U.S. Dodges OPA Claim But Must Defend Against Insurer’s Negligence Claims

On September 15, the U.S. Court of Appeals for the First Circuit released a significant Oil Pollution Act (OPA) ruling. The case is Ironshore Specialty Insurance Company v. U.S., et al. The Court of Appeals affirmed the District Court’s decision that neither the U.S. nor American Overseas Marine Company, LLC (AMSEA) , a contractor that provided specified services to the U.S. Navy in connection with the operation of “the FISHER,” a government-owned transport vessel and vehicle cargo ship, were liable under the Oil Pollution Act of 1990, 33 U.S.C. §§ 2701-2761 (OPA), for a fuel oil discharge. However, Ironshore Specialty Insurance Company (Ironshore), BSR’s insurer, negligence claims against the U.S. (but not AMSEA) were remanded to the District Court for further proceedings.

In July 2914, the FISHER released 11,000 gallons of diesel fuel while the vessel was performing fuel transfers in a “graving dock.” Boston Sip Repair (BSR) owned the dock and cleaned up the fuel spill at a cost of nearly $3M.  reimbursed BSR, and then filed a cost recovery claim pursuant to the provisions of OPA, as well alleging negligence claims based on general admiralty and maritime law.

The Court of Appeals held that since the FISHER was in fact and in law, a “public vessel” despite the fact that it was operated by a non-governmental party, and the Congress had specifically excluded public vessels from OPA liability, Ironshore’s claims against the U.S. and AMSEA were properly dismissed. However, the U.S. could not avoid the negligence claims because the Suits in Admiralty Act contains a provision that explicitly waives the government’s sovereign immunity defense.