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First Circuit Finds a Vessel Owned by the United States but Operated by a Private Contractor Is a "Public Vessel" – In Direct Contradiction of the Oil Pollution Act of 1990

On September 15, 2017, the United States Court of Appeals for the First Circuit affirmed in part and reversed in part a decision from the District of Massachusetts in Ironshore Specialty Insurance Co. v. United States of America, 2017 U.S. App. LEXIS 17928 (1st Cir. Sept. 15, 2017). The First Circuit interpreted the definition of “public vessel” under the Oil Pollution Act of 1990 (“OPA”) to include a vessel owned by the United States, but operated by an independent contractor, as long as the private contractor is under the “operational control” of the United States. The First Circuit also held that OPA does not affect the general admiralty and maritime law outside the context of OPA. Specifically, OPA does not preempt a party’s ability to sue for negligence under the general maritime law when a public vessel is the origin of an oil spill.

The FISHER is a transport vessel which is primarily used to carry military vehicles and containerized cargo for the Department of Defense. It is owned by Military Sealift Command, a division of the United States Navy. Military Sealift Command entered into a contract with American Overseas Marine Company, LLC (“AMSEA”), where AMSEA agreed to crew, maintain, and make routine repairs to the FISHER. While the FISHER was in a graving dock, a spill occurred and over 11,000 gallons of diesel fuel poured out of the vessel. The owner of the graving dock incurred costs of nearly $3,000,000 to clean up the spill, an amount which was reimbursed by Ironshore Specialty Insurance Co. (“Ironshore”), the pollution policy insurer. Ironshore brought a complaint against the United States and AMSEA seeking, inter alia, cleanup costs and damages under OPA, and damages sounding in general admiralty and maritime law as a result of AMSEA’s and the United States’ negligence. The district court dismissed Ironshore’s OPA and negligence claims.

The Oil Pollution Act of 1990 explicitly states that the statute does not apply to discharge from public vessels. The statute defines a public vessel as "a vessel owned or bareboat chartered and operated by the United States . . . ." 33 U.S.C. § 2701(29) (emphasis added). AMSEA and the United States asserted that the FISHER was exempt from OPA because it was owned and operated by the United States at the time of the spill, and was therefore a public vessel. Ironshore argued that, while the United States was the owner of the FISHER, AMSEA was the sole operator. Ironshore argued that the vessel was operated by AMSEA crew, not by government employees. The First Circuit attempted to explain away this fact, as well as the conjunctive “and” present in OPA’s statute, by holding that if a vessel, functioning in a public capacity is owned by the United States but operated by a private contractor, the vessel is a “public vessel” as long as the private contractor is acting under the “operational control of the United States.” The Court held that AMSEA was acting under the operational control of the United States based on the contract between AMSEA and the United States stipulating that the vessel would operate under the “ultimate operational control of one of five military commands.” The Court, in reaching this decision, considered the contract between AMSEA and the United States, despite it being extrinsic evidence and not referenced in the pleadings. Ultimately, the First Circuit affirmed the District Court’s decision to dismiss Ironshore’s OPA claims against the United States and AMSEA.

Ironshore also brought negligence claims against the United States and AMSEA under general maritime and admiralty law. The district court dismissed the negligence claims on the basis that OPA “supplants and preempts all such claims.” However, the First Circuit held that “any preexisting admiralty and maritime law that applied to public vessels before OPA’s passage survives its enactment.” On this basis, the First Circuit held that OPA does not bar a negligence claim under the general maritime law when a public vessel is the origin of an oil spill. Accordingly, the First Circuit reversedthe district court’s dismissal of Ironshore’s negligence claims against the United States. The Court further held that AMSEA were agents of the United States, and thus the negligence claims against AMSEA cannot stand under the Suits in Admiralty Act, which states that if a remedy is provided, “it shall be exclusive of any other action arising out of the same subject matter against the . . . agent of the United States . . . whose act or omission gave rise to the claim.” 46 U.S.C. § 30904. The First Circuit affirmed the dismissal of all claims against AMSEA.

To read the full opinion of the First Circuit, please click here.

For more information about the Court's decision, please do not hesitate to call on us at info@chaloslaw.com.

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