DANNY C. REEVES, District Judge.
This matter is pending for consideration of defendant S.J. Louis Construction, Inc.'s ("S. J. Louis") motion to dismiss. [Record No. 14] S.J. Louis asserts that Defendant Mid-Valley Pipeline Co. ("Mid-Valley") is not entitled to indemnification or reimbursement for any fines imposed under the Clean Water Act. It also argues that Counts I and II of the Complaint — both of which assert claims under common law negligence theories — are either preempted by federal law or are otherwise inapplicable. Additionally, it contends that the claims outlined in Count III seeking indemnification and contribution under Kentucky law are preempted by the Oil Pollution Act of 1990. Therefore, it seeks to dismiss those claims that arise under Kentucky law, so that the only issue remaining would be whether S.J. Louis was "solely responsible" for the oil spill under the Oil Pollution Act. For the reasons explained below, the Court will grant the motion in part, and Mid-Valley's claim for indemnification under Kentucky law will be dismissed. Mid-Valley will be allowed to proceed on all other claims outlined in its Complaint.
This case arose from the rupture of an oil pipeline ("the Pipeline") owned by Mid-Valley and extending from Texas to Ohio. [Record No. 1, ¶ 9] A sewer pipe stretching through several counties in northern Kentucky intersects with the Pipeline in Burlington, Kentucky. [Id., ¶¶ 10, 12] In 2008, S.J. Louis was hired to work on a portion of the sewer pipe that runs through Burlington. [Id., ¶ 11] At their point of intersection, the sewer pipe runs beneath the Pipeline. Therefore, to reach the sewer pipe, S.J. Louis was required to excavate under the Pipeline "to the depth of approximately 20 feet below the ground surface." [Id., ¶ 12] Mr. Williamson, a representative from Mid-Valley was present during the excavation, to advise S.J. Louis, monitor the proceedings, and take "certain steps to prevent damage to the [P]ipeline." [Record No. 14-1, p. 3] However, according to the Complaint, "Mr. Williamson did not have control over the job site." [Record No. 1, ¶ 18]
By early October, the digging had been completed with the Pipeline exposed. On the morning of October 3, 2008, S.J. Louis employee James E. Robben was using a track hoe to finish-grade the bottom of the excavation site, when the "bucket of the track hoe curled, the boom of the track hoe rose, and the bucket struck the Pipeline, puncturing it." [Id., ¶¶ 20, 21, 25] As a result, "over 150,000 thousand barrels of crude oil were released from the Pipeline." [Id., ¶ 31] Despite Mid-Valley's efforts to mitigate the environmental effects of the spill, "a substantial amount of crude oil was absorbed in 3,376 tons of soil" and a
To date, Mid-Valley has incurred costs of $1,271,869.56 to "repair the Pipeline, recover the spilled oil, remediate the environmental effects ... and conduct emergency activities to contain the spilled oil." [Id., ¶ 35] It has "also incurred damages in the form of lost revenue and increased operating expenses." [Id.] Additionally, due to the environmental impact of the spill, Mid-Valley has incurred Environmental Protection Agency ("EPA") fines under the Clean Water Act, in the approximate amount of $275,000.
Mid-Valley filed suit against S.J. Louis on September 22, 2011, to recover these costs. The Complaint contains three counts. Count I asserts a claim under common law negligence. Count II asserts an alternative claim under a theory of res ipsa loquitur while Count III seeks indemnification under the Federal Oil Pollution Act. [Id., ¶¶ 37-49] S.J. Louis filed its motion to dismiss these claims on October 14, 2011. [Record No. 14]
Mid-Valley is pursuing this action under the theory that S.J. Louis punctured the Pipeline and, therefore, should bear all costs associated with the oil spill. To that end, Mid-Valley has asserted a claim for damages under a negligence theory. Additionally, it seeks indemnification and contribution from S.J. Louis under the relevant provisions of the Oil Pollution Act of 1990 ("OPA"). S.J. Louis seeks to dismiss the common law negligence counts of Mid-Valley's Complaint. [Record No. 27, p. 12] It argues that Mid-Valley is not entitled to recover fines levied by the EPA under the Clean Water Act. [Record No. 14-1, p. 5] Moreover, it maintains that Counts I and II — as well as the claims in Count III that rely on Kentucky law — are preempted by the OPA. Finally, it asserts that Mid-Valley has failed to state a claim for relief under the doctrine of res ipsa loquitur. [Id., p. 11]
When evaluating a motion to dismiss under Rule 12(b)(6), the Court must determine whether the complaint alleges "sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). The plausibility standard is met "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). Although the complaint need not contain "detailed factual allegations" to survive a motion to dismiss, "a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (internal quotation marks and alteration omitted).
Mid-Valley seeks damages from S.J. Louis for the fines it will be required to pay to the EPA.
The Federal Water Pollution Control Act Amendments of 1972 ("FWPCA"), as amended by the Clean Water Act of 1977 ("CWA"), provide for civil penalties for owners or operators of vessels from which oil is accidentally discharged. 33 U.S.C. § 1251 et seq. Under the CWA, any "owner, operator, or person in charge" of a facility from which a harmful quantity of oil is discharged into navigable waters, "shall be subject to a civil penalty in an amount up to $25,000 per day of violation or an amount up to $1,000 per barrel of oil... discharged." 33 U.S.C. § 1321(b)(7)(A). The CWA also contains a "savings clause," which preserves certain rights against third parties who might have caused or contributed to the discharge of oil:
33 U.S.C. § 1321(h). The savings clause "preserves the right of contribution in favor of a discharger against a third party whose fault contributed to the discharge." United States v. Bear Marine Servs., 509 F.Supp. 710, 716 (E.D.La.1980) (noting that this conclusion is supported "by both the clear language of the statute, and its legislative history"); see Frederick E. Bouchard, Inc. v. United States, 583 F.Supp. 477, 482 (D.C.Mass.1984) ("The clear intent of this provision is to preserve pre-existing... remedies at least as against any non-discharging third party not solely responsible for causing an oil spill.").
S.J. Louis attempts to cabin the applicability of the savings clause in several ways. First, it points to a decision from the Southern District of New York that interprets the term "liabilities" to exclude any penalty imposed pursuant to Section 1321(b)(6).
According to S.J. Louis, allowing Mid-Valley to recover for its negligence would "negat[e] the very purpose of imposing the
S.J. Louis also cites several cases that uphold an owner or operator's liability for an oil spill under section 1321(b), even where a third party's "act or omission was the immediate cause of the spill." E.g., United States v. Tex-Tow, Inc., 589 F.2d 1310, 1316 (7th Cir.1978) (holding that "an owner or operator of a discharging facility is liable to a section 1321(b)(6) civil penalty even where it exercised all due care and a third party's act or omission was the immediate cause of the spill").
In summary, the Court concludes that section 1321(h) recognizes the right to recover penalties paid to the EPA under section 1321(b). See United States v. M/V Big Sam, 681 F.2d 432, 435 n. 2 (5th Cir.1982). Consistent with this conclusion, several courts have interpreted section 1321(h) to ensure a right to reimbursement for fines imposed under the CWA, whether by indemnification or contribution. See, e.g., Bear Marine Servs., 509 F.Supp. at 716.
However, Section 1321(h) does not create a right to contribution or indemnity. Tetra Tech., Inc. v. Kansas City Southern Ry. Co., 122 Fed.Appx. 99, 102 (5th Cir. 2005); Colorado v. ASARCO, Inc., 608 F.Supp. 1484, 1491 n. 4 (D.Colo.1985) (noting that there is "no case expressly articulating the source of the FWPCA's right to contribution"). Instead, a right to contribution or indemnification "may arise in either of two ways: first, through the affirmative creation of a right of action by Congress, either expressly or by clear implication; or, second, through the power of federal courts to fashion a federal common law of contribution." Texas Indus. v. Radcliff Materials, 451 U.S. 630, 638, 101 S.Ct. 2061, 68 L.Ed.2d 500 (1981). And because section 1321(h) does not create a right to contribution or indemnity, either expressly or by implication, see Tetra
Courts have the authority to formulate federal common law under limited circumstances. There are two main situations in which such circumstances arise: (1) when "Congress has given the courts the power to develop substantive law"; and (2) when "a federal rule of decision is `necessary to protect uniquely federal interests.'" Texas Indus., 451 U.S. at 640, 101 S.Ct. 2061 (internal citations omitted). Regarding the first situation, courts generally look to statutory language and legislative history to determine if Congress intended the development of federal common law within a certain statutory scheme. Cf. ASARCO, 608 F.Supp. at 1489 ("It is clear from the legislative history [of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA")] that contribution is one of the liability issues to be determined on a case-by-case basis through the common law process, rather than by specific statutory directive."). In the context of "uniquely federal interests," the inquiry is even more restricted: "federal common law exists only in such narrow areas as those concerned with the rights and obligations of the United States, interstate and international disputes implicating the conflicting rights of States or our relations with foreign nations, and admiralty cases." Texas Indus., 451 U.S. at 641, 101 S.Ct. 2061; see United States v. Kimbell Foods, 440 U.S. 715, 99 S.Ct. 1448, 59 L.Ed.2d 711 (1979) (explaining that federal programs "that `by their nature are and must be uniform in character throughout the Nation' necessitate formulation of controlling federal rules.").
The provisions of the CWA that establish liability for the discharge of oil into navigable waters create just such a "narrow area." Texas Indus., 451 U.S. at 641, 101 S.Ct. 2061. The CWA is closely akin to CERCLA because the "pollution of land, groundwater, surface water and air as a consequence of ... dumping presents potentially interstate problems." United States v. Chem-Dyne Corp., 572 F.Supp. 802, 808-09 (S.D.Ohio 1983) (finding that the "language of the two statutes addressing liability and contribution is strikingly similar"). And federal courts interpreting the liability provision of CERCLA have consistently concluded that "Congress did empower the federal courts to develop a common law of liability under CERCLA." ASARCO, 608 F.Supp. at 1492; see 42 U.S.C. § 9607. Moreover, courts have relied on CWA jurisprudence in fashioning federal common law rules for contribution in CERCLA cases. United States v. Conservation Chem. Co., 619 F.Supp. 162, 228 (W.D.Mo.1985) (citing Bear Marine Servs., 509 F.Supp. at 716; In re Complaint of Berkley Curtis Bay Co., 557 F.Supp. 335, 339 (S.D.N.Y.1983)). Based on these authorities, the Court concludes that there is a right to contribution under the CWA. The source of this right is, "as in CERCLA, the prevailing common law rule permitting contribution among joint tortfeasors." ASARCO, 608 F.Supp. at 1491 n. 4; see also In re Complaint of Berkley Curtis Bay Co., 557 F.Supp. at 339 (noting that under the CWA, "the party that pays for more than its share of fault will have an action for contribution from the party that pays for less than its share of fault"). This result comports with principles of equity because denying contribution to Mid-Valley would effectively immunize S.J. Louis from bearing the costs of non-compliance with the CWA, despite its potential liability. Therefore, Mid-Valley may seek to recover fines imposed by the EPA pursuant to section 1321(b)(7).
In addition to the EPA fines discussed above, Mid-Valley seeks to recover the
The OPA provides that "each responsible party for a vessel or a facility from which oil is discharged ... into or upon the navigable waters or adjoining shorelines... is liable for the removal costs and damages ... that result from such incident." 33 U.S.C. § 2702(a). Mid-Valley concedes that it is a "responsible party" under the relevant definition.
33 U.S.C. § 2702(d)(1)(A). Additionally, the OPA expressly allows a responsible party to seek contribution from third parties who are "potentially liable." 33 U.S.C. § 2709.
S.J. Louis asserts that the OPA preempts Mid-Valley's common law claims. Like the CWA, the OPA contains a "savings clause," which provides that nothing in the Act should:
33 U.S.C. § 2718(a).
S.J. Louis concedes that the OPA does not expressly preempt state law causes of action. [Record No. 14-1, p. 8] However, it contends that the OPA impliedly preempts the state common law claims in this case due to a conflict between the two. A state law is preempted by federal law either: (1) "when compliance with both state and federal law is impossible"; or (2) when the state law "stands as an obstacle to the accomplishment of the full purposes and objectives of Congress." Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 248, 104 S.Ct. 615, 78 L.Ed.2d 443 (1984).
S.J. Louis argues that conflict preemption bars Mid-Valley's state law claims. It maintains that Mid-Valley's claims would "supplant the requirement under ... the OPA that, as a responsible party, [Mid-Valley] is fully liable for the cleanup costs and the other damages claimed unless it can establish that S.J.
Thus it remains for the Court to determine if the OPA preempts Mid-Valley's Kentucky law claim for contribution. S.J. Louis' arguments on this point are somewhat unclear, as they tend to conflate Mid-Valley's claim for indemnification with the claim for contribution. For instance, it asserts that Mid-Valley's only "mechanism to recover for remediation and other claims is through the [OPA], under which it is obligated to demonstrate that S.J. Louis was solely at fault." [Record No. 14-1, p. 14 (emphasis in original)]. It is true that Mid-Valley can only "exculpate itself from liability" by establishing that "the incident was caused solely by the actions of others." [Id., p. 11 (emphasis omitted)] But exculpation and apportionment of fault are different concepts. If it fails to prove that S.J. Louis was solely at fault, Mid-Valley will not be entitled to indemnification under the OPA. But it does not follow that Mid-Valley would be unable to prove its right to contribution from S.J. Louis.
S.J. Louis also contends that the common law claim "conflict[s] with the goals and obstruct[s] the ends sought by Congress with the enactment of the OPA — namely holding responsible parties 100% at fault unless an incident is solely caused by a third party." [Record No. 14-1, p. 11] This argument is clearly inapplicable to the contribution claim. The OPA expressly permits a responsible party that has paid removal costs or damages under the Act to "bring a civil action for contribution against any other person who is liable or
S.J. Louis also requests that the Court adopt the reasoning from the Eastern District of Virginia case, NSCSA v. Moran Mid-Atlantic Corp., in which the court concluded that the defendant was not entitled to bring a claim for contribution under state law. [Record No. 27, p. 3 (citing Nat'l Shipping Co. of Saudi Arabia (NSCSA) v. Moran Mid-Atl. Corp., 924 F.Supp. 1436, 1448 (E.D.Va.1996))] The NSCSA court determined that the savings clause of the OPA does not preserve the plaintiff's right to seek contribution under both the OPA and state law. NSCSA, 924 F.Supp. at 1448-49. It concluded that the "purpose behind the savings clause is to allow the states to impose liability upon oil polluters above the liability imposed through OPA." Id. at 1448. This is not an unreasonable reading of the first part of the savings clause, which clearly provides a state with the power to impose "additional liability" for spills within that state. 33 U.S.C. § 2718(a)(1). But the interpretation is incomplete because it ignores the second part of the clause. When the NSCSA court reasoned that the savings clause was "not intended to affect liability between two vessels involved in an oil spill," it focused its analysis on subsection (a)(1) of the savings clause to the exclusion of subsection (a)(2), which provides that nothing in the Act shall "affect or modify in any way the obligations or liabilities of any person." 33 U.S.C. § 2718(a)(2) (emphasis added). If all Congress intended was to allow the states to enact legislation protecting their citizens, then the language of subsection (a)(2) would be superfluous. It is a basic canon of statutory construction that when "construing a statute we are obliged to give effect, if possible, to every word Congress used." Reiter v. Sonotone Corp., 442 U.S. 330, 339, 99 S.Ct. 2326, 60 L.Ed.2d 931 (1979). Therefore, the Court concludes that, read as a whole, the savings clause does in fact preserve state laws, even those that shift the liability for the costs and damages associated with oil spills. See United States v. Locke, 529 U.S. 89, 105, 120 S.Ct. 1135, 146 L.Ed.2d 69 (2000) ("The evident purpose of the saving clauses is to preserve state laws which ... establish liability rules and financial requirements relating to oil spills." (emphasis added)).
The Court also finds that NSCSA is distinguishable from the case at bar. The plaintiff in NSCSA was the owner of a cargo vessel who sought to recover damages on the grounds that the defendant, the owner of a tug boat, was at fault in causing the oil spill. NSCSA, 924 F.Supp. at 1440. However, because the two boats involved in the collision were different sizes, the court found that the plaintiff's recovery would be limited under the OPA.
This conclusion is also consistent with the difference in the procedural posture of these two cases. The decision in NSCSA was issued after a bench trial on the merits, so there was far more factual development before the decision. Thus, even if NSCSA's interpretation of the OPA's savings clause was correct, the holding does not necessarily apply to this case. It is still unclear at this point in the litigation which portions of Mid-Valley's damages claimed arose from the OPA, which arose under state law,
This leaves the question whether Mid-Valley is entitled to rely on Kentucky common law negligence principles when seeking contribution under the OPA. The Court holds that, based on the plain language of the statute, it is. The OPA expressly provides for a right to contribution if a third party is liable under either the OPA itself of "another law." 33 U.S.C.
Finally, S.J. Louis contends that Mid-Valley has failed to state a claim under the Kentucky common law theory of res ipsa loquitur. To prove entitlement to damages under this theory, a plaintiff must demonstrate: (1) the instrumentality must be "under the control or management" of the defendant; (2) the "circumstances, according to common knowledge and experience, must create a clear inference that the accident would not have happened" had the defendant not been negligent; and (3) the plaintiffs injury resulted from the accident. Banes v. Otis Elevator Co., 2 Fed.Appx. 461, 467 (6th Cir.2001).
Accepting all facts pleaded in the Complaint as true, the first and third elements are clearly met. The instrumentality, namely the track hoe,
Mid-Valley's claim for indemnification under Kentucky law is preempted by the OPA. Mid-Valley will be allowed to proceed on all other claims asserted in its Complaint. Accordingly, it is hereby
(1) Defendant S.J. Louis Construction, Inc.'s Motion to Dismiss [Record No. 14] is
(2) Mid-Valley Pipeline Co.'s claim for indemnification under Kentucky law is dismissed with respect to any damages incurred under the Oil Pollution Act of 1990.
(3) Defendant S.J. Louis Construction, Inc.'s motion to dismiss is