Citgo Petroleum Co. has asked the U.S. Supreme Court to dismiss a $180 million oil spill liability suit filed by a pair of shipping companies. Citgo told the high court last month that its responsibility for ensuring a safe berth into its Philadelphia-area port does not extend beyond the immediate entrance. In an attempt to convince the justices to overturn a Third Circuit Court of Appeals’ ruling reviving the case, Citgo argued in a petition for writ of certiorari that the appeals court misinterpreted the contractual safe berth warranty the oil company provided Frescati Shipping Co. Ltd. and its M/V Athos I vessel. The appeals court found that the Athos I was within its approach when it struck an abandoned ship anchor that caused the spill because the vessel had stopped generally “navigating.” The panel said that Citgo should have exercised reasonable diligence and provided the ship with a safe path to port.
Citgo argued in its petition that it had no control over the federal waters where Athos I collided with the anchor. The oil company contended that the Third Circuit’s decision unfairly expands a port owner’s liability and conflicts with other federal appeals court decisions. The Citgo petition stated:
By not defining the ‘approach’ in terms of a finite geographical area controlled by the wharf owner, the decision below shifts responsibilities and duties from public agencies to private entities, imposes substantial new liabilities on wharf owners, and creates uncertainty and confusion for all maritime interests.
The ship struck the submerged anchor in the Delaware River in November 2004 near Citgo’s terminal, spilling 265,000 gallons of crude oil into the river. Frescati said it spent more than $180 million to clean up the spill, $88 million of which was covered by the federal government under the Oil Pollution Act. Both Frescati and the U.S. sued Citgo looking to recoup the funds, arguing that the oil giant had an obligation to remove any potential hazards in the vicinity of its port.
U.S. District Judge John Fullam dismissed the negligence claims against Citgo in 2011, ruling that holding the company liable would have placed an unreasonable amount of responsibility on Citgo regarding port operations. The Third Circuit, however, said Citgo cannot escape its duty to maintain a safe approach for ships like the Athos I that enter its port. The district court limited the approach to the areas “immediately adjacent or within immediate access” of the ship’s berth, but the appeals court said that interpretation is overly restrictive.
The appeals court perpetuated a current circuit conflict on the issue by rejecting a 1990 Fifth Circuit decision limiting the liability of port owners. Instead, the court adopted the Second Circuit’s view from 1935 that the safe berth clause is an “express assurance made without regard to the amount of diligence taken by the charterer.” The court’s order states:
The prospect that charterers with identical contract clauses can have categorically different liability in different circuits is intolerable. This is precisely the sort of inconsistency in federal law that this court grants certiorari to prevent.
This is a most interesting case and one that should get lots of attention. It will be watched closely in several quarters. It could wind up being a very important case for a number of reasons.
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