Oil and Water Don’t Mix: No OPA 90 Claim for Economic Damages of Comingled Oil and Hazardous Substances

Munoz v. Intercontinental Terminals Co., L.L.C., 2023 U.S. App. LEXIS 28667 *, 2023 WL 7103161 (5th Cir., Oct. 27. 2023)

            What happens when there is a discharge of oil mixed with hazardous substances which is not oil? May a party recover economic damages pursuant to 33 USCS § 2702(b)(2)(E)?[1] A party seeking economic damages under this provision of OPA 90 does not have to satisfy the proprietary interest rule.[2] OPA 90 was enacted by Congress to cure some deficiencies in CERCLA[3] which excluded “’petroleum, including crude oil or any fraction thereof which is not otherwise specifically listed or designated as a hazardous substance.’”[4]

            After a discharge of a mixture of oil and hazardous substances into the Houston Ship channel, the Coast Guard temporarily halted traffic on a portion of the channel affected by the discharge. Claims pursuant to OPA 90 were filed with the Oil Spill Liability Trust Fund which were denied on the basis that the mixed substance was not oil. Others sued ITC for economic damages under OPA 90. Texas Aromatics sued ITC in federal court under OPA 90 seeking: “(1) monetary damages for violations of OPA and (2) declaratory relief that OPA applies.”[5]

            ITC sought summary judgment on the legal issue whether OPA applied. The magistrate held in favor of ITC which was confirmed by the district judge.

            A unanimous panel[6] of the Fifth Circuit in an opinion by Judge Jolly affirmed the dismissal of the OPA 90 claims and held that oil comingled with other hazardous substances is not oil under OPA 90. It is by definition a “hazardous substance.” Accordingly, the parties have no economic damage claim under OPA 90 as it does not apply. “We hold that the district court correctly interpreted OPA's definition of ‘oil’ to exclude a commingled mixture of oil and CERCLA-regulated "hazardous substances.’”[7]

            A more detailed explanation will follow within the next few days.

[1] 33 USCS § 2702(b)(2)(E): “Profits and earning capacity. Damages equal to the loss of profits or impairment of earning capacity due to the injury, destruction, or loss of real property, personal property, or natural resources, which shall be recoverable by any claimant.”

[2] 33 USCS § 2702(b)(2((B): “Real or personal property. Damages for injury to, or economic losses resulting from destruction of, real or personal property, which shall be recoverable by a claimant who owns or leases that property.” (emphasis added).

[3] 42 U.S.C. §§ 9601-9628

[4] 2023 U.S. App. LEXIS 28667 at *3-4, quoting 42 U.S.C. § 9701(14).

[5] Id. at *7

[6] The panel consisted of Judges Jolly, Southwick and Oldham.

[7] 2023 U.S. App. LEXIS 28667 at *15-16.