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In re Complaint of Oswego Barge Corp.

decided: October 20, 1981.


Appeal from a judgment of the District Court for the Northern District of New York (Howard G. Munson, Chief Judge) dismissing the United States' claim for recovery of oil spill cleanup costs and recoupment of money reimbursed to Canada for Canada's cleanup expenses from the limitation of liability proceeding brought by plaintiff-appellee. Affirmed in part, reversed in part, and remanded.

Before Van Graafeiland and Newman, Circuit Judges, and Dumbauld,*fn* District Judge.

Author: Newman

In the aftermath of a massive oil spill in the St. Lawrence Seaway, the United States filed claims for cleanup costs against the owner of the discharging vessel. Some of the claims were based on § 311 of the Federal Water Pollution Control Act (FWPCA), 33 U.S.C. § 1321 (1976); others were based on traditional maritime law, the federal common law of public nuisance, and § 13 of the Rivers and Harbors Act of 1899, 33 U.S.C. § 407 (1976) (s 13 is known as the Refuse Act). The District Court for the Northern District of New York (Howard G. Munson, Chief Judge) dismissed the FWPCA claims without prejudice, and those claims have been refiled in a separate action that is still pending. This appeal is from a judgment dismissing all of the remaining claims on the ground that they are preempted by the provisions of the FWPCA. We affirm the dismissal insofar as the non-FWPCA claims seek recovery of the costs of cleaning up navigable waters of the United States; however, we reverse and remand for further proceedings the claim of the United States for recovery of money reimbursed to Canada for the costs Canada incurred in cleaning up Canadian waters.

The oil spill occurred on June 23, 1976, when the Barge "Nepco 140," while being towed by the Tug "Eileen C," grounded in fog in American territorial waters, causing a discharge of oil into the St. Lawrence Seaway. The appellee Oswego Barge Company ("Oswego") owned the barge and had chartered the tug. As a result of the spill, the United States alleges it spent $8,062,981 to clean its territorial waters and reimbursed Canada, pursuant to an executive agreement,*fn1 for the $768,265 Canada spent to clean Canadian waters.

On June 30, 1976, Oswego filed in the Northern District of New York a petition for exoneration from or limitation of liability pursuant to the Limitation of Liability Act of 1851, 46 U.S.C. § 183 (1976) ("Limitation Act"). The District Court ordered all claimants to submit their claims by December 31, 1976. On December 15, 1976, the United States submitted a claim seeking recovery of up to $9,000,000 from Oswego. Invoices were tendered by the Government to Oswego in the total amount of $8,831,246, including $768,265 paid by the United States to Canada. On November 13, 1978, the District Court ruled on Oswego's motion to dismiss the claim presented by the United States.*fn2 First, the District Court dismissed, without prejudice, the Government's claim to the extent that it was based on § 311 of the FWPCA, because recovery under that statute would not be subject to the Limitation Act Fund.*fn3 The Government refiled its claim based on the FWPCA in a separate action,*fn4 United States v. Tug Eileen C, No. 79 CV 117 (N.D.N.Y., filed Feb. 23, 1979), which is still pending. Second, to the extent that the Government's claim for cleanup costs rested on the Refuse Act, the common law of nuisance, or maritime tort law, the District Court ruled that the Government's right to proceed was precluded by the exclusive provisions of the FWPCA. Finally, the Court's ruling permitted the Government to proceed on its claim for recovery on behalf of its citizens for damage to natural resources and wildlife.

On October 28, 1980, the Government moved to amend its complaint so as to segregate its claim for its own cleanup expenses from its claim for recoupment of money reimbursed to Canada for Canada's cleanup expenses; the amendment also set out fully the facts (and amounts claimed) pertinent to the "Canadian claim." On April 3, 1981, the District Court denied the United States' motion to amend because of "the prejudice that would befall the petitioner in this action if the amendment were permitted, and the Court's previous ruling on the exclusivity of the Federal Water Pollution Control Act." Meanwhile the parties had settled the claim for damage to natural resources and wildlife. Since the United States did not retain any outstanding claims in the limitation proceeding, the District Court entered judgment against the Government pursuant to Fed.R.Civ.P. 54(b). This appeal followed.

On appeal the Government contends that by enacting the FWPCA Congress did not intend to limit the availability of other remedies that would be consistent with the general purpose of the FWPCA to prevent the discharge of oil into United States waters. The Government asserts that the FWPCA was enacted only to insure a minimum recovery of oil pollution cleanup expenses and was not intended to preclude supplementary remedies that would also help prevent oil spills. The Government also argues that the District Court erred in not permitting its complaint to be amended with regard to the "Canadian claim," which it contends is clearly not precluded by the FWPCA. Oswego responds that permitting the Government to seek supplementary remedies would undermine and conflict with the carefully balanced and comprehensive remedial scheme established by Congress in § 311 of the FWPCA. As for the "Canadian claim," Oswego contends that amendment of the complaint was properly denied because of the prejudice that it would otherwise suffer, and that, in any event, the claim is time-barred and precluded by the exclusive provisions of the FWPCA.

1. The Claim for Cleanup of United States Waters

To determine whether the Government is limited to FWPCA remedies in its claim against Oswego for costs of cleaning up pollution of United States waters requires some understanding of the background against which Congress enacted § 311. Before 1970, the Government's statutory remedy for recovery of its cleanup costs was the Oil Pollution Act of 1924, 43 Stat. 604, as amended by Act of Nov. 3, 1966, Pub.L. No. 89-753, § 211(a), 80 Stat. 1246-1252. Recovery was available only upon proof of gross negligence or willfulness on the part of the discharging vessel. Non-statutory remedies required proof of the elements of a public nuisance*fn5 or a maritime tort,*fn6 and any non-statutory recovery would be limited by the Limitation Act to the value of the vessel after the accident unless the act causing the spill was within the privity or knowledge of the vessel owner.*fn7 See generally Note, Oil Spills and Cleanup Bills: Federal Recovery of Oil Spill Cleanup Costs, 93 Harv.L.Rev. 1761, 1763 (1980) (hereafter "Note, Oil Spills ").

Recognizing the inadequacy of these remedies, Congress included a detailed scheme for recovery by the United States of oil spill cleanup costs in § 102 of the Water Quality Improvement Act of 1970, Pub.L. No. 91-224, 84 Stat. 91 (formerly codified at 33 U.S.C. § 1161 (1970)), a statute designed to remedy several deficiencies in the Nation's then-existing water pollution laws. Two years later, in the course of a comprehensive restructuring of water pollution laws, Congress reenacted the oil spill cleanup provisions of § 102 in slightly modified form as § 311 of the FWPCA, 33 U.S.C. § 1321 (1976) (hereafter cited as § 1321). Pub.L. No. 92-500, § 2, 86 Stat. 862 (1972). Under § 1321(f)(1) the Government, with exceptions not relevant to this appeal, can recover its cleanup costs under a theory of strict liability from the vessel owner or operator, up to specified dollar limits.*fn8 The Government can recover its total cleanup costs if it can prove "willful negligence or willful misconduct within the privity and knowledge of the owner." The Act also requires vessels to establish evidence of financial responsibility up to the limits for recovery based on strict liability. Id. § 1321(p)(1). The Oil Pollution Act of 1924 was expressly repealed, Pub.L. No. 91-224, § 108, 84 Stat. 113 (1970), but no mention was made of either the preservation or repeal of additional remedies for cleanup costs under theories of public nuisance, maritime tort, or the Refuse Act.

Non-Statutory Theories of Recovery

In order to determine whether the FWPCA preempts theories of recovery based on public nuisance or maritime tort, we must first bring into focus the nature of the claims the Government is asserting. Many passages in the Government's statement of its claim in the District Court and in its brief in this Court suggest that the Government is attempting to pitch liability upon two different bodies of law: federal common law and maritime law. To the extent that maritime law is judge-made, it can be viewed as simply one branch of federal common law. See, e.g., M. Redish, Federal Jurisdiction: Tensions in the Allocation of Judicial Power 97 (1980) (referring to "a federal common law of admiralty"). But we understand the Government to use the phrase "federal common law" in contrast to maritime law, i. e., referring to judge-made law pronounced on the law side of the district courts (or in the exercise of equity jurisdiction). See, e.g., Illinois v. Milwaukee, 406 U.S. 91, 92 S. Ct. 1385, 31 L. Ed. 2d 712 (1972); Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S. Ct. 573, 87 L. Ed. 838 (1943); Friendly, In Praise of Erie-And of the New Federal Common Law, 39 N.Y.U.L.Rev. 383 (1964). In particular, the Government contends that its claim for recovery of cleanup costs may be based upon that aspect of federal common law revived or discovered in Illinois v. Milwaukee, supra : public nuisance resulting from interstate pollution of navigable water. With respect to maritime law, the Government is less precise in describing the pertinent aspects of this body of law on which it grounds liability for cleanup costs; the Government simply says Oswego is liable for a "maritime tort."

As we analyze the Government's non-statutory theories, they both must rest upon maritime law. The essential facts supporting the legal theories are that a vessel discharged oil into navigable waters of the United States and the United States incurred costs in cleaning up the oil from those waters. The facts satisfy the elements of admiralty jurisdiction-a maritime locality and a significant relationship to a traditional maritime activity. See Executive Jet Aviation, Inc. v. City of Cleveland, 409 U.S. 249, 93 S. Ct. 493, 34 L. Ed. 2d 454 (1972). Whatever federal liabilities arise from these facts,*fn9 only maritime law, both judge-made and statutory, creates them.*fn10 In referring to both maritime law and federal common law as the sources of liability, the Government is apparently searching for bodies of law that will support theories of negligence and public nuisance. But maritime law, unless preempted by the FWPCA, can comprehend both theories. Negligent conduct causing loss to others constitutes a traditional maritime tort. Pope & Talbot, Inc. v. Hawn, 346 U.S. 406, 413 & n.6, 74 S. Ct. 202, 207 & n.6, 98 L. Ed. 143 (1953); cf. Union Oil Co. v. Oppen, 501 F.2d 558, 567-68 (9th Cir. 1974). Whether non-negligent conduct amounting to a public nuisance creates liability within maritime law is more debatable, but this type of "maritime nuisance tort" has been recognized. National Sea Clammers Ass'n v. City of New York, 616 F.2d 1222, 1236 (3d Cir. 1980), rev'd ...

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