By Amanda Howard Lowe

In a decision of first impression interpreting the meaning of “operating” under the Oil Pollution Act of 1990 (“OPA,” 33 U.S.C. §§2701 et seq.), the U.S. Fifth Circuit held the owner and operator of a tugboat liable as the “responsible party” for a spill emanating from a tank barge in its tow, and consequently found the owner ineligible for reimbursement for the cleanup costs. See U.S. v. Nature’s Way Marine, LLC, 904 F.3d 416 (5th Cir. 2018).

The underlying incident occurred in January 2013 when a tug owned by Nature’s Way was moving two oil carrying tank barges owned by Third Coast Towing, LLC (“TCT”), down the Mississippi River. The barges allided with a bridge over the Mississippi River, resulting in a release of over 7,000 gallons of oil into the river. The Coast Guard designated both Nature’s Way and TCT as “responsible parties” under OPA §2702(a). Nature’s Way and its insurers spent nearly $3 million in clean-up costs and the federal government incurred another $792,000.

Following settlement of auxiliary disputes between Nature’s Way and TCT, in May 2015, Nature’s Way submitted a claim to the National Pollution Funds Center (“NPFC”)[1] seeking reimbursement of over $2.13 million it spent in clean-up on the grounds that its liability (if any) should be limited to the tonnage of the tug alone, and not the tonnage of the barges. OPA limits liability of a “responsible party” based on tonnage of the vessel it was operating. While Nature’s Way admitted it operated the tugboat, it contested its status as operator of the oil-discharging barge. The NPFC rejected the request to decrease the limit of liability, concluding instead that Nature’s Way was the “operator” of the barges under §2702(a) and thus both barges were properly included in the limitation assessment.

In light of the NPFC dispute, the United States sued Nature’s Way and TCT in the Southern District of Mississippi to recover the $792,000 in cleanup costs directly funded by the federal government. Nature’s Way denied liability, and counterclaimed against the government asserting that the NPFC’s “operator” determination was wrong and violated the Administrative Procedure Act (“APA”) by erroneously applying §2702(a).

The U.S. moved for partial summary judgment on the sole question of whether the NPFC violated the APA by declaring that Nature’s Way was the “operator” of the barge. In opposition, Nature’s Way argued that TCT was actually the “operator” of the barge as it was responsible for instructing when the barge would be loaded, unloaded, and moved.  The district court disagreed with Nature’s Way, holding that a “common sense” interpretation of “operator” as used in the statute supports the conclusion that a “dominant mind” tug moving “dumb” barges (lacking the ability for self-propulsion or navigation) through the water is “operating” those barges. Nature’s Way appealed.

The Court focused on the express language of the statute, which defines an “operator” as “any person … operating” a vessel and a “responsible party” as “any person owing, operating, or demise chartering the vessel.” Though both terms use the word “operating,” the Fifth Circuit noted that “operating” is not defined within the statute. The Fifth Circuit also relied on Supreme Court jurisprudence construing the definition of “operator” in the Comprehensive Environmental Response Compensation and Liability Act of 1980 (“CERCLA”) as any person “who directs the workings of, manages, or conducts the affairs of” the facility/equipment in question.” U.S. v. Bestfoods, 524 U.S. 51, 66 (1998). Given that OPA and CERCLA have common purposes and a shared history, the Court found the parallel language between the statutes significant. The Fifth Circuit concluded that the ordinary and natural meaning of “operating” a vessel under OPA would thereby include the act of piloting or moving a “dumb” vessel like the TCT tank barges. The Court held that because “Nature’s Way had exclusive navigational control over the barge at the time of the collision, and, as such… was a party whose direction (or lack thereof) caused the barge to collide with the bridge,” Nature’s Way was the “operator” of the barges under OPA.

Significantly, the Fifth Circuit has now recognized the potential increased liability for negligent vessel operators who cause spills subject to OPA, as the Court has very plainly held that a tug pushing loaded “dumb” barges can only limit its liability to the full value of the entire flotilla. With the potential for increased exposure, this decision will obviously impact vessel operators and the oil and gas industry, as well as their respective insurers. Additionally, the ruling does not appear to foreclose the argument that the barge owner might also be considered an operator under OPA 90, if its actions also rise to the level of “operating.”

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[1] The National Pollution Funds Center oversees the Oil Spill Liability Trust Fund, 26 U.S.C.§9509, an OPA-created mechanism, funded by inter alia OPA civil penalties, from which faultless or partially at-fault “responsible parties” can recoup, to the extent of their non-fault, clean-up costs paid out pursuant to their strict OPA liability, see 33 U.S.C. §2708(a), 26 U.S.C. §9509)