United States District Court, Eastern District of Pennsylvania
NEREUS SHIPPING, S.A., as owner and operator of the M/T NORTH STAR
THE UNITED STATES OF AMERICA, et al.
Harvey Bartle III, J.
Plaintiff Nereus Shipping, S.A. ("Nereus"), the owner and operator of the motor tank vessel M/T North Star ("North Star"), filed a claim for reimbursement from the Oil Spill Liability Trust Fund (the "Fund") pursuant to the Oil Pollution Act of 1990 ("OPA"), 33 U.S.C. § 2701. Nereus sought recovery of loss of profits associated with the North Star arising out of an oil spill that occurred on November 26, 2004 in the Delaware River. The National Pollution Funds Center ("NPFC"), which manages the Fund, denied Nereus' claim on the basis that Nereus failed to establish that it had sustained a loss. Nereus now seeks review in this court of that decision under the Administrative Procedures Act ("APA"), 5 U.S.C. § 706.
Before the court are the parties' cross-motions for summary judgment. Nereus seeks reversal of the NPFC's decision to deny its claim for reimbursement from the Fund, while the government asks us to affirm the agency's decision.
The following facts are undisputed. Nereus, which is a shipping corporation headquartered in Greece, owns and operates the North Star. On October 15, 2004, Nereus chartered the North Star to Sunoco, Inc. ("Sunoco") to transport crude oil from West Africa to the Sunoco refineries along the Delaware River. The charter between Nereus and Sunoco provided for payment based on the freight tonnage carried by the North Star using a worldscale rate. Under the charter, Nereus would also be compensated by Sunoco if the loading and unloading of cargo took more than 72 hours total. In that event, Sunoco would pay Nereus for the excess time, or demurrage, at a daily rate of $90, 000, prorated per hour. The 72 hours of loading time specified in the charter was exhausted before the North Star left Africa as the loading of the cargo took over four days.
On November 26, 2004 the North Star arrived at Sunoco's Fort Mifflin dock where it offloaded part of its cargo as scheduled. The same day, the Cypriot-flagged tank vessel ATHOS I struck a submerged anchor as it approached the CITGO Asphalt Refining Company terminal in Paulsboro, New Jersey. The anchor punctured the hull and caused the release of crude oil into the Delaware River. The ATHOS I spill caused a 34.4 hour delay of the North Star at Fort Mifflin from 6:00 a.m. on November 27, 2004 until 4:25 p.m. on November 28, 2004. On the afternoon of November 28, the Coast Guard cleared the North Star to travel within the spill zone between Fort Mifflin and Eagle Point, and the vessel finished unloading the remainder of its cargo on November 29, 2004. The North Star then shifted to the Hog Island pier, adjacent to Fort Mifflin, to await cleaning.
Following this voyage, Nereus sent an invoice to Sunoco for demurrage. The invoice identified 12 days, 5 hours, and 25 minutes of laytime, including 3 days, 11 hours and 55 minutes at Fort Mifflin/Eagle Point. Deducting the 72 hours provided for in the charter, Nereus requested demurrage for 9 days, 5 hours, and 25 minutes, totaling $830, 312.50. Sunoco and Nereus agreed that they would split 50/50 the demurrage that resulted from the delay that occurred while the North Star awaited Coast Guard permission to travel from Fort Mifflin to Eagle Point. Thus, the amount Sunoco paid Nereus for demurrage, $734, 021.09, included $45, 000 for the aforementioned delay at Fort Mifflin.
As the North Star awaited cleaning and further orders from Nereus, Sunoco was looking into options for lightering, that is, transporting cargo from one vessel to another, for two of its vessels waiting in the nearby Big Stone anchorage. Sunoco thereafter chartered the North Star to lighter the two vessels. The Coast Guard granted the North Star permission to undertake the trip with the agreement that the ship would be cleaned after the voyage was completed. For this spot-charter with Sunoco, the agreed-upon rate was $130, 000 per day. Sunoco was charged for the use of the North Star from December 2, 2004 until December 12, 2004, minus the time it took for the North Star to be cleaned at the end of the trip. Sunoco paid Nereus $1, 004, 919.06 for the use of the North Star and for the fuel used during the trip. Finally, the North Star departed the Delaware River region on December 11, 2004, after it was cleaned.
The owner of the ATHOS I, Frescati Shipping Company Ltd., was designated by the Federal On Scene Coordinator as the responsible party ("RP") for the oil spill. After it paid for costs exceeding its limit of liability, the RP denied all claims under the Oil Pollution Act of 1990, including a claim submitted by Nereus.
Upon learning of the RP's denial of its claim, Nereus submitted a claim to the NPFC seeking reimbursement from the Fund for loss of profits and earning capacity and increased expenses associated with the North Star. The amount sought by Nereus totaled $804, 360.34 and was composed of lost charter hire, totaling $772, 326.38, increased fuel consumption, totaling $14, 217.79, and increased port expenses, totaling $17, 816.17. As proof of its economic loss due to the delay caused by the ATHOS I spill, Nereus submitted the following documentation to the NPFC: (1) proof of its last charter with a hire rate of $90, 000 per day; (2) proof of the vessel performance for five charters including the voyage before the October 15, 2004 Sunoco charter; (3) proof of the published rates on the spot charter market during the relevant period of time which show a hire rate of more than $137, 000 per day.
Nereus arrived at the amount sought from the NPFC by calculating the time during which the North Star was not actively working in the Delaware River area under either the original Sunoco charter or the Sunoco spot charter. Nereus identified the amount of time as 142.75 hours. Nereus then multiplied that time by an alleged market rate of $130, 000 per day. Nereus did not offset the amount of its alleged lost income when the North Star was not chartered against the entire amount of its mitigating income from Sunoco and saved expenses as a result of the oil spill. Indeed, it did not initially disclose to the NPFC the spot charter with Sunoco which resulted in additional income of $1, 004, 919.06.
In an email dated August 4, 2009, the NPFC denied payment on Nereus' claim to the Fund. According to the NPFC, Nereus failed to meet its burden of proof by the preponderance of the evidence that it had lost profits as a result of the oil spill:
"While, [sic] demurrage rates may indicate a value of time, in and of themselves they do not represent an expense or lost profit without demonstrating they were an expense or that in fact that the time was lost opportunity. While it is clear Nereus Shipping N.A. incurred increased expenses as a result of the Athos I oil spill, it is also clear that [it] gained over $1M in revenues from Sunoco's impromptu spot charter of the North Star for which Nereus Shipping would not have made but for the Athos I oil spill..." Nereus timely made a written request for reconsideration which was denied on March 23, 2011. In its written denial, which constituted the NPFC's final action, the agency reiterated that Nereus had failed to account for an offset to its lost profits as required by regulations.
Having exhausted its opportunities for review at the agency level, Nereus initiated this action in March 2013 seeking reversal of the NPFC's decision. The parties subsequently filed cross-motions ...