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May 1990
Vol. 1, No. 2
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Activities of Healy & Baillie Lawyers
On Friday, May 4th, 1990, at the Annual Meeting of The Maritime Law Association of the United States, Howard McCormack was elected Secretary of the Association and John Kimball was elected a member of the Executive Committee.
Howard McCormack, who served as Membership Secretary of the Association for the past four years, has served the Association in a number of other capacities, including having been a member of the Executive Committee with responsibility for its Maritime Arbitration Committee and a member of the CMI Committee. He has lectured widely on maritime arbitration, particularly at meetings of the International Congress of Maritime Arbitrators, most recently at Hamburg in 1989. On April 27, 1990, he lectured on "Issues of Collision, Salvage and General Average" at the Second Biennial Admiralty Law Seminar of the North Carolina Bar Foundation Seminar held at Williamsburg, Virginia. John Kimball, who has been a member of the Association since 1976, has served on its Carriage of Goods Committee. John has also participated in activities of the CMI (of which the USMLA is a member organization) such as lecturing at last year's CMI seminar at Knokke-Zoute, Belgium. He is Adjunct Professor at the Law School of New York University, where he gives the Admiralty course, and is a member of the Board of Editors of the Journal of Maritime Law & Commerce. He is co-author of "Time Charters" (3rd Edition 1989) and has written numerous articles on maritime law subjects. He was facilitator at the New York Arbitration Day program on Maritime Arbitration on Friday, May 11, 1990 at the Hilton Hotel in New York.
Thomas L. Rohrer, who has been a member of the firm since its inception in 1965 under the present name, has taken early retirement and has become "of counsel" to the firm.
Tom began his career with the predecessor firm of Nelson, Healy, Baillie & Burke in August 1955, after graduating from Columbia Law School that year. His principal specialty is litigation and he has tried a substantial number of jury cases (seamen's and longshoremen's personal injury and death actions) and non-jury cases (collision and other maritime casualty actions) in the Federal and State Courts. He was for a number of years counsel for Marine Transport Lines and handled a number of important cases, including those arising out of the sinkings of the HAWAIIAN PATRIOT (ex-OSWEGO PATRIOT) and the MARINE ELECTRIC. He recalls that in an era of "runaway" juries, he had never been the victim of an unreasonable jury verdict.
Tom acted as manager of the firm's Admiralty League softball team, which during the past ten years has twice won the championship. Richard Singleton succeeds him in that post.
He is now completing the last of his case assignments, and plans a second career in real estate management in the New York area.
Philip S. LaPenta joined the firm as a partner on April 16, 1990 and will primarily be involved in personal injury and marine casualty matters. Mr. LaPenta is a graduate of Rutgers University in New Jersey and received his law degree from the American University in Washington, D.C. where he was Research Editor of the Law Review. Upon graduation from law school in 1972, he became an Assistant to the famous Frank Hogan in the New York County District Attorney's Office where he was assigned to the Homicide Bureau. After five years in that office, he went into private practice handling a full range of maritime law cases. He has handled a number of important matters in state and federal courts as well as arbitrations.
Gordon Paulsen presided at a three-day meeting of the Navigation Safety Advisory Council of the United States Coast Guard in Annapolis, Maryland, beginning on Monday, May 7, 1990. The Council, consisting of 21 prominent United States citizens involved in navigation and maritime law activities, from all parts of the country, "serves as a deliberative body to advise the Secretary of Transportation, via the Commandant, U. S. Coast Guard, on matters relating to the prevention of collisions, rammings, and groundings, including, but not limited to: Inland Rules of the Road, International Rules of the Road, navigation regulations and equipment, routing measures, marine information, diving safety and aids to navigation (excerpt from Charter)." Mr. Paulsen has served on the Council and its predecessor bodies for about 30 years and as Chairman for about 20 years. His predecessor as Chairman was Nicholas Healy. Mr. Paulsen withdrew as Chairman of the Council at the conclusion of the meeting and will be succeeded as Chairman by Antonio J. Rodriquez of the law firm of Phelps, Dunbar, Marks, Claverie & Sims of New Orleans.
In closing ceremonies, the Sponsor of the Council, Rear Admiral Robert T. Nelson, presented Mr. Paulsen with his third Coast Guard medal, prior medals having been awarded in 1977 and 1986. The citation for this latest award, discussing activities more recent than those for which he was twice given the Distinguished Public Service Award, reads, in part, as follows:
"Mr. Gordon W. Paulsen is cited for his meritorious contributions to the Coast Guard which have enhanced the safety of navigation in the United States . . . From 1985 until the present, Mr. Paulsen has guided the Council through difficult times of severe budget constraints. In spite of cancelled and delayed meetings, Mr. Paulsen has endeavored to maintain contact with other members and with the Executive Director. He has presided over the council's deliberations on such significant issues as changing the Inland Navigation Rules Act and the Bridge-to-Bridge Radiotelephone Act, changing Inland Rules Annexes, and amending the rules of the road demarcation lines. He also responded to a request from the Alaska State Oil Spill Commission for testimony concerning the Exxon Valdez oil spill. Mr. Paulsen's devotion to the cause of safe navigation and services to the United States Coast Guard are exemplary, and are most heartily commended."
In his closing remarks, Admiral Nelson said, "We must reluctantly honor Mr. Paulsen's request to step down. His personal contributions have been enormous. We will miss you, and the gentlemanly way you ran this Council . . . Good luck to you and Janet!"
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The Status of Oil Pollution Legislation in the United States as of Mid-May
1990
Gordon
W. Paulsen
The predictable aftermath of any incident such as a highly publicized major maritime casualty is new legislation ostensibly intended to reduce the likelihood of a similar casualty in the future, to provide reasonable compensation for the parties injured (it being recognized that no matter how tough the legislation, there is no way that one can guarantee that such an incident will not occur again) and to reimburse the governmental authorities for expenses they incurred following the incident.
The Torrey Canyon stranding on Seven Stones Reef in the Scilly Isles off the coast of England in March, 1967 triggered the 1969 International Convention on Intervention on the High Seas in Cases of Oil Pollution Casualties and the 1969 Convention on Civil Liability for Oil Pollution Damage ("CLC"). Both conventions were the result of deliberations by IMCO (now IMO, the International Maritime Organization) which considered these matters pursuant to a request by the United Kingdom. The Comite Maritime International (CMI) prepared the initial draft of the Civil Liability Convention, which was adopted at the CMI Conference in Tokyo in 1969. Later that same year, the CMI draft was approved, with some changes, at a diplomatic conference called by IMCO.
The United States decided not to follow the example of the United Kingdom in looking for an international solution to the oil pollution problem, but to "go it alone" insofar as civil liability was concerned, and in 1970, enacted the Federal Water Quality Improvement Act, which dealt only with liability for government clean-up costs, and the cost of preventive measures. Liability for damages was to be determined under general maritime law or other federal or state legislation. (The term "general maritime law" is used in the United States to denote uncodified law, based mainly on court decisions relating to maritime matters.)
Subsequent to 1970, the United States enacted several other statutes greatly expanding the scope of the initial legislation. However, although it played a major role in persuading participating nations to agree to the 1984 Protocols to the Civil Liability and Fund Conventions (which set much higher liability limits than those nations initially wanted), the United States has not ratified the Protocols. Further, there seems to be little possibility - largely as a result of the Exxon Valdez incident - that the Civil Liability Convention will ever be ratified by the United States. There is, however, a possibility that the 1984 Protocols will be ratified, as is contemplated in H.R. 1465, which was passed by the House of Representatives on November 9, 1989 in reaction to the Exxon Valdez incident. The Senate bill, S. 686, passed on November 19, 1989, does not contemplate ratification of the Protocols. Neither the House nor the Senate bill would preempt state legislation.
Now, let us look at existing United States law on the subject as of May 15, 1990.
1. The Present Law in the United States: Liability for costs of removal of oil and other hazardous substances discharged from vessels in waters of the United States (including the 200-mile fishery zone and waters over the continental shelf) is primarily covered by The Federal Water Pollution Control Act, 33 U.S.C. § 1251, et seq., as amended, particularly § 1321(f). Limited liability is imposed on the owner or operator of a vessel from which oil or a hazardous substance is discharged, except where it can be proved "that a discharge was caused solely by (A) an act of God, (B) an act of war, (C) negligence on the part of the United States Government, or (D) an act or omission of a third party without regard to whether any such act or omission was or was not negligent, or any combination of the foregoing clauses [sic] . . ." in which cases liability is unlimited.
The act further provides that "where the United States can show that such discharge was the result of willful negligence or willful misconduct within the privity or knowledge of the owner, such owner or operator shall be liable to the United States Government for the full amount of such costs." "Privity or knowledge" means active participation in the cause of the incident (not merely proper delegation to a qualified person) or improper consent to action which brought about the incident. An act done by a person not in a managerial position would not normally result in denial of limitation.
It should be noted that § 1321 (f)(4) defines costs of removal as including "any costs or expenses incurred by the Federal Government or any state government in the restoration or replacement of natural resources damaged or destroyed as a result of a discharge of oil or a hazardous substance . . ." Further, § 1319 provides that the United States may impose heavy criminal and civil penalties in cases of violation of the statute.
Section 1370 makes it crystal clear that the Federal Act does not pre-empt any of the 50 states or political subdivisions thereof from enacting any legislation they deem necessary to control pollution within their respective territories, including "higher pollution control standards than those established" by the Federal Act. See Spannus v. Hoffman, 543 F.2d 1198, (C.A. Minn. 1976). Section 1321(p) of the Federal Act requires vessels trading to the United States to have on board Certificates of Financial Responsibility to meet the liabilities imposed by it under the Act. To obtain such a certificate the owner or operator must furnish evidence of insurance, a surety bond, or other evidence of financial responsibility, or must qualify as a self-insurer.
As stated, the Federal Act does not deal with civil liability to those who suffer damage resulting from pollution by oil or hazardous substances. Under the general maritime law, a plaintiff must establish culpable negligence in order to recover damages resulting from a discharge. Insofar as vessel owners and bareboat charterers are concerned, the liability can be limited under the Limitation of Liability Act, 46 U.S.C. § 183, to the value of the vessel and her pending freight at the time of the incident. In order to qualify for limitation, the owner or bareboat charterer must prove that the incident was not caused with his "privity or knowledge." In essence, in order to obtain limitation of liability, the court must be satisfied that the owner or operator, or, in the case of a corporation, an officer, director, principal shareholder, or managerial employee was personally, not vicariously, at fault. Any civil liability under a state statute is subject to the Federal Limitation of Liability Act in the same way as is liability under the general maritime law. Liability to the United States government under the Federal Water Pollution Control Act, however, is not, since the Act contains its own limitation provisions.
To summarize, at the present time, the Federal Water Pollution Control Act imposes heavy liability for government clean-up costs on an owner or operator of a vessel involved in a pollution incident and specifically does not pre-empt the states of the United States from enacting even heavier liabilities or imposing civil or criminal penalties, if they elect to do so. A number of states, including Maine, Massachusetts, Washington and Florida, among others, have statutes covering these matters.
At the present time, there is no basis under federal law nor, insofar as we are aware, under any state law for imposing liability for pollution claims on a party, such as a time charterer, which did not actively participate in the incident which was the basis for the claims. Accordingly, if a time charterer assumes a more active role with respect to the management of a vessel than is usually the case (for example, in deciding, without regard for tides and currents, specific times for the movement of a vessel from one part of a discharging port to another), and this was held to be a cause of the incident, the time charterer may find himself cast in the role of an operator, with concomitant potential liability.
2. The Law in the United States Versus International Law: International law, on this subject, generally speaking, is much less complex because United States law concerning pollution by oil and other hazardous substances consists not only of federal law but also of the laws of the various states. Most maritime nations, except the United States, have ratified the CLC, which entered into force in 1975, and the International Fund for Compensation for Oil Pollution Damage which entered into force in 1978. Likewise the 1976 Protocols to the CLC have been adopted by many of these nations, although not all, and are now in force. The 1984 Protocols to the conventions are not yet in force.
Although the Conventions and the Protocols are much more comprehensive than U. S. law on the subject, and although the United States actively participated in the conferences leading to the Conventions and greatly influenced their provisions, the United States has refused to ratify them. The principal reason given for the refusal is that in the eyes of the Senate the liability limits are too low and an international convention would, by its nature, pre-empt state law on the subject. A number of members of Congress - especially Senator Mitchell, Majority Leader of the Senate -are strong advocates of "states' rights" and will not concede that the Federal Government should have the right to pre-empt such rights insofar as pollution damage is concerned.
This writer, who was President of The Maritime Law Association of the United States from 1982 to 1984 (and was also a member of the U. S. Delegation to the Diplomatic Conference which drafted the 1984 Protocols) has long advocated that the United States ratify these international Conventions and the Protocols thereto. Unfortunately, the Exxon Valdez incident and other recent incidents in United States waters have set back the chances of ratification, perhaps beyond hope. This is so, not on the basis of logic or on the basis of what is actually good for U.S. citizens, but because of uninformed public reaction and the sensitivity of legislators to such public reaction.
3. Possible Changes in United States Law As a Result of Recent Pollution Incidents: As was to be expected, immediately after the Exxon Valdez incident, there was an increase in activity with respect to U.S. law concerning liability for pollution of U.S. waters. One result was the reactivation and modification of prior draft legislation. The Bush Administration introduced bills, S. 1066 and H. R. 2325, which would incorporate the Protocols and tighten up domestic control over the transportation of oil and hazardous substances. Neither bill has thus far been enacted. H. R. 1465, which has been passed by the House of Representatives, specifically provides in § 3002(a) that "Nothing in this title shall constitute a ratification of either the Civil Liability Convention or the Fund Convention." The bill, however, does provide for the possibility that the United States may ratify the protocols to the Conventions. Section 3003 recognizes the International Fund as a legal entity. Oil companies contribute to this fund on the basis of oil imports into the territory of one of the contracting states. The fund is available to compensate claimants who cannot obtain full recovery under the CLC, and to reimburse shipowners for voluntary clean-up expenses. "It is in this way that the [Fund] convention distributes the overall burden of pollution damage between the shipowner and the cargo interests." David W. Abecassis, "The Law and Practice Relating To Oil Pollution From Ships," pp. 221-222.
The Senate bill, S. 686, appears to be more concerned with punishing a vessel owner who has been involved in an oil spill than providing a vehicle for fair recovery of damages by injured parties. Further, the bill does not recognize the very real possibility that vessel owners may not be able to obtain insurance to cover the liabilities which it imposes, and as a result, could not obtain certificates of responsibility which are prerequisites for vessels trading to the United States.* Another result could be higher cost of petroleum products to the public, and/or a drying up of present sources of supply. If the Senate bill were enacted, the United States may have to rely more heavily on domestic oil than imported oil.
As expected, there has been a great deal of activity to reconcile the differences between the Senate and House bills, with a view to arriving at a compromise bill which could, when passed by both Houses, be sent to the President for signature. No bill can become law unless passed by both the Senate and the House of Representatives and either signed by the President or, if vetoed, passed in a second vote by Congress by a two-thirds majority. After the Senate vote on S.686, Senator Mitchell of Maine, the prime mover of that bill, made the following remarks:
Is my hope . . . [that] this legislation . . . will deter oil spills in the future, thereby reducing the potential of damage to our Nation's resources, and when in the unfortunate instance as will inevitably occur spills do happen, they will be cleaned up and contained much more readily than would otherwise have been the case. * * * . . . one of the issues we have not debated during consideration of this legislation has been the value of the oilspill protocols. Those protocols are currently pending before the Foreign Relations Committee. The House has included language in its bill to implement the protocols. I am reminded by the chairman of the Foreign Relations Committee that only the Senate can ratify the protocols. Thus the question of the protocols is not a matter to be debated during the conference on S.686. (Excerpt from Congressional Record, August 4, 1989, pages 10087-88)
The Maritime Law Association of the United States has written to President Bush and to legislators urging that provision be made for implementation of the protocols by enacting the House rather than the Senate bill. In response to the Association's letter, Congressman Walter B. Jones of North Carolina, Chairman of the House Committee on Merchant Marine and Fisheries stated in a letter dated May 4, 1990 to the President of the MLA:
"I wholeheartedly concur with your assertion that ratification of the International Protocols is extremely important for a number of reasons. The House has traditionally supported the ratification of the Protocols in light of the many benefits which they would confer including providing a means by which to enforce U.S. judgments against foreign vessel operators as well as contributing up to $260 million towards the cleanup of an oil spill in U.S. waters.
Sadly, influential members in the Senate view the ratification of the Protocols as insulating oil spillers from possibly more stringent State oil spill laws. While this issue has been argued from every angle, the Senate remains intractable in its position. Hopefully, the entering of entities such as yours into the debate will serve to convince the Senate of the value of the Protocols and the impact which their rejection will have on the shipping industry.
The arguments which you set out in your letter are persuasive and I welcome your views and your participation in this process."
CONCLUSION
Undoubtedly, there will be new United States law as a result of the Exxon Valdez and other recent incidents. I have no doubt, however, that higher and perhaps uninsurable liabilities will be imposed, that certificates of financial responsibility to meet those liabilities will be required for vessels trading to the United States, and that higher standards of care (including controversial stricter, possibly ineffective, and certainly more expensive vessel construction requirements) will be imposed on vessel owners and operators. The shattering near unanimity with which the Senate passed its bill is a rather grim portent of things to come. The efforts now being made, by the Maritime Law Association of the United States and others, to convince the Senate and the House of Representatives that in the best interest of all concerned the United States should ratify the 1984 Protocols to the Civil Liability and Fund Conventions on the basis that this would promote uniformity of international law may work in persuading Congress to adopt the House version insofar as liability is concerned. Let us hope so!
_______
* There has been an indication by members of the International Group of P & I insurers that evidence of financial responsibility may not be available from them under the Senate version of the bill. However, they have stated ". . . there is unanimous agreement that the Group could amend its policy on certification to provide certificates which are the equivalent of those required under the 1984 CLC Protocol, although that Protocol is not yet in force, but that no further relaxation of existing policy on certification is appropriate."
NOTE: This is the second issue of "Mainbrace", a new publication which we hope our friends will find interesting and informative. We plan to include articles of general interest; items concerning the work of the firm and activities of its members and associates; discussions of cases in which we have been involved and brief reports of recent cases. "Mainbrace" is our firm's cable address. According to Webster's Dictionary, in nautical terminology it means the brace or rope sustaining the main yard on a ship.
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MAINBRACE is intended to provide general information. The articles contained in MAINBRACE do not constitute legal advice. An analysis of the facts relating to a particular issue must be accomplished before legal advice can be given.
NOTE: "Mainbrace," our Firm's cable address, in nautical terminology means the brace or rope sustaining the main yard on a ship. The Staff of "Mainbrace" consists of Nicholas J. Healy, Gordon W. Paulsen, John C. Koster, Matthew A. Marion, Betty M. Waterman and Renee Kintzer.
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