A Regulatory Increase to the Limits of Liability for Oil Pollution and an Amendment Exempting Small Passenger Vessels from the Limitation of Liability Act Present New Challenges for Vessel Owners
U.S. maritime law experienced two significant changes on December 23, 2022-one pertaining to liability for oil pollution, the other concerning small passenger vessels.
First, the Coast Guard announced1 increases to the liability limits in the Oil Pollution Act of 1990 ("OPA").2 OPA, which was passed in response to the 1989 oil spill from the EXXON VALDEZ in Alaska, makes the "responsible party" of any vessel or facility that discharges (or substantially threatens to discharge) oil into navigable waters strictly liable for removal costs and damages.3 When the source of the discharge is a vessel, the "responsible party" is the owner, operator, or demise charterer of that vessel.4 OPA liability is capped, however, subject to certain exceptions.5
The Coast Guard periodically adjusts OPA's liability limits to reflect increases in the Consumer Price Index ("CPI").6 The last CPI adjustment occurred in 2019. The present adjustment increases by 7.91% the liability limits for vessels, deepwater ports, and onshore facilities, as reflected in the table below:
| Source | Original OPA Limit (set in 1990)7 | Current CPI-Adjusted Limit (set in 2019)8 | New CPI-Adjusted Limit (effective 3/23/23)9 |
| Single-hull tank vessel greater than 3,000 gross tons ("GT") |
Greater of $3,000 per GT or $22,000,000 |
Greater of $3,700 per GT or $27,422,200 | Greater of $4,000 per GT or $29,591,300 |
| Double-hull tank vessel greater than 3,000 GT |
Greater of $1,900 per GT or $16,000,000 |
Greater of $2,300 per GT or $19,943,400 | Greater of $2,500 per GT or $21,521,000 |
| Single-hull tank vessel less than or equal to 3,000 GT |
Greater of $3,000 per GT or $6,000,000 |
Greater of $3,700 per GT or $7,478,800 | Greater of $4,000 per GT or $8,070,400 |
| Double-hull tank vessel less than or equal to 3,000 GT |
Greater of $1,900 per GT or $4,000,000 |
Greater of $2,300 per GT or $4,985,900 | Greater of $2,500 per GT or $5,380,300 |
| Any other vessel (including any edible oil tank vessel or oil spill response vessel) | Greater of $950 per GT or $800,000 |
Greater of $1,200 per GT or $997,100 | Greater of $1,300 per GT or $1,076,000 |
| Deepwater port, including component pipelines, other than Louisiana Offshore Oil Port |
$350,000,000 | $672,514,900 | $725,710,800 |
| Louisiana Offshore Oil Port, including component pipelines | ---------- | $102,245,000 | $110,332,600 |
| Onshore Facilities, including motor vehicles, rolling stock and onshore pipelines |
$350,000,000 | $672,514,900 | $725,710,800 |
The Coast Guard's final rule states that the new limits become "effective on March 23, 2023."10 While the rule does not specify whether the new limits apply retroactively to oil spills that occur before the effective date, case law indicates that the change will be prospective only.11
The Coast Guard is not responsible for adjusting OPA limits for offshore facilities (other than deepwater ports). Those limits were last increased in 2018 to $137,659,500 by the Bureau of Ocean Energy Management.12
The Coast Guard's final rule can be found here.
The second development exempts "small passenger vessels" from the Limitation of Liability Act-the most significant change to that Act in 86 years. Passed in 1851, the Limitation of Liability Act allows a vessel owner to limit liability for damage or injury, occasioned without the owner's privity or knowledge, to the post-casualty value of the vessel plus any pending freight.13 The Act also contains a concursus procedure whereby all claims are marshaled into a single "limitation action" before a federal court sitting in admiralty; claimants are typically enjoined from suing the owner outside the limitation action.14
The Limitation of Liability Act has been amended just a handful of times. The last major change occurred in 1936, when Congress increased the liability limits for an owner of a "seagoing vessel" with respect to personal injury and death claims to $60 (now $420) per gross ton, in addition to the value of the vessel and pending freight.15 That amendment was prompted by the MORRO CASTLE, a passenger liner that burned off the coast of New Jersey in 1934 with a loss of 135 lives.16
A tragedy not unlike MORRO CASTLE provided the catalyst for the current amendment. On September 2, 2019, a fire broke out aboard the dive boat CONCEPTION while it was anchored off the coast of Santa Cruz Island, California. Thirty-four people, all of whom were sleeping below deck, died as a result. In response, Congressman Salud Carbajal and Senator Dianne Feinstein introduced the Small Passenger Vessel Liability Fairness Act ("SPVA"). As initially drafted, the SPVA would have made the Limitation of Liability Act inapplicable to small passenger vessels and required the Coast Guard to promulgate rules to "provide just compensation in any claim for which the owner or operator of a covered small passenger vessel is found liable."17 Furthermore, the proposed legislation would be retroactive to the date of the CONCEPTION casualty.
After significant changes, the SPVA was signed into law on December 23, 2022, as part of the nearly 2000-page James M. Inhofe National Defense Authorization Act.18 As enacted, the SPVA simply exempts "small passenger vessels" from most of chapter 305 of Title 46, U.S.C., including the Limitation of Liability Act. The SPVA does not require the Coast Guard to promulgate rules, and it is not retroactive. "Small passenger vessels" is defined, in relevant part, as a vessel of under 100 gross tons carrying "not more than 49 passengers on an overnight domestic voyage; and not more than 150 passengers on any voyage that is not an overnight domestic voyage."19 Notably, crewboats ostensibly fall within this definition.
As a consequence of the SPVA, owners of small passenger vessels will be exposed to unlimited liability with respect to injuries, losses, and damages involving their vessels (provided some other limitation statute, such as OPA or the Carriage of Goods by Sea Act, does not apply). The SPVA also deprives these owners of the Limitation Act's concursus, greatly increasing the likelihood of multiple lawsuits in different fora following a casualty. Additionally, the SPVA makes the Fire Statute inapplicable to small passenger vessels. That statue, which was enacted alongside the Limitation of Liability Act in 1851, immunizes a vessel owner from liability for damage "to merchandise on the vessel caused by a fire . . . unless the fire resulted from the design or neglect of the owner."20
There is frequently a call to amend or repeal the Limitation of Liability Act following a significant marine casualty.21 These efforts usually fail, but occasionally-as in the case of MORRO CASTLE and now CONCEPTION-they succeed, even if only partially. Presently, the SPVA is an isolated, albeit significant, amendment passed in response to a tragic loss of life. The question, though, is whether more changes will follow when the next marine casualty occurs.
PRACTIONERS' NOTE: The SPVA renumbered many sections of the Limitation of Liability Act. Specifically, 46 U.S.C §§ 30503-30512 will become §§ 30521-30530, respectively.
The SPVA can be viewed here. Note that this is a link to the relevant pages of H.R. 7776, the bill that became Pub. L. No. 117-263.
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Footnotes
1. See Consumer Price Index Adjustments of Oil Pollution Act of 1990 Limits of Liability-Vessels, Deepwater Ports and Onshore Facilities, 87 Fed. Reg. 78860 (Dec. 23, 2022) (to be codified at 33 C.F.R. § 138.230).
2. 33 U.S.C. §§ 2701, et seq.
3. Id. § 2702(a).
4. Id. § 2701(32)(A).
5. Id. § 2704.
6. Id. § 2704(d).
7. Id. § 2704.
8. 33 C.F.R. § 138.230 (2020).
9. 87 Fed. Reg. at 78861-62 (to be codified at 33 C.F.R. § 138.230).
10. 87 Fed. Reg. at 78860
11. See, e.g., Landgraf v. USI Film Products, 511 U.S. 244, 283-84 & n.36 (1994).
12. 30 C.F.R. § 553.702. This limit applies to damages only. Offshore facilities have unlimited liability for removal costs.
13. 46 U.S.C. § 30505; Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438, 446 (2001).
14. 46 U.S.C. § 305011; Fed. R. Civ. P. Supp. Rule F.
15. 46 U.S.C. § 30506.
16. Grant Gilmore & Charles L. Black, Jr., The Law of Admiralty 919 (2d ed. 1975).
17. S. 2805, 117th Cong. (2021).
18. Pub. L. No. 117-263, § 11503, 136 Stat. 2395, 4130 (2022).
19. Id. (referencing 46 U.S.C. § 2001) (paragraph numbers omitted from quote).
20. 46 U.S.C. § 30504.
21. See, e.g., https://thedailyrecord.com/2010/08/29/congress-may-repeal-maritime-law-after-gulf-spill/ (reporting on proposed legislation following the 2010 DEEPWATER HORIZON oil spill).
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