STATEMENT OF H. MERRITT LANE, III

PRESIDENT, CANAL BARGE COMPANY, INC.

REPRESENTING THE AMERICAN WATERWAYS OPERATORS

HEARING ON CRIMINAL LIABILITY FOR OIL POLLUTION

COAST GUARD & MARITIME TRANSPORTATION SUBCOMMITTEE

TRANSPORTATION & INFRASTRUCTURE COMMITTEE

UNITED STATES HOUSE OF REPRESENTATIVES

THURSDAY, MAY 14, 1998

Good morning, Mr. Chairman, Mr. Clement, and members of this Subcommittee. I am Merritt Lane, the President of Canal Barge Company, Inc., headquartered in New Orleans, Louisiana. I am pleased to testify today on behalf of our company and the American Waterways Operators (AWO). AWO is the national trade association representing the inland and coastal barge and towing industry. AWO is comprised of more than 350 companies from New England to Alaska and all points along the navigable waters of the United States. In addition to the AWO, my testimony today enjoys the support of several other organizations, including the Transportation Institute and the Water Quality Insurance Syndicate (WQIS).

Mr. Chairman, let me begin by commending you for holding this oversight hearing today to review the impact of criminal liability on the implementation of the Oil Pollution Act of 1990, commonly referred to as "OPA90". As my testimony will explore in more detail, OPA90 has been tremendously successful in reducing the number of oil spills and in establishing a cooperative public/private partnership to respond effectively in the diminishing number of situations when an oil spill occurs in the marine environment. Nonetheless, over the course of the last eight years, we have found that the implementation of some aspects of OPA90 have undermined the spill prevention and response objectives of the Act, the very objectives that were established by the Congress to preserve the environment, safeguard the public welfare, and promote the safe transportation of oil. While the focus of this hearing and my testimony today is on the strict criminal liability issue, the Congress should also examine other reforms and improvements that could be made in certain other areas involving the transportation of oil, including the following:

With regard to the primary purpose of this hearing, I am pleased to have the opportunity today to suggest reasonable, measured refinements in federal law relating to unjustified strict criminal liability imposed in oil spill incidents. As stated in the Coast Guard's own environmental enforcement directive, a company, its officers, employees, and mariners, in the event of an oil spill could be convicted and sentenced to a criminal fine even where [they] took all reasonable precautions to avoid the discharge.1 With increasing frequency, responsible operators who transport oil are unavoidably exposed to potentially immeasurable criminal fines and, in the worst case scenario, jail time. Not only is this situation unfairly targeting an industry that plays an extremely important role in our national economy, but it also works contrary to the public welfare.

Against that backdrop, let me briefly describe our company and its OPA90 record. Canal Barge Company is one of the major providers of liquid cargo transportation services on the Gulf Coast and inland waterway system of the United States. Safe operation and risk management are two of the most important and fundamental values in our company. As an example, our company's safety program has resulted in a greater than 400% reduction in personal injuries to our mariners since its inception seven years ago. Since 1991, Canal Barge has upgraded its tank barge fleet by building 31 new state-of-the-art double hulled tank barges while retiring all of our obsolete single skin barges far in advance of the OPA90 deadline for the conversion of all tank vessels trading in U.S. waters to double hulls. Additionally, Canal Barge and other AWO members have dedicated significant time and financial resources to provide continuous and comprehensive education and training for our vessel captains, crews and shoreside staff, not only in the operation of vessels but also to prepare them for all contingencies that could occur in the transportation of oil products. In June 1997, we were gratified that Canal Barge qualified as a responsible carrier under the AWO Responsible Carrier Program (RCP), a program developed by the towing industry to improve the overall safety, efficiency, and quality of its marine operations. As of today, more than 90 percent of the tugboats, towboats and barges owned and operated by AWO member companies are in compliance with the RCP. The RCP, complemented by advanced training programs such as the ground breaking wheelhouse resource management and simulator training program for towboat operators, is greatly enhancing the professionalism of our mariners as we enter the next millennium.

Our industry's commitment to marine safety and environmental protection is real. We have worked hand in hand with the Coast Guard to upgrade regulatory standards in such key areas as towing vessel operator qualifications and navigation equipment on towing vessels. That commitment is also demonstrated by industry-driven safety initiatives like the Responsible Carrier Program mentioned above and the Coast Guard-AWO Partnership, which brings the leadership of our industry together with government to solve marine safety and environmental protection problems. Perhaps most significantly, our commitment to safety is manifested by our record (See Exhibit 1), one we are committed to continually improving.

Through our own efforts and in conjunction with these AWO programs, Canal Barge has achieved an outstanding compliance record with the numerous laws and regulations enforced by the Coast Guard. Let me be clear: we and, frankly our customers, have a zero tolerance policy for oil spills. Consistent with that policy, our tankermen performed over 5,300 oil cargo transfer operations without spilling or contaminating any of the almost 2.8 billion gallons of oil we transferred in the past several years. Additionally, we take our spill response preparedness seriously. We have sent two company managers to participate in the Coast Guard's eight day On-Scene Coordinator Crisis Management Course in Yorktown, Virginia; we participated in the Coast Guard's PREP Drill late last year; and, we involved the Coast Guard, six Oil Spill Response Organizations (OSROs) and a spill cleanup management contractor in our own 1997 OPA Tabletop Drill. Yet despite all of the modernization, safety, and training efforts Canal Barge has undertaken, our shoreside employees and mariners cannot escape the threat of criminal liability in the event of an oil spill, even where it is shown that we took all reasonable precautions to avoid [a] discharge.2 Mr. Chairman, as you know, in response to the tragic EXXON VALDEZ spill, Congress enacted OPA90. OPA90 mandated new, comprehensive, and complex regulatory and enforcement requirements for the transportation of oil products and for oil spill response. Both the federal government and maritime industry have worked hard to accomplish the legislation's primary objective -- to provide greater environmental safeguards in oil transportation by creating a comprehensive prevention, response, liability, and compensation regime to deal with vessel and facility oil pollution.

I am pleased to report to you that in a truly meaningful sense, OPA90 is working. To prevent oil spill incidents from occurring in the first place, OPA90 provides an enormously powerful deterrent, both through its criminal and civil liability provisions. Moreover, OPA90 mandates prompt reporting of spills, contingency planning, and both cooperation and coordination with federal, state, and local authorities in connection with managing the spill response. Failure to report and cooperate as required by OPA90 may impose automatic civil penalties, criminal liability and unlimited civil liability. As a result, the number of domestic oil spills has been dramatically reduced over the past eight years since OPA90 was enacted. Coast Guard statistics reflect that in 1990 there were a total of 35 major and medium oil spills, seven of which were major spills. In 1997, as a direct result of OPA90, there were no major oil spills and the number of medium spills had been reduced to eight.3 In those limited situations in which oil spills unfortunately occurred, intensive efforts commenced immediately with federal, state and local officials working in a joint, unified manner with the industry, as contemplated by OPA90, to clean up and report spills as quickly as possible and to mitigate to the greatest extent any impact on the environment. OPA90 has provided a comprehensive and cohesive "blueprint" for proper planning, training, and resource identification to respond to an oil spill incident, and to ensure that such a response is properly and cooperatively managed.

OPA90 also provides a complete statutory framework for proceeding against individuals for civil and/or criminal penalties arising out of oil spills in the marine environment. When Congress crafted this Act, it carefully balanced the imposition of stronger criminal and civil penalties with the need to promote enhanced cooperation among all of the parties involved in the spill prevention and response effort. In so doing, the Congress clearly enumerated the circumstances where criminal penalties could be imposed for actions related to maritime oil spills. In particular, OPA90 properly imposes criminal liability for negligent violations and provides for punishment of up to one year imprisonment and/or fines between $2500 and $25,000 per day. The punishment for each knowing violation was increased by OPA90 to up to three years imprisonment and/or fines between $5000 and $50,000 per day. Furthermore, OPA90 added and/or substantially increased criminal penalties under the following pre-existing laws which comprehensively govern the maritime transportation of oil and other petroleum products:

Canal Barge and others within the maritime transportation industry that operate responsibly and within the law are not here today to advocate changes to the tough criminal sanctions that were imposed in OPA90. The criminal sanctions under OPA90 properly follow the traditional notion of what constitutes criminal acts in this country -- namely, that a crime occurs when a knowing, intentional act is committed or when a party's conduct is so egregious that negligence has occurred. The OPA90 provisions collectively operate as a major deterrent for oil spills, and we again assure this Subcommittee that we do not seek any amendments to the existing criminal penalties in OPA90.

However, AWO member companies are concerned, as are other responsible, law-abiding maritime interests, by both the Justice Department's increasing willingness in the post-OPA90 environment to use strict criminal liability statutes and the Coast Guard's increasing attention to criminal enforcement in oil spill incidents. As you know, strict liability imposes criminal sanctions without requiring a showing of criminal knowledge, intent or even negligence. These federal actions imposing strict liability have created an atmosphere of extreme uncertainty for Canal Barge, other AWO members and members of the Oil Spill Response Organizations (OSROs) about how to respond to and cooperate with the Coast Guard and other federal agencies in cleaning up an oil spill. Criminal culpability in this country, both historically and as reflected in the comprehensive OPA90 legislation itself, typically requires wrongful actions or omissions by individuals through some degree of criminal intent or through the failure to use the required standard of care. However, overzealous Federal prosecutors increasingly have been employing other antiquated, seemingly unrelated strict liability statutes that do not require a showing of knowledge or intent as a basis for criminal prosecution for oil spill incidents. Such strict criminal liability statutes as the Migratory Bird Treaty Act and the Refuse Act, statutes that were enacted at the turn of the century to serve other purposes, have been used to harass and intimidate the maritime industry, and, in effect, have turned every oil spill into a potential crime scene without regard to the fault or intent of companies, corporate officers and employees, and mariners.

The Migratory Bird Treaty Act (MBTA) (16 U.S.C. 703 et seq.) provides that it shall be unlawful at any time, by any means or in any manner, to pursue, hunt, take, capture, kill, attempt to take, capture, or kill, ... any migratory bird ..., a violation of which is punishable by imprisonment and/or fines. Prior to the EXXON VALDEZ oil spill in 1989, the MBTA was primarily used to prosecute the illegal activities of hunters and capturers of migratory birds, as the Congress originally intended when it enacted the MBTA in 1918. In the EXXON VALDEZ case itself, and prior to the enactment of OPA90, the MBTA was first used to support a criminal prosecution against a vessel

owner in relation to a maritime oil spill, and this "hunting statute" has been increasingly used ever since against the maritime industry. The "Refuse Act" (33 U.S.C. 407, 411) was enacted 100 years ago at a time well before subsequent federal legislation essentially replaced it with comprehensive requirements and regulations specifically directed to the maritime transportation of oil and other petroleum products. Such strict liability statutes are unrelated to the regulation and enforcement of oil transportation activities, and in fact were not included within the comprehensive OPA90 legislation as statutes where criminal liability could be found. With the prosecutorial use of strict liability statutes, owners and mariners engaged in the transportation of oil cannot avoid exposure to criminal liability, regardless of how diligently they adhere to prudent practice and safe environmental standards. Although conscientious safety and training programs, state-of-the-art equipment, proper operational procedures, preventative maintenance programs, and the employment of qualified and experienced personnel will collectively prevent most oil spills from occurring, unfortunately spills will still occur on occasion.

Mr. Chairman, please permit me to present a scenario that highlights the dilemma we face today in the maritime oil transportation industry. Imagine, if you will, that a company is operating a towing vessel in compliance with Coast Guard regulations on the Mississippi River on a calm, clear day with several fully laden tank barges in tow. Suddenly, in what was charted and previously identified to be a clear portion of the waterway, one of the tank barges strikes an unknown submerged object which shears through its hull and causes a significant oil spill in the river. Unfortunately, in addition to any other environmental damage that may occur, the oil spill kills one or more migratory birds. As you know, under OPA90 the operator must immediately undertake coordinated spill response actions with the Coast Guard and other federal, state, and local agencies to safeguard the vessel and its crew, clean up the oil spill, and otherwise mitigate any damage to the surrounding environment. The overriding objective at this critical moment is to clean up the oil spill as quickly as possible without constraint. However, in the current atmosphere the operator must take into consideration the threat of strict criminal liability under the Migratory Bird Treaty Act and the Refuse Act, together with their attendant imprisonment and fines, despite the reasonable care and precautions taken in the operation and navigation of the tow and in the spill response effort. Indeed, in the Coast Guard's recently issued Commandant's Instruction, the statement is made that [t]he decision to commit the necessary Coast Guard resources to obtain the evidence that will support a criminal prosecution must often be made in the very early stages of a pollution incident.4 Any prudent operator will quickly recognize the dilemma in complying with the mandate to act cooperatively with all appropriate public agencies in cleaning up the oil spill, while at the same time those very agencies may be conducting a criminal investigation of that operator. Vessel owners and their employees who have complied with federal laws and regulations and have exercised all reasonable care should not continue to face a substantial risk of imprisonment and criminal fines under such strict liability statutes. Criminal liability, when appropriately imposed under OPA90, should be employed only where a discharge is caused by conduct which is truly criminal in nature, i.e., where a discharge is caused by reckless, intentional or other conduct deemed criminal by OPA90.

The unjustified use of strict liability statutes is plainly undermining the very objectives which OPA90 sought to achieve, namely to enhance the prevention of and response to oil spills. As you are well aware, Mr. Chairman, tremendous time, effort, and resources have been expended by both the federal government and the maritime industry to eliminate oil spills to the maximum extent possible, and to plan for and undertake an immediate and effective response to mitigate any environmental damage from spills that do occur. Clearly unwarranted and improper prosecutorial use of strict liability statutes will have a chilling effect on these cooperative spill prevention and response efforts. Indeed, even if we were to believe that criminal prosecution only follows intentional criminal conduct, the mere fact that strict criminal liability statutes are available at the prosecutor's discretion will intimidate even the most innocent and careful operator. With strict liability criminal enforcement, responsible members of the maritime transportation industry are faced with an extreme dilemma in the event of an oil spill -- provide less than full cooperation and response as criminal defense attorneys will certainly direct, or cooperate fully despite the risk of criminal prosecution that could result from any additional actions or statements made during the course of the spill response. Consequently, increased criminalization of oil spill incidents introduces uncertainty into the response effort by discouraging full and open communication and cooperation, and leaves vessel owners and operators criminally vulnerable for response actions taken in an effort to "do the right thing".

In our continuing effort to improve our risk management process, we seek to identify and address all foreseeable risks associated with the operation of our business. By modernizing our fleet, training our personnel, and taking all other reasonable steps to address identified risks in our business, we still cannot manage or avoid the increased risks of strict criminal liability (again, a liability that has no regard to fault or intent). The only method available to companies and their officers to avoid the risk of criminal liability completely is to divest themselves from the maritime business of transporting oil and other petroleum products, in effect to get out of the business altogether. Furthermore, strict liability criminal laws provide a strong disincentive for trained, highly experienced mariners to continue the operation of tank vessels. Certainly, the federal government does not want to create a situation where the least experienced mariners are the only available crew to handle the most hazardous cargoes, or the least responsible operators are the only available carriers. Thus, the unavoidable risk of such criminal liability directly and adversely affects the safe transportation of oil products, an activity essential for the public, the economy, and the nation.

Therefore, Mr. Chairman, despite our commitment and effort to provide trained and experienced vessel operators and employees, to comply with all Coast Guard laws and regulations, to abide by the safety and other operational mandates of the American Waterways Operators Responsible Carrier Program, and to provide for the safe transportation of oil as required by OPA90 and our customers, Canal Barge and other AWO member companies still cannot avoid criminal liability in the event of an oil spill. We have unfortunately been forced to undertake the only prudent action that we could under the circumstances. Canal Barge has commenced the preliminary development of a criminal liability action plan in an attempt to prepare for the unavoidable risks of such liability. Accordingly, even though we have an exceptional spill prevention record, Canal Barge has taken the following initial steps:

These are only preliminary steps and do not begin to address the many implications of the increasing criminalization of oil spills. We ask ourselves what responsibility do we have to educate our mariners and shoreside staff about the potential personal exposure they may face and wonder how to do this without creating many undesirable consequences? How should we organize our spill management team and educate them on how to cooperate openly and avoid unwitting exposure to criminal liability? Mr. Chairman, I have thought about these issues a great deal and simply do not know how to resolve these dilemmas.

In the event of an oil spill, a responsible party not only must manage the cleanup of the oil and the civil liability resulting from the spill itself, but also must protect itself from the criminal liability that now exists due to the available and willing use of strict liability criminal laws by the federal government. Managing the pervasive threat of strict criminal liability, by its very nature, prevents a responsible party from cooperating fully and completely in response to an oil spill situation. The OPA90 "blueprint" is no longer clear. Is this serving the objectives of OPA90? Does this really serve the public welfare of our nation? Is this what Congress had in mind when it mandated its spill response regime? Is this in the interest of the most immediate, most effective oil spill cleanup in the unfortunate event of a spill? We think not.

To restore the delicate balance of interests reached in the enactment of OPA90 almost eight years ago, we believe that your Subcommittee should take the lead by reaffirming the exclusive use of OPA90 and its related framework for criminal prosecutions in oil spill incidents, and work to enact legislation that reasserts the preeminent role of OPA90 as the statute providing the exclusive criminal penalties for oil spills. Such legislation will ensure increased cooperation and responsiveness desired by all those interested in oil spill response issues, while not diluting the deterrent effect and stringent criminal penalties imposed by OPA90 itself.

Mr. Chairman, I thank you for the opportunity to testify before you today on this very important issue, and I look forward to responding to any questions you or members of the Subcommittee may have concerning this matter.

* * * * *

1 Criminal Enforcement of Environmental Laws, U. S. Coast Guard Commandant Instruction M16201.1 of 30 July, 1997.

2 U. S. Coast Guard Commandant Instruction M16201.1, supra.

3 Marine Environmental Protection Performance Indicators, U. S. Coast Guard.

4 U. S. Coast Guard Commandant Instruction M16201.1, supra.

Papers & Presentations | Transportation Safety


NTSB Home | Contact Us | Search | About the NTSB | Policies and Notices | Related Sites