hawaiioceanlaw.com

Bills at the Lege: Barrels, Boom, Unlimited Liability and Molasses

The Hawaii Legislature recently introduced several bills relating to the ocean environment and maritime industry here.  

First up, an increase in barrel tax from five cents per barrel to fifteen.  Follow it here.

Next, a requirement that barge-based fuel transfers use containment boom during transfer operations.  Follow it here.

And, the biggie, an amendment to Hawaii Revised Statutes Chapter 342D Water Pollution which provides for "unlimited liability" for any owner or operator of a vessel engaged in the commercial transport, storage on vessel or transfer of any "oil, hazardous substances, or unnatural or artificial substance" resulting from the spill or incurred by the State in responding to the release.  And, for those of you who learned a lot about the molasses trade in the past year, the bill defines "unnatural or artificial substance" as "the release of any substance in a quantity, duration, or form that disrupts or causes damage to the natural ecosystem of the ocean."

Finally, if you were wondering whether the State was going to proceed against Matson for the molasses spill, you should note that the Attorney General is seeking an emergency appropriation for hiring experts and outside counsel, for: "its impending lawsuit by the State against Matson for damages caused by the molasses spill in Honolulu Harbor."

Are Cruise Ships Public or Private Nuisances? S. Carolina SCT Says No Standing to Challenge

It is a rare day that my legal interests of zoning law and ocean governance are discussed in a single case, but thanks to the South Carolina Supreme Court, I must say:

 

The case is Carnival Corporation v. Historic Ansonborough Neighborhood Association and the original opinion can be found here.

In South Carolina, several citizen's groups and interested associations brought a suit against a cruise ship operator alleging nuisance and zoning violations and sought an injunction.  The groups complain about the use of Charleston's terminal to berth the Fantasy.  The groups alleged that the noise pollution and passenger operations disrupted the historic district where it berthed.

Carnival (and the municipal defendants) filed a motion to dismiss asserting that the plaintiffs failed to state a claim because they lack standing and that the cruise ship operations were not governed by the zoning ordinances asserted.  

Strangely, before the trial court decided the motion, the case was transferred to the South Carolina Supreme Court, invoking the court's original jurisdiction.    That court ordered a special referee to conduct a hearing and then make a recommendation on the motion to dismiss.

The court, reviewing the special referee's recommendation, found that the plaintiffs lacked standing to assert any of the claims brought.  The court found that the plaintiffs claimed only generalized grievances and not particularized harm, which is fatal to a party's standing to proceed.  All of the environmental impacts, traffic, smokestacks, soot, zoning, other environmental laws are suffered by the public at large and are not particular to any one person or group.  [Under S. Carolina law, typically the State itself makes these claims].

As to the zoning claims, S. Carolina law did provide for standing for violations of zoning ordinances, but only for adjacent property owners.  Added to the lack of particular damage to any person or group, the court found standing lacking to make these claims.

The court concludes by imploring the plaintiffs to seek redress elsewhere:

In our constitutional system of government with its separation of powers, courts exercise the limited constitutional function of the "judicial power." S.C. Const. art. V, § 1. Accordingly, courts are limited to resolving cases and the powers inherent in that function. Courts are not bodies for the resolution of public policy and generalized grievances. Harms suffered by the public at large, like those Plaintiffs allege here, are to be remedied by the legislative and executive branches. If existing laws and regulations or their enforcement fail to protect the public from harm, it is incumbent upon the public to seek reform through their elected officials or failing that, at the ballot box.

Sound advice.

Coast Guard - You Want Your Boat Back? We Set Bond Amount - Angelex v. US

Hot off the Press:  the Fourth Circuit Court of Appeals just issued a decision arising out of a "Magic Pipe" case and the shipowner's attempt to post a bond allowing the offending vessel to sail.  The case is Angelex, Ltd. v. United States of America and the opinion can be found here. 

The United States is a signatory to the MARPOL treaty of 1978 which seeks to eliminated international pollution from the marine environment.  To implement the treaty, Congress enacted the "Act to Prevent Pollution from Ships", codified at 33 U.S.C. 1901-15.  The Act and the regulations implemented under the Act's authority require ships to maintain an Oil Record Book which records discharges of oil. During a Coast Guard inspection of Angelex's vessel, the inspector discovered that the oily water separator was bypassed and a crewmember advised the inspector that oily water was discharged. That discharge was not noted in the Oil Record Book.

As is customary, the Coast Guard requested that the Customs Service withhold "clearance" so that the vessel could not depart from the U.S. port.  The Act does allow shipowners to post a bond which, if approved, would allow the vessel to sail.  The Coast Guard and shipowner tried to negotiate a bond amount, but could not reach an agreed upon sum.  The shipowner brought suit and with the judge's assistance reached an agreement as to bond amount, subject to approval by Coast Guard Headquarters.  Headquarters did not approve the agreed-upon conditional amount.  The judge issued an order directing the bond amount and other terms.  The government appealed.

The Fourth Circuit overruled the district judge's decision.  It found that under the Act to Prevent Pollution from Ships, the Coast Guard had fully discretionary authority to set the bond amount.  Therefore, the courts had no jurisdiction under the Administrative Procedures Act.  Also, because the statute had a provision that allowed a claim against the government for unreasonable detention.  This safeguard against overreach by the government made the shipowner's requested injunctive relief to be beyond the federal court's power.

Liability for Oil Spills, Warranties for Safe Berth - Third Circuit Decision in Athos I

The Court of Appeals published a decision in the Athos I oil spill.  It is a consolidated case arising from a limitation action and an action to apportion liability for oil spill clean up costs, to the tune of $180 million.

The opinion is lengthy and I'm still digesting it.  But, it can be found here and is a must read for practitioners involved in litigation over pollution cleanup cost recovery.

The introduction is reproduced below:

As the oil tanker M/T Athos I neared Paulsboro, New Jersey, after a journey from Venezuela, an abandoned ship anchor lay hidden on the bottom of the Delaware River squarely within the Athos I‘s path and only 900 feet away from its berth. Although dozens of ships had docked since the anchor was deposited in the River, none had reported encountering it. The Athos I struck the anchor, which punctured the ship‘s hull and caused approximately 263,000 gallons of crude oil to spill into the River. The cleanup following the casualty was successful, but expensive. 

This appeal is the result of three interested parties attempting to apportion the monetary liability. The first party (actually two entities consolidated as one for our purposes) includes the Athos I‘s owner, Frescati Shipping Company, Ltd., and its manager, Tsakos Shipping & Trading, S.A. (jointly and severally, "Frescati"). Although Frescati states that the spill caused it to pay out $180 million in cleanup costs and ship damages, it was reimbursed for nearly $88 million of that amount by the United States (the "Government")—the second interested party—pursuant to the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq. In order to recoup the unreimbursed losses, Frescati made claims in contract and tort against the third interested party—a set of affiliates known as CITGO Asphalt Refining Company, CITGO Petroleum Corporation, and CITGO East Coast Oil Corporation (jointly and severally, "CARCO")—which requested the oil shipped on the Athos I and owned the marine terminal where it was to dock to unload its oil. Specifically, Frescati brought a contract claim for CARCO‘s alleged breach of the safe port/safe berth warranty (jointly and severally, ―safe berth warranty‖) it made to an intermediary—Star Tankers, Inc.—responsible for chartering the Athos I to CARCO‘s port, and alleged negligence and negligent misrepresentation against CARCO as the owner of the wharf the Athos I was nearing when it was holed. The Government, as a statutory subrogee that stepped into Frescati‘s position for the $88 million it reimbursed to Frescati under the Oil Pollution Act, has limited its claim for reimbursement from CARCO to Frescati‘s contractual claim pursuant to a limited settlement agreement.

Following a 41-day bench trial, the District Court for the Eastern District of Pennsylvania held that CARCO was not liable for the accident under any of these theories. The Court, however, made no separate findings of fact and conclusions of law as required by Federal Rule of Civil Procedure 52(a)(1). That calls for a remand to set out these mandated matters. However, for the sake of efficiency, we discuss—and, to the extent necessary, make holdings on—the legal issues appealed.

In regard to the contractual safe berth warranty, the Court determined that Frescati (and the Government as a subrogee) could not recover on their contractual claims. First, Frescati was not a party to the agreement that contained the warranty between CARCO and Star Tankers, and was not an intended beneficiary of that agreement. Furthermore, even if Frescati could claim the protection of the warranty, it was only a promise by CARCO to exercise due diligence and not an unconditional guarantee; moreover, sufficient diligence existed here. In any event, the warranty was excused because CARCO specified the port ahead of the Athos I‘s arrival, placing the burden on the Athos I‘s captain to accept it as safe or reject it under what is called the ―named port exception."

For reasons elaborated below, we disagree with all three of these rulings. Instead, we hold that the Athos I—and by extension, its owner, Frescati—was an implied beneficiary of CARCO‘s safe berth warranty. We conclude as well that the safe berth warranty is an express assurance of safety, and that the named port exception to that warranty does not apply to hazards that are unknown to the parties and not reasonably foreseeable. We cannot be sure, however, that this warranty was actually breached, as the District Court made no finding as to the Athos I‘s actual draft nor the amount of clearance actually provided. 

If on remand the District Court rules in favor of Frescati on its contractual warranty claim, its negligence claim becomes unnecessary. If this issue is reached, we do not agree with the District Court‘s conclusion that CARCO cannot be liable in negligence because the anchor lay outside the approach to CARCO‘s terminal—the area in which CARCO had a duty to exercise reasonable care in proving a safe approach. As such, the District Court would need to resolve the appropriate standard of care required, whether CARCO breached that standard, and if so, whether any such breach caused the accident. Conversely, we find no error with the Court‘s holding that CARCO‘s alleged misrepresentation as to the depth of its berth was geographically (and hence factually) irrelevant to the ultimate accident. In addition, we conclude that the Government has waived reliance on a partial settlement agreement with CARCO that, the Government contends, precludes CARCO from making certain equitable defenses to the Government‘s subrogation claims. In this context, we affirm in part, and vacate and remand in part for additional factfinding on the contractual (and possibly negligence) claims.

SCOTUS: Briefs Filed in "What is a vessel?" Case

As mentioned in my post earlier, in the Supreme Court's next term, it will hear the case of Lozman v. City of Riviera Beach. My other posts on this case are here and here.

The Question Presented is:

Whether a floating structure that is indefinitely moored receives power and other utilities from shore and is not intended to be used in maritime transportation or commerce constitutes a "vessel" under 1 U.S.C. § 3, thus triggering federal maritime jurisdiction.

Amazingly, but not surprisingly, what is a "vessel" is a thorny question not amenable to a simple definition.  Are surfboards vessels?  Houseboats?  Floating casinos?  For every objective definition you attempt (e.g. vessels can be propelled through the water), there are exceptions (e.g. barges cannot propel themselves through the water).

On page 12 of his brief, the Petitioner urges the Court to adopt this definition: 

In order to be a vessel, a structure’s purpose must be to carry people or things over water, and indefinitely moored structures that function as extensions of land lack any such purpose.

Several briefs on the merits have been filed and I've provided links to them below:

Parties

Petitioner's Brief

Respondent's Brief

Amici

Brief of the United States Supporting Petitioner

Brief of Maritime Law Professors Supporting Petitioner

Brief of the Seattle Floating Homes Association and the Floating Homes Association of Sausalito in Support of Petitioner

Brief for the American Gaming Association in Support of Petitioner.

Stay tuned and we'll post the briefs as they come in.

APEC 2011 - Security Zones Draw Some Interesting Comments

One nice feature of the digital age is that it increases transparency in government. 

The "docket" for the APEC 2011 Security Zones, as created by the U.S. Coast Guard, has the ability to submit public comments.

Comments so far discuss the impact of the Waikiki security zone on beachgoers, surf schools and the like.

 

APEC 2011 - Waterside Security Zones

I've obtained graphics from www.regulations.gov and have included them below.  The Ala Wai canal one is the old version.  The regulation states that the zone continues to the northeast side of the McCully bridge.

Ocean side Waikiki:

Koolina:

Coast Guard Proposes APEC 2011 Security Zones

 
U.S. Coast Guard photo

The U.S. Coast Guard announced its proposed security zones for the upcoming APEC 2011 conference in Waikiki.  The graphic wasn't available yet online, but the temporary zones will include West Waikiki, Ala Wai Boat Harbor and Canal, Ko Olina offshore and East Waikiki. While the safety rules are in place, access to these areas will be restricted to authorized personnel only.

Download the regulation at Federal Register - USCG.

Harbor Improvements on the Way

Gov. Lingle announced a new plan for much overdue improvements to the state's harbor system.  These harbors are the commercial lifeblood of the state providing 98% of the cargo.  The announcement is discussed here.

Photos showing some the infrastructure improvements can be downloaded here.  The photos show a wide array of projects in all the major commercial ports in Hawaii.