove and, if necessary, destroy a
vessel discharging, or threatening to
App. 75
discharge, by whatever means avail-
able.
(2) Discharge posing substantial threat to public
health or welfare
(A)
(B)
If a discharge, or a substantial threat of a
discharge, of oil or a hazardous substance
from a vessel, offshore facility, or onshore
facility is of such a size or character as to
be a substantial threat to the public health
or welfare of the United States (including
but not limited to fish, shellfish, wildlife,
other natural resources, and the public and
private beaches and shorelines of the
United States), the President shall direct all
Federal, State, and private actions to
remove the discharge or to mitigate or pre-
vent the threat of the discharge.
In carrying out this paragraph, the Presi-
dent may, without regard to any other pro-
vision of law governing contracting
procedures or employment of personnel by
the Federal Government -
(i) remove or arrange for the removal of
the discharge, or mitigate or prevent
the substantial threat of the dis-
charge; and
(ii) remove and, if necessary, destroy a
vessel discharging, or threatening to
discharge, by whatever means are
available.
App. 76
(5) Obligation and liability of owner or operator
not affected
Nothing in this subsection affects -
(A) the obligation of an owner or operator to
respond immediately to a discharge, or the
threat of a discharge, of oil; or
(B) the liability of a responsible party under
the Oil Pollution Act of 1990 [33 U.S.C.A.
§ 2701 et seq.].
OIL POLLUTION ACT OF 1990
33 U.S.C. § 2701. Definitions
For the purposes of this chapter, the term -
(4) “claimant” means any person or government
who presents a claim for compensation under this
subchapter;
(30) “remove” or “removal” means containment
and removal of oil or a hazardous substance from
water and shorelines or the taking of other actions as
may be necessary to minimize or mitigate damage to
the public health or welfare, including, but not lim-
ited to, fish, shellfish, wildlife, and public and pri-
vate property, shorelines, and beaches;
(31) “removal costs” means the costs of removal
that are incurred after a discharge of oil has occurred
or, in any case in which there is a substantial threat of
discharge of oil, the costs to prevent, minimize, or
mitigate oil pollution from such an incident;
App. 77
33 U.S.C. § 2702. Elements of liability.
(a) In general
Notwithstanding any other provisions or rule of law,
and subject to the provisions this Act, each responsible
party for a vessel or a facility from which oil is dis-
charged, or which poses 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 suc: incident.
‘b) Covered removal costs and damages
(1) Removal costs
The removal costs referred to in subsection (a) of this
section are —
(A) all removal costs incurred by the United
States, a State, or an Indian tribe under
subsection (c), (d), (e), or (1) of section 1321
of this title as amended by this Act, under
the Intervention on the High Seas Act (33
U.S.C. 1471 et seq.), or under State law;
and
(B) any removal costs incurred by any person
for acts taken by the person which are con-
sistent with the National Contingency
Plan.
App. 78
33 U.S.C. § 2712. Uses of Fund
(a) Uses generally
The Fund Shall be available to the President for -
(1) the payment of removal costs, including the
costs of monitoring removal actions, determined
by the President to be consistent with the
National Contingency Plan -
33 U.S.C. § 2715. Subrogation
(c) Actions on behalf of Fund
At the request of the Secretary, the Attorney General
shall commence an action on behalf of the Fund to
recover any compensation paid by the Fund to any claim-
ant pursuant to this chapter, and all costs incurred by the
Fund by reason of the claim, including interest (including
prejudgment interest), administrative and adjudicative
costs, and attorneys’ fees. Such an action may be com-
menced against any responsible party or (subject to sec-
tion 2716 of this title) guarantor, or against any other
person who is liable, pursuant to any law, to the compen-
sated claimant or to the Fund, for the cost against the
responsible foreign government or other responsible
party to recover any removal costs or damages paid from
the Fund as the result of the discharge, or substantial
threat of discharge, of oil from a foreign offshore unit.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.