Beacon
Skuld Newsletter
Number 2 June 1999
In the land of litigation: USA POLLUTION LAW UPDATE
By David Farrell, Jr.
Much was written about achieving compliance with the International Safety Management Code ("ISM Code") by 1 July 1998. Since that date has come and gone, what's the likely impact for Members operating in USA waters?
First and foremost, it can be expected that widespread ISM Code compliance will result in safer ship operations and pollution prevention. But what about other consequences?
In the land of litigation, it is clear that ISM Code records will be relevant in almost any claim involving the Member. In Coast Guard casualty investigations and USA legal proceedings, all the paper documents and computer files related to (1) the Safety Management Manual, (2) the reporting of accidents and non-conformities, and (3) probably even internal audits and management reviews will become legal evidence.
Careful writing is therefore imperative: in the hands of smart opposing attorneys, ISM Code records will be as important as log entries.
Accordingly, there can be little doubt that formal, immediate production of ISM Code records will become required and routine in any USA legal proceedings involving the Member. This is not necessarily all bad: whereas liability in civil cases may become clear because the Member's documented standard of care was breached, non-liability too might be concluded if operating procedure was reasonable and precisely executed as planned.
CRIMINAL LAW
In the criminal law realm, however, prospects for the future are most alarming. The ISM Code's "Designated Person" as well as the Master are now criminal targets under obscure provisions of USA law whenever there is an oil spill in USA waters. Members should be aware, for example, that the Refuse Act of 1899 and the Migratory Bird Treaty Act of 1918 make it a criminal offense to discharge refuse (i.e., oil) or kill a sea bird -- even if the spill is unintentional and merely negligent. These are known as "strict liability" criminal laws that apply to both the Member's company organization and its individual employees.
The ISM Code records constitute a detailed road map for criminal prosecution of these and other anti-pollution laws. Astoundingly, huge dollar fines and jail time have become likely following any serious spill.
Recognizing that criminal liability absent bad intent is unfair to the accused and will interfere with spill response cooperation with the Coast Guard, there is some Congressional recognition that strict liability criminal laws need to be changed. But as demonstrated so well by the Clinton impeachment hearings, Congress is most interested in politics, so drastic anti-pollution laws are unlikely to change soon given American voters' emotional reaction to oil spills. Last winter's torpedoing of the New Carissa off Oregon did nothing to enhance public confidence in USA spill response. There are many challenges ahead!
STATE LAWS AND SPILLS
Internationally perceived as one nation, Members must remember that the United States of America is a federal union comprised of 50 states -- each with its own, separate legal system. Nowhere is this more apparent than with the pollution laws and regulations now evolving in most of the 30 states bordering the Atlantic, Pacific, Gulf of Mexico, and Great Lakes.
The Oil Pollution Act of 1990 ("OPA '90") was the USA federal government's response to Exxon Valdez. As Y2K approaches, individual state oil pollution laws, regulations, civil recoveries, criminal fines, and penalties add new layers of concern for Members calling here.
The 1998 INTERTANKO decision out of Washington State confirmed that states can make their own oil pollution laws. In May 1999 the case was appealed to the USA Supreme Court with this issue: can the states, in addition to imposing their own compensation laws, also impose their own prevention/clean-up regulations on top of OPA '90's federal regime?
State waters are generally considered to lie within 3 miles of shore, but those waters are also considered part of USA navigable waters. In sum, a "patchwork quilt" of pollution laws is fast developing, such that on top of OPA '90 which applies throughout the USA each different state is enforcing its own set of pollution laws.
STATE OF CALIFORNIA
Members should pay particular attention to oil pollution developments in California, which has a larger economy than most nations. Since 1990, California has had a comprehensive state oil spill program for tankers and barges operating in state waters. This year, California state regulation will be extended to nontank vessels in an effort to prevent and respond to bunker oil spills.
By 1 September 1999 every nontank vessel of 300 gross registered tons or more operating in California waters will be subject to comprehensive state regulation. Nontank vessels are defined by California as vessels not designed to carry oil as cargo (such as dry cargo vessels, cruise ships, and car carriers). Each needs to have a pre-approved oil spill contingency plan for a worst case scenario plus a USD 300 million Certificate of Financial Responsibility. Violations will carry stiff civil and criminal penalties.
The biggest problem is logistics. Finalized regulations will note be ready until August, leaving less than a month to comply by the 1 September 1999 deadline. However, the draft regulations are unlikely to change dramatically, so Members calling in California should use them as a guideline.
Ms. Joy Lavin-Jones of the California Office of Oil Spill Prevention and Response, telephone (916) 324-7889, has been helpful in providing information about the new nontank vessel requirements. She believes compliance will be easy for anyone familiar with tanker contingency plans; for Members who are not, your author can provide some suggestions.
The Northcape spill: government sponsored environmental terrorism?
In January 1996 on the Atlantic coast of the tiny State of Rhode Island the maritime industry woke up to its worst nightmare.
During heavy but not unusual winter weather, a fire disabled a tug towing the oil barge NORTH CAPE. Lacking a proper windlass, the anchor hung up and could not be dropped so the barge grounded, spilling almost 1 million gallons of No. 2 oil, most of which was blown offshore.
In addition to undisclosed civil settlements with lobstermen for lost fishing claims there remains a hotly contested Natural Resource Damages Claim demand totalling USD 27.6 million. Part of this involves protecting lakefront loon nesting habitat in the State of Maine so that replacement birds will be able to winter off Rhode Island.
On the criminal side, prosecution came from two directions, targeting both company and individual defendants.
Two years after the spill, the criminal charges were settled in what is known as a plea bargain agreement. The USA federal government obtained a $3.5 million fine against the company for violations of OPA '90, the Refuse Act of 1899, and the Migratory Bird Treaty Act of 1918. The State of Rhode Island also obtained a USD 3.5 million fine against the company for violation of the Rhode Island Oil Pollution Control Act. In addition, the company paid $1.5 million to a conservation organization and was required to spend USD 1 million upgrading safety equipment. Furthermore, the company's president was fined USD100,000 and placed on criminal probation for 3 years while the tug's captain was fined USD 10,000 and placed on criminal probation for 2 years.
CONCLUSION
Frustratingly, it seems that merely carrying oil in USA waters constitutes a crime. That's not really true, of course
- unless there's a spill.
As a result Skuld correspondents in the United States have established relationships with local criminal defense attorneys who can be telephoned on short notice during an incident.
Besides avoiding a spill in the first place, a prompt, coordinated, civil and criminal response following an incident is the Member's best defense in the litigious USA.
