[House Report 111-521]
[From the U.S. Government Publishing Office]
111th Congress Rept. 111-521
HOUSE OF REPRESENTATIVES
2d Session Part 1
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SECURING PROTECTIONS FOR THE INJURED FROM LIMITATIONS ON LIABILITY ACT
_______
June 30, 2010.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Conyers, from the Committee on the Judiciary, submitted the
following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 5503]
[Including Committee Cost Estimate]
The Committee on the Judiciary, to whom was referred the bill
(H.R. 5503) to revise laws regarding liability in certain civil
actions arising from maritime incidents, and for other
purposes, having considered the same, report favorably thereon
with an amendment and recommend that the bill as amended do
pass.
CONTENTS
Page
The Amendment.................................................... 2
Purpose and Summary.............................................. 4
Background and Need for the Legislation.......................... 4
Supporters of H.R. 5503.......................................... 16
Hearings......................................................... 17
Committee Consideration.......................................... 17
Committee Votes.................................................. 17
Committee Oversight Findings..................................... 19
New Budget Authority and Tax Expenditures........................ 20
Committee Cost Cost Estimate..................................... 20
Performance Goals and Objectives................................. 20
Constitutional Authority Statement............................... 20
Advisory on Earmarks............................................. 20
Section-by-Section Analysis...................................... 21
Changes in Existing Law Made by the Bill, as Reported............ 22
Additional Views................................................. 31
The Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Securing Protections for the Injured
from Limitations on Liability Act''.
SEC. 2. AMENDMENTS TO DEATH ON THE HIGH SEAS ACT.
The Death on the High Seas Act (chapter 303 of title 46, United
States Code), is amended--
(1) in section 30302--
(A) by inserting ``or law'' after ``admiralty'';
(B) by striking ``3 nautical miles'' and inserting
``12 nautical miles''; and
(C) by striking the last sentence;
(2) in section 30303--
(A) by inserting ``and nonpecuniary loss'' after
``pecuniary loss'';
(B) by striking ``by'' and all that follows through
the end, and inserting ``, plus a fair compensation for
the decedent's pain and suffering.''; and
(C) by adding at the end the following: ``In this
section, the term `nonpecuniary loss' means loss of
care, comfort, and companionship.'';
(3) in section 30305 by inserting ``or law'' after
``admiralty'';
(4) in section 30306, by inserting ``or law'' after
``admiralty'';
(5) by striking section 30307, and redesignating section
30308 as section 30307;
(6) in section 30307, as so redesignated, by amending
subsection (b) to read as follows:
``(b) Internal and Territorial Waters.--This chapter does not apply
to the waters of the Great Lakes or waters within the territorial
limits of a State that do not exceed 12 nautical miles from the shore
of the United States. In such waters, the rules applicable under
Federal, State, maritime, and other appropriate law shall apply.''; and
(7) in the table of sections at the beginning of such
chapter, by striking the items relating to sections 30307 and
30308 and inserting the following:
``30307. Nonapplication.''.
SEC. 3. AMENDMENTS TO JONES ACT.
Title 46, United States Code, is amended--
(1) in section 30104, by adding at the end the following:
``In addition to other amounts authorized under such laws, the
recovery for a seaman who so dies shall include recovery for
loss of care, comfort, and companionship.''; and
(2) by striking section 30105 and the item relating to that
section in the table of sections at the beginning of chapter
301.
SEC. 4. REPEAL OF LIMITATION OF LIABILITY ACT.
Chapter 305 of title 46, United States Code, is amended by repealing
sections 30505, 30506, 30507, 30511, and 30512 and the items relating
to those sections in the table of sections at the beginning of chapter
305.
SEC. 5. AMENDMENT TO CLASS ACTION FAIRNESS ACT.
Title 28, United States Code, is amended--
(1) in section 1711(2), by inserting ``, but does not include
an action brought by a State or subdivision of a State on
behalf of its citizens'' before the period;
(2) in section 1332(d)(1)(B), by inserting ``, but does not
include an action brought by a State or subdivision of a State
on behalf of its citizens'' before the semicolon; and
(3) in section 1332(d)(11)(B)(ii)--
(A) by striking ``or'' at the end of subclause (III);
(B) by striking the period at the end of subclause
(IV) and inserting ``; or''; and
(C) by adding at the end the following:
``(V) the claims are made by a State or subdivision of a
State on behalf of its citizens.''.
SEC. 6. UNENFORCEABILITY OF CERTAIN SECRECY AGREEMENTS.
(a) In General.--Part VI of title 28, United States Code, is amended
by adding at the end the following:
``CHAPTER 181--UNENFORCEABILITY OF CERTAIN SECRECY AGREEMENTS
``Sec.
``4101. Unenforceability of certain secrecy agreements.
``Sec. 4101. Unenforceability of certain secrecy agreements
``(a) In General.--Subject to subsection (b), an agreement, promise,
or directive to restrict the dissemination of information regarding the
cause of a discharge into waters off the shore of the United States of
a substance that contaminates a marine or coastal environment or
endangers public health, regarding the nature or extent of such a
discharge, regarding the damage caused or threatened by such a
discharge, or regarding the efforts to remediate the effects of such a
discharge, shall be void as against public policy and unenforceable in
any legal proceeding.
``(b) Exception.--
``(1) Generally.--Subsection (a) does not apply with respect
to a directive contained in a court order, or issued by a
Government agency with authority to enforce such a directive in
a court, restricting dissemination of information as necessary
to protect public health or safety.
``(2) Procedure relating to exception.--
``(A) A court shall not grant judicial enforcement of
a directive or order described in paragraph (1) unless
the proponent of the directive or order proves by clear
and convincing evidence that such enforcement is
permitted under paragraph (1).
``(B) If a court grants judicial enforcement of any
directive or order described in paragraph (1), the
court shall state the court's factual findings and
conclusions of law relating to that enforcement on the
record.''.
(b) Clerical Amendment.--The table of chapters for part VI of title
28, United States Code, is amended by adding at the end the following
new item:
``181. Unenforceability of Certain Secrecy Agreements....... 4101''.
SEC. 7. AMENDMENTS TO TITLE 11 OF THE UNITED STATES CODE.
(a) Treatment of Certain Property in Bankruptcy.--
(1) Limitation on sale or lease of certain property in
bankruptcy.--Section 363 of title 11, United States Code, is
amended by adding at the end the following:
``(q) Notwithstanding any other provision of this section, if the
debtor is liable under any law for a claim arising from an incident (as
defined in section 1001 of the Oil Pollution Act of 1990, and that
gives rise to liability under such Act), the trustee may not sell or
lease all or substantially all property of the estate of the debtor
(or, to the extent that the court has or can obtain jurisdiction over
any affiliate of the debtor, property of such affiliate) unless the
entity that acquires such property (including any affiliate of such
entity) assumes the obligation to pay the amount of allowed unsecured
claims arising from such incident that is not paid by the debtor, or
unless creditors holding at least two-thirds in amount, and more than
one-half in number, of such claims consent to different treatment.''.
(2) Limitation on treatment of certain property under a plan
of reorganization.--Section 1129(b)(2)(B) of title 11, United
States Code, is amended--
(A) in clause (i) by striking ``or'' at the end;
(B) in clause (ii) by striking the period at the end
and inserting ``; or''; and
(C) by adding at the end the following:
``(iii) that includes claims of the kind described in
section 363(q), if the plan provides for a sale or
lease of all or substantially all of property of the
estate, the plan requires the entity that acquires such
property (including any affiliate of such entity) to
assume the obligation to pay the amount of allowed
unsecured claims arising from an incident described in
section 363(q) that is not paid by the debtor, or
creditors holding at least two-thirds in amount, and
more than one-half in number, of such claims consent to
different treatment.''.
(b) Conforming Amendment.--Section 303(f) of title 11, United States
Code, is amended by adding at the end the following: ``If the debtor is
liable under any law for a claim arising from an incident (as defined
in section 1001 of the Oil Pollution Act of 1990, and that gives rise
to liability under such Act), the debtor may not sell or lease all or
substantially all property of the debtor (or, to the extent that the
court has or can obtain jurisdiction over any affiliate of the debtor,
property of such affiliate) unless the entity that acquires such
property (including any affiliate of such entity) assumes the
obligation to pay the amount of allowed unsecured claims arising from
such incident that is not paid by the debtor, or creditors holding at
least two-thirds in amount, and more than one-half in number, of such
claims consent to different treatment.''.
SEC. 8. EFFECTIVE DATE.
This Act and the amendments made by this Act shall take effect on the
date of enactment of this Act and shall apply to cases pending on or
after such date.
Purpose and Summary
H.R. 5503, the Securing Protections for the Injured from
Limitations on Liability Act, will revise outdated laws
regarding liability in certain civil actions arising from
maritime incidents, to ensure fair and just compensation to the
injured and their families. It will also make supplemental
changes in other laws to prevent companies with widespread
liability from offshore oil disasters from using bankruptcy to
remove significant assets from availability to pay victims, to
restrict enforceability of secrecy agreements regarding the
contamination or the cleanup efforts, and to clarify the
authority of State attorneys general to pursue claims on behalf
of their citizens.
Background and Need for the Legislation
I. BACKGROUND
On April 20, 2010, there was an explosion on the Deepwater
Horizon oil drilling platform that ultimately engulfed the
vessel in flames, sank it, and caused a massive oil spill in
the Gulf of Mexico that continues to spread throughout the Gulf
Coast, and perhaps beyond. Of the 126 crew members, 11 men were
killed, and at least 17 others were physically injured.\1\
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\1\The 126-member crew reportedly consisted of forty-one contract
workers, including four Halliburton employees and five M-I SWACO
employees; six or seven BP employees; and seventy-nine Transocean
employees, including the rig commander, Captain Curt Kuchta. Of the
eleven fatalities, nine of the men were employed by Transocean and two
by M-I SWACO.
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The Deepwater Horizon (DWH) was owned by Transocean, Ltd.,
a leading offshore drilling contractor with more than 18,000
employees worldwide. British Petroleum (BP) is a global energy
company (including BP America). It leased the DWH from
Transocean, and was also the operator and principal developer
of the oil field on which the Deepwater Horizon oil drilling
platform was located. Halliburton, a global oil field services
company with over 50,000 employees worldwide, was the cement
contractor aboard the vessel. Cameron International is a global
provider of pressure control, processing, flow control, and
compression systems, and was the manufacturer of the blowout
preventer (BOP) aboard the oil vessel.
BP's partners in the DWH drilling project were Anadarko
Petroleum Corporation and Mitsui Oil Exploration. Anadarko was
a non-operating investor with a 25% stake in the project, and
had no employees stationed on the rig. Mitsui, which
specializes in natural gas exploration and development, had a
10% investment in the well. There have been no published
reports about whether Mitsui had any employees on board the rig
on the day of the explosion.
M-I SWACO was subcontracted as the DWH's mud engineer.
Weatherford International Ltd. was the casing subcontractor.
Finally, Schlumberger Ltd. was contracted by BP to conduct
wireline services. Schlumberger had a crew on board the DWH,
but according to company officials, they left the rig several
hours before the fire and explosion.\2\
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\2\Henry Fountain, ``Documents Show Risky Decisions Before BP
Blowout,'' N.Y. Times, June 14, 2010.
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Each of these companies has been implicated in the events
leading up to the explosion and the continuing oil spillage,
and each may bear some legal responsibility for the resulting
harm.\3\
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\3\John Schwartz, ``Liability Questions Loom for BP and Ex-
Partners,'' N.Y. Times,. June 24, 2010.
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Although the legal issues are complex and still taking
shape, there are at least several general categories of
responsibility arising out of the Gulf Coast oil disaster.
First, there is the legal responsibility of the companies for
the deaths and injuries of the workers that resulted from the
April 20 explosion.\4\ The current statutory regime governing
this aspect of the legal liabilities is exceedingly complex and
outdated, in some instances resting on laws written in the mid-
19th century to protect American merchant sailing ship owners.
In addition to general maritime law, at least two Federal
statutes--the Death on the High Seas Act\5\ (DOHSA) and the
Jones Act\6\--will likely govern the extent to which injured
workers and dependent family members of deceased or injured
workers can recover damages.
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\4\It is difficult to estimate the potential costs of the DWH
disaster, but a 2005 explosion at a BP refinery in Texas, killing 15
and injuring scores more, reportedly resulted in a settlement totaling
some $1.6 billion, albeit under a different applicable liability
scheme. Stephanie Mencimer, ``Screwed if By Sea,'' Slate, June 16,
2010.
\5\46 U.S.C. Sec. Sec. 30301-30308.
\6\46 U.S.C. Sec. Sec. 30104-30106. There are two maritime
statutes, both enacted as part of the Merchant Marine Act of 1920, that
are commonly known as the ``Jones Act,'' both named for the sponsor of
the provisions, Senator Wesley Jones. Section 27 of the 1920 Act, now
codified at 46 U.S.C. Sec. 55102, is a cabotage law that requires that
all waterborne shipping between points within the United States be
carried out by vessels built in the United States, owned by U.S.
citizens (at least 75%), and manned with U.S. citizen crews. The Act
essentially bars foreign-built and -operated vessels from engaging in
U.S. domestic commerce. The second, at issue here, is section 33 of the
1920 Act, now codified at 46 U.S.C. Sec. Sec. 30104-30106, It governs
liability for the personal injury or death of a seaman occurring during
the course of employment.
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In addition, for its part, Transocean filed suit in
Houston, Texas, on May 13, 2010 under another statute that may
be relevant to further proceedings. That statute, the
Limitation of Liability Act\7\ (LOLA), enacted in 1851, is
designed to limit rather than facilitate recovery. It permits a
vessel owner to limit its liability for all personal injury
claims that may be brought against it to the value of the
vessel and its cargo. With its ``vessel'' on the Gulf floor,
Transocean has estimated that amount in this case to be
approximately $27 million.
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\7\46 U.S.C. Sec. 30501 et. seq.
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Second, there is responsibility for the broader economic
damages resulting from the spill, under the Oil Pollution Act
of 1990\8\ (OPA). Passed in the aftermath of the Exxon Valdez
oil spill in Prince William Sound, OPA establishes a framework
for those harmed by the offshore discharge of oil to recover
for specified damages. Under OPA, the ``responsible party'' is
strictly liable for all economic damages associated with a
discharge of oil into the waters of the United States, as well
as cleanup and removal costs. A ``responsible party'' may
recoup some costs from third parties under certain
circumstances.\9\ Where an oil spill emanates from a vessel,
the ``responsible party'' is the owner or operator of the
vessel from which the oil is discharged.\10\ As the operator of
the DWH, BP is responsible for the economic damages associated
with the spill. As of June 22, 2010, BP estimated that it had
paid out $118,044,258 to Gulf Coast claimants, but the ultimate
responsibility will be far more. For example, on June 2, 2010,
Credit Suisse estimated that these economic damages could total
$14 billion.\11\
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\8\33 U.S.C. Sec. Sec. 2701-2761.
\9\33 U.S.C. Sec. 2702(d). ``The responsible party is able to
recover through subrogation from a third party solely at fault, but is
not relieved of strict liability for the payment of claims up to the
limitations provided by OPA. The sole fault third party, once complete
fault has been established, then steps into the shoes of the
responsible party, theerby becoming subject to the liabilities,
limitations and defenses of the Act. There is, however, no mention of
the liabilities or defenses available to third parties only partially
at fault.'' Gregg L. McCurdy, Comment, An Overview of OPA 1990 and its
Relationship to Other Laws, 5 U.S.F. Mar. L.J. 423, 426-27
(1993)(footnotes omitted).
\10\33 U.S.C. Sec. 2701(32).
\11\See ``CS Sees Total BP Oil Spill Cost Up To $37 Billion.'' June
2, 2010. at http://www.zerohedge.com/article/cs-sees-total-bp-oil-
spill-cost-37-billion-eat-3-years-free-cash-flow-will-require-10-rise-
g.
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OPA sets liability limits, or caps, on what the responsible
party pays beyond the cleanup costs, at $75 million per
incident (as defined by the Act). This liability cap does not
apply if the responsible party or any of its contractors
violated any Federal or State safety regulations or acted with
gross negligence.\12\ The damages expressly recoverable under
OPA are limited to (1) property damage; (2) subsistence loss;
(3) net lost government revenue; (4) net lost profits or
earning capacity; (5) cost of increased public services; and
(6) damage to natural resources. OPA does not apply to personal
injury or wrongful death. However, BP representatives have
testified that it would not seek to avail itself of the cap--
that it would pay ``all legitimate claims''--though it has not
yet explained what it will consider legitimate, nor has it
formally agreed to extend its liability beyond the OPA cap.\13\
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\12\In addition, liability limits are unavailable if the violation
of a Federal safety, construction, or operating requirement proximately
caused the spill. Spillers must also report the incident and cooperate
with response officials to take advantage of the liability caps. OPA
Section 1004(c).
\13\See Liability Issues Surrounding the Gulf Coast Oil Disaster:
Hearing Before the House Committee on the Judiciary, 111th Cong. (2010)
(testimony of Darryl Willis, Vice President, Resources, BP America).
See also Jackie Calmes, ``For Gulf Victims, Mediator With Deep Pockets
and Broad Power,'' N.Y.Times, June 22, 2010 (```All of the design, all
of the implementation and all of the administration' of the claims
process `is basically a handshake between the Obama administration, BP
and me,' Mr. Feinberg said Tuesday.'').
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The third category of legal responsibility is the broader
responsibility for cleanup costs. Under OPA, the responsible
party is obligated to reimburse all cleanup costs incurred by
others, not only by a government entity, but also by a private
party,\14\ although it may seek contribution or subrogation
from other companies.\15\ As of June 21, 2010, BP had
reportedly spent approximately $2 billion in cleanup and
containment efforts,\16\ but a recent estimate by The New York
Times estimated eventual cleanup costs of perhaps as high as
$14 billion.\17\ If BP is unwilling or unable to pay all
cleanup costs, the Oil Spill Liability Trust Fund (OSLTF)
provides a backstop for relief. The OSLTF was established by
Congress in 1986 to create a pool of readily available funds
for oil spill response needs.\18\ The Fund is primarily used to
finance the costs incurred by Federal and State agencies for
prompt oil spill removal and to reimburse Federal, State and
Indian tribe trustees for recoverable costs associated with oil
spills, including natural resource damages.\19\ The OSLTF is
presently estimated to contain roughly $1.6 billion.\20\ The
maximum amount of money that may be withdrawn from the OSLTF is
$1 billion per incident (as defined by OPA).\21\
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\14\OPA Section 1002(b)(1).
\15\33 U.S.C. Sec. 2715.
\16\See, BP has spent $2 billion on Oil Spill cleanup: Company Says
it has paid out $105 Million to Victims; Overall Cleanup Cost Expected
to Continue Rising, June 21, 2010, http://www.cbsnews.com/stories/2010/
06/21/national/main6602994.shtml
\17\Fiona Marharg-Bravo and Rolfe Winkler, ``Could BP's Money Stop
Flowing?'' N.Y. Times, June 18, 2010.
\18\See Omnibus Budget Reconciliation Act of 1986 (P.L. 99-509).
However, Congress did not authorize its use or fund it until after the
Exxon Valdez incident. In 1990, OPA provided the statutory
authorization necessary to put the fund into effect. The OSLTF was
initially funded by a five-cent-per-barrel tax on the oil industry. The
Emergency Economic Stabilization Act of 2008 (P.L. 110-343) increased
the tax rate to eight cents through 2016. In 2017, the rate will
increase to nine cents, and the tax is scheduled to terminate at the
end of 2017. See section 405 of P.L. 110-343. The fund is administered
by the U.S. Coast Guard. Other revenue sources for the fund include
interest earned on fund deposits, cost recovery from the parties
responsible for spills, and any fines or civil penalties collected.
\19\``Could BP's Money Stop Flowing,'' N.Y. Times, June 18, 2010,
B2.
\20\Matthew Wald, ``Tax on Oil May Help Pay for Cleanup,'' N.Y.
Times, May 1, 2010.
\21\26 U.S.C. Sec. 9509(c)(2)(A).
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OPA was designed to encourage administrative resolution of
claims directly with the responsible party. Therefore, a
government claimant seeking reimbursement for removal or
cleanup costs, or any claimant seeking economic damages, must
first present the claim to the responsible party. If the
responsible party denies the claim or does not settle the claim
within 90 days, a claimant may seek funds from the OSLTF or
initiate action in a court of law. To date, no money has been
withdrawn from the Fund in connection with the Gulf spill
cleanup.
In regard to these two broader categories of
responsibility, BP announced that it will establish a $20
billion escrow account--a claims fund--as urged by President
Obama, which adds another layer of complexity to the evaluation
and resolution of claims. This fund will be set aside as part
of the ``Independent Claims Facility'' (ICF), which will be
managed by Kenneth Feinberg. The fund will be built up over a
three-and-a-half-year period and be available ``to satisfy
legitimate claims including natural resource damages and state
and local response costs.''\22\ The fund reportedly will not
pay out fines or penalties, but will honor claims that are
adjudicated, whether by the ICF or by a court, or as agreed to
by BP. According to initial accounts, the fund is not intended
to represent a cap on BP liabilities, and will proceed on
parallel tracks with other efforts by claimants to obtain
redress for harms caused by the spill. Although the contours of
this fund, and of the overall claims process, are not entirely
clear at this point, claimants apparently may choose to pursue
their claims wherever they wish, and are not precluded from
accessing multiple forums.
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\22\Press Release, BP, BP Establishes $20 Billion Claims Fund for
Deepwater Horizon Spill and Outlines Dividend Decisions (June 16, 2010)
(www.bp.com).
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Many of the general areas of liability present overlapping
and interrelated issues. As of June 11, 2010, more than 160
cases are going forward as class actions.\23\ BP has already
filed a motion to consolidate the cases before one multi-
district litigation court, and the Judicial Panel for
Multidistrict Litigation is scheduled to hold a hearing on July
29 in Boise, Idaho.\24\ In addition, personal injury claims
stemming from the spill and cleanup have been submitted to BP
or are being pursued in the courts under various theories of
relief. It is unclear to what extent these type claims are
candidates for resolution by the ICF.
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\23\Anna Fifield, ``Lawyers file class action suits against BP,''
Financial Times, FT.com. June 11, 2010.
\24\Marilyn Tennissen, ``BP seeks MDL in Houston for Deepwater
Horizon cases,'' LegalNewline.com, May 19, 2010.
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Finally, there are the fines due under the Clean Water
Act\25\ and related statutes. It has been estimated by some
that the civil fines due under this statute could be as high as
$22 billion, and a private lawsuit has recently been filed
seeking a similar amount.\26\ It has also been asserted that BP
will be responsible for royalties to the Federal Government for
each barrel of oil lost, which could cost large additional
amounts.\27\ A further factor is the criminal probe that
Attorney General Eric Holder announced on June 1, 2010, along
with the Justice Department's civil investigation. The
threshold for a criminal investigation has ``certainly been
passed,'' Attorney General Holder said, although he would not
disclose the exact targets of the probe. Prosecutors are
reportedly looking at possible violations of the Clean Water
Act, the Migratory Bird Treaty Act, the Endangered Species Act,
and the Oil Pollution Act.\28\ In addition, lawsuits have been
filed or are contemplated by the attorneys general of the
affected States.\29\
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\25\33 U.S.C. Sec. 1251 et seq.
\26\Press Release, Center for Biological Diversity, Lawsuit Seeks
$19 Billion in Clean Water Act Penalties From BP (June 21, 2010).
\27\Jim Efstathiou Jr., ``BP May Owe U.S. $1 Million a Day in
Royalties on Spilled Oil,'' Bloomberg.com, May 21, 2010.
\28\Helene Cooper and Peter Baker, ``U.S. Opens Criminal Inquiry
Into Oil Spill,'' N.Y.Times, June 1, 2010.
\29\See Liability Issues Surrounding the Gulf Coast Oil Disaster:
Hearing Before the House Committee on the Judiciary, 111th Cong. (2010)
(testimony of Jim Hood, Attorney General, State of Mississippi) (``[M]y
office has begun the process of reviewing all potential legal claims on
behalf of the state arising out of the oil spill incident.''). See
also, ``UPDATE 1-Florida could sue BP over any spill damage-governor.''
Reuters, May 4, 2010.
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II. NEED FOR THE LEGISLATION
A. Remedies for maritime death and injury due to negligence
Maritime law is a patchwork of Federal rules and principles
emanating from judicial opinions, statutory enactments, and
international treaties. In the wake of what is projected to be
the largest oil spill in U.S. history, it is evident that
raising the $75 million cap provided by the Oil Pollution Act
of 1990 (OPA) is not sufficient, now or in the future, to
address the bodily harm to those caught in the explosion or
those involved in cleanup of the resulting spill. The OPA cap
applies to commercial loss; it does not reach the losses of
those who suffered personal injuries or who died in the
explosion, or those who may be harmed in the cleanup efforts.
The Death on the High Seas Act (DOHSA) is the primary
statute applicable to wrongful deaths occurring on board
vessels further than three nautical miles from U.S. shores and
on commercial aircraft further than twelve nautical miles out.
It allows for specified dependent relatives of the decedent to
seek pecuniary damages for accidents at sea, and both pecuniary
and non-pecuniary damages for certain aviation accidents.
Congress enacted DOSHA in 1920\30\ to create a cause of
action for wrongful deaths occurring on the high seas beyond 3
nautical miles from U.S. shores, after a series of Supreme
Court cases left the availability of damages for deaths at sea
in confusion.\31\ DOHSA allows the spouse, parents, child, or
dependent relative of a seafarer or vessel passenger to seek
recovery for pecuniary damages only. But DOHSA generally does
not provide recovery for pre-death pain and suffering, or for
non-pecuniary loss of care, comfort, and companionship. This
means, for example, that when a child or retired worker is
killed, the surviving family's recovery would essentially be
limited to funeral expenses. Indeed, the fact that many of the
passengers aboard TWA Flight 800 were children, who had no
income on which to base pecuniary loss, was a significant
driving factor in Congress's decision to amend DOHSA as to
commercial aviation accidents.
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\30\Originally codified at 46 U.S.C. Sec. 761, et seq, the statute
is now found at 46 U.S.C. Sec. 30301 through Sec. 30308.
\31\See The Harrisburg, 119 U.S. 199 (1886); The Alaska, 130 U.S.
201 (1889); La Bourgoyne, 210 U.S. 95 (1908).
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The Jones Act, also passed in 1920, provides a cause of
action for wrongful death or personal injury for ``seamen'' who
die in the course of employment as the result of negligence.
The Jones Act allows pecuniary damages from the employer for
the negligence of the shipowner, the captain, or fellow members
of the crew.
In the area of wrongful death, both the Jones Act and DOHSA
generally confine recovery for negligent loss of life to
pecuniary losses. Both statutes, however, have legislatively or
judicially mandated exceptions that have produced irrational
anomalies in the law. This legislation addresses those
anomalies.
When Congress first considered and enacted DOHSA, overseas
commercial aviation simply did not exist. Still, anyone who
died as the result of a plane crash on the high seas was
covered under the terms of the statute. Following the TWA
Flight 800 crash in 1996, Congress amended DOHSA to provide for
non-pecuniary damages--specifically, the loss of care, comfort
and companionship--for victims of commercial aviation crashes
that occur more than 12 nautical miles from the coast.\32\ The
change was made effective from the day before the TWA crash.
---------------------------------------------------------------------------
\32\46 U.S.C. Sec. 30307.
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The Jones Act\33\ provides protections for seamen on
vessels, including benefits for injured seamen and a cause of
action for injuries or death resulting from negligence on the
part of their employer. Liability for the wrongful death of a
Jones Act seaman may also be based on the unseaworthiness of
the vessel under DOHSA.\34\
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\33\There are two very different laws commonly referred to as the
Jones Act. See supra note 6.
\34\See Kernan v. American Dredging Co., 355 U.S. 426, 430 n.4
(1958); Moragne v. States Marine Lines, Inc., 398 U.S. 375, 399-401
(1970) (discussing unseaworthiness remedy under DOHSA).
---------------------------------------------------------------------------
Only seamen can bring claims under the Jones Act, and then
only against their employer. The test for seaman status is
three-pronged: a worker must (1) be assigned to a vessel or
identifiable fleet of vessels that is not permanently moored
and is operating on a navigable waterway; (2) contribute to the
mission of the vessel; and (3) spend a significant amount of
time on board the vessel.\35\ There is no doubt that the
regular crew of the Deepwater Horizon were seamen under the
Jones Act. The available damages are claims for injuries--in
which case seamen are entitled to regular tort damages--and for
wrongful death claims, in which case the damages are limited to
pecuniary loss and pre-death pain and suffering.\36\ Damages
stemming from loss of society are not recoverable under either
type of claim. The underlying cause of action for Jones Act
claims is negligence on the part of the employer, although
injured seamen also have the right to obtain maintenance and
cure (generally a daily stipend as well as the payment of
medical bills) for injuries that do not stem from negligence.
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\35\``Seaman Status,'' website prepared and hosted by Arnold &
Itkin LLP, available at: http://www.jones-act-maritime-lawyer.com/
jones-act/jones-act-seaman-status.php.
\36\46 U.S.C. 30104. In Miles v. Apex Marine Corp., 498 U.S. 19
(1990), the Supreme Court held that the Jones Act precludes recovery of
non-pecuniary losses by the dependants of a deceased seaman.
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The bill corrects these shortcomings. It amends DOHSA to
permit recovery for non-pecuniary loss and pre-death pain the
suffering, to allow trial by jury, and to permit State law to
govern which surviving family members are eligible to recover.
It amends the Jones Act to permit recovery of non-pecuniary
loss in cases of wrongful death, and to ensure that these
protections apply to all offshore oil rig workers.
B. Limitation of Liability Act
In addition to the restrictions on damages recoverable
under DOHSA and the Jones Act, the Limitation of Liability Act
(LOLA) is another Federal law that could operate to arbitrarily
limit the liability owed to the dead and injured workers who
were serving on the Deepwater Horizon. Passed in 1851, LOLA
limits a vessel owner's liability to the post-accident value of
the vessel and her pending freight. Like much of maritime law,
U.S. law borrowed this principle of British maritime law. The
British Parliament passed legislation in 1734 to limit the
liability of shipowners to the value of the ship, in order to
give the British shipping industry a competitive advantage over
shipping companies based in continental Europe. The American
shipping industry sought a similar limitation.\37\
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\37\Thomas J. Schoenbaum, Admiralty and Maritime Law 805 (4th ed.
2004).
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When LOLA was enacted in 1851, the ship's master controlled
and managed the ship and stood in place of the ship's owner--
usually an individual, not the shipping conglomerates of
today--during voyages that took months and often years. The
absence of modern technology and communications equipment left
shipowners vulnerable to the improper acts of the master,
including embezzlement and other criminal acts. In 1848, the
U.S. Supreme Court held steamboat owners responsible for the
loss of gold and silver coins contained in a wooden crate after
a fire destroyed the ship.\38\ This decision prompted Congress
to legislate for the protection of the American maritime
industry.
---------------------------------------------------------------------------
\38\New Jersey Steam Nav. Co. v. Merchant's Bank of Boston, 47 U.S.
344 (1848)
---------------------------------------------------------------------------
Congress enacted the LOLA in 1851. The Act restricts the
liability of shipowners to the value of the vessel and pending
freight. Liability resulting from an employee's negligence or
other bad act exists only if there was ``privity or knowledge''
of the owner. In 1934, Congress amended LOLA, after a fire on a
ship caused 134 deaths, to require that a shipowner's liability
for personal injury or death be based on a dollar amount--then
$60 per ton. That amount was raised to $420 per ton in 1984.
LOLA does not provide for liability, but rather limits the
liability of a shipowner for personal injury and property
damage. A shipowner can initiate a limitation action by
petitioning the Federal court within 6 months after receiving a
notice that a suit has been filed. The petition stays
proceedings elsewhere, and consolidates all State claims into
Federal court.
In a filing in a Federal court in Texas, Transocean has
invoked this antiquated law in an effort to have its liability
``for all claims for any loss of life, injury, loss,
destruction and damages arising out of or occurring on the
voyage of the . . . Deepwater Horizon''\39\ limited to the
post-accident value of the Deepwater Horizon--essentially a
$26.7 million cap. All other proceedings against Transocean
have been suspended pending a determination by the court
whether the LOLA limitation applies.\40\ For victims of the DWH
disaster and their families, LOLA prolongs their grief, and
threatens to limit severely their ability to provide economic
stability for the future. If the court grants the limitation,
multiple claimants--including the DWH survivors and the
families of those who died--will be eligible for only a pro
rata share of the limitation fund.
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\39\Complaint and Petition for Exoneration from or Limitation of
Liability, In re the complaint and petition of Triton Asset Leasing
GmbH, Transocean Holdings LLC, Transocean Offshore Deepwater Drilling
Inc., and Transocean Deepwater Inc., as owner, managing owners, owners
pro-hoc vice, and/or Operators of the MODU Deepwater Horizon, in a
Cause for Exoneration From or Limitation of Liability, Complaint and
Petition No. 4:10-cv-01721 (S.D.Tex. May 13, 2010).
\40\Mary Flood, ``Judge stays spill cases at Transocean's
request,'' Houston Chronicle. May 13, 2010.
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LOLA has clearly outlived any legitimate purpose it may
once have served. Its original purpose--to promote American
shipping interests--is now largely serving the interests of
carriers incorporated in Third World countries and using
foreign-flagged vessels in order to avoid having to pay U.S.
taxes or follow U.S. health and safety regulations. Moreover,
Congress could not possibly have envisioned in 1851 that
movable industrial oil exploration and development platforms
would qualify as ``vessels'' under LOLA and attempt to shield
their liability in this type of disaster.
When LOLA was enacted, a shipowner could communicate with
the captain and crew of a vessel away from home port only
through documents transshipped on other vessels. LOLA was
intended to protect those owners in light of that difficulty in
staying in communication. Today's communication technology
allows shipowners to oversee their vessels as constantly as
they wish, even when the vessel is on the other side of the
world. Owners today have direct communication by radio,
computers, and phone, and a ship can be positioned and
monitored constantly using satellite systems. Continued use of
LOLA simply removes healthy incentives for owners to properly
oversee their ships.
Finally, there are better, more sophisticated alternatives
for protecting shipowners than LOLA. Today, shipowners have a
wide variety of legal tools available that better protect their
financial interests. For example, insurance, contract, charter,
mortgage, and the separate incorporation of vessels are
alternative methods that offer more appropriate financial
protection than LOLA.
In this current case, LOLA could even hamper BP from
seeking reimbursement from Transocean for Transocean's own
negligence in the Deepwater Horizon explosion and resulting
spill. Repealing LOLA will enable BP to hold Transocean
accountable for any appropriate share of responsibility under
the Oil Pollution Act. This is yet another illustration of why
LOLA should be repealed.
C. Clarification of state enforcement authority
Congress enacted the Class Action Fairness Act of 2005
(CAFA) to facilitate the removal of ``interstate cases of
national significance'' to Federal court under diversity
jurisdiction, and to provide for greater regulation of class
and mass actions.\41\ Although the statutory definitions in
CAFA of ``class action'' and ``mass action'' are phrased
broadly,\42\ the congressional debates in both the House\43\
and Senate\44\ indicate an intent to preserve the authority of
a State government to bring and keep cases in its own State
courts when the action involves its own citizens and its own
laws. Nevertheless, the Fifth Circuit held in 2008 that an
action brought by a State attorney general as a parens patriae
action was subject to CAFA.\45\
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\41\Class Action Fairness Act Sec. 2, 28 U.S.C. 1332(d).
\42\Under CAFA, a ``class action'' is ``any civil action filed in a
district court of the United States under rule 23 of the Federal Rules
of Civil Procedure or any civil action that is removed to a district
court of the United States that was originally filed under a State
statute or rule of judicial procedure authorizing an action to be
brought by 1 or more representatives as a class action.'' 28 U.S.C.
Sec. 1711(2). ``Mass action'' is defined as ``any civil action (except
a civil action within the scope of section 1711(2) in which monetary
relief claims of 100 or more persons are proposed to be tried jointly
on the ground that the plaintiffs' claims involve common questions of
law or fact, except that jurisdiction shall exist only over those
plaintiffs whose claims in a mass action satisfy the jurisdictional
amount requirements under subsection (a).'' 28 U.S.C.
Sec. 1332(d)(11)(B)(i).
\43\151 Cong. Rec. 746 (2005) (statement of Rep. James F.
Sensenbrenner) (``[W]hen State attorneys general sue on behalf of their
citizens, those actions are almost always `parens patriae' actions, and
not class actions; and the former will be in no way affected by this
bill.'').
\44\151 Cong. Rec. 1161 (2005) (statement of Sen. Thomas R. Carper)
(``For most attorneys general who wish to file a case on behalf of
their citizens against some defendant, they have the opportunity to use
parens patriae. For those who do not, in my judgment, they still have
the opportunity to use the class action lawsuit.''); id. at 1162
(statement of Sen. John Cornyn) (``But clearly, when State law and the
State Constitution specifically provide for the right of . . . a State
attorney general, to sue on behalf of his State's citizens, then this
bill, when made a law, will not in any way impede that endeavor.'');
id. at 1163 (statement of Sen. Chuck Grassley) (``because almost all
civil suits brought by State attorneys general are parens patriae
suits, similar representative suits or direct enforcement actions, it
is clear they . . . will not be affected by this bill.''); id. at 1164
(statement of Sen. Pryor) (``I hope the courts will recognize the
legislative history we developed today. The intention of this Senate
and the conference is not to limit any existing rights or any existing
abilities of the State attorneys general in pursuing cases they may
deem appropriate to pursue.'').
\45\In re Katrina Canal Breaches Litigation, 524 F.3d 700, 706 (5th
Cir. 2008); Louisiana ex rel. Caldwell v. Allstate Ins. Co., 536 F.3d
418 (5th Cir. 2008).
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During the Committee's hearing on the legal liability
issues stemming from the Gulf Coast oil spill, Mississippi
Attorney General Jim Hood testified that CAFA impeded his
ability to pursue claims on behalf of the State of Mississippi
against parties responsible for violating State law.\46\ H.R.
5503 will clarify that actions brought by a State attorney
general in his official capacity under his State's law, in its
courts, on behalf of its citizens, are not subject to removal
to Federal court under CAFA.\47\
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\46\Liability Issues Surrounding the Gulf Coast Oil Disaster:
Hearing Before the H. Comm. on the Judiciary, 111th Cong. (2010)
(testimony of Jim Hood, Attorney General of Mississippi).
\47\Connecticut v. Moody's Corp., 664 F. Supp. 2d 196, 200 (D.
Conn. 2009) (citing Connecticut v. Levi Strauss & Co., 471 F. Supp.
363, 370-71 (D. Conn. 1979) (``[I]t has long been recognized that a
state can act as parens patriae for a circumscribed group of its
citizens.'').
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D. Protections against unwarranted secrecy regarding pollutant
discharges
In the days following the DWH explosion and rescue efforts,
reports emerged that BP had required unemployed fishermen, as a
condition for assistance, employment, or access to the affected
area, to sign an agreement not to provide information to the
news media, investigators, or others regarding the oil spill,
the clean-up and containment efforts, or the public health
implications.\48\ Indeed, in a lawsuit brought by the president
of the United Commercial Fishermen Association in Louisiana,
U.S. District Judge Helen G. Berrigan granted a restraining
order against the agreements, finding them unconscionable. To
prevent further abuses in this and future disasters, H.R. 5503
specifies that agreements or directives of this nature are
unenforceable, as they interfere with the public's right to be
informed. It provides an exception for court orders or
government agency directives when there is a determination that
the dissemination of information could endanger public health
or safety.
---------------------------------------------------------------------------
\48\See ``Federal judge says BP can't force local workers to sign
waivers of liability,'' at http://thelensnola.org/2010/05/03/bp-worker-
agreemen/. There were also other reports of statements being signed
under apparent duress. For example, in early May, National Public Radio
(NPR) reported that DWH rig workers were required ``to sign form
letters about what they had seen and whether they had been injured''
before being released to their families. This account was verified in
testimony before the Committee by Stephen Stone, a roustabout employed
by Transocean who was on the DWH on April 20. Mr. Stone testified that
they ``were told we had to give a written statement before we could
leave the boat'' and that it was ``28 hours after the explosion''
before he ``was given access to a phone, and was allowed to call [his]
wife'' to let her know that he had survived.
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E. Protections in bankruptcy for maritime oil spill claimants
Under section 363(f) of the Bankruptcy Code, assets of a
company in a bankruptcy case may be sold ``free and clear of
any interest in such property'' if certain conditions are
met.\49\ Unsecured creditors generally are entitled to share
only in the unencumbered proceeds of the sale and in the
remaining unencumbered assets. In actuality, the sale may
generate proceeds sufficient only to satisfy the claims of
secured creditors having an interest in the transferred
property, thereby leaving little or no money for unsecured
creditors.
---------------------------------------------------------------------------
\49\Section 363(f) provides:
---------------------------------------------------------------------------
G The trustee may sell property under subsection (b) or (c) of this
section free and clear of any interest in such property of an entity
other than the estate only if--
(1) applicable nonbankruptcy law permits sale of such
property free and clear of such interest;
(2) such entity consents;
(3) such interest is a lien and the price at which such
property is to be sold is greater than the aggregate value
of all liens on such property;
(4) such interest is in bona fide dispute; or
(5) such entity could be compelled, in a legal or
equitable proceeding, to accept a money satisfaction of
such interest.
11 U.S.C. Sec. 363(f).
The rights of future creditors may also be terminated.
Successor liability is an equitable principle largely
determined under applicable State law.\50\ A number of courts
have sought to protect purchasers of assets in bankruptcy,
against possible claims to which they might otherwise be
subject under principles of successor liability, by approving
sales ``free of all present or future claims against the debtor
or the estate,''\51\ although some courts have questioned the
ability of a bankruptcy court to override principles of
successor liability under section 363(f).\52\
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\50\In general, successor liability will attach if: (1) the
purchaser expressly or impliedly assumed the liability; (2) the
transaction amounted to a merger or consolidation of the businesses;
(3) the purchaser was merely a continuation of the seller; or (4) the
transaction was entered into fraudulently in order to avoid liability
for the obligations. Alan N. Resnick & Henry J. Sommer, Collier on
Bankruptcy, 363.06[7] (15th ed. rev'd 2007).
\51\Id.
\52\Id.; see, e.g., Chicago Truck Drivers, Helpers and Warehouse
Workers Union (Independent) Pension Fund v. Tasemkin, Inc., 59 F.3d 48,
51 (7th Cir. 1995) (noting that ``it is not clear why an intervening
bankruptcy proceeding, in particular, should have a per se preclusive
effect on the creditor's chances'').
---------------------------------------------------------------------------
A company in chapter 11 reorganization may also choose to
dispose of all its assets under a reorganization plan.\53\
While creditors have the right to object, a court can confirm a
plan anyway if it finds that the plan is ``fair and equitable''
within the meaning of section 1129(b)(2).\54\ A plan can
satisfy this standard with respect to a class of unsecured
claims even if it does not propose to pay them in full, as long
as they receive as much as they would in liquidation, and as
long as no claims junior to them receive any payment.\55\
---------------------------------------------------------------------------
\53\Under section 1123(a)(5)(D), a plan may be implemented through
the ``sale of all or any part of the property of the estate, either
subject to or free of any lien, or the distribution of all or any part
of the property of the estate among those having an interest in such
property of the estate.''
\54\11 U.S.C. Sec. 1129(b)(2).
\55\11 U.S.C. Sec. Sec. 1129(b)(2)(B), 1129(a)(7)(A)(ii).
---------------------------------------------------------------------------
A company in involuntary bankruptcy may also sell all or
substantially all its assets if no order for relief has yet
been entered. During the so-called ``gap period'' between the
filing of the petition and the entry of the order for relief,
the company may dispose of property ``as if an involuntary case
concerning the debtor had not been commenced,'' notwithstanding
section 363, unless the court orders otherwise.\56\
---------------------------------------------------------------------------
\56\11 U.S.C. Sec. 303(f).
---------------------------------------------------------------------------
In a bankruptcy case where the debtor is liable under any
law for claims arising from an Oil Pollution Act (OPA)
incident,\57\ section 7 of this bill makes several amendments
to the Bankruptcy Code to protect the holders of such claims.
First, the bill amends section 363 to condition the sale or
lease of all or substantially all of the debtor's assets in a
bankruptcy case where the company is liable for such claims.
The sale or lease may not occur unless either: (1) the acquirer
(including any affiliate thereof) assumes the obligation to pay
the amount of allowed unsecured claims arising from such
incident not paid by the debtor; or (2) creditors holding at
least two-thirds in amount, and more than one-half in number,
of such claims consent to different treatment.
---------------------------------------------------------------------------
\57\33 U.S.C. Sec. 2701(14)(```incident' means any occurrence or
series of occurrences having the same origin, involving one or more
vessels, facilities, or any combination thereof, resulting in the
discharge or substantial threat of discharge of oil''); 33 U.S.C.
Sec. 1321(7)(A) (establishing civil liability for entities responsible
for an incident).
---------------------------------------------------------------------------
The amendment to 363 applies not only to property of the
estate of the debtor, but also to property of any affiliate of
the debtor to the extent the court has or can obtain
jurisdiction over the affiliate. The Bankruptcy Code defines
``affiliate,'' in pertinent part, to include the parents and
subsidiaries of corporate debtors who meet certain specified
ownership criteria.\58\ Thus, in a chapter 11 case filed by a
subsidiary with few assets, this bill will also condition sales
by the debtor's parent if the court has jurisdiction over the
parent.
---------------------------------------------------------------------------
\58\11 U.S.C. Sec. 101(2).
---------------------------------------------------------------------------
The bill also amends Bankruptcy Code section 1129(b)(2)(B)
to impose the same conditions on confirming a chapter 11 plan
of reorganization. Thus, a plan of reorganization that proposes
to sell or lease all or substantially all of the debtor's
assets must provide that either the acquirer (including any
affiliate) will assume the obligation to pay the claims arising
from the OPA incident if not paid by the debtor, or creditors
holding at least two-thirds in amount, and more than one-half
in number, of such claims must consent to different treatment.
Finally, this bill amends Bankruptcy Code section 303(f) to
ensure that creditors with claims arising from an incident
under the OPA will be similarly protected during the period
between an involuntary bankruptcy petition and an order for
relief.
F. Ensuring immediate applicability of improvements in the law
Based on evidence gathered during the hearing on Liability
Issues Surrounding the Gulf Coast Oil Disaster, the Committee
determined that there were several reasons to apply this
legislation to pending cases, including the gravity of the
disaster on April 20, 2010, the antiquated and inconsistent
nature of much of the legal framework in maritime law, and the
need for comprehensive and uniform application of the new
legislation.
It is long settled that as long as Congress has a rational
purpose, it may elect to respond to an issue of public policy
with legislation that is immediate in effect, without running
afoul of the Constitution.\59\ The 9th Circuit, in Seariver
Maritime Financial Holdings v. Mineta,\60\ held that
legislation providing for immediate liability adjustments, even
if it could apply to identifiable parties on the basis of
``irreversible past actions,'' is permissible so long as it
furthers a ``nonpunitive legislative purpose.''
---------------------------------------------------------------------------
\59\See, e.g., Landgraf v.USI Film Products, 511 U.S. 265 (1994);
Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15-16 (1976); U.S. v.
Schooner Peggy, 5 U.S. (Cranch 1) 103, 110 (1801) (``It is in the
general true that the province of an appellate court is only to enquire
whether a judgment when rendered was erroneous or not. But if
subsequent to the judgment and before the decision of the appellate
court, a law intervenes and positively changes the rule which governs,
the law must be obeyed, or its obligation denied.'').
\60\309 F.3d 662, 674 (9th Cir. 2002).
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Moreover, analysis by the non-partisan Congressional
Research Service confirms that ``because H.R. 5503 does not
impose criminal penalties, it raises no constitutionality
concerns under the Ex Post Facto Clause.''\61\
---------------------------------------------------------------------------
\61\Robert Meltz and Kenneth Thomas, ``Constitutional Issues Raised
By Pending Bill to Expand Liability Under the Death on the High Seas
Act and the Jones Act,'' Congressional Research Service, June 28, 2010.
---------------------------------------------------------------------------
This provision is consistent with a number of statutory
changes to liability law enacted in recent years, including
laws partially immunizing gun sellers and manufacturers;\62\
limiting liability of airlines and providing compensation for
victims of the September 11, 2001 attack;\63\ providing
compensation to workers subjected to unlawful employment
practices;\64\ expanding recovery under State law retroactively
for cases stemming from the Minot, North Dakota train
derailment;\65\ and permitting non-pecuniary damages under
DOSHA for aviation accidents on the high seas.\66\ Relevant
Supreme Court precedent, in cases such as Usery v. Turner
Elkhorn Mining Co.,\67\ have upheld immediate application of
civil law changes of this nature.
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\62\H.R. 800, the Protection of Lawful Commerce in Arms Act,
introduced by Rep. Stearns (R-FL) in the 109th Congress (Senate
version, S. 397, became Pub. L. 109-124) (``A qualified civil liability
action [against gun manufacturers or sellers] that is pending on the
date of the enactment of this Act shall be dismissed immediately by the
court in which the action was brought or is currently pending.'').
\63\H.R. 2926, Air Transportation Safety and System Stabilization
Act, introduced by Rep. Young (R-AK) on September 21, 2001, and became
Pub. L. 107-42 on September 22, 2001. (``SEC. 408. Limitation on Air
Carrier Liability (a) In General.'' Notwithstanding any other provision
of law, liability for all claims, whether for compensatory or punitive
damages, arising from the terrorist-related aircraft crashes of
September 11, 2001, against any air carrier shall not be in an amount
greater than the limits of the liability coverage maintained by the air
carrier.'')
\64\S. 181, Lilly Ledbetter Fair Pay Act of 2009, introduced by
Sen. Mikulski (D-MD) on January 8, 2009 in the 111th Congress, became
Pub. L. 111-2 on January 29, 2009 (``This Act, and the amendments made
by this Act, take effect as if enacted on May 28, 2007 and apply to all
claims of discrimination in compensation under title VII of the Civil
Rights Act of 1964 (42 U.S.C. 2000e et seq.) the Age Discrimination in
Employment Act of 1967 (29 U.S.C. 621 et seq.), title I and section 503
of the Americans with Disabilities Act of 1990, and sections 501 and
504 of the Rehabilitation Act of 1973, that are pending on or after
that date.'')
\65\Implementing Recommendations of the 9/11 Commission Act of
2007, Pub. L. No. 110-53 (2007) (legislation contains a retroactivity
provision, which clarifies that 49 U.S.C. Sec. 20106 applies to all
pending State law causes of action arising from activities or events
occurring on or after January 18, 2002, the date of the Minot, North
Dakota train derailment).
\66\H.R. 1000, The Wendell H. Ford Aviation Investment and Reform
Act for the 21st Century, introduced by Rep. Shuster (R-PA) on March 3,
1999 in response to the Continental Express Flight 2574 in 1991 (became
Pub. L. 106-181 on April 4, 2000) (``The amendments [to DOHSA] made by
subsections (a) and (b) shall apply to any death occurring after July
16, 1996'').
\67\428 U.S. 1 (1976). In Turner Elkhorn Mining Co., the Court
upheld a statute which required mine operators to provide compensation
for a former employee's death or disability due to pneumoconiosis who
terminated before the act's passage and was challenged as a violation
of the Due Process Clause of the Fifth Amendment. The Court held that
immediate application of such civil liability statutes will be upheld
as constitutional so long as there is a rational governmental purpose.
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Supporters of H.R. 5503
The following individuals and organizations have written in
support of H.R. 5503:
LSurvivors of workers killed in the Deepwater Horizon
explosion, including Michelle, Keith, and Chris Jones, the
widow, father, and brother of Gordon Jones; Natalie Roshto and
Denise Arnold, widow and mother of Shane Roshto; Rhonda
Burkeen, widow of Aaron Dale Burkeen; and Jacqueline Duncan,
sister of Wyatt Kemp
LDavid Erickson, father of Christopher Blair Erickson,
killed by electrocution while working aboard the oil tanker S/R
Wilmington, owned by a subsidary of Exxon-Mobile
LLynda Sanford, who was injured in a cruise ship
accident that killed her mother and two other women and injured
13 other passengers
LMississippi Attorney General Jim Hood
LThe International Cruise Victims Association
LThe National Center for Victims of Crime
LThe National Organization of Parents of Murdered
Children
LPublic Citizen
LAlliance for Justice
LNational Consumers League
LConsumerWatchdog
LCenter for Justice & Democracy
LCenter for Biological Diversity
LFriends of the Earth
LU.S. Action
Hearings
The full Committee on the Judiciary held 1 day of hearings
on May 27, 2010, to examine the liability issues stemming from
the explosion on the Deepwater Horizon and the resulting oil
spill. The witnesses who testified before the Committee were
Keith D. Jones, Esq., father of Gordon Jones, who died while
working on the Deepwater Horizon; Douglas Harold Brown, a
Transocean, Ltd. employee and survivor of the Deepwater Horizon
explosion; Stephen Stone, a Transocean, Ltd. employee and
survivor of the Deepwater Horizon explosion; Bryan Encalade,
President, Louisiana Oysters Association; Jim Hood, Attorney
General for the State of Mississippi; Darryl Willis, Vice
President, Resources, BP America; Rachel Clingman, Acting
General Counsel, Transocean, Ltd.; James W. Ferguson, Vice
President and Deputy General Counsel, Halliburton; William C.
Lemmer, General Counsel, Cameron International Corporation;
Vincent J. Foley, Partner, Holland & Knight; and Thomas C.
Galligan, Jr., President and Professor, Colby-Sawyer College.
Committee Consideration
On June 23, 2010, the Committee met in open session to mark
up the bill H.R. 5503, and ordered the bill, as amended,
favorably reported by a rollcall vote of 16 to 11, a quorum
being present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
following rollcall votes occurred during the Committee's
consideration of H.R. 5503.
1. An amendment offered by Mr. Smith to limit the bill's
coverage to claims arising out of an oil spill. Defeated 19 to
14.
ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Conyers, Jr., Chairman...................................... X
Mr. Berman...................................................... X
Mr. Boucher.....................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren..................................................... X
Ms. Jackson Lee................................................. X
Ms. Waters......................................................
Mr. Delahunt....................................................
Mr. Cohen....................................................... X
Mr. Johnson..................................................... X
Mr. Pierluisi................................................... X
Mr. Quigley..................................................... X
Ms. Chu......................................................... X
Mr. Deutch...................................................... X
Mr. Gutierrez...................................................
Ms. Baldwin..................................................... X
Mr. Gonzalez.................................................... X
Mr. Weiner...................................................... X
Mr. Schiff...................................................... X
Ms. Sanchez..................................................... X
Mr. Maffei...................................................... X
Mr. Polis.......................................................
Mr. Smith, Ranking Member....................................... X
Mr. Sensenbrenner, Jr........................................... X
Mr. Coble....................................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Lungren.....................................................
Mr. Issa........................................................ X
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Franks...................................................... X
Mr. Gohmert.....................................................
Mr. Jordan...................................................... X
Mr. Poe......................................................... X
Mr. Chaffetz.................................................... X
Mr. Rooney...................................................... X
Mr. Harper...................................................... X
-----------------------------------------------
Total....................................................... 14 19
----------------------------------------------------------------------------------------------------------------
2. An amendment offered by Mr. Goodlatte to limit the Class
Action Fairness Act amendment to class actions arising out of
an oil spill. Defeated 16 to 12.
ROLLCALL NO. 2
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Conyers, Jr., Chairman...................................... X
Mr. Berman......................................................
Mr. Boucher.....................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren..................................................... X
Ms. Jackson Lee................................................. X
Ms. Waters...................................................... X
Mr. Delahunt....................................................
Mr. Cohen....................................................... X
Mr. Johnson..................................................... X
Mr. Pierluisi................................................... X
Mr. Quigley.....................................................
Ms. Chu......................................................... X
Mr. Deutch...................................................... X
Mr. Gutierrez...................................................
Ms. Baldwin..................................................... X
Mr. Gonzalez....................................................
Mr. Weiner...................................................... X
Mr. Schiff...................................................... X
Ms. Sanchez.....................................................
Mr. Maffei...................................................... X
Mr. Polis.......................................................
Mr. Smith, Ranking Member....................................... X
Mr. Sensenbrenner, Jr...........................................
Mr. Coble.......................................................
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Lungren..................................................... X
Mr. Issa........................................................
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Franks...................................................... X
Mr. Gohmert.....................................................
Mr. Jordan...................................................... X
Mr. Poe......................................................... X
Mr. Chaffetz.................................................... X
Mr. Rooney...................................................... X
Mr. Harper...................................................... X
-----------------------------------------------
Total....................................................... 12 16
----------------------------------------------------------------------------------------------------------------
3. Motion to order the bill favorably reported, as amended.
Approved 16-11.
ROLLCALL NO. 3
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Conyers, Jr., Chairman...................................... X
Mr. Berman......................................................
Mr. Boucher..................................................... X
Mr. Nadler......................................................
Mr. Scott....................................................... X
Mr. Watt........................................................
Ms. Lofgren..................................................... X
Ms. Jackson Lee.................................................
Ms. Waters......................................................
Mr. Delahunt....................................................
Mr. Cohen.......................................................
Mr. Johnson..................................................... X
Mr. Pierluisi................................................... X
Mr. Quigley..................................................... X
Ms. Chu......................................................... X
Mr. Deutch...................................................... X
Mr. Gutierrez...................................................
Ms. Baldwin..................................................... X
Mr. Gonzalez....................................................
Mr. Weiner......................................................
Mr. Schiff...................................................... X
Ms. Sanchez..................................................... X
Mr. Maffei...................................................... X
Mr. Polis....................................................... X
Mr. Smith, Ranking Member....................................... X
Mr. Sensenbrenner, Jr...........................................
Mr. Coble....................................................... X
Mr. Gallegly.................................................... X
Mr. Goodlatte................................................... X
Mr. Lungren..................................................... X
Mr. Issa........................................................
Mr. Forbes...................................................... X
Mr. King........................................................ X
Mr. Franks...................................................... X
Mr. Gohmert..................................................... X
Mr. Jordan...................................................... X
Mr. Poe......................................................... X
Mr. Chaffetz.................................................... X
Mr. Rooney...................................................... X
Mr. Harper......................................................
-----------------------------------------------
Total....................................................... 16 11
----------------------------------------------------------------------------------------------------------------
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Committee Cost Estimate
The Congressional Budget Office (CBO) estimate of the costs
of implementing H.R. 5503 was not available as the time of
filing this report. When the CBO letter setting forth its
official cost estimate becomes available, it will be printed in
the Congressional Record. In compliance with clause 3(d)(2) of
rule XIII of the Rules of the House of Representatives, the
Committee estimates the costs as follows:
The Committee does not anticipate that the bill will have
any significant effect on the Federal budget, nor that it will
result in any unfunded mandate or any significant new costs to
the U.S. economy. The bill amends various existing laws
governing private and State government actions for recovery of
damages for tortious conduct, conditions the sale of certain
assets in bankruptcy under certain conditions, and adds a new
restriction on the enforcement of secrecy agreements unless
necessary to protect public health or safety.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
5503 amends the Death on the High Seas Act, the Jones Act, the
Class Action Fairness Act, and the Bankruptcy Code, repeals the
Limitations on Liability Act, and limits the enforceability of
secrecy agreements regarding the discharge of dangerous
materials into waters off the shore of the United States. This
will improve the relief available for death or injury on the
high seas, help ensure accountability of companies responsible
for environmental and physical disasters at sea, hold polluting
entities accountable to a high level of transparency, and
secure the right of State attorneys general to bring court
actions on behalf of citizens of their State, under the law of
their State, in their State courts.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds authority for
this legislation in article I, section 8, clauses 4 and 18 of
the Constitution.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 5503 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in such clause 9.
Section-by-Section Analysis
The following discussion describes the bill as reported by
the Committee.
Sec. 1. Short Title. Section 1 sets forth the short title
of the bill as the ``Securing Protection for the Injured from
Limitations on Liability Act.''
Sec. 2. Amendments to Death on the High Seas Act. Section 2
makes various amendments to the Death on the High Seas Act
(DOHSA). Section 2(1) amends 46 U.S.C. Sec. 30302 to allow the
personal representative to bring suit under law as well as
admiralty, thus permitting a jury trial; to standardize the
threshold for DOHSA's applicability at beyond 12 nautical miles
from the U.S. shore; and to permit State law to govern who is
eligible to receive compensation, by deleting language that
confines those eligible to the decedent's spouse, parent,
child, or dependent relative.
Section 2(2) amends 46 U.S.C. Sec. 30303 to permit recovery
for non-pecuniary loss (defined as the survivors' loss of the
care, comfort, and companionship provided by the decedent), as
well as for the pain and suffering endured by the decedent
prior to death.
Sections 2(3) and 2(4) make conforming changes to other
sections of DOHSA to ensure that actions can be brought in law
as well as in admiralty.
Section 2(5) strikes 46 U.S.C. Sec. 30307, which provides
special rules governing commercial aviation. As the bill now
essentially makes these special rules applicable universally,
this section is unnecessary.
Section 2(6) revises the clarifications, in what is now 46
U.S.C. Sec. 30308, and will become redesignated as 46 U.S.C.
Sec. 30307, as to what law applies on the Great Lakes and in
waters within the 12-mile limit. It confirms that the rules
applicable under Federal, State, maritime, and other
appropriate law shall apply.
Section 2(7) makes a conforming change to the table of
sections in chapter 303 of 46 U.S.C.
Sec. 3. Amendments to Jones Act. Section 3 makes two
amendments to the Jones Act. Section 3(1) amends 46 U.S.C.
30104 to add non-pecuniary loss to the recovery permitted by
the survivors of a seaman who is killed in the course of
employment. Section 3(2) strikes 46 U.S.C. Sec. 30105, which
currently bars recovery by a worker who is not a U.S. citizen
or permanent resident, or the worker's survivors, against
mineral or energy companies for personal injury or death
occurring in the territorial waters or continental shelf of a
foreign state, unless neither the law of that foreign state nor
the law of the worker's country of citizenship or residence
makes any remedy available.
Sec. 4. Repeal of Limitation of Liability Act. Section 4
repeals the Limitation of Liability Act, now found in 46 U.S.C.
Sec. Sec. 30505, 30506, 30507, 30511, and 30512.
Sec. 5. Amendment to Class Action Fairness Act. Section 5
amends the Class Action Fairness Act to clarify that the right
to remove class actions and mass actions to Federal court does
not apply to an action brought by a State (or subdivision of a
State) in its own State court on behalf of citizens of that
State. Substantively equivalent clarifications are made to 28
U.S.C. Sec. Sec. 1711(2), 1332(d)(1)(B), and
1332(d)(11)(B)(ii).
Sec. 6. Unenforceability of Certain Secrecy Agreements.
Section 6 adds a new section 4101 to 28 U.S.C., to make
unenforceable in any legal proceeding secrecy agreements or
directives regarding the cause of a discharge of contaminants
into the waters off the shore of the United States or regarding
the cleanup efforts. There is an exception for directives in
court orders or by a government agency determination that the
restriction is necessary to protect public health or safety.
Any court order enforcing a restriction on this basis must be
based on clear and convincing evidence, and must be accompanied
by findings of fact and conclusions of law supporting it.
Sec. 7. Amendments to Title 11 of the United States Code.
Section 7 amends the Bankruptcy Code to place conditions on the
sale or lease of all or substantially all property of a company
in bankruptcy that is liable under any law for claims arising
from an incident covered under the Oil Pollution Act. Related
amendments are made to 11 U.S.C. Sec. Sec. 363, 1129(b)(2)(B),
and 303(f). No such sale or lease is permitted unless (1) the
entity that acquires the property (including all the entity's
affiliates, if any) assumes the obligation to pay whatever
amount of those claims is not paid by the company in
bankruptcy, or (2) more than one-half the claimants, holding at
least two-thirds the dollar aggregate amount of the claims,
consent to different treatment.
Sec. 8. Effective Date. Section 8 provides that the bill
and the amendments made by it take effect immediately on the
date of enactment and apply to all pending and future cases.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
TITLE 46, UNITED STATES CODE
* * * * * * *
Subtitle III--Maritime Liability
* * * * * * *
CHAPTER 301--GENERAL LIABILITY PROVISIONS
Sec.
30101. Extension of jurisdiction to cases of damage or injury on land.
* * * * * * *
[30105. Restriction on recovery by non-citizens and non-resident aliens
for incidents in waters of other countries.]
* * * * * * *
Sec. 30104. Personal injury to or death of seamen
A seaman injured in the course of employment or, if the
seaman dies from the injury, the personal representative of the
seaman may elect to bring a civil action at law, with the right
of trial by jury, against the employer. Laws of the United
States regulating recovery for personal injury to, or death of,
a railway employee apply to an action under this section. In
addition to other amounts authorized under such laws, the
recovery for a seaman who so dies shall include recovery for
loss of care, comfort, and companionship.
[Sec. 30105. Restriction on recovery by non-citizens and non-resident
aliens for incidents in waters of other countries
[(a) Definition.--In this section, the term ``continental
shelf'' has the meaning given that term in article I of the
1958 Convention on the Continental Shelf.
[(b) Restriction.--Except as provided in subsection (c), a
civil action for maintenance and cure or for damages for
personal injury or death may not be brought under a maritime
law of the United States if--
[(1) the individual suffering the injury or death was
not a citizen or permanent resident alien of the United
States at the time of the incident giving rise to the
action;
[(2) the incident occurred in the territorial waters
or waters overlaying the continental shelf of a country
other than the United States; and
[(3) the individual suffering the injury or death was
employed at the time of the incident by a person
engaged in the exploration, development, or production
of offshore mineral or energy resources, including
drilling, mapping, surveying, diving, pipelaying,
maintaining, repairing, constructing, or transporting
supplies, equipment, or personnel, but not including
transporting those resources by a vessel constructed or
adapted primarily to carry oil in bulk in the cargo
spaces.
[(c) Nonapplication.--Subsection (b) does not apply if the
individual bringing the action establishes that a remedy is not
available under the laws of--
[(1) the country asserting jurisdiction over the area
in which the incident occurred; or
[(2) the country in which the individual suffering
the injury or death maintained citizenship or residency
at the time of the incident.]
* * * * * * *
CHAPTER 303--DEATH ON THE HIGH SEAS
Sec.
30301. Short title.
* * * * * * *
[30307. Commercial aviation accidents.
[30308. Nonapplication.]
30307. Nonapplication.
Sec. 30301. Short title
This chapter may be cited as the ``Death on the High Seas
Act''.
Sec. 30302. Cause of action
When the death of an individual is caused by wrongful act,
neglect, or default occurring on the high seas beyond [3
nautical miles] 12 nautical miles from the shore of the United
States, the personal representative of the decedent may bring a
civil action in admiralty or law against the person or vessel
responsible. [The action shall be for the exclusive benefit of
the decedent's spouse, parent, child, or dependent relative.]
Sec. 30303. Amount and apportionment of recovery
The recovery in an action under this chapter shall be a fair
compensation for the pecuniary loss and nonpecuniary loss
sustained [by the individuals for whose benefit the action is
brought. The court shall apportion the recovery among those
individuals in proportion to the loss each has sustained.],
plus a fair compensation for the decedent's pain and suffering.
In this section, the term ``nonpecuniary loss'' means loss of
care, comfort, and companionship.
* * * * * * *
Sec. 30305. Death of plaintiff in pending action
If a civil action in admiralty or law is pending in a court
of the United States to recover for personal injury caused by
wrongful act, neglect, or default described in section 30302 of
this title, and the individual dies during the action as a
result of the wrongful act, neglect, or default, the personal
representative of the decedent may be substituted as the
plaintiff and the action may proceed under this chapter for the
recovery authorized by this chapter.
Sec. 30306. Foreign cause of action
When a cause of action exists under the law of a foreign
country for death by wrongful act, neglect, or default on the
high seas, a civil action in admiralty or law may be brought in
a court of the United States based on the foreign cause of
action, without abatement of the amount for which recovery is
authorized.
[Sec. 30307. Commercial aviation accidents
[(a) Definition.--In this section, the term ``nonpecuniary
damages'' means damages for loss of care, comfort, and
companionship.
[(b) Beyond 12 Nautical Miles.--In an action under this
chapter, if the death resulted from a commercial aviation
accident occurring on the high seas beyond 12 nautical miles
from the shore of the United States, additional compensation is
recoverable for nonpecuniary damages, but punitive damages are
not recoverable.
[(c) Within 12 Nautical Miles.--This chapter does not apply
if the death resulted from a commercial aviation accident
occurring on the high seas 12 nautical miles or less from the
shore of the United States.]
Sec. [30308.] 30307. Nonapplication
(a) * * *
[(b) Internal Waters.--This chapter does not apply to the
Great Lakes or waters within the territorial limits of a
State.]
(b) Internal and Territorial Waters.--This chapter does not
apply to the waters of the Great Lakes or waters within the
territorial limits of a State that do not exceed 12 nautical
miles from the shore of the United States. In such waters, the
rules applicable under Federal, State, maritime, and other
appropriate law shall apply.
CHAPTER 305--EXONERATION AND LIMITATION OF LIABILITY
Sec.
30501. Definition.
* * * * * * *
[30505. General limit of liability.
[30506. Limit of liability for personal injury or death.
[30507. Apportionment of losses.]
* * * * * * *
[30511. Action by owner for limitation.
[30512. Liability as master, officer, or seaman not affected.]
* * * * * * *
[Sec. 30505. General limit of liability
[(a) In General.--Except as provided in section 30506 of this
title, the liability of the owner of a vessel for any claim,
debt, or liability described in subsection (b) shall not exceed
the value of the vessel and pending freight. If the vessel has
more than one owner, the proportionate share of the liability
of any one owner shall not exceed that owner's proportionate
interest in the vessel and pending freight.
[(b) Claims Subject to Limitation.--Unless otherwise excluded
by law, claims, debts, and liabilities subject to limitation
under subsection (a) are those arising from any embezzlement,
loss, or destruction of any property, goods, or merchandise
shipped or put on board the vessel, any loss, damage, or injury
by collision, or any act, matter, or thing, loss, damage, or
forfeiture, done, occasioned, or incurred, without the privity
or knowledge of the owner.
[(c) Wages.--Subsection (a) does not apply to a claim for
wages.
[Sec. 30506. Limit of liability for personal injury or death
[(a) Application.--This section applies only to seagoing
vessels, but does not apply to pleasure yachts, tugs, towboats,
towing vessels, tank vessels, fishing vessels, fish tender
vessels, canal boats, scows, car floats, barges, lighters, or
nondescript vessels.
[(b) Minimum Liability.--If the amount of the vessel owner's
liability determined under section 30505 of this title is
insufficient to pay all losses in full, and the portion
available to pay claims for personal injury or death is less
than $420 times the tonnage of the vessel, that portion shall
be increased to $420 times the tonnage of the vessel. That
portion may be used only to pay claims for personal injury or
death.
[(c) Calculation of Tonnage.--Under subsection (b), the
tonnage of a self-propelled vessel is the gross tonnage without
deduction for engine room, and the tonnage of a sailing vessel
is the tonnage for documentation. However, space for the use of
seamen is excluded.
[(d) Claims Arising on Distinct Occasions.--Separate limits
of liability apply to claims for personal injury or death
arising on distinct occasions.
[(e) Privity or Knowledge.--In a claim for personal injury or
death, the privity or knowledge of the master or the owner's
superintendent or managing agent, at or before the beginning of
each voyage, is imputed to the owner.
[Sec. 30507. Apportionment of losses
[If the amounts determined under sections 30505 and 30506 of
this title are insufficient to pay all claims--
[(1) all claimants shall be paid in proportion to
their respective losses out of the amount determined
under section 30505 of this title; and
[(2) personal injury and death claimants, if any,
shall be paid an additional amount in proportion to
their respective losses out of the additional amount
determined under section 30506(b) of this title.]
* * * * * * *
[Sec. 30511. Action by owner for limitation
[(a) In General.--The owner of a vessel may bring a civil
action in a district court of the United States for limitation
of liability under this chapter. The action must be brought
within 6 months after a claimant gives the owner written notice
of a claim.
[(b) Creation of Fund.--When the action is brought, the owner
(at the owner's option) shall--
[(1) deposit with the court, for the benefit of
claimants--
[(A) an amount equal to the value of the
owner's interest in the vessel and pending
freight, or approved security; and
[(B) an amount, or approved security, that
the court may fix from time to time as
necessary to carry out this chapter; or
[(2) transfer to a trustee appointed by the court,
for the benefit of claimants--
[(A) the owner's interest in the vessel and
pending freight; and
[(B) an amount, or approved security, that
the court may fix from time to time as
necessary to carry out this chapter.
[(c) Cessation of Other Actions.--When an action has been
brought under this section and the owner has complied with
subsection (b), all claims and proceedings against the owner
related to the matter in question shall cease.
[Sec. 30512. Liability as master, officer, or seaman not affected
[This chapter does not affect the liability of an individual
as a master, officer, or seaman, even though the individual is
also an owner of the vessel.]
* * * * * * *
----------
TITLE 28, UNITED STATES CODE
* * * * * * *
PART IV--JURISDICTION AND VENUE
* * * * * * *
CHAPTER 85--DISTRICT COURTS; JURISDICTION
* * * * * * *
Sec. 1332. Diversity of citizenship; amount in controversy; costs
(a) * * *
* * * * * * *
(d)(1) In this subsection--
(A) * * *
(B) the term ``class action'' means any civil action
filed under rule 23 of the Federal Rules of Civil
Procedure or similar State statute or rule of judicial
procedure authorizing an action to be brought by 1 or
more representative persons as a class action, but does
not include an action brought by a State or subdivision
of a State on behalf of its citizens;
* * * * * * *
(11)(A) * * *
(B)(i) * * *
(ii) As used in subparagraph (A), the term ``mass action''
shall not include any civil action in which--
(I) * * *
* * * * * * *
(III) all of the claims in the action are asserted on
behalf of the general public (and not on behalf of
individual claimants or members of a purported class)
pursuant to a State statute specifically authorizing
such action; [or]
(IV) the claims have been consolidated or coordinated
solely for pretrial proceedings[.]; or
(V) the claims are made by a State or subdivision of
a State on behalf of its citizens.
* * * * * * *
PART V--PROCEDURE
* * * * * * *
CHAPTER 114--CLASS ACTIONS
* * * * * * *
Sec. 1711. Definitions
In this chapter:
(1) * * *
(2) Class action.--The term ``class action'' means
any civil action filed in a district court of the
United States under rule 23 of the Federal Rules of
Civil Procedure or any civil action that is removed to
a district court of the United States that was
originally filed under a State statute or rule of
judicial procedure authorizing an action to be brought
by 1 or more representatives as a class action, but
does not include an action brought by a State or
subdivision of a State on behalf of its citizens.
* * * * * * *
PART VI--PARTICULAR PROCEEDINGS
Chap. Sec.
Declaratory Judgments.........................................2201
* * * * * * *
4101Unenforceability of Certain Secrecy Agreements....................
* * * * * * *
CHAPTER 181--UNENFORCEABILITY OF CERTAIN SECRECY AGREEMENTS
Sec.
4101. Unenforceability of certain secrecy agreements.
Sec. 4101. Unenforceability of certain secrecy agreements
(a) In General.--Subject to subsection (b), an agreement,
promise, or directive to restrict the dissemination of
information regarding the cause of a discharge into waters off
the shore of the United States of a substance that contaminates
a marine or coastal environment or endangers public health,
regarding the nature or extent of such a discharge, regarding
the damage caused or threatened by such a discharge, or
regarding the efforts to remediate the effects of such a
discharge, shall be void as against public policy and
unenforceable in any legal proceeding.
(b) Exception.--
(1) Generally.--Subsection (a) does not apply with
respect to a directive contained in a court order, or
issued by a Government agency with authority to enforce
such a directive in a court, restricting dissemination
of information as necessary to protect public health or
safety.
(2) Procedure relating to exception.--
(A) A court shall not grant judicial
enforcement of a directive or order described
in paragraph (1) unless the proponent of the
directive or order proves by clear and
convincing evidence that such enforcement is
permitted under paragraph (1).
(B) If a court grants judicial enforcement of
any directive or order described in paragraph
(1), the court shall state the court's factual
findings and conclusions of law relating to
that enforcement on the record.
* * * * * * *
----------
TITLE 11, UNITED STATES CODE
* * * * * * *
CHAPTER 3--CASE ADMINISTRATION
* * * * * * *
SUBCHAPTER I--COMMENCEMENT OF A CASE
* * * * * * *
Sec. 303. Involuntary cases
(a) * * *
* * * * * * *
(f) Notwithstanding section 363 of this title, except to the
extent that the court orders otherwise, and until an order for
relief in the case, any business of the debtor may continue to
operate, and the debtor may continue to use, acquire, or
dispose of property as if an involuntary case concerning the
debtor had not been commenced. If the debtor is liable under
any law for a claim arising from an incident (as defined in
section 1001 of the Oil Pollution Act of 1990, and that gives
rise to liability under such Act), the debtor may not sell or
lease all or substantially all property of the debtor (or, to
the extent that the court has or can obtain jurisdiction over
any affiliate of the debtor, property of such affiliate) unless
the entity that acquires such property (including any affiliate
of such entity) assumes the obligation to pay the amount of
allowed unsecured claims arising from such incident that is not
paid by the debtor, or creditors holding at least two-thirds in
amount, and more than one-half in number, of such claims
consent to different treatment.
* * * * * * *
SUBCHAPTER IV--ADMINISTRATIVE POWERS
* * * * * * *
Sec. 363. Use, sale, or lease of property
(a) * * *
* * * * * * *
(q) Notwithstanding any other provision of this section, if
the debtor is liable under any law for a claim arising from an
incident (as defined in section 1001 of the Oil Pollution Act
of 1990, and that gives rise to liability under such Act), the
trustee may not sell or lease all or substantially all property
of the estate of the debtor (or, to the extent that the court
has or can obtain jurisdiction over any affiliate of the
debtor, property of such affiliate) unless the entity that
acquires such property (including any affiliate of such entity)
assumes the obligation to pay the amount of allowed unsecured
claims arising from such incident that is not paid by the
debtor, or unless creditors holding at least two-thirds in
amount, and more than one-half in number, of such claims
consent to different treatment.
* * * * * * *
CHAPTER 11--REORGANIZATION
* * * * * * *
SUBCHAPTER II--THE PLAN
* * * * * * *
Sec. 1129. Confirmation of plan
(a) * * *
(b)(1) * * *
(2) For the purpose of this subsection, the condition that a
plan be fair and equitable with respect to a class includes the
following requirements:
(A) * * *
(B) With respect to a class of unsecured claims--
(i) the plan provides that each holder of a
claim of such class receive or retain on
account of such claim property of a value, as
of the effective date of the plan, equal to the
allowed amount of such claim; [or]
(ii) the holder of any claim or interest that
is junior to the claims of such class will not
receive or retain under the plan on account of
such junior claim or interest any property,
except that in a case in which the debtor is an
individual, the debtor may retain property
included in the estate under section 1115,
subject to the requirements of subsection
(a)(14) of this section[.]; or
(iii) that includes claims of the kind
described in section 363(q), if the plan
provides for a sale or lease of all or
substantially all of property of the estate,
the plan requires the entity that acquires such
property (including any affiliate of such
entity) to assume the obligation to pay the
amount of allowed unsecured claims arising from
an incident described in section 363(q) that is
not paid by the debtor, or creditors holding at
least two-thirds in amount, and more than one-
half in number, of such claims consent to
different treatment.
Additional Views
No one wants to see BP, Transocean, or any other party
responsible for the Gulf coast oil disaster let off the hook
for the tremendous amount of damage they have caused to the
Gulf of Mexico and surrounding coastal states or for the lives
lost in the fire and explosion aboard the Deepwater Horizon.
Those responsible for this tragedy, and the economic damage,
personal injury, and death it has caused, must be held fully
accountable.
H.R. 5503, the ``Securing Protections for the Injured from
Limitations on Liability Act,'' was introduced in response to
liability questions that have arisen in the wake of the Gulf
oil spill. Certainly, the intent underlying this legislation is
good. However, H.R. 5503 is a very broad bill with only two
major provisions directed solely at oil-spill related issues.
The bill will likely have unintended consequences that reach
well beyond the Gulf oil spill. Despite the fact that the bill
is not emergency legislation aimed directly at the ongoing
spill and that the bill applies retroactively, obviating the
need for immediate, expedited consideration, the Committee did
not hold a single legislative hearing on any of the bill's
provisions to help understand their full impact.
Nonetheless, without the benefit of even a single
legislative hearing, H.R. 5503 virtually re-writes U.S.
maritime law, making portions of it out-of-step with the
maritime-liability laws of nearly every other seagoing nation;
eliminates important provisions of the Class Action Fairness
Act, a statute passed just 5 years ago, with strong bi-partisan
support, to ensure that class actions are decided in a neutral,
fair forum--the Federal courts; and makes significant
amendments to provisions of the Bankruptcy Code for debtors
with oil-spill liability. Given the sweeping nature of the
changes in this bill and the lack of committee process to
create a record so members could understand its full effects,
we were unable to support this legislation.
BACKGROUND
A. Death on the High Seas Act
Before the enactment of the Death on the High Seas Act
(DOHSA), general maritime law did not permit the survivors of a
person killed on the high seas to bring an action for wrongful
death.\1\ In 1920, Congress enacted DOHSA to remedy this harsh
consequence of general maritime law and create a cause of
action in admiralty for wrongful deaths occurring more than
three miles from shore, outside the territorial waters of the
states. DOHSA limits the class of beneficiaries to the
decedent's ``spouse, parent, child, or dependent relative,''\2\
establishes a 3-year period of limitations,\3\ allows suits
filed by the victim to continue as wrongful-death actions if
the victim dies of his injuries while the action is pending,\4\
and provides that contributory negligence will not bar
recovery.\5\ With respect to damages, the statute provides that
the ``recovery . . . shall be a fair compensation for the
pecuniary loss sustained by the individuals for whose benefit
the action is brought.''\6\ Liability may be based on
intentional acts, negligence, or unseaworthiness. DOHSA
preempts all state wrongful death statutes\7\ and actions under
general maritime law.\8\
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\1\The Harrisburg, 119 U.S. 199 (1886) (holding that admiralty
afforded no remedy for wrongful death in the absence of an applicable
state or Federal statute). In 1970, the Supreme Court reversed its
decision in The Harrisburg and provided for a general maritime cause of
action for wrongful death. Moragne v. States Marines Lines, 398 U.S.
375 (1970). The general maritime cause of action is not applicable in
cases in which other Federal statutory law (e.g., the Jones Act or
DOHSA) applies.
\2\46 U.S.C. Sec. 30302.
\3\46 U.S.C. Sec. 30106.
\4\46 U.S.C. Sec. 30305.
\5\46 U.S.C. Sec. 30304.
\6\46 U.S.C. Sec. 30303.
\7\Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207, 209
(1986).
\8\Dooley v. Korean Air Lines Co., 524 U.S. 116, 118 (1998).
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B. Jones Act
In 1920, Congress enacted the Jones Act to remove the
maritime law's bar to a seaman's suit for negligence. Under the
Jones Act, which makes applicable to seamen injured in the
course of their employment the provisions of the Federal
Employers' Liability Act,\9\ employees have a right of recovery
for injuries resulting from the negligence of the shipowner,
the operator, the captain, or fellow members of the crew. The
Jones Act does not allow for the recovery of non-pecuniary
damages. An action under the Act may be brought either in
Federal court or state court, and a seaman is entitled to a
jury trial (a right which is not afforded by general maritime
law). In order to be considered a ``Jones Act seaman,'' a
worker must have (1) an employment-related connection, which is
substantial in both nature and duration,\10\ (2) to a vessel in
navigation.
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\9\45 U.S.C. Sec. Sec. 51-60.
\10\To be considered a substantial connection with a vessel, the
worker must spend at least 30 percent of his time in the service of a
vessel on navigable waters. Chandris, Inc., v. Latsis, 515 U.S. 347
(1995).
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The Jones Act is best thought of as an analog to land-based
workers' compensation laws, which do not apply to seamen
working on U.S.-flagged vessels. Proof of negligence under the
Jones Act does not require as high a burden of proof as is
required for the general common law tort of negligence. Under
the Jones Act, an injured seaman only needs to prove that his
employer's negligence is ``a'' cause of his injuries. Thus, an
employer is liable under the Jones Act if the employer's
actions ``played any part, no matter how small, in bringing
about the injury or damage.''\11\ Courts have described the
seaman's burden of proving Jones Act negligence as
``featherweight.''\12\
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\11\See Ninth Circuit Model Civil Jury Instructions No. 9.4.
\12\Comeaux v. T.L. James & Co., Inc., 702 F.2d 1023 (5th Cir.
1983).
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C. Limitation of Liability Act
Congress enacted the Limitation of Liability Act (Liability
Act) to encourage shipbuilding and to induce investment in the
maritime industry by limiting the liability of vessel owners to
the value of the vessel involved, together with its freight
then pending. Claims for personal injury and death have higher
limits of liability over and above the value of the vessel and
its freight. Additionally, certain other claims, including
those for breach of contract, wages and environmental damage,
are not subject to any limitation. A shipowner may invoke the
protection of the Liability Act in two ways: (1) by asserting
limitation of liability as a defense to a lawsuit; and (2) by
filing a petition in Federal court seeking either exoneration
from or limitation of liability and requiring all parties to
bring their claims into that court. For purposes of H.R. 5503
and the Gulf oil spill, the two most important features of the
Liability Act are the provisions concerning personal injury and
death and the concursus provision that requires all claims to
be filed before one Federal court.
It is important to note that liability for oil spill and
pollution related claims under the Oil Pollution Act are not
covered by the Liability Act. The Oil Pollution Act has been
interpreted to apply exclusively to such claims notwithstanding
the Liability Act.
D. Class Action Fairness Act
Prior to enactment of the Class Action Fairness Act, most
class actions were adjudicated in state courts, where the
governing rules were applied inconsistently and often in a way
that violated basic fairness and due process, and where there
was often inadequate supervision over litigation procedures and
proposed settlements. The Act corrected those flaws in the
diversity jurisdiction statute\13\ that prevented most
interstate class actions from being adjudicated in Federal
courts. Thus, it furthered one of the primary historical
reasons for diversity jurisdiction, which ``is the reassurance
of fairness and competence that a Federal court can supply to
an out-of-state defendant facing suit in state court.''\14\
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\13\28 U.S.C. Sec. 1332.
\14\Davis v. Carl Cannon Chevrolet-Olds, Inc. 182. F.3d 792, 797
(11th Cir. 1999).
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As relevant to H.R. 5503, the Class Action Fairness Act
(CAFA) amended 28 U.S.C. Sec. 1332 to provide Federal district
courts with original jurisdiction of class actions if there are
100 or more class members, the aggregate amount in controversy
exceeds $5,000,000, and: (A) any class member is a citizen of a
state different from any defendant; (B) any member of the
plaintiff class is a foreign state, or a citizen or subject of
a foreign state, and any defendant is a citizen of a state; or
(C) any member of the plaintiff class is a citizen of a state
and any defendant is a foreign state or a citizen or subject of
a foreign state. This change was a stark contrast to prior law,
which required diversity of citizenship between every class
representative and also required that every plaintiff seek
damages in excess of $75,000. The pre-CAFA system easily
allowed plaintiffs to avoid removal to Federal court by
including a single non-diverse class representative, or by
limiting an individual plaintiff's claims to under $75,000.
DISCUSSION
In general, we opposed H.R. 5503 in committee for two main
reasons. First, although H.R. 5503 is being pushed as a
response to liability issues that have arisen in the wake of
the Gulf oil spill (indeed the acronym for the bill is the
``SPILL Act''), the provisions in the bill are not limited to
either the Gulf oil spill or oil spills generally. Rather, the
bill's provisions make major changes to, among other things,
U.S. maritime liability laws, the Class Action Fairness Act,
and the Bankruptcy Code. In other words, the bill affects a
wide range of interests that not only have no association with
the Gulf oil spill, but are not even associated with the oil
industry.
Second, the bill is making these changes without even the
benefit of one legislative hearing. Without a legislative
hearing, we have no clear understanding of the full impact of
the bill's provisions. Understandably, sometimes legislation
must move on an expedited basis to respond to emergencies;
however, by its own terms H.R. 5503 applies retroactively,
providing the committee with a window of time in which to
conduct the hearings required to ensure that the changes made
by the bill are necessary and that the unintended consequences
are limited.
Beyond these two overarching concerns with H.R. 5503, we
have several specific concerns with the bill's provisions:
Non-pecuniary damages. H.R. 5503 provides for non-pecuniary
damages under both the Death on the High Seas Act and the Jones
Act. While it is understandable that in the wake of this
tragedy, and in the name of holding the responsible parties
fully accountable, there would be a push to provide decedents
with the ability to claim additional damages, the non-pecuniary
damages provisions apply to all cases brought under both acts
and thus will have broad impact. It is unclear how
significantly this change will affect U.S. maritime interests.
However, we do know that in general awards of non-pecuniary
damages are unpredictable, resulting from the inherent
difficulties in valuing such damages and the great disparity in
the price tag which different juries place on such losses.
Additionally, with regard to allowing such damages under
the Jones Act in particular, the change made by H.R. 5503 may
create inequities for other American workers versus Jones Act
seamen. The Jones Act, like the Federal Employer Liability Act
(FELA) and the Longshore and Harbor Workers Compensation Act
(LHWCA), is best thought of as an analog to state workers'
compensation statutes, not state tort law. But state workers'
compensation schemes, FELA, and LWHCA do not generally provide
for the award of non-economic damages. Combined with the fact
that the negligence standard under the Jones Act has been
characterized as ``featherweight,'' the provision of non-
pecuniary damages under the Jones Act may be highly
problematic.
Unfortunately, just as with the other provisions in this
bill, we did not have a hearing on these non-pecuniary damages
provisions to understand how they will affect the U.S. maritime
industry, which by most accounts is already in significant
decline. Overturning long-settled expectations and possibly
adding significant new costs could weaken the industry even
further and lead to domestic job losses. We should not run that
risk without a legislative record.
Limitation of Liability Act. Section 4 of H.R. 5503 repeals the
Liability Act without adopting any replacement legislation to
fill the void in the United States for purposes of limitation
of liability for vessel-related incidents. However, the
Liability Act is an important feature of U.S. maritime law
addressing the liability of a vessel owner in the aftermath of
a marine casualty, usually involving numerous parties with
competing damage claims, loss of life or personal injury, and
several potential jurisdictions in which claims may be filed.
Repeal of the Liability Act without a suitable replacement
mechanism will introduce uncertainty and in many cases may
result in inadequate funds to compensate non-Oil Pollution Act
claimants for personal injury and property damage resulting
from a vessel casualty.
The Liability Act provides a procedure in admiralty to
enjoin all pending suits, and requires a concursus to compel
all claims to be filed in a special limitation proceeding so
that liability may be determined in one Federal forum. This
procedure promotes judicial efficiency because it requires all
claims from one incident to be litigated before a single
Federal judge instead of multiple different forums with
potentially conflicting or competing judgments. While
limitation of liability promotes consistency and reliability
for commercial interests involved in the shipping industry, the
Act also benefits claimants because it requires the vessel
owner to create a compensation fund to pay claimants. The
vessel owner is required to file a ``stipulation for value'' in
the form of a bond or other acceptable security for payment of
claims arising out of the incident. The Act also requires the
owner to create a personal injury fund ($420 per gross ton of
the vessel's weight) to compensate personal injury or death
claimants apart from property damage or other claims. By
repealing the Act, this compensation fund will not be available
to secure the claims of parties.
The principle of global limitation of liability is vital to
the international shipping industry. In particular, a large
number of jurisdictions worldwide (52 nations as of May 31,
2010, including Canada, Mexico, United Kingdom, France,
Germany, Spain, Italy, Japan, South Africa, and Korea) have
adopted the 1976 Convention on Limitation of Liability for
Maritime Claims (LLMC). The Protocol of 1996 amended the LLMC
to provide for enhanced compensation and to provide a
simplified procedure for updating the limitation amounts.
If Congress wants to update or modernize the Liability Act,
the answer is not simply to repeal the Act as is done in H.R.
5503. The LLMC and the Protocol of 1996 provide a useful
example of a consensus among the international shipping nations
for a workable compensation scheme that addresses modern
concepts of insurance and liability with respect to claims
against an owner and also creates a larger compensation fund
based on the gross tonnage of the vessel involved.
Class Action Fairness Act. The proposed amendments to the Class
Action Fairness Act (CAFA) in H.R. 5503 are unnecessary and run
counter to the very purpose of CAFA. CAFA was intended to
ensure that actions involving minimal diversity (that is, cases
brought by plaintiffs of one state against defendants of
another state) are decided in a neutral, fair forum--the
Federal courts. The alternative--permitting such actions to be
tried in local courts, often with elected trial court judges,
who favor local plaintiffs over out-of-state businesses--leads
to unjust results.
H.R. 5503 amends CAFA by providing that the CAFA minimal
diversity provisions do not apply to ``an action brought by a
State or a subdivision of a State on behalf of its citizens.''
However, this change is entirely unnecessary as courts appear
uniformly to agree that CAFA does not provide Federal
jurisdiction over enforcement actions brought by states on
behalf of their citizens.\15\ Thus, the only real effect of the
CAFA provisions in H.R. 5503 is to create a loophole that would
keep legitimate class actions and mass actions from being
removed to Federal court.
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\15\For instance, a state may bring an enforcement action for
violation of the state's unfair and deceptive trade practices statute
to enjoin a deceptive practice and/or seeking civil penalties and other
remedies authorized by the state statute. See, e.g., Missouri ex rel.
Koster v. Portfolio Recovery Assocs., Inc., 686 F. Supp. 2d 942, 946-47
(E.D. Mo. 2010); Connecticut v. Moody's Corp., 664 F. Supp. 2d 196, 202
(D. Conn. 2009).
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This loophole would encourage enterprising attorneys to
avoid Federal jurisdiction by finding state attorneys general
to join their class action lawsuits. Rather than promote
justice, such a result would promote questionable
collaborations between private attorneys and public officials,
in which the attorneys seek the state attorney general's
signature in order to avoid Federal jurisdiction. As Senator
Hatch noted in floor debate on CAFA of an amendment with
similar language to the language in H.R. 5503,
this amendment is not only unnecessary, it actually
creates opportunities for gaming. If this legislation
enables State attorneys general to keep all class
actions in State court, it will not take long for
plaintiffs' lawyers to figure out that all they need to
do to avoid the impact of S. 5 is to persuade a State
attorney general to simply lend the name of his or her
office to a private class action. In other words,
plaintiffs' lawyers will try to keep interstate class
actions in State court by simply naming that State's
attorney general at the end of complaint as a co-
counsel or of-counsel.\16\
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\16\151 Cong. Rec. S 1157 (Feb. 9, 2005).
In effect, the amendments to CAFA contained in H.R. 5503
circumvent the law by creating a situation in which state
attorneys general could partner with personal injury lawyers
and bring private class actions for tort or contract damages
that must stay in state courts. In other words, including a
state attorney general as a co-plaintiff on a private class
action might be enough to nullify CAFA, raising serious
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conflict of interest, legal ethics, and constitutional issues.
Enforceability of Secrecy Agreements. Section 6 of H.R. 5503
would make court orders restricting the dissemination of broad
categories of information related to oil spills void and
unenforceable in any legal proceeding, with very limited
exception. The Judicial Conference of the United States has
expressed serious concerns regarding this provision. According
to the Conference, ``[n]ot only does Section 6 circumvent the
process for amending the Federal Rules of Civil Procedure that
Congress established in the Rules Enabling Act, it threatens
litigants' rights and interests and creates an unworkable
procedure for the cases covered by H.R. 5503.''\17\
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\17\Letter from the Judicial Conference of the United States,
Committee on Rules of Practice and Procedure, to the Hon. Lamar Smith,
Ranking Member, House Judiciary Committee (June 28, 2010) (internal
citations omitted).
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The Judicial Conference explains that the ``provisions in
Section 6 would prohibit a court from enforcing a protective or
confidentiality order that is necessary to protect vital
privacy rights.''\18\ Moreover, the Conference notes that
section 6 ``is unnecessary to achieve the bill's purposes and
has the potential to do great harm to those already struggling
with the effects of the oil spill.''\19\ Furthermore, according
to the Conference, section 6 ``provides an unworkable procedure
that would delay and complicate discovery in the very cases
that should be handled with expedition and efficiency to
provide needed relief to those affected by the spill.''\20\
Ultimately, the Judicial Conference concludes that section 6
should be removed from the legislation.
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\18\Id.
\19\Id.
\20\Id.
Bankruptcy Protections. The impact of the bankruptcy provisions
in H.R. 5503 is particularly difficult to understand fully
without a legislative hearing. Certainly, no one wants BP or
any other company with oil spill liability to file an
opportunistic chapter 11 bankruptcy to avoid its liability
under the Oil Pollution Act and related laws. However, the
bill's proposed changes to the Bankruptcy Code are
substantively questionable.
The bill effectively gives oil spill liability claimants a
veto over any asset sale unless they are paid in full and does
not allow for confirmation of a chapter 11 plan that provides
for the sale of assets unless oil spill claimants are either
paid in full or consent to the sale. But, property cannot be
sold for more than its value. Thus, if there is insufficient
unencumbered value left in any property proposed to be sold in
bankruptcy to compensate fully oil spill claimants, the oil
spill claimants will have to agree to the sale or the sale will
be blocked.
The bankruptcy provisions in this bill, therefore, appear
designed to give oil spill claimants leverage over secured
claimholders by blocking sales of their collateral unless
someone pays them off even before the secured claim is paid
off. Accordingly, the bankruptcy provisions raise
constitutional questions under the Fifth Amendment because they
undermine the value of the collateral of the secured
claimholders. In addition to the constitutional concerns, if
property needs to be sold, it creates a stalemate between the
debtor's secured claimholders and other unsecured claimholders
on the one hand, and the oil spill claimants on the other.
Normally, if Congress wants to give claimants an advantage in
bankruptcy, it gives some or all their claims (up to whatever
amount Congress determines) priority status under 11 U.S.C.
Sec. 507(a).
Giving veto power, leverage, and quasi priorities to oil
spill claimants may sound good, but the flipside is that it
demotes all other secured and unsecured claims. Why are these
oil pollution claims more entitled to payment than other
claims? What about personal injury bankruptcy claimants, should
their claims be given less bankruptcy protection? Or, secured
claimants, which in many cases include pension funds that have
invested people's retirement savings in what would otherwise be
relatively safe investment vehicles, should their claims be put
behind oil spill claimants?
Perhaps oil spill claimants should be given additional
bankruptcy protections. But the exact nature of these
protections and their impact needs to be examined through the
normal legislative process of conducting hearings. BP is not on
the verge of bankruptcy, as is demonstrated by its willingness
to set up a $20 billion escrow fund, backed by BP assets.
Ironically, the impact of this reform may be to make it harder
for smaller firms to obtain financing, ultimately benefiting BP
(and other large oil companies) by driving out potential
competitors from off-shore drilling. The committee has the time
to conduct a legislative hearing to ascertain the correct level
and form of any needed bankruptcy protection for oil spill
claimants.
REPUBLICAN AMENDMENTS
Limit the bill's provisions to claims arising out of oil
spills. Ranking Member Smith offered an amendment to limit H.R.
5503 to claims arising out of oil spills. The amendment was
rejected on a party-line vote.
Remove the Class Action Fairness Act provisions from the bill.
Mr. Goodlatte offered an amendment to strike section 5 of the
bill, which contains provisions amending the Class Action
Fairness Act. The amendment was defeated on a voice vote.
Limit the bill's Class Action Fairness Act provisions to claims
arising out of oil spills. Mr. Goodlatte also offered an
amendment to limit the bill's Class Action Fairness Act
provisions to cases arising out of oil spills. The amendment
was withdrawn.
Waiver of the Jones Act restrictions on the operation of
foreign vessels in U.S. waters. Mr. Lungren offered an
amendment to waive the Jones Act provisions that restrict
foreign vessels from aiding in the cleanup efforts in the Gulf
of Mexico. The amendment was ruled non-germane.
CONCLUSION
Those responsible for the Gulf coast oil disaster must be
held fully liable, and Congress must ensure that U.S. liability
laws are sufficient to ensure that result. However, without
having held a legislative hearing to understand the full impact
of H.R. 5503, we should not have moved this bill through
committee on such an expedited basis. The extensive changes to
U.S. maritime liability law in H.R. 5503, which apply well
beyond oil spills, threaten to increase dramatically the cost
of shipping goods--an increase that will be borne by all
American consumers, and may put American jobs at risk.
Additionally, the legislation unnecessarily amends the Class
Action Fairness Act, opening up the very realistic possibility
of enterprising trial attorneys gaming the system and
circumventing Federal law to keep class actions out of Federal
court. Finally, the bill essentially gives Oil Pollution Act
claimants veto power over essential aspects of the bankruptcy
process, seriously curtailing the rights of other bankruptcy
claimants.
Because this bill applies retroactively, there is no reason
to rush this bill through committee, recommending that the full
House adopt it, without having taken the time to conduct a
single legislative hearing on its sweeping provisions. As
Congress considers amending the law to ensure that BP is held
accountable for the Gulf oil spill, it should avoid harming,
rather than advancing, the national interest. Without proper
consideration of these proposed changes to the law, however,
Congress risks harming the nation in order to punish BP.
Lamar Smith.
F. James Sensenbrenner, Jr.
Bob Goodlatte.
Darrell E. Issa.
Trent Franks.
Jim Jordan.