Marine Salavage: Responder Immunity Benefits a Responsible Party
Putting to rest the fears and misconceptions about what responder immunity means and what it will eventually do. It’s all good.
As many in the response industry, and in many cases the marine industry in general appreciate, there has been an extended effort to enact an enhanced responder immunity regime following the lessons learned from the Deepwater Horizon incident. It is hard to believe that we only recently observed the fourth anniversary of this unfortunate incident. And, ironically, some of the responders sued after the incident, remain in the litigation even though BP was able to settle its claims with plaintiffs. This article will not only provide a status update of the effort to enact an enhanced responder immunity regime, but it will address the key concerns that often have been raised by those stakeholders who have expressed skepticism as to the need or desire for such legislation.
Why the Response Industry Needs Responder Immunity
In way of background, following lessons learned from the Deepwater Horizon incident, specifically the extensive lawsuits filed against all segments of the response industry involved in the response, a Responder Immunity Coalition (the “Coalition”) was formed, which is represented by all response interests including the salvage industry, oil clean-up industry, spill management industry, the offshore vessel support industry, and the well containment industry to work with Congress to enact enhancements to the current responder immunity provisions enacted by the Oil Pollution Act of 1990 (“OPA 90”).
Based on lessons learned, the two main concerns following the incident were that (1) plaintiffs sued responders under general maritime law due to personal injury caused by the exposure to the spilled oil and the dispersants which were approved for use on a daily basis by the Federal On-Scene Coordinator (“FOSC”) pursuant to the National Contingency Plan (“NCP”); and (2) bare allegations by plaintiffs of gross negligence and willful misconduct related to the response actions without having to provide any underlying facts to support such allegations.
To address these concerns, the proposed legislation would:
- Extend the immunity under the law to a full range of response activities by explicitly defining the response activities covered under the immunity.
- Provide immunity to a responder with regard to exposure claims related to the oil and dispersants but otherwise maintain the current regime of responder employer liability for slips, trips, and fall type injuries (seaman Jones Act remedies) that commonly occur in marine operations.
- Establish a presumption that response actions do not constitute gross negligence and would require claimants to pay attorney fees and court costs for meritless claims to disincentivize frivolous lawsuits.
Why a Responsible Party (RP) Should Support or not Object to Enhanced Responder Immunity
As the Coalition moved forward with this effort it received numerous comments and concerns with regard to the specific language of the proposal. As a result, the Coalition took action to fix those deficiencies to make sure the immunity was not unnecessarily broad and would not have unintended consequences.
In particular, to address these comments, the current proposal includes new language to make it explicitly clear that no new liability is transferred to an RP. Under the law today, an RP is strictly liable for damages and removal costs and would be liable for an exposure claim as discussed above if found negligent under general maritime law. This proposal would not change that liability. And in all cases, an injured party will always have a remedy which will be backed up by the Oil Spill Liability Trust Fund even if an RP is unable or unwilling to pay compensation.
In addition, concerns have been raised that “opening up OPA 90 to amendments” would result in numerous other OPA 90 amendments that could be attached to the Coalition’s proposal which would have severe negative effects on the marine industry such as increased limits to liability that were proposed shortly after the Deepwater Horizon incident. It has been four years since the incident and the constant barrage of OPA 90 related to proposed legislation has died down completely. This is simply not a valid reason today not to move forward with this proposal. The Coalition is committed to work with industry to make sure that does not happen.
Moreover, there are real tangible benefits that will inure to an RP as a result of this legislation if enacted. That is because ultimately, it is the RP and others requiring the services of responders that pay the cost of any frivolous litigation against a Responder. This is because if a robust responder immunity protection is not available through statute, then the RP will still have to bear this liability and cost.
Specifically, under the usual response contract between an RP and responders, the RP will have agreed to provide enhanced contractual indemnity provisions to their contracted responders. And, as a result of this indemnification the RP will have to pay in the future the increased time and material services costs as their contracted Responders are forced to pay for increased insurance premiums to insure against these risks because the current regime of responder immunity is not providing the protection from lawsuits that was envisioned.
In addition, once a responder is sued, the RP will not only have to pay for its own defense costs as the RP, but it also will have to pay the defense costs of the responder as a result of its indemnification provision. Thus, the RP is paying double defense costs if adequate responder immunity is not available and will ultimately pay for the responder’s increased insurance rates through higher costs for response services which will be passed along to the RP. This is exactly what happened as a result of the Deepwater Horizon incident due to the claims against responders which are still pending in court. Accordingly, the Coalition proposal benefits potential RPs by avoiding unnecessary additional defense costs and increased rates for services.
Current Status & Looking Ahead
Although there has been mostly great support from key Congressional offices to move this project along, there have been objections expressed by certain insurance interests and a key industry organization opposing this effort. I truly believe that the concerns addressed by these interests are misplaced as addressed in this article. As the result of a Coalition effort to better educate industry, we have recently seen a turn within industry to support this effort as more stakeholders begin to fully understand how this enhanced responder immunity will not only help the response industry but also provide tangible benefits to an RP that has a future incident.
However, this turn-around has to happen quickly so that objections from these interests are at least changed to neutral if not in support of the proposal. This is because the House passed its version of the Coast Guard Authorization bill earlier this year and the Senate is now in the process of finalizing its version. Senate action could happen soon but in any event is expected before the summer recess in August 2014. It is critical that the Coalition’s proposal be included in the Senate version of the bill because it was not included in the House version. In order for there to be any realistic chance for enactment, a responder immunity provision needs to be included in either the House or Senate passed bill in order to be germane for consideration when the bill goes to Conference and is finalized later this year.
In conclusion, litigation following the Deepwater Horizon incident demonstrated that the current responder immunity provisions of OPA 90 are inadequate to fully protect responders from lawsuits and exposure to liability. As discussed herein, not only will the Coalition’s proposal help the response industry, it will also provide real benefits in terms of costs to RPs due to increased litigation defense costs due to indemnification of response contractors as well as the increased cost of response services in order to pay for higher insurance premiums. This will provide responders with the necessary confidence that it can continue to respond expeditiously without the fear of unfounded lawsuits in order to minimize the damages to the greatest extent possible which will have the added benefit to lower the RP’s liability for additional damages that would result from a slow response effort.
Thus, it is time for the entire marine industry to get on board with this proposal so it is enacted by Congress this year as the response industry is losing its appetite for continuing the fight much longer. Indeed, there is a need for urgency here before we forget key lessons learned from history in our world of oil spills.
(As published in the 2Q 2014 edition of Maritime Professional - www.maritimeprofessional.com)
Other stories from Q2 2014 issue
- Managing Shipping & Risk with New Variables page: 10
- A Closer Look at Maritime Finance and Risk page: 14
- Decisions at the Pump - Regular, Super or Sustainability page: 16
- INTERVIEW: U.S. Maritime Administration - Paul N. Jaenichen, Sr. page: 19
- Piracy Offshore Africa: Securing a Continent page: 22
- Maritime Fuel of the Future: Training to an Uncertain Standard page: 30
- Port Modernization Critical to Export Futures page: 38
- The Evolution of Classification Societies page: 42
- Risk Assessments: the Critical Heart of Underwriting page: 48
- Bringing America’s Waterways into the 21st Century page: 50
- Eliminating Aids to Navigation? page: 54
- Piling It On: Oil Spill Liability page: 56
- Marine Salavage: Responder Immunity Benefits a Responsible Party page: 58
- Allianz Global Shipping Review 2014 page: 60