District Court Finds Importer Liable for Chemical Spill at Port of L.A., Aboard Container Ships
A New York federal court on Feb. 25 found an importer liable for a leak of a corrosive chemical aboard two ships while crossing the Pacific. Carrier APL spent over $5 million cleaning up the 2006 spill aboard two of its ships and at two container terminals at the Port of Los Angeles. The U.S. District Court for the Southern District of New York found importer Kemira Water Solutions jointly and severally liable, in part because the company specified the wrong type of packaging in its purchasing agreement.
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Kemira, a seller of water treatment chemicals, had arranged to import the ferrous chloride crystals from Fairyland, a now-defunct Taiwanese chemical supplier. The chemical is used by water treatment plants to eliminate sewer odor. But ferrous chloride liquefies easily, and in liquid form is aggressively corrosive to most metals. In its purchase agreement, Kemira specified to Fairyland that the chemical was to be shipped in “bottom-loading” bags. APL was the carrier of the shipment aboard two ships, the M/V Hyundai Independence and the M/V APL Singapore.
As the first shipment arrived at Port of Los Angeles aboard the Independence and was unloaded at the California United Terminals, a brown sludge was discovered to be leaking from the containers. APL discovered that the leak not only affected the container terminal and 22 containers, but also the M/V Hyundai Independence. The container ship had to be cleaned before it could again set sail, because of the risk that the corrosive acid would eat the ship while at sea.
As cleanup was ongoing, and unbeknownst to APL, another shipment of Kemira’s ferrous chloride was on its way aboard the APL Singapore. As it arrived at the Port of Los Angeles and was unloaded at the Global Gateway South terminal, leakage was again discovered. This time, the corrosive chemical not only had to be cleaned from 29 containers holding ferrous acid, the terminal, and the APL Singapore, but also more than 80 “victim” containers that the chemical had leaked on while aboard the ship. All in all, APL and its insurers paid $5,020,169.88 in clean-up costs.
The District Court had already found Kemira to be potentially liable under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for the clean-up costs. Now at issue for the court was Kemira’s insistence that its liability should be limited because the APL prioritized its own business interests in the clean-up by devoting extra attention ensuring that its ships were again seaworthy. It also said that it was only liable for part of the damage.
U.S. District Judge Katherine Forrest denied both of Kemira’s defenses. In her 74-page opinion, she found that, “though there were certainly many twists and turns in the road,” the clean-up operations on the Hyundai Independence and APL Singapore were the work of experienced professionals in both the private and public sectors. “The efforts of APL and its contractors were consistently geared toward mitigating the threat to human health and the environment caused by the leaking ferrous chloride (both aboard the ships and on the ports),” she said.
The District Court also said Kemira could not be held liable for only part of the clean-up costs. Kemira ”specified the use of improper packaging in the Purchase Agreement (bottom-loading bags),” said Forrest. “When the ferrous chloride was shipped in these bags, it leaked--on the vessels, on other containers, and ultimately on the ports. As a result, APL was forced to incur significant costs in order to address the release and continued release of the material,” she said.
(APL Co. Pte. Ltd. v. Kemira Water Solutions, Inc.; S.D.N.Y. No. 11-1686, dated 02/25/14, Judge Forrest)
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