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Borough v. Exxon Corporation (11/22/99) sp-5210
Kodiak Borough v. Exxon Corporation (11/22/99) sp-5210
Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
KODIAK ISLAND BOROUGH, CITY )
OF SEWARD, CITY OF CORDOVA, )
CITY OF OLD HARBOR, CITY OF ) Supreme Court No. S-7581
OUZINKIE, CITY OF PORT LIONS, )
and CITY OF LARSEN BAY, ) Superior Court No.
) 3AN-89-2533 CI (Consolidated)
Appellants, )
)
v. ) O P I N I O N
)
EXXON CORPORATION and EXXON ) [No. 5210 - November 22, 1999]
SHIPPING CORPORATION, )
)
Appellees. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Brian C. Shortell, Judge.
Appearances: Matthew D. Jamin, Jamin Ebell
Bolger & Gentry, Kodiak, Lloyd B. Miller, Sonosky Chambers Sachse
Miller & Munson, Anchorage, and N. Robert Stoll, Stoll Stoll Berne
Lokting & Shlachter, P.C., Portland, Oregon, for Appellants.
Douglas J. Serdahely, Bogle & Gates, P.L.L.C., Anchorage, John F.
Clough III, Clough & Associates, P.C., Juneau, and Charles P.
Diamond, O'Melveny & Myers, Los Angeles, California, for Appellees.
Before: Bryner, Justice, Rabinowitz, Senior
Justice, pro tem, Hunt, Greene, and Zervos, Justices, pro tem.
[Matthews, Chief Justice, Compton, Eastaugh, and Fabe, Justices,
not participating.]
BRYNER, Justice.
This case arises from the EXXON VALDEZ oil spill of March
1989. In response to the discharge of nearly eleven million
gallons of crude oil into Prince William Sound, several
municipalities were forced to divert employee time and municipal
services to a massive cleanup operation. They later filed suit
against Exxon to recover the value of these diverted services under
an Alaska statute imposing strict liability for the discharge of
hazardous substances. The trial court granted summary judgment to
Exxon, concluding that the statute did not permit recovery of
damages for the municipalities' diverted-services claims. Because
we conclude that Alaska law does permit recovery for these diverted
services, we reverse.
I. FACTS AND PROCEEDINGS
On March 24, 1989, the tanker EXXON VALDEZ ran aground
near Bligh Reef, spilling nearly eleven million gallons of crude
oil into Prince William Sound. In response, Kodiak Island Borough
and the cities of Seward, Cordova, Old Harbor, Ouzinkie, Port
Lions, and Larsen Bay (collectively, the Cities) were forced to
participate in a massive cleanup operation. Municipal officials
and employees devoted significant time to tracking oil flow;
monitoring shoreline; acquiring oil containment equipment; meeting
with Exxon, governmental representatives, and experts about the oil
spill and cleanup; and booming off and cleaning key spawning areas
on city-owned tidelands. Because the Cities' employees were
engaged in these activities, they were unable to provide ordinary
services to their residents.
The Cities sued Exxon Corporation, which owned the
spilled oil, and its maritime subsidiary, Exxon Shipping
Corporation, which owned the EXXON VALDEZ (collectively, Exxon).
Relying on AS 46.03.822(a), which imposes strict liability for harm
caused by the release of hazardous substances, the Cities claimed
damages for the costs of municipal services diverted as a result of
the spill. These diverted-services claims included the value of
ordinary municipal services that the spill prevented the Cities
from providing their residents and the costs of extraordinary
services necessitated by the spill. [Fn. 1]
The superior court established as a matter of law that
the oil spill violated the statutory prohibition against release of
hazardous substances, that no defenses specified in the hazardous
substances statute applied to Exxon, and that Exxon was therefore
strictly liable under the statute for "all compensable damages"
that the Cities "proved at trial to have been proximately caused by
the spill."[Fn. 2]
Exxon then moved for summary judgment, contending that
the Cities' diverted-services claims were not compensable under the
hazardous substances statute. The superior court agreed and
granted summary judgment in Exxon's favor.
The Cities appeal.
II. DISCUSSION
A. Standard of Review
We review a grant of summary judgment de novo, [Fn. 3]
determining whether the record shows a genuine issue of material
fact and whether the moving party is entitled to judgment on the
law applicable to the established facts. [Fn. 4] For purposes of
determining what facts are established, we must draw all reasonable
inferences in favor of the non-moving party. [Fn. 5] But in
answering questions of law, we apply our independent judgment and
adopt "the rule of law that is most persuasive in light of
precedent, reason, and policy."[Fn. 6] We may affirm a grant of
summary judgment on any legal ground that supports the trial
court's ruling. [Fn. 7]
B. The Parties' Arguments
Alaska Statute 46.03.822(a) provides that certain persons
may be held strictly liable for various damages caused by an
unpermitted release of a hazardous substance. [Fn. 8] Alaska
Statutes 46.03.822(a), AS 46.03.822(k), [Fn. 9] and AS 46.03.824
[Fn. 10] together define the scope of recoverable damages.
The Cities argue that the superior court erred in
concluding that their diverted-services claims are not "damages"
within the meaning of these statutes. Exxon responds that the
"free public services doctrine"bars the Cities' diverted-services
claims and that the superior court therefore correctly interpreted
the statutes. Exxon also argues that the Cities waived their
rights to these damages and that they lack standing to assert their
claims. Last, Exxon argues that federal maritime law preempts the
Cities' claims. We consider each argument below.
C. Alaska's Hazardous Substances Statutes Authorize Recovery
for Diverted Services.
1. Assuming that the free public services doctrine
applies as a matter of common law, Alaska's
hazardous substances statutes abrogate the doctrine to the extent
that it affects municipal recovery for spill-related damages.
Exxon argues that the free public services doctrine bars
the Cities' claims for costs they incurred in responding to the oil
spill. This common-law doctrine provides that the public must bear
the costs of providing emergency public services, thus relieving
individual tortfeasors of liability. [Fn. 11] Although we have had
no occasion to consider the doctrine, we assume for purposes of
this appeal that it applies unless abrogated by statute.
The pertinent question thus becomes whether the
legislature has in fact abrogated the doctrine insofar as it might
bar municipal claims for costs of diverted services resulting from
the EXXON VALDEZ oil spill. In our judgment, the answer lies in
the text of AS 46.03.822. Subsection .822(a) subjects owners and
shippers of oil to strict liability for various damages caused by
an unpermitted release of oil. [Fn. 12] Specifically, the statute
imposes liability
for damages, for the costs of response,
containment, removal, or remedial action incurred by the state, a
municipality, or a village, and for the additional costs of a
function or service, including administrative expenses for the
incremental costs of providing the function or service, that are
incurred by the state, a municipality, or a village, and the costs
of projects or activities that are delayed or lost because of the
efforts of the state, the municipality, or the village . . . .[[Fn. 13]]
Subsection (k) of the same statute adds: "In this
section, 'damages' has the meaning given in AS 46.03.824 and
includes damage to persons or to public or private property, [and]
damage to the natural resources of the state or a municipality
. . . ."[Fn. 14] And AS 46.03.824 broadly defines damages to
include any "injury to or loss of persons or property, real or
personal, loss of income, loss of the means of producing income, or
the loss of an economic benefit."
The breadth of this language and the statute's specific
provision for recovery of costs incurred by "the state, a
municipality, or a village,"[Fn. 15] strongly suggest a
legislative intent to permit compensation for governmental services
including those services rendered non-compensable at common law by
the free public services doctrine. Moreover, AS 46.03.822(a)
expressly states that the imposition of strict liability for
release of hazardous substances applies "[n]otwithstanding any
other provision or rule of law." This language evinces the
legislature's intent to abrogate all otherwise applicable common-
law doctrines, including the doctrine of free public services,
except insofar as they are expressed in the statute itself.
Again assuming that the free public services doctrine is
part of Alaska's common law, we reject Exxon's contention that the
doctrine restricts the Cities' compensable damages in the factual
context of this case. To define the scope of recoverable damages,
we must examine Alaska's hazardous substances statutes.
2. The Cities' diverted-services claims are
compensable under Alaska's hazardous substances statutes.
We next consider whether the superior court correctly
interpreted and applied the damages provisions of Alaska's
hazardous substances statutes. When we engage in statutory
construction, we must, whenever possible, "interpret[] each part or
section of a statute with every other part or section, so as to
create a harmonious whole."[Fn. 16] We must also presume "that
the legislature intended every word, sentence, or provision of a
statute to have some purpose, force, and effect, and that no words
or provisions are superfluous."[Fn. 17] Furthermore, we generally
presume that an amendment to an unambiguous statute indicates a
"substantive change in the law."[Fn. 18] But if the original
version of the statute is ambiguous, we may regard a subsequent
change as a legislative interpretation or clarification. [Fn. 19]
a. Legislative history of AS 46.03.822
Alaska's hazardous substances provisions, including
AS 46.03.822, were added to the state Environmental Conservation
Act in 1972. [Fn. 20] Except for a minor, irrelevant modification,
the original version of AS 46.03.822 remained in effect when the
EXXON VALDEZ spill occurred; it provided, in relevant part:
To the extent not otherwise preempted by
federal law, a person owning or having control over a hazardous
substance which enters in or upon the waters, surface or subsurface
lands of the state is strictly liable, without regard to fault, for
the damages to persons or property, public or private, caused by
the entry.[ [Fn. 21]]
Though this provision did not specifically define
"damages,"a companion section of the Environmental Conservation
statute, AS 46.03.824, provided that "[d]amages include but are not
limited to injury to or loss of persons or property, real or
personal, loss of income, loss of the means of producing income, or
the loss of an economic benefit."[Fn. 22] Alaska Statute
46.03.826(2) further specified that "'economic benefit' means a
benefit measurable in economic terms."[Fn. 23] And AS 46.03.900
defined "person"to mean "any individual, public or private
corporation, political subdivision, government agency,
municipality, industry, copartnership, association, firm, trust,
estate, or any other entity whatsoever."[Fn. 24]
When read together, these provisions encompassed an
exceedingly broad but rather loosely described range of recovery
for spill-related harm to virtually any entity -- private or public
-- injured by the release of hazardous substances within Alaska.
Soon after the EXXON VALDEZ spill, questions arose as to the
precise scope of damages these hazardous substances provisions
allowed.
In 1989 the legislature rewrote and reorganized
AS 46.03.822, designating its original strict-liability language as
subsection .822(a) and amending the subsection to read:
(a) Notwithstanding any other provision or
rule of law . . . , the following persons are strictly liable,
jointly and severally, for damages to persons or property, whether
public or private, including damage to the natural resources of the
state or municipality, and for the cost of response, containment,
removal, or remedial action incurred by the state or municipality,
resulting from unpermitted release of hazardous substance or, with
respect to response costs, the substantial threat of an unpermitted
release of a hazardous substance[.][ [Fn. 25]]
The newly enacted language, which the legislature applied
retroactively, [Fn. 26] provided for joint and several liability
and made clear that the public could recover the full costs of
responses for spills. [Fn. 27] When introduced in the legislature,
this amendment was likened to the federal Comprehensive
Environmental Recovery, Compensation, and Liability Act (CERCLA)
[Fn. 28] -- the basic premise of both the federal and state
legislation being that the responsible parties, not the general
public, would pay for cleanup of hazardous substance spills. [Fn.
29]
The legislature returned to AS 46.03.822 in 1991,
amending the statute twice. The first amendment, which also
applied retroactively to the date of the EXXON VALDEZ spill, [Fn.
30] added villages to the entities allowed to recover under the
statute and again expanded compensable oil-spill damages by
including:
the additional costs of a function or service,
including administrative expenses for the incremental costs of
providing the function or service, that are incurred by the state,
a municipality, or a village, and the costs of projects or
activities that are delayed or lost because of the efforts of the
state, the municipality, or the village . . . .[ [Fn. 31]]
The second 1991 amendment moved some of the damages
language originally included in subsection .822(a) -- specifically,
the subsection's reference to damage "to persons or property,
whether public or private, including damage to the natural
resources of the state or municipality"-- into a new subsection,
.822(k), which set out a definition of damages governing section
.822 as a whole:
(k) In this section, "damages"include
damage to persons or to public or private property, damage to the
natural resources of the state or a municipality . . . .[ [Fn. 32]]
After the 1991 amendments, three distinct provisions of
the hazardous substances statutes addressed damages. First, the
doubly amended subsection .822(a) provided:
(a) Notwithstanding any other provision
or rule of law . . . , the following persons are strictly liable,
jointly and severally, for damages, for the cost of response,
containment, removal, remedial action incurred by the state, a
municipality, or a village, and for the additional costs of a
function or service, including administrative expenses for the
incremental costs of providing the function or service, that are
incurred by the state, a municipality, or a village, and the costs
of projects or activities that are delayed or lost because of the
efforts of the state, the municipality, or the village, resulting
from unpermitted release of hazardous substance, or with respect to
response costs, the substantial threat of an unpermitted release of
a hazardous substance[.][ [Fn. 33]]
Second, newly enacted subsection (k) contained the provisions
already quoted above. And, third, AS 46.03.824 continued to state,
as it had since the original enactment of the hazardous substances
provisions in 1972: "Damages include but are not limited to injury
to or loss of persons or property, real or personal, loss of
income, loss of the means of producing income, or the loss of an
economic benefit."
By shifting language from subsection .822(a) into the
definition of damages in subsection .822(k), the legislature
created some confusion as to whether the original definition of
damages set out in section .824 continued to apply to section .822.
The legislature resolved this confusion in 1992 by amending
subsection .822(k) to expressly incorporate the general definition
of damages set out in section .824:
(k) In this section, "damages"has the
meaning given in AS 46.03.824 and includes damage to persons or to
public or private property, damage to the natural resources of the
state or a municipality . . . .[ [Fn. 34]]
Since this 1992 amendment of subsection (k), the
definitions of damages set out in sections .822 and .824 have
remained unchanged.
b. Neither the text nor the history of the
hazardous substances statutes supports restricting the Cities'
diverted-services claims.
In rejecting the Cities' diverted-services claims, the
superior court ruled that only a narrow portion of the damages
provisions in the hazardous substances statutes applied to
municipalities and villages. Noting that the language in
subsection .822(a) dealing with "the cost of response"and "other
costs"expressly extended to "municipalities and villages,"the
superior court reasoned that the legislature did not intend the
subsection's other damages language, or damages described in
subsection .822(k) and section .824, to apply to the Cities.
But nothing in subsection .822(a) or elsewhere indicates
that the subsection's express "cost"language exclusively defines
municipal damages. Subsection .822(a) broadly imposes joint and
several strict liability for all spill-related "damages." Although
this general damages clause does not explicitly mention
municipalities, its scope must be gauged by reference to subsection
.822(k) and section .824. These provisions do specifically
contemplate municipal recovery of "damages." Subsection .822(k)
expressly defines damages "[i]n this section"-- that is, in
section .822 as a whole -- to include "damage to persons or to
public or private property, [and] damage to the natural resources
of the state or a municipality."[Fn. 35] The subsection also
explicitly incorporates the definition of damages contained in
section .824. [Fn. 36] Strikingly broad, that latter definition
includes "injury to . . . persons."[Fn. 37] And AS 46.03.900
comprehensively defines "person"to mean "any individual, public or
private corporation, political subdivision, government agency,
municipality, industry, copartnership, association, firm, trust,
estate, or any other entity whatsoever."[Fn. 38]
Nor does the history of the hazardous substances statutes
indicate that the legislature intended to preclude municipal
diverted-services claims from being asserted under these general
damages provisions. As we have seen, although sections .822 and
.824 originally defined damages in general terms, the definition
was remarkably broad from the outset and has always encompassed
recovery by "any . . . entity whatsoever."[Fn. 39] In amending
the damages provisions after the EXXON VALDEZ disaster, the
legislature showed little inclination to restrict the overall scope
of permissible recovery. To the contrary, both the progressive
expansion of compensable harms covered by the post-spill amendments
and the comprehensive nature of the damages provisions as
ultimately configured strongly suggest that the legislature acted
not to narrow compensation or limit liability but to clarify and
confirm the broad scope of the original provisions by describing
concrete examples of allowable damages.
Nothing in the wording or legislative history of the
hazardous substances statutes hints that subsection .822(a)'s more
recently added examples of compensable harms were meant to exclude
other claims for different spill-related harms or to constrict the
universe of future recovery -- for municipalities or for any other
prospective claimants. While the specific costs listed in
subsection .822(a) provide useful examples of harms that the
legislature clearly considered compensable, they cannot properly be
construed to define the outer limits of the Cities' right to assert
their diverted-services claims. Accordingly, we conclude that the
superior court erred in ruling that the Cities were only entitled
to recover costs that subsection .822(a) specifically identifies as
recoverable by municipalities.
Moreover, we note that the superior court construed
subsection .822(a)'s costs provisions narrowly. For example, the
court ruled that subsection .822(a)'s "cost of response"clause
only covers out-of-pocket costs for extraordinary governmental
services and that its provision for "additional costs"could only
include costs of services not already budgeted. And because the
Cities had not specifically pressed for damages under subsection
.822(a)'s "costs of projects or activities delayed or lost"
language, the court declined to consider whether their diverted-
services claims were compensable under that provision.
The Cities contend that subsection .822(a)'s costs
clauses should be read more broadly. They argue, for instance,
that the "costs of response"clause should be read to encompass all
costs of municipal services -- ordinary and extraordinary, budgeted
and unbudgeted, and emergency and non-emergency -- incurred "in
response"to the spill. They also argue that "additional"costs
should be understood to include costs of response in addition to
the direct costs of containment, removal, and remedial action.
Though our conclusion that the court erred in too
narrowly interpreting the general damages provisions of sections
.822 and .824 as a whole makes it unnecessary to decide the Cities'
specific contentions concerning the scope of subsection .822(a)'s
costs clauses, we think it appropriate to note our agreement with
the Cities' basic position.
The Cities' claim is relatively straightforward: they
seek to recover all "damages"allowable under the hazardous
substances statutes that they ultimately are capable of proving.
We have interpreted the hazardous substances statutes to encompass
a broad range of potential recovery and have construed subsection
.822(a)'s statement of specific compensable costs to be exemplary
and inclusive, not definitive or exclusive. On remand, the Cities
certainly must be held to their burden of proving actual damages
within the meaning of sections .822 and .824. And the trial court
will retain broad discretion to interpret these provisions and to
decide precisely how they mesh with the Cities' proposed diverted-
services evidence. But given the broad range of damages allowable
under the hazardous substances statutes, to adopt a literal and
inflexible view of subsection .822(a)'s cost clauses would be
fundamentally inconsistent with what we perceive to be the
legislature's primary intent in enacting these provisions: to hold
responsible parties strictly liable for all provable spill-related
harms.
D. The Cities Have Not Waived Their Right to Argue Their
Diverted-Services Claims.
After the superior court dismissed the diverted-services
claims on summary judgment, the Cities asserted a more modest claim
for unreimbursed labor. This claim had been subsumed within, but
was legally distinct from, their diverted-services claims, and thus
survived the summary judgment order. The parties eventually
settled the remaining triable issues; their settlement included the
Cities' claim for unreimbursed labor, which the parties valued at
$88,900. As part of the settlement, the Cities expressly reserved
the right to appeal the trial court's dismissal of their diverted-
services claims. Accordingly, the settlement agreement
specifically provided that if the Cities prevailed on appeal and
went on to win their diverted-services claims on remand, their
eventual diverted-services award would be reduced to reflect the
$88,900 settlement payment they had already received for the
subsumed, unreimbursed-labor claim.
Because the Cities based their unreimbursed-labor claim
on evidence that overlaps the evidence they relied on to support
their "cost of response"theory of recovery for diverted services,
Exxon argues that the settlement bars them from arguing costs of
response as a theory of damages on appeal. But Exxon bases this
argument on the narrow view that the Cities' diverted-services
claims can only be compensated under subsection .822(a)'s specific
costs provisions. We have held that this narrow view of damages is
legally unfounded. Since the Cities expressly reserved the right
to appeal the dismissal of their diverted-services claims and these
claims are not limited to unreimbursed labor, we hold that the
Cities have not waived the right to argue their diverted-services
claims on appeal.
E. The Hazardous Substances Statutes Confer Standing on the
Cities to Assert Diverted-Services Claims.
Exxon contends that the Cities' diverted services
actually belonged to their citizens, not to the Cities themselves.
For this reason, Exxon argues, the Cities lack standing to maintain
these claims. But this argument overlooks the express language of
the hazardous substances statutes. By defining damages to include
costs incurred "by a state, a municipality, or a village,"[Fn. 40]
section .822(a) itself vests injured municipalities with standing
to sue. Exxon cites no convincing authority to the contrary.
In support of its theory that the Cities lack standing, it
primarily relies on two cases -- both distinguishable from the case
at bar. One case, In re Oil Spill by the Amoco Cadiz, [Fn. 41]
involved municipal claims for damages suffered by recreational
visitors, not residents. [Fn. 42] The other case, Iowa ex rel
Miller v. Block, [Fn. 43] involved a suit by the State of Iowa for
emergency benefits actually belonging, and payable directly, to
certain individual citizens. [Fn. 44] Here, by contrast, the
Cities seek to recover damages to replenish their own coffers with
municipal funds that they could expend for the benefit of their
citizens, as originally intended.
Since neither Amoco Cadiz nor Iowa v. Block supports
Exxon's arguments, we conclude that the Cities have standing to
sue.
F. Federal Maritime Law Does Not Preempt the Cities'
Diverted-Services Claims.
Exxon contends that federal maritime law preempts the
Cities' diverted-services claims, even if Alaska's hazardous
substances statutes allow them. Although federal law applies to
state cases falling within admiralty jurisdiction, states are not
barred from applying their own laws unless "the state remedy 'works
material prejudice to the characteristic features of the general
maritime law or interferes with the proper harmony and uniformity
of that law in its international and interstate relations.'"[Fn.
45]
Exxon bases its federal-preemption argument on Robins Dry
Dock & Repair Company v. Flint, [Fn. 46] an admiralty case that is
commonly read to hold "that economic losses arising from a tort,
but unaccompanied by a physical injury to anything in which
plaintiff has a proprietary interest, are not compensable under
federal maritime law."[Fn. 47] Since AS 46.03.822 undeniably
provides a cause of action for purely economic damages, [Fn. 48]
Exxon asserts that Alaska law directly conflicts with the maritime
rule of Robins. Hence, according to Exxon, the Cities' diverted-
services claims are preempted.
To determine whether the Cities' claims are preempted, we
must engage in a twofold inquiry: first, we must ask whether
AS 46.03.822, as applied in this case, works material prejudice to
a "characteristic feature[] of the general maritime law"; [Fn. 49]
second, we must ask whether the statute unduly interferes with the
harmony and uniformity of the admiralty system. [Fn. 50] If we
answer either of these questions affirmatively, federal maritime
law preempts the more expansive state remedy. [Fn. 51]
Although the Robins rule has had widespread application
in admiralty, [Fn. 52] we are convinced that it is not a
"characteristic feature"of admiralty law. For purposes of
maritime preemption, a "characteristic feature of the general
maritime law"is one that "originated in admiralty"or "has
exclusive application there[in]."[Fn. 53] In Ballard Shipping v.
Beach Shellfish, [Fn. 54] the First Circuit, construing Robins,
held that federal admiralty law did not preempt a Rhode Island law
permitting recovery of economic losses "caused by the violation of
any . . . piloting or water pollution laws."[Fn. 55]
In reaching this conclusion, the Ballard Shipping court
"found no evidence that Robins's denial of recovery for purely
economic losses originated in admiralty."[Fn. 56] The court noted
that Robins's precedential roots extend equally into admiralty and
non-admiralty case law [Fn. 57] and that in any event the precedent
Robins cited reflected no more than a general, once-widely-cited
principle denying liability for purely economic loss in cases
involving negligent interference with contractual rights. [Fn. 58]
The Ballard Shipping court also observed that the Robins doctrine
did not apply exclusively in admiralty: "Courts have denied
liability for purely economic harm in a variety of land-based
contexts."[Fn. 59]
Since Ballard Shipping convincingly negates origin and
exclusivity as grounds for preemption, we must determine whether
Alaska law "'interferes with the proper harmony and uniformity' of
maritime law."[Fn. 60] Courts apply a balancing test to decide
issues of harmony and uniformity. [Fn. 61] One commentator
concisely explains:
[S]tate law will not be preempted if the state
has a strong interest in the subject matter and there is
correspondingly little need for uniformity; if, however, there is
a strong federal interest, state law will not be allowed to impair
the essential uniformity of maritime law.[ [Fn. 62]]
The Cities correctly argue that the state has a strong
interest in regulating oil pollution and in providing remedies for
damages caused by oil spills. In Askew v. American Waterways
Operators, Inc., [Fn. 63] the United States Supreme Court confirmed
that a Florida statute regulating oil pollution and providing for
recovery of economic damages was within the state's police powers.
[Fn. 64] Describing oil spills as "an insidious form of pollution
of vast concern to every coastal city or port and to all the
estuaries on which the life of the ocean and the lives of the
coastal people are greatly dependent,"[Fn. 65] the Court
recognized the state's strong interest in protecting its local
waters from pollution and found the statute not preempted. [Fn. 66]
Of course, federal concern in barring recovery for purely
economic damages "is not without importance"; [Fn. 67] as the court
in Ballard Shipping noted, a "regime of liability"may threaten or
impose high costs on maritime commerce. [Fn. 68] If the regime is
difficult to administer, it may result in inefficient and
inconsistent application. [Fn. 69] There is at least some risk
that a state law imposing liability on ship owners and operators
for purely economic losses might impede "the free flow of maritime
commerce"-- a legitimate federal interest in admiralty. [Fn. 70]
But we agree with Ballard Shipping that the general
federal interest in barring recovery for purely economic damages is
less significant than it historically has been due to recent
federal legislation. In both the Trans-Alaska Pipeline
Authorization Act (TAPAA) [Fn. 71] and the Oil Pollution Act of
1990 (OPA 90), [Fn. 72] Congress to a certain extent repudiated the
Robins rule and expanded the kinds of damages recoverable under
maritime law. [Fn. 73] Moreover, TAPAA's language and legislative
history support the conclusion that Congress intended the Act to
permit states to provide additional remedies for harm caused by oil
spills in maritime cases. [Fn. 74] And most commentators have also
read OPA 90 to impose liability for purely economic damages. [Fn.
75] Thus, future application of TAPAA and OPA 90 will diminish
uniformity in applying the Robins rule in oil-spill cases. To this
extent, the federal interest in uniform application of the Robins
rule appears to have been diminished and may no longer be
compelling.
On balance, we are convinced that Alaska's strong
interest in protecting its waters and providing remedies for
damages resulting from oil spills outweighs the diminishing federal
interest in achieving interstate harmony through the uniform
application of Robins. [Fn. 76] We conclude, therefore, that, in
allowing recovery for purely economic damages, Alaska's hazardous
substances statutes do not unduly interfere with the harmony or
uniformity of federal maritime law.
Because the Robins rule is not a "characteristic feature"
of admiralty and the application of Alaska law will not unduly
interfere with the harmony and uniformity of the admiralty system,
we hold that federal law does not preempt enforcement of the
damages provisions of Alaska's hazardous substances statutes.
III. CONCLUSION
The Cities' diverted-services claims fall within the
broad ambit of AS 46.03.822 and AS 46.03.824. The superior court
therefore erred in granting Exxon's motion for summary judgment,
and we REVERSE and REMAND for further proceedings.
FOOTNOTES
Footnote 1:
AS 46.03.822(a) provides for recovery of various direct and
indirect damages resulting from an oil spill. See infra note 8.
Under this statute, recoverable indirect costs encompass
the additional costs of a function or service,
including administrative expenses for the incremental costs of
providing the function or service, that are incurred by the state,
a municipality, or a village, and the costs of projects or
activities that are delayed or lost because of the efforts of the
state, the municipality, or the village . . . .
Id. In this opinion, we use the term "diverted-services claims"to
refer to claims for recovery of such indirect costs.
Footnote 2:
See AS 46.03.822(a).
Footnote 3:
See Reeves v. Alyeska Pipeline Serv. Co., 926 P.2d 1130, 1134
(Alaska 1996).
Footnote 4:
See Nielson v. Benton, 903 P.2d 1049, 1051-52 (Alaska 1995).
Footnote 5:
See id.
Footnote 6:
Id.
Footnote 7:
See State v. Teller Native Corp., 904 P.2d 847, 849 (Alaska
1995).
Footnote 8:
AS 46.03.822(a) provides, in relevant part:
(a) Notwithstanding any other provision
or rule of law and subject only to [various defenses not pertinent
to this case], the following persons are strictly liable, jointly
and severally, for damages, for the costs of response, containment,
removal, or remedial action incurred by the state, a municipality,
or a village, and for the additional costs of a function or
service, including administrative expenses for the incremental
costs of providing the function or service, that are incurred by
the state, a municipality, or a village, and the costs of projects
or activities that are delayed or lost because of the efforts of
the state, the municipality, or the village, resulting from an
unpermitted release of a hazardous substance or, with respect to
response costs, the substantial threat of an unpermitted release of
a hazardous substance:
(1) the owner of, and the person having
control over, the hazardous substance at the time of the release or
threatened release; this paragraph does not apply to a consumer
product in consumer use;
(2) the owner and the operator of a
vessel or facility, from which there is a release, or a threatened
release that causes the incurrence of response costs, of a
hazardous substance[.]
Footnote 9:
AS 46.03.822(k) provides:
(k) In this section, "damages"has the
meaning given in AS 46.03.824 and includes damage to persons or to
public or private property, [and] damage to the natural resources
of the state or a municipality . . . .
Footnote 10:
AS 46.03.824 provides:
Damages include but are not limited to
injury to or loss of persons or property, real or personal, loss of
income, loss of the means of producing income, or the loss of an
economic benefit.
Footnote 11:
See City of Flagstaff v. Atchison, Topeka and Santa Fe R.R.
Co., 719 F.2d 322, 323-24 (9th Cir. 1983) (first prominent decision
on the free public services doctrine); see also District of
Columbia v. Air Florida, Inc., 750 F.2d 1077, 1079-80 (D.C. Cir.
1984) (holding that the doctrine barred the city from recovering
the cost of emergency services and cleanup associated with an
airline crash from allegedly negligent airline); County of San Luis
Obispo v. Abalone Alliance, 223 Cal. Rptr. 846, 850-51 (Cal. App.
1986) (ruling that the county could not recover from allegedly
trespassing protestors the cost of additional police to protect
nuclear power plant construction site); Austin v. City of Buffalo,
586 N.Y.S.2d 841, 842 (App. Div. 1992) (concluding that the city
could not recover from tortious fire-starter the cost of damaged
firefighting equipment and injury to fire fighters); City of
Pittsburgh v. Equitable Gas Co., 512 A.2d 83, 84 (Pa. Commw. 1986)
(holding that the city could not recover from gas company the cost
of police force needed to isolate natural-gas fires). But see
David C. McIntyre, Note, Tortfeasor Liability for Disaster Response
Costs: Accounting for the True Cost of Accidents, 55 Fordham L.
Rev. 1001, 1004-07 (1987) (advocating a contrary common-law rule
for extraordinary emergency services since local governments rarely
budget to absorb these costs).
Footnote 12:
See AS 46.03.822(a) (quoted in supra note 8).
Footnote 13:
AS 46.03.822(a).
Footnote 14:
AS 43.03.822(k).
Footnote 15:
AS 46.03.822(a).
Footnote 16:
Rydwell v. Anchorage Sch. Dist., 864 P.2d 526, 528 (Alaska
1993).
Footnote 17:
Id. at 530-31.
Footnote 18:
City of Anchorage v. Thomas, 624 P.2d 271, 273 (Alaska 1981).
Footnote 19:
See id.
Footnote 20:
See Ch. 122, sec. 1, SLA 1972.
Footnote 21:
Former AS 46.03.822, as amended by Ch. 220, sec. 13, SLA 1976
(omitting various defenses not pertinent here).
Footnote 22:
Former AS 46.03.824, as amended by Ch. 122, sec. 1, SLA 1972.
Footnote 23:
Id.
Footnote 24:
Former 46.03.900, as amended by Ch. 120, sec. 3, SLA 1971.
This
provision was originally enacted as AS 46.03.900(13). AS 46.03.900
was later reorganized; the current provision is AS 46.03.900(17).
Footnote 25:
See Ch. 39, sec. 2, SLA 1989 (emphasis added to identify
relevant
substantive changes).
Footnote 26:
See id. sec. 8.
Footnote 27:
See 1989 House Journal 46-49 (Letter from Steve Cowper,
Governor, to Sam Cotten, Speaker of the House, January 9, 1989).
Footnote 28:
42 U.S.C. sec.sec. 9601-9675 (1995 & Supp. 1998).
Footnote 29:
See 1989 House Journal 46-49 (Letter from Steve Cowper,
Governor, to Sam Cotten, Speaker of the House, January 9, 1989);
see also Letter from Steve Cowper, Governor, to Jan Faiks, Senator
(May 2, 1989) ("The people of the state must be assured that they
will not have to absorb the costs of cleanup from hazardous
substance spills.").
Footnote 30:
See Ch. 83, sec. 22, SLA 1991.
Footnote 31:
See id. sec. 9.
Footnote 32:
See Ch. 92, sec.sec. 1 & 3, SLA 1991. The language shifted
from
subsection (a) was supplemented by new language -- not quoted in
the text because it has no relevance -- which holds shippers and
owners of spilled oil liable for damages caused by spill cleanup
contractors. See id. sec.sec. 1 & 3. The added language holding
owners
and shippers liable for acts of response-action contractors was
necessary because, by separate provisions of the same amendment,
the legislature exempted the contractors themselves from cleanup
liability. See id. sec.sec. 4-8.
Footnote 33:
AS 46.03.822(a).
Footnote 34:
Former AS 46.03.822(k), as amended by Ch. 83, sec. 5, SLA
1992; see also supra note 32 (discussing 1991 amendments).
Footnote 35:
AS 46.03.822(k) (emphasis added).
Footnote 36:
Id.
Footnote 37:
AS 46.03.824.
Footnote 38:
AS 46.03.900(17) (emphasis added).
Footnote 39:
AS 46.03.824.
Footnote 40:
AS 46.03.822(a).
Footnote 41:
954 F.2d 1279 (7th Cir. 1992), aff'd, 4 F.3d 997 (7th Cir.
1993).
Footnote 42:
Id. at 1321.
Footnote 43:
626 F. Supp. 15 (S.D. Iowa 1984), aff'd on grounds cited,
rev'd on other grounds, 771 F.2d 347 (8th Cir. 1985).
Footnote 44:
See id. at 17-18.
Footnote 45:
Hughes v. Foster Wheeler Co., 932 P.2d 784, 787 (Alaska 1997)
(quoting American Dredging Co. v. Miller, 510 U.S. 443, 447 (1994)
(citations omitted)). Cf. Barber v. New England Fish Co., 510 P.2d
806, 811 (Alaska 1973) (key inquiry regarding federal maritime
preemption of the exclusive-remedies rule of the Alaska Workers'
Compensation Act is whether the state rule "would materially
prejudice the characteristic features of federal law and interfere
with the uniformity of that law").
Footnote 46:
275 U.S. 303 (1927).
Footnote 47:
Ballard Shipping Co. v. Beach Shellfish, 32 F.3d 623, 625
(1st Cir. 1994); see also Barber Lines A/S v. M/V Donau Maru, 764
F.2d 50, 51-52 (1st Cir. 1985); Getty Ref. & Mktg. Co. v. M/T Fadi
B., 766 F.2d 829, 830-32 (3rd Cir. 1985); Louisiana ex rel. Guste
v. M/V Testbank, 752 F.2d 1019, 1021-32 (5th Cir. 1985) (en banc);
In re Glacier Bay, 865 F. Supp. 629, 632 (D. Alaska 1991).
Footnote 48:
See AS 46.03.822 (defining "damages"broadly); AS 46.03.824
(same).
Footnote 49:
American Dredging, 510 U.S. at 447 (quoting Southern Pac. Co.
v. Jensen, 244 U.S. 205, 216 (1917)).
Footnote 50:
See American Dredging, 510 U.S. at 447; see also Romero v.
International Terminal Operating Co., 358 U.S. 354, 373 (1959);
Hughes, 932 P.2d at 788-89.
Footnote 51:
See American Dredging, 510 U.S. at 447; Ballard Shipping, 32
F.3d at 627.
Footnote 52:
See, e.g., Barber Lines, 764 F.2d 50; Getty Ref. & Mktg. Co.,
766 F.2d 829; Louisiana ex rel. Guste, 752 F.2d 1019 (en banc); see
also In re Glacier Bay, 865 F. Supp. at 635-38; In re Exxon Valdez,
767 F. Supp. 1509, 1511 (D. Alaska 1991) (barring general tort
claims under the Robins rule and applying the rule to claims under
state strict-liability statute which exceeded $100 million).
Footnote 53:
American Dredging, 510 U.S. at 450 (quoting in part Southern
Pac. Co., 244 U.S. at 216).
Footnote 54:
32 F.3d 623 (1st Cir. 1994).
Footnote 55:
Id. at 626, 631.
Footnote 56:
Id. at 625, 627.
Footnote 57:
See id. at 627-28 (noting that of the four cases that Justice
Holmes cited to support the rule in Robins only two of them were
admiralty cases) (citing Savings Bank v. Ward, 100 U.S. 195 (1879)
(non-admiralty); Elliot Steam Tug Co. v. Shipping Controller, 1
K.B. 127, 139, 140 (1922) (admiralty); Byrd v. English, 117 Ga. 191
(1903) (non-admiralty); The Federal No. 2, 21 F.2d 313 (2d Cir.
1927) (admiralty)).
Footnote 58:
See Ballard Shipping, 32 F.3d at 628 (citing Patrick S.
Atiyah, Negligence and Economic Loss, 83 L.Q. Rev. 248, 248-51
(1967) (tracing the rule to Cattle v. Stockton Waterworks Co., 10
Q.B. 453 (1875), a non-admiralty case involving a construction
company suing for damages caused by leaky water pipes) and
Louisiana ex rel. Guste v. M/V Testbank, 752 F.2d 1019, 1022 (5th
Cir. 1985) (en banc)).
Footnote 59:
See Ballard Shipping, 32 F.3d at 628 (footnote omitted); see
also Dundee Cement Co. v. Chemical Labs., Inc., 712 F.2d 1166,
1169-70 (7th Cir. 1983) (denying recovery for pure economic loss
where defendant blocked access to plaintiff's business); Nebraska
Innkeepers, Inc. v. Pittsburg-Des Moines Corp., 345 N.W.2d 124, 128
(Iowa 1984) (denying recovery for pure economic loss sustained when
structural problems caused a bridge closure); P. Keeton, Prosser
and Keaton on Torts sec. 129, at 999-1002 (5th ed. 1984); Robert L.
Rabin, Tort Recovery for Negligently Inflicted Economic Loss: A
Reassessment, 37 Stan. L. Rev. 1513, 1528 (1985) (discussing land-
based cases).
Footnote 60:
American Dredging Co. v. Miller, 510 U.S. 443, 450 (1994)
(quoting Southern Pac. Co. v. Jensen, 244 U.S. 205, 216 (1917)).
Footnote 61:
See Ballard Shipping, 32 F.3d at 628; see also Kossik v.
United Fruit Co., 365 U.S. 731, 738-42 (1961); Huron Portland
Cement Co. v. City of Detroit, 362 U.S. 440, 442-48 (1960); Just v.
Chambers, 312 U.S. 383 (1941); Brockington v. Certified Elec. Inc.,
903 F.2d 1523, 1530 (11th Cir. 1990).
Footnote 62:
Thomas J. Schoenbaum, Admiralty and Maritime Law sec. 4-5, at
147-48 (2d ed. 1994) (footnotes omitted).
Footnote 63:
411 U.S. 325 (1973).
Footnote 64:
See id. at 328-29.
Footnote 65:
Id. (emphasis added).
Footnote 66:
See id. at 327-29.
Footnote 67:
Ballard Shipping Co. v. Beach Shellfish, 32 F.3d 623, 629 (1st
Cir. 1994).
Footnote 68:
Id. at 630.
Footnote 69:
See id.
Footnote 70:
See American Dredging Co. v. Miller, 510 U.S. 443, 457-58
(1994) (Souter, J., concurring) (commenting that "whether federal
maritime law pre-empts state law will turn on whether the state
rule unduly interferes with the federal interest in maintaining the
free flow of maritime commerce"); but cf. id. at 452 n.3 (Scalia,
J.) (instructing that "the principle that the States may not impair
maritime commerce"is not "the unifying theme of this aspect of
[the Supreme Court's] admiralty jurisprudence").
Footnote 71:
43 U.S.C. sec.sec. 1651-1656 (1994).
Footnote 72:
Pub. L. No. 101-380, 104 Stat. 484 (1990) (codified as amended
in scattered sections of titles 14, 16, 23, 26, 33, 43, and 46 of
the United States Code).
Footnote 73:
For example, portions of the TAPAA expand liability in a
manner that arguably displaces Robins. See Slaven v. BP America,
Inc., 786 F. Supp. 853, 859 (C.D. Cal. 1992). Under sec.
1653(c)(1),
TAPAA imposes strict liability for damages caused by an oil spill
on owners and operators of vessels and the Trans-Alaska Pipeline
Fund, with a cap of $100 million on recovery. A claimant may
pursue any claims under sec. 1653(c)(1) that are not satisfied in
full
under other applicable state and federal law. See TAPAA
sec. 1653(c)(3) & (9); see also Slaven, 786 F. Supp. at 857.
Section
1653(c)(9) clarifies that "[t]his subsection shall not be inter
preted to preempt the field of strict liability or to preclude any
State from imposing additional requirements."
Most federal district courts agree that sec. 1653(c)(1)
of
TAPAA trumps the Robins rule. See Slaven, 786 F. Supp. at 857-59
(TAPAA repealed Robins, at least in part); accord In re Exxon
Valdez, 767 F. Supp. 1509, 1515 (D. Alaska 1991); In re Glacier
Bay, 746 F. Supp. 1379, 1384-86 (D. Alaska 1990).
Courts are split as to whether additional state remedies
for purely economic losses in excess of the $100 million cap are
available under sec. 1653(c)(3). See In re Exxon Valdez, 767 F.
Supp.
at 1515-16 (finding AS 46.03.822 subject to Robins based on the
conclusion that Congress could not delegate the power to legislate
concerning rights and responsibilities in admiralty); but seeSlaven, 786 F. Supp. at 860 (finding that the Robins rule does not
preempt remedies provided by Alaska statute under TAPAA, 43 U.S.C.
sec. 1653(c)(3)). But most of the cases finding additional state
remedies preempted were decided before American Dredging narrowly
defined what constitutes a "characteristic feature"of admiralty
law. See, e.g., In re Exxon Valdez, 767 F. Supp. at 1509 (decided
three years before American Dredging).
Footnote 74:
See 43 U.S.C. sec.sec. 1653(c)(3) & (9). The TAPAA conference
report specified that "[s]tates are expressly not precluded from
setting higher limits or from legislating in any manner not
inconsistent with the provisions of this Act." H.R. Conf. Rep. No.
93-624 (1973), reprinted in 1973 U.S.C.C.A.N. 2523, 2531; see alsoIn re Exxon Valdez, 767 F. Supp. at 1515.
Footnote 75:
See Ballard Shipping Co. v. Beach Shellfish, 32 F.3d 623, 630-
31 & n.6 (1st Cir. 1994) (citing Gregg L. McCurdy, An Overview of
OPA 1990 and Its Relationship to Other Laws, 5 U.S.F. Mar. L.J. 423
(1993), and Francis J. Gonynor, The Robins Dry Dock Rule: Is the
"Bright Line"Fading? 4 U.S.F. Mar. L.J. 85 (1992)). But see In re
Petition of Cleveland Tankers, Inc., 791 F. Supp. 669, 678-79 (E.D.
Mich. 1992).
Footnote 76:
See Slaven, 786 F. Supp. at 864-65; Ballard Shipping, 32 F.3d
at 628-29; see also In re Nautilus Motor Tanker Co., 900 F. Supp.
697, 704-05 (D.N.J. 1995) (noting that the Robins rule has never
completely precluded recovery, even in admiralty).
