Andrew J' Garger

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Andrew J. Garger

• Vice President, Legal General Counsel
• Water Quality Insurance Syndicate

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Mississippi River Spill

• Ground rules Current Potential Litigation
• Cannot give opinion regarding coverages
• No opinions regarding ultimate outcome
• If I happen to give opinions about any of the
  above they are my personal opinions, not WQISs.

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Do You Remember?
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THE OIL POLLUTION ACT OF 1990 (OPA) P.L. 101-380
Responsible Party Owner, Operator or
Charterer by demise Nature of
Liability Strict, joint and several
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THE OIL POLLUTION ACT OF 1990 (OPA) P.L. 101-380
Pollutant Oil of any kind, except if
classified as an hazardous substance
under CERCLA
Jurisdiction Navigable waters, adjoining
shorelines, or the Exclusive Economic
Zone
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WHAT IS RECOVERABLE ?

• Removal Costs
• Natural Resource Damages
• Damage to Property
• Loss of Subsistence Use

• Lost Revenue
• Lost Profits
• Increased Costs of Public Services

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Mississippi River Spill

• Collision July 23rd Barge DM-932, TUG MEL
  OLIVER, M/V TINTOMARA
• Mile 99 near entrance to Harvey Canal
• Approximately 9000 bbls of 6 oil (heavy).
  Approx. half spilled
• ACL, owner of the DM-932 (double skinned barge)
  is responsible party

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Mississippi River Spill

• CASUALTY RESPONSE
• On scene- spill response managers, spill response
  contractors, environmental experts, Coast Guard,
  state officials, 3rd party claims handlers.
• Over 1000 responders at height of cleanup.

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Mississippi River Spill

• SPILL RESPONSE
• Coast Guard closed 58 miles of the Mississippi
  River (at least 3 days).
• Down-river water intakes boomed off.

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Mississippi River Spill
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Mississippi River Spill
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Mississippi River Spill
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Mississippi River Spill
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Mississippi River Spill
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Mississippi River Spill
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Mississippi River Spill
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Beach Cleanup Using Boom
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Aggressive Cleanup Measures
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Mississippi River Spill

• Public Commentary (NOLA.COM)
• Was Joseph Hazlewood piloting the tanker?
• Sounds like someone had too much to drink.
• How in the hell do you not see a 600 foot
  tanker? Can you say DUI.?
• Sounds like Al Qaeda.
• I might just call it a day and get on out of
  work and throw and oil spill party.
• If they were only using Cosmo Kramers bladder
  system that he invented this could have all been
  avoided.
• The oil futures just went up again.

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Mississippi River Spill

• Does this oil contain Benzene? My research tells
  me that ingestion of Benzene builds character.
  Everyone take a deep breath.

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Mississippi River Spill

• Coast Guard Investigation
• Hearing August 8th. Took a break for Hurricane
  Gustav. Continued in October.
• Close to thirty witnesses
• Barge pilot took the 5th.
• Preliminary Statement by Coast Guard indicated
  improper licensure.

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Mississippi River Spill

• Congressional Hearings
• Coast Guard stated that federalizing spill
  triples the cost.
• Insisted that rules be implemented regarding the
  inspection of tug boats as required by Coast
  Guard Act of 2004.

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What Now?
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Mississippi River Spill

• Current Status
• Incident Command System remains in place.
• Free floating oil cleaned up still locating
  oily debris.
• 200 miles of impacted shoreline were surveyed
  90 of impacted areas cleaned.

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Natural Resource Damage Assessment

• Natural Resource Damage Assessment
• Huge potential damages
• Passive-Use (loss of enjoyment)
• Wildlife habitats
• Bird kills

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Mississippi River Spill

• Class Action Lawsuits
• At least six filed naming ACL, DRD, and others.
• Includes loss of revenue claims.
• Classes have not been certified.

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Other Pollution Coverage Issues

• Eventual Submission to National Pollution Funds
  Center
• Many roadblocks to recovery
• Long process
• Unreasonable Standards
• Morris J. Berman
• Tako Spirit

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BREAKING LIABILITY LIMITS

• Gross negligence, willful misconduct
  (no privity or knowledge of owner required).
• Violation of federal safety, construction or
  operating standard.
• Failure to report spill or cooperate with
  clean-up.

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Criminal Liability

• Oily Water Separator Cases
• Overseas Shipholding Group Inc (OSG)
• Plead Guilty to 33 Felony counts
• Deliberate Vessel Pollution from nine ships
• False pollution log entries in three additional
  ships

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Criminal Liability

• Record fine 37 million penalty for violations
  that occurred on the twelve vessels
• 27.8 million criminal fine
• 9.2 million organizational community service
  payment
• Three-year term of probation

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Magic Pipe O.W.S. Acquittal

• Athenian Sea Carriers of Greece
• Suezmax Tanker Captain X. Kyriakou
• Acquitted of charges of false statements and the
  use of an illegal discharge pipe
• Seven total acquittals
• Reports calling acquittal an industry first

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Criminal Liability

• Background
• Greater potential that environmental violations
  will be treated criminally
• Statutory Basis for Liability
• OPA 90
• Migratory Bird Treaty Act
• Refuse Act

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Criminal Liability

• Good Operators targeted for negligent violations
  (OPA 90 Standard)
• Use of Strict Liability Statutes
• Lose Government Contracts
• Onerous terms of Probation

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Criminal Liability

• Example Eklof Towing (1998)
• 9.5 million fine
• Fine and Probation for company president and tug
  captain
• Collateral Consequences
• Lose Government Contracts
• Onerous terms of Probation

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Criminal Liability

• Solutions
• Legislative
• Educate Employees
• Identify Criminal Defense Counsel
• EPA / DOJ want compliance programs
• Choose Location of a Violation Carefully

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Mississippi River Spill Insurance

• Reservation of Rights
• Potential Recovery by Insurers
• Recovery NRDA
• Suits Against DRD/ACL??

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Thanks!