Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_08-cv-02078/USCOURTS-azd-2_08-cv-02078-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:2201 Constitutionality of State Statute(s)

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Red River Farms, a California general

partnership; Robert Mullion, a California

resident; Joe D. McCain, a California

resident; Wayne Sprawls Family Trust, 

Plaintiffs, 

vs.

United States of America; United States

Department of Homeland Security;

Michael Chertoff, in his official capacity

as Secretary of the United States

Department of Homeland Security; United

States Coast Guard; Admiral Thad W.

Allen, in his official capacity as

Commandant of the United States Coast

Guard; Robert L. Hildebrand, in his

official capacity as case officer with the

United States Coast Guard; Wayne

Hamilton, in his official capacity as case

officer with the United States Coast

Guard; Miguel Bella, in his official

capacity as case officer with the United

States Coast Guard, 

Defendants. 

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

No. CV 08-2078-PHX-NVW

ORDER

Plaintiffs Red River Farms, Robert Mullion, Joe D. McCain, and Wayne Sprawls

Family Trust (collectively “Red River”) move for summary judgment that Defendants

(collectively “the Government”) may not collect from them certain removal costs and

damages incurred by the Oil Spill Liability Trust Fund because the applicable statute of

Case 2:08-cv-02078-NVW Document 53 Filed 09/17/09 Page 1 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 2 -

limitations has expired. (Doc. # 40.) At this time, the sole issue before the Court is the

applicability of the three year statute of limitations on cost recovery actions under the Oil

Pollution Act, 33 U.S.C. § 2717(f)(4). Red River filed its motion before the Government

filed the administrative record in this case. The parties stipulated that further motions for

summary judgment based on the administrative record would take place only if the Court

denied Red River’s motion for summary judgment on the statute of limitations. (Doc. ##

44, 45.) The Court will therefore limit its discussion to those facts bearing on the statute

of limitations issue.

I. Background

On January 5, 2002, diesel fuel from a fuel line to an irrigation pump on Red River

property leaked onto the surrounding ground. Some of the fuel ultimately discharged into

the Colorado River. Several federal and state agencies responded to the fuel leak. On

September 5, 2002, the United States Coast Guard’s National Pollution Fund Center

(“NPFC”) paid $136,578.60 from the Oil Spill Liability Trust Fund to reimburse federal

and state agencies that responded to the spill. The NPFC contacted Plaintiff Robert

Mullion on February 22, 2003, and notified him of his potential liability for the response

costs. After reviewing information provided in response to the notification, the NPFC

concluded that Plaintiff Mullion was responsible for the costs and issued him a bill on

June 11, 2003. NPFC issued bills for the same amount to Plaintiff Joe D. McCain and

Harold Wayne Sprawls on September 3, 2003. Neither Plaintiff Mullion, nor Plaintiff

McCain, nor Mr. Sprawls paid the bills. Several years passed. 

On February 10, 2006, NPFC sent a bill to the Wayne Sprawls Family Trust,

explaining that the previous bill had mistakenly been addressed to Mr. Sprawls himself. 

Wayne Sprawls Family Trust did not pay the bill. On June 15, 2006, NPFC referred

Plaintiffs Mullion, McCain, and Wayne Sprawls Family Trust to the Department of

Treasury’s Debt Management Services (“DMS”) for collection. 

Case 2:08-cv-02078-NVW Document 53 Filed 09/17/09 Page 2 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 -

NPFC sent a bill for the response costs to Plaintiff Red River Farms on October 9,

2007. Red River Farms did not pay the bill. On April 3, 2008, NPFC referred Red River

Farms to DMS for collection. 

II. Analysis

A. The Oil Pollution Act, 33 U.S.C. §§ 2701–2762

The Oil Pollution Act (“OPA”), passed following the 1989 Exxon Valdez tanker

disaster, created “a more comprehensive compensation and liability scheme for oil spill

pollution than had existed under earlier legislation.” Matter of Metlife Capital Corp., 132

F.3d 818, 820 (1st Cir. 1997). The OPA imposes strict liability for oil pollution removal

costs and damages on the “responsible party”:

[E]ach responsible party for a vessel or a facility from which oil is

discharged . . . into or upon the navigable waters or adjoining shorelines . . .

is liable for the removal costs and damages specified in subsection (b) that

result from such incident.

33 U.S.C. § 2702(a); Metlife Capital, 132 F.3d at 820-21. The OPA defines the

“responsible party” for a pipeline as “any person owning or operating the pipeline.” 

33 U.S.C. § 2701(32)(E). In the case of an onshore facility other than a pipeline, the

“responsible party” is “any person owning or operating the facility,” with some

exceptions not relevant here. Thus, under the OPA, the owner or operator of a pipeline or

onshore facility is presumptively liable for oil spill removal costs and damages.

The OPA provides that a third party or parties will be treated as the “responsible

party or parties” if a “responsible party” establishes, by a preponderance of the evidence,

that a discharge and the resulting removal costs and damages were caused solely by a

third party or parties. 33 U.S.C. §§ 2702(d)(1)(A), 2703(a)(3). The “responsible party”

must also establish, by a preponderance of the evidence, that the responsible party

“exercised due care with respect to the oil concerned” and “took precautions against

foreseeable acts or omissions of any such third party and the foreseeable consequences of

those acts or omissions.” 33 U.S.C. § 2703(a)(3).

Case 2:08-cv-02078-NVW Document 53 Filed 09/17/09 Page 3 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 -

Alternatively, if the “responsible party” alleges that the discharge was caused

solely by an act or omission of a third party, the “responsible party” “shall pay removal

costs and damages to any claimant” and “shall be entitled by subrogation to all rights of

the United States Government and the claimant to recover removal costs or damages from

the third party or the [Oil Spill Liability] Fund paid under [the OPA].” 33 U.S.C.

§ 2702(d)(1)(B).

Federal or state agencies that incur costs to remove oil pollution may claim those

costs from the Oil Spill Liability Trust Fund (“the Fund”). 33 U.S.C. § 2712(a)(1); see

also § 1321(s). When the Fund pays compensation to claimants, it becomes subrogated to

“all rights, claims, and causes of action” held by the federal or state agency against the

responsible party. 33 U.S.C. § 2715(a). At the request of the Secretary, the Attorney

General “shall commence an action on behalf of the Fund” against any responsible party

“for the cost or damages for which compensation was paid.” 33 U.S.C. § 2715(c). 

Although the Attorney General is required to commence an action on behalf of the Fund

“at the request of the Secretary,” the OPA does not require the Secretary to request the

Attorney General to commence an action each time the Fund pays compensation to

claimants. If any such action is commenced, however, it must be done within “3 years of

the payment of such claim.” 33 U.S.C. § 2717(f)(4).

B. The Debt Collection Improvement Act of 1996, 31 U.S.C. §§ 3701–3733

The Debt Collection Improvement Act of 1996 (“DCIA”) provides an

administrative offset mechanism through which the Government may collect debts. The

DCIA provides that “[i]f a nontax debt or claim owed to the United States has been

delinquent for a period of 180 days,” the head of the executive agency responsible for the

debt or claim “shall transfer the debt or claim to the Secretary of the Treasury” for

collection. 31 U.S.C. § 3711(g)(1). The Treasury may collect the debt through

administrative offset, 31 U.S.C. § 3716(a), unless “a statute explicitly prohibits using

administrative offset or setoff to collect the claim or type of claim involved,” 31 U.S.C.

§ 3716(e)(2). Administrative offset is defined as “withholding funds payable by the

Case 2:08-cv-02078-NVW Document 53 Filed 09/17/09 Page 4 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 5 -

United States . . . to, or held by the United States for, a person to satisfy a claim.” 31

U.S.C. § 3701(a). 

C. The OPA’s Three-Year Limitation on Actions Does Not Limit

Collection of Removal Costs and Damages by Administrative Offset

Under the DCIA. 

NPFC compensated the federal and state agencies that responded to the spill at

Red River Farms on September 5, 2002. It is therefore undisputed that the statute of

limitations has long since run on any “action” by the Attorney General to recover the

removal costs from Red River. The crux of the dispute is whether the Government may

still pursue an administrative means of collecting the removal costs, such as the

administrative offset mechanism provided by the DCIA. 

The OPA’s three-year statute of limitations on “actions” by the Attorney General

does not apply to administrative offsets by the Treasury under the DCIA. “The term

‘action,’ standing alone, ordinarily refers to a judicial proceeding,” not an administrative

collections mechanism. BP Am. Prod. Co. v. Burton, 549 U.S. 84, 93 (2006). “[T]he fact

that the statute of limitations bars a government suit to collect an amount due to it does

not bar the government from invoking its administrative remedies to offset the

indebtedness against other claims by the debtor.” Doko Farms v. United States, 956 F.2d

1136, 1140 (Fed. Cir. 1992); see also id. at 1142–43 (relying in part on 31 U.S.C.

§ 3716). Moreover, the DCIA itself specifies that “[n]otwithstanding any other provision

of law, regulation, or administrative limitation, no limitation on the period within which

an offset may be initiated or taken pursuant to this section shall be effective.” 31 U.S.C.

§ 3716(e)(1). Thus, there is no time limit on the Government’s ability to recover removal

costs from Red River by administrative offset. 

Also, there is no requirement that the Government sue Red River before it resorts

to administrative offset. The DCIA is Congress’s most recent addition to a long line of

statutes that have increased federal agencies’ ability to collect debts without the need for

judicial action. See Lawrence v. Commodity Futures Trading Com., 759 F.2d 767, 772

(9th Cir. 1985) (“The provisions of the [Federal Claims Collections Act of 1966] and the

Case 2:08-cv-02078-NVW Document 53 Filed 09/17/09 Page 5 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 6 -

amendments in the Debt Collection Act of 1982 express a Congressional mandate that

agencies play a more active role in the collection of delinquent claims than merely

referring them to the Department of Justice.”). Even before the amendments effectuated

by the DCIA, the “argument that mediation or direct suit must precede use of an

administrative offset ha[d] no basis in statute or regulation.” McCall Stock Farms v.

United States, 14 F.3d 1562, 1570 (Fed. Cir. 1993) (applying the Debt Collection Act of

1982). The DCIA was enacted to further “maximize collections of delinquent debts owed

to the Government by ensuring quick action to enforce recovery of debts and the use of

all appropriate collection tools.” Debt Collection Improvement Act of 1996, Pub. L. No.

104-138, § 31001(b)(1), 110 Stat. 1321, 1321-358 (“Purposes of 1996 Amendments” note

following 31 U.S.C. § 3701).

Removal costs owed by responsible parties under the OPA can be “debts” under

the DCIA, even without an “action” by the Attorney General. The DCIA defines a “debt”

to be “any amount of funds or property that has been determined by an appropriate

official of the Federal Government to be owed to the United States by a person,

organization, or entity other than another Federal agency.” 31 U.S.C. § 3701(b)(1). The

statute does not explicitly define who qualifies as “an appropriate official of the Federal

Government.” However, it does provide that the “head of an executive, judicial, or

legislative agency” can collect a debt by administrative offset after following certain

procedures, including providing “an opportunity for a review within the agency of the

decision of the agency related to the claim.” 31 U.S.C.§ 3716(a)(3) (emphasis supplied). 

The DCIA therefore contemplates that an agency official may decide whether or not

funds or property are owed to the United States, thereby establishing a “debt,” without

resorting to judicial action.

The Treasury’s regulations reinforce that no judicial action is required before an

agency may resort to administrative offset. The regulations specify that so long as a debt

is “legally enforceable” and the DCIA’s procedural requirements have been observed, the

debt may be collected through administrative offset. 31 C.F.R. § 285.5(d)(3), (6). 

Case 2:08-cv-02078-NVW Document 53 Filed 09/17/09 Page 6 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 7 -

“Legally enforceable” simply means that “there has been a final agency determination

that the debt, in the amount stated, is due, and there are no legal bars to collection by

offset.” 31 C.F.R. § 285.5(b). The requirement that there be no “legal bars” does not

mean that collection by offset must take place within a specified time period because, as

discussed above, no limitations period applies to administrative offsets. See 31 U.S.C.

§ 3716(e)(1). Rather, the “legal bars” language refers to other prohibitions on collection

through offset, such as “debts subject to the automatic stay in bankruptcy proceedings or

debts covered by a statute that prohibits collection of such debt by offset.” 31 C.F.R.

§ 285.5(b). 

No provision of the OPA explicitly forecloses collection of removal costs through

administrative offset. NPFC administers the Fund and therefore has authority to

determine whether removal costs are owed to the Government. When NPFC determined

that Red River owed removal costs, those removal costs became a debt under the DCIA. 

Once Red River’s debt was 180 days delinquent and NPFC had fulfilled the procedural

requirements, it could refer Red River’s debt to the Treasury for collection through

administrative offset, even though the statute of limitations had expired on a recovery

“action” by the Attorney General.

The Court is mindful that this rule of decision will fall harshly on some people. 

But this is the handiwork of Congress, and it is for Congress to improve upon it.

IT IS THEREFORE ORDERED that Plaintiffs’ Motion for Summary Judgment

(doc. # 40) is denied.

DATED this 16th day of September, 2009.

Case 2:08-cv-02078-NVW Document 53 Filed 09/17/09 Page 7 of 7