H.R. 5503: Securing Protections for the Injured from Limitations on Liability Act

H.R. 5503

Securing Protections for the Injured from Limitations on Liability Act

Sponsor
Rep. John Conyers Jr.

Date
June 29, 2010 (111th Congress, 2nd Session)

Staff Contact
Sarah Makin

Floor Situation

H.R. 5503 is expected to be considered on the floor of the House on Tuesday, June 29, 2010, under a motion to suspend the rules, requiring a two-thirds vote for passage.  The legislation was introduced by Rep. John Conyers (D-MI) on June 10, 2010.

Bill Summary

H.R. 5503 makes six changes to current law to remove some limitations on liability related, in part, to the Gulf oil spill.  The bill makes three major changes to liability limits in federal maritime law; makes a change to the Class Action Fairness Act (CAFA); makes agreements restricting dissemination of information regarding a discharge of hazardous substances into U.S. waters void as against public policy; and makes certain important provisions of the Bankruptcy Code effectively inapplicable to debtors with liability related to oil spills.  The bill makes all of these changes apply retroactively.

 

Specifically, H.R. 5503 amends the Death on the High Seas Act to permit recovery of non-economic damages (e.g., pain and suffering and loss of care, comfort, and companionship) by the decedent’s family; standardize the geographic threshold for its application; and permit surviving family members to bring suit directly rather than through a personal representative.

 

The bill amends the Jones Act to permit recovery of non-economic damages (e.g., pain and suffering and loss of care, comfort, and companionship) by the families of seamen who are killed and are covered by the Jones Act. 

 

The bill repeals the Limitation of Liability Act, which addresses the liability of a vessel owner in the aftermath of a maritime accident.

 

H.R. 5503 attempts to amend the CAFA to clarify that impacted states can seek legal remedies in their own courts.

 

The bill makes agreements to restrict the disclosure of information about offshore spills of oil and other pollutants void as against public policy.

 

H.R. 5503 amends the Bankruptcy Code to prevent debtors liable for damages under the Oil Pollution Act from seeking to sever their assets from the legal liabilities they owe to tort claimants and makes chapter 15 of the Bankruptcy Code inapplicable to such debtors.

Background

This bill was introduced in order to address the liability framework governing the spill in the Gulf.  However, H.R. 5503 is a very broad bill with only two major provisions directed solely at oil spill related issues and would have unintended consequences that reach well beyond the Gulf oil spill.

 

H.R. 5503 makes several broad based changes to long-standing U.S. maritime laws; takes U.S. maritime law out-of-step with the laws of other maritime nation; makes unnecessary changes to the Class Action Fairness Act; and amends the Bankruptcy Code in a manner that effectively gives oil spill claimants control over the bankruptcy process.

Cost

The Congressional Budget Office (CBO) has not produced a cost estimate for H.R. 5503 as of press time.

Additional Information

MEMBER CONCERNS

According to the House Committee on the Judiciary Republican staff, the following are possible Member concerns with H.R. 5503:

H.R. 5503 is broad legislation that applies well beyond oil spills, creating unintended consequences that reach considerably further than the Gulf coast disaster. Very little of what is in this bill is limited solely to oil spills and only the bill’s bankruptcy provisions will even potentially apply to BP. Instead of addressing the current oil spill or even future spills, the bill’s main focus is on re-writing major portions of U.S. maritime liability law. The majority rejected a Republican amendment in committee to limit the bill to liability arising out of oil spills.

H.R. 5503 was rushed through committee without even one legislative hearing, despite the fact that the bill applies retroactively, obviating the need for expedited consideration. Without a legislative hearing, we have no clear understanding of the full impact of the bill’s provisions. Understandably, sometimes legislation must move on an expedited basis to respond to emergencies; however, H.R. 5503 applies retroactively, providing the time needed to conduct the hearings required to ensure that the changes made by the bill are necessary and that the unintended consequences are limited.

H.R. 5503 repeals the Limitation of Liability Act without adopting a replacement to fill the void, even though virtually all seagoing nations limit vessel-owner liability. Most seagoing nations limit vessel-owner liability through national law or through adoption of the Convention on Limitation of Liability for Maritime Claims. Repeal of the Act could be detrimental to U.S. shipping resulting in damaging effects on the economies of the Gulf States and other coastal regions.

Increasing U.S. maritime liability versus other seagoing nations will create an effective tax on the U.S. shipping industry at precisely the time when it is not needed.

Repealing the Limitation of Liability Act actually hurts victims of maritime accidents. The Limitation of Liability Act provides for the orderly resolution of claims arising out of a maritime accident in one federal court. It also creates a compensation fund for personal injury claims. Repealing the Act will eliminate these two important provisions, which in many cases will result in victims receiving less compensation than they would under current law.

H.R. 5503 provides for non-economic damages in wrongful death cases without any limitation despite the unpredictable nature of such awards. In general, awards of non-pecuniary damages are unpredictable, resulting from the inherent difficulties in valuing such damages and the great disparity in the price tag that different juries place on such losses. This is why many states have placed limits on the award of non-economic damages.

These provisions are especially problematic for asbestos claims, which obviously have nothing to do with oil spills. Allowing for non-economic damages for wrongful death claims under the Death on the High Seas Act and the Jones Act will have a major impact on asbestos claims brought by those exposed to asbestos aboard ships.

Giving decedents of Jones Act seamen non-economic damages in wrongful death actions creates inequities versus the treatment of other American workers. The Jones Act, like the Federal Employer Liability Act and the Longshore and Harbor Workers Compensation Act, is best thought of as an analog to state workers’ compensation statutes. However, non-economic damages are not typically available as a form of workers’ compensation.

H.R. 5503 effectively gives oil spill claimants control of the bankruptcy process for a company with oil spill liability to the derogation of the rights of all other creditors. By giving Oil Pollution Act claimants veto power over bankruptcy asset sales of companies with OPA liability, H.R. 5503 effectively gives these claimants control of the bankruptcy process. However, giving OPA claimants this veto power seriously curtails the rights of other bankruptcy claimants, including secured creditors, pension funds, other tort victims and state and local governments.

According to the National Bankruptcy Conference, the bankruptcy provisions in H.R. 5503 are “bad public policy,” which will have “pernicious, unintended and counterproductive consequences.” The Conference, a non-partisan organization, also believes that the bankruptcy provisions in this bill will come “at the expense of other innocent and equally deserving claimants.”