Seattle Maritime Law Blog : Seattle Maritime Lawyers & Attorneys : Mikkelborg Broz Law Firm : Collision and Salvage, Fisheries, Jones Act : Seattle, Washington

By Jess G. Webster and Lafcadio Darling

Legislation currently working its way through Congress, called the “Securing Protections for the Injured from Limitations on Liability Act” (or “SPILL Act”) proposes significant changes to several old and established maritime stattues.  In brief, the proposed SPILL Act amends the Death on the High Seas Act and the Jones Act to allow for non-pecuniary damages under certain circumstances.  It also expands the scope of the Death on the High Seas Act, extending it to 12 miles offshore, instead of the current 3-mile limit.  The proposed Act also has provisions requiring more transparency regarding discharges of pollutants in U.S. waters, and restrictions upon bankruptcy trustees to sell assets of a debtor that may be liable under the Oil Pollution Act of 1990.

There are two ways to view this proposed legislation.  One perspective is that the changes to the DOHSA and Jones Act simply bring those statutes in line with the law of most states.  As to the Limitation of Liability Act, federal courts rarely grant limitation in practice, so its repeal would have a limited effect on the rights of litigants.

On the other hand, it can be argued that this legislation represents a significant change.  The changes to the DOHSA and Jones Act will undoubtely increase the amount of damages that can be claimed by seaman and others injured or killed at sea.  Also, limitation of liability under federal law, whether or not it is granted, is a powerful tool that often drives consolidation and settlement of claims and its removal may cause more cases to be taken to trial.

Another factor to consider is perception.  It is well known that foreign insurers and maritime businesses are notoriously fearful of American litigation, with its attendant costs and reportedly large verdicts.  Although this fear is probably overblown, these legislative changes may feed these concerns and cause certain insurers or businesses to reconsider doing business in U.S. waters. 

Whether these changes are a good or bad idea depends on who you ask, and is probably an unanswerable policy question. 

In any event, vessel owners and maritime employers would be well advised to monitor this legislation and, if it passes, revisit their liability insurance coverage with their insurance brokers.

A more detailed explanation of the proposed SPILL Act can be found on our firm's website, where  full text of the proposed SPILL Act can also be found.

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 By Jess G. Webster

Any vessel repairer who withholds possession of a vessel until repair invoices are paid in full is at risk for liability for conversion. Conversion is wrongfully denying possession of personal property from the party entitled to possession. In the recent case of 4H Construction Corp. v. Superior Boat Works, Inc., the U.S. District Court for the Northern District of Mississippi held that a shipyard that refused to redeliver a barge to the barge owner until the shipyard’s disputed charges were paid in full was liable for conversion.  The court awarded damages in the amount needed to compensate the barge owners for loss of use of the barge during the pendency of the lawsuit. 

The court ruled that the maritime lien enjoyed by the shipyard was a non-possessory lien, which could only be enforced against the vessel by an action in rem. Furthermore, there was no separate agreement between the parties allowing for the shipyard to retain possession of the vessel until its charges were paid in full, which may have changed the result. 

Vessel owners would be wise not to enter into contractual commitments that leave them vulnerable to being coerced into paying patently unreasonable charges in order to secure possession of their vessels.   A better approach is an agreement to escrow the amount of disputed charges until the reasonableness of charges is resolved by agreement or arbitration.

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The need for more vessels to assist with the Gulf oil spill may pressure the Obama Administration to waive the Jones Act's requirement that all goods and people transported by water between United States ports be carried in American flagged, owned, and crewed ships. 

The Jones Act's requirements were temporarily waived by the Bush Administration as a result of Hurricane Katrina.  

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By Mark Fahrenkrug and Lafcadio Darling

On June 2, 2010, U.S. District Judge Martin Feldman ruled that the Federal government had acted in an arbitrary and capricious manner when deciding to impose a deep water drilling moratorium in the Gulf of Mexico, and concluding it therefore could not stand.  This ruling was the result of a legal challenge to the moratorium mounted by several parties who work in the oil extraction industry in the Gulf. 

In his ruling, Judge Feldman took particular note of disagreement by some members of the panel advising the “National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling,” as to the scientific support for the hazards posed by deep drilling.  Based on this finding, the Judge enjoined the moratorium; not surprisingly, the government plans an emergency appeal, which will no doubt ask the 5th Circuit Court of Appeals to enter an injunction until a full appeal can be entertained.

In a statement issued on the same day, U.S. Secretary of the Interior Ken Salazar defended the moratorium, vowing to issue a further moratorium order that addresses the District Court's concerns.

This case not only involves one of the largest environmental and economic disasters in United States history, but also implicates other issues such as separation of powers and the proper role of regulators of activity on public land after permits have been issued but in the face of changing circumstances.

Stay tuned, as this story is bound to quickly develop in interesting ways.

The text of the District Court's ruling can be found here.
 

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As was previously discussed on our firm website, Transocean--the owner of the oil rig DEEPWATER HORIZON--made waves by filing an action in U.S. federal court seeking to limit its liability for the catastrophic oil spill in the Gulf of Mexico to $26.7 million.

Recently, the U.S. Department of Justice decisively condemned this attempt to limit liability as "unconscionable."  Comparing Transocean to the owners of the infamous ocean liner RMS TITANIC, who also tried to use the Limitation of Liability Act, a letter from the Attorney General's office strongly criticized Transocean's move and sought confirmation from Transocean that it was not trying to limit its liability under the Oil Pollution Act of 1990.

Transocean responded quickly by "clarifying" that it never intended to limit its liability under the OPA through this filing and seemed to hastily retreat from the apparently broad sweep of its original limitation filing.

It seems that Transocean is trying to cover its bases legally, while avoiding too much heat from the authorities or from the general public.  Regardless of whether the limitation action succeeds, this will be a difficult tight-rope for Transocean to walk.

A longer discussion of these recent developments can be found on our website.

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