The Oil Pollution Act of 1990 (known as “OPA 90”) and the Comprehensive Environmental Response, Compensation, and Liability Act (known as “CERCLA”) are two federal environmental laws with significant effects on businesses and individuals across the nation. OPA 90 provides a remedial scheme that apportions the liability and costs of oil spills among responsible parties. CERCLA does the same but for spills of “hazardous substances,” a term of art that is defined in the statute.

But what if there is a spill that is a mix of oil and hazardous substances? Which law governs, OPA 90 or CERCLA? That is the question answered recently by the U.S. Fifth Circuit in the case of Munoz v. Intercontinental Terminals Co.[1] The court’s answer: CERCLA.

The case arose out of a fire that broke out at Intercontinental Terminals Company’s chemical-storage facility at Deer Park, Texas. There was an allegation that during the ensuing battle to control the fire, various tank products, fire water, and firefighting foam accumulated behind ITC’s containment wall. Later, damage to this wall caused it to collapse, allegedly releasing various contaminants into the Houston Ship Channel.

Crucially, subsequent testing by the Texas Commission on Environmental Quality revealed that the spill was oil mixed with hazardous substances. About a year later, various plaintiffs sued ITC under OPA 90, seeking to recover economic losses due to interruptions of their business caused by closures of the Houston Ship Channel.

OPA 90, unlike CERCLA, allows for recovery of purely economic losses. For that reason, the plaintiffs brought OPA 90 claims, arguing that OPA’s definition of “oil” includes mixtures of oil and hazardous substances. ITC disagreed and moved for summary judgment on the issue of OPA 90’s applicability.

The district court granted ITC’s motion, and the plaintiffs appealed, teeing up the issue for the Fifth Circuit. As with all legitimate statutory interpretation, the court started with the text of the law. CERCLA, which was passed before OPA 90, expressly excludes “petroleum, including crude oil” from its definition of “hazardous substance.” But it does not exclude mixtures of oil and hazardous substances. In fact, before OPA 90 was passed, courts interpreted CERCLA’s definition of “hazardous substance” to include such mixtures.

Because OPA 90 was passed against this backdrop, the court could reasonably assume that Congress was aware of the accepted interpretation of CERCLA when drafting OPA 90. And OPA 90’s definition of “oil” expressly excludes any “hazardous substance” under CERCLA. The statute provides:

“oil” means oil of any kind or in any form, including petroleum, fuel oil, sludge, oil refuse, and oil mixed with wastes other than dredged spoil, but does not include any substance which is specifically listed or designated as a hazardous substance under [CERCLA].

33 U.S.C. § 2701(23). The plaintiffs, however, argued that a mixture of oil and hazardous substances was not “specifically listed” under CERCLA, so OPA 90’s hazardous-substance exclusion did not include ITC’s mixed spill.

The court rejected this clever argument. It reasoned that the Ninth Circuit, the Fifth Circuit, and the EPA had interpreted CERCLA’s definition of “hazardous substance” to include mixtures of oil and hazardous substances. Therefore, when Congress later excluded hazardous substances from OPA 90’s purview, it did so knowing that exemption included commingled spills. Further, OPA 90’s legislative history revealed that Congress intended for OPA 90 and CERCLA to be mutually exclusive.

The plaintiffs also argued that the court’s interpretation of OPA 90 incentivizes the intentional or reckless commingling of oil with hazardous substances so that the responsible party can avoid liability for economic losses under OPA 90. The Fifth Circuit explained that while this might amount to a questionable policy decision under the law, it is not so absurd as to overcome the plain language of OPA 90, interpreted in light of the backdrop of CERCLA and its accepted meaning.

The Munoz case does create a disparity in potential liabilities for different parties. A party responsible for an unmixed spill of oil may be liable for pure economic losses under OPA 90, while a party responsible for a mixed spill may be liable under CERCLA, which does not include pure economic losses.

[1] Munoz v. Intercontinental Terminals Co.