Robins Dry Dock and the Economic Loss Rule
The Oil Pollution Act of 1990 
Recent Cases
 
Oil Spill Liability Trust Fund 


Under US admiralty law, a party may not recover purely economic loss damages in the absence of physical damage to property or damage to property in which the party holds a proprietary interest. However, under the Oil Pollution Act of 1990, pure economic loss damages may be recoverable when caused by the discharge or threat of discharge of oil onto the navigable waters of the United States. 

Robins Dry Dock and the Economic Loss Rule 

Under the principle announced by the US Supreme Court in Robins Dry Dock & Repair Co v Flint,(1) and adopted by the federal Fifth Circuit in Louisiana ex rel Guste v M/V Testbank,(2) an injured party may not recover for economic loss damages unaccompanied by physical damage to property in which plaintiff has a proprietary interest. Thus, under the general maritime law's economic loss rule, in most maritime tort actions a party sustaining no damage to its property is precluded from recovery for consequential economic losses. 

The Oil Pollution Act

The economic loss rule notwithstanding, a party sustaining purely economic loss damages as a result of an oil spill may still be able to pursue a recovery under the Oil Pollution Act. The act establishes a strict liability standard under which "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", is liable, subject to limited defences. Under the act a 'responsible party' or a vessel is defined as any person or company "owning, operating or demise chartering the vessel". 

Section 2702(b)(2)(e) of the act expressly provides that among the categories of recoverable damages, a party may recover damages:

"equal to the loss of profits or impairment of earning capacity due to the injury, destruction, or loss of real property, personal property, or natural resources, which shall be recoverable by any claimant."

The legislative history confirms that "the claimant need not be the owner of the damaged property or resources to recover for lost profits or income".(3) 

Recent Cases 

On November 24 2004 the Athos I struck a submerged anchor as it approached the CITGO Asphalt Refining Company at Paulsboro, New Jersey. The anchor punctured the hull and caused the release of 265,000 gallons of crude oil into the Delaware River. The oil spill caused substantial economic loss damages to businesses in the area of the spill. Claims for economic loss were submitted to the National Pollution Funds Centre (NPFC) by numerous business affected by the spill, including the Salem Nuclear Plant and South Jersey Port. It has been reported that a number of these claimants have received reimbursement from the NPFC for these economic loss damages. 

On July 23 2008 the M/V Tintomara, a 600-foot Liberian-flagged tanker, collided with a 61-foot barge in the tow of the tug Mel Oliver near New Orleans, Louisiana. The collision caused the barge to split in half, spilling 420,000 gallons of No 6 fuel oil into the Mississippi River. As a result of the spill, the US Coast Guard closed a 100-mile section of the Mississippi River from New Orleans to the Gulf of Mexico at 3:30 am on July 23. The river remained closed to commercial traffic until July 29 2008. At the time of the incident, the Mel Oliver was being operated by DRD Towing Co, LLC, of Harvey, Louisiana, and the barge was owned by American Commercial Lines, Inc. The closure of the river caused significant disruption to commercial traffic and resulted in a wide range of third party damages and economic losses. Under the Oil Pollution Act, third parties which sustained economic loss as a result of the spill are seeking recovery of these losses unrestrained by the economic loss rule. 

Oil Spill Liability Trust Fund 

The Oil Pollution Act contains mandatory claims procedures which must be adhered to prior to seeking recovery. It requires that claims for removal costs and damages, including economic loss, first be presented to the responsible party or guarantor of the designated source of the spill. If the responsible party denies liability for the claim or the claim is not settled within 90 days of presentation, the claimant may commence an action against the responsible party in court to recover damages and costs that are the subject of the claim, or alternatively may seek reimbursement by presenting the claim to the Oil Spill Liability Trust Fund. The fund, which is administered by the US Coast Guard, was established in 1986 to pay claims for under-compensated or uncompensated oil pollution damages and related expenses. 

The claim is submitted to the fund through written submissions which must be in strict compliance with the fund's detailed claims procedure. Some of the required elements of the initial submission include:

  • general information regarding the claimant; 
  • details pertaining to the pollution incident; 
  • details and documentation regarding how the claimant's damages were sustained;
  • evidence regarding mitigation efforts undertaken by the claimant; 
  • proofs of payment evidencing costs/damages; and
  • production of other evidence, including identification and contact details of witnesses.

The proper assembly and presentment of the initial Oil Spill Liability Trust Fund claim submission containing each of the requisite elements and accompanied by detailed supports is of paramount importance in obtaining a successful claim disposition.

For further information please contact Antonio J Rodriguez or H Jake Rodriguez at Fowler Rodriguez Valdes-Fauli by telephone (+1 504 523 2600) or by fax (+1 504 523 2705) or by email (ajr@frc-law.com or jrodriguez@frvf-law.com).

Endnotes

(1) 275 US 303 (1927).

(2) 752 F 2d 1019 (5th Cir. 1985).

(3) HR Conf Rep No 101-653, 101st Cong, 2d Sess 103 (1990). 

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