author: CLARKE, District Judge.

text:
    ENTE NAZIONALE PER L’ENERGIA ELETTRICA, Plaintiff, v. BALIWAG NAVIGATION, INC. and Wheelock Marine Services, Ltd., Defendants, and Rex Shipping Company S.A. of Panama, in personam, and M/V KUNIANG, her engines, tackle, and apparel, etc., in rem, Defendants and Third-Party Plaintiffs, v. CRAVAT COAL COMPANY, Third-Party Defendant and Third-Party Plaintiff, v. BALIWAG NAVIGATION, INC., Wheelock Marine Services, Ltd., Almare Societa Di Navigazione S.p.A., Cooper Stevedoring Company, Inc. and Alla-Ohio Valley Coals, Inc., Third-Party Defendants.
    Civ. A. No. 81-441-N.
    United States District Court, E.D. Virginia, Norfolk Division.
    June 6, 1984.

      Philip N. Davey, Seawell, Dalton, Hughes & Timms, Norfolk, Va., for plaintiffs.
    Carter T. Gunn, Norfolk, Vá., for Rex Shipping.
    William B. Eley, Norfolk, Va., for Aliñare.
    Gregory N. Stillman, Norfolk, Va., for Cravat.
    R. Arthur Jett, Jr., Norfolk, Va., for Cooper.
    Daniel R. Warman, Norfolk, Va., for Alla-Ohio.
   OPINION AND ORDER

CLARKE, District Judge.

This matter is before the Court following a nonjury trial which was held on January 18 to 20, 1984. The trial of this case has been bifurcated, with the Court in this phase to determine only the liability of the parties. After hearing the evidence, the Court directed all parties to submit post-trial briefs addressing the factual and legal issues raised. Post-trial briefs and reply briefs were timely submitted by the parties and therefore the matter is ripe for decision.

This action concerns a cargo of more than 45,000 long tons of steam coal carried by the M/V KUNIANG. The vessel’s owner has settled with the consignee of the coal, and now seeks indemnity and/or contribution from the other parties involved in the shipment, as well as recovery of miscellaneous costs.

SUMMARY OF FACTS

The undisputed facts in this case can be summarized as follows: On April 2, 1981, the M/V KUNIANG departed Darrow, Louisiana with a cargo of approximately 45,254.03 long tons of steam coal, bound for La Linea, Gibraltar, with orders to either Vado Ligure or La Spezia, Italy. The vessel was forced to divert to Miami, Florida because of mechanical problems. On April 6, 1981, while at anchor off Miami, the M/V KUNIANG dragged anchor and grounded. The vessel’s bottom was severely damaged by the grounding and several cargo holds were flooded by seawater as a result.

The vessel was towed to Sewell’s Point Anchorage, Norfolk, Virginia for discharge of her cargo of coal and drydocking. The M/V GARDEN NEPTUNE was designated to receive the coal from the M/V KUNIANG for shipment to its destination in Italy. On May 7, 1981, the transfer of the coal from the M/V KUNIANG to the M/V GARDEN NEPTUNE began. On May 13, 1981, the Master of the M/V GARDEN NEPTUNE refused to accept any further coal from the M/V KUNIANG because the coal was heating.

The M/V KUNIANG was towed to Elizabeth River Terminals (“ERT”), Chesapeake, Virginia on May 16, 1981, where she discharged the balance of her coal to ground storage. The coal in ground storage at ERT was eventually sold, and reloaded aboard the M/V NORDVARD, which carried approximately 41,974 metric tons of steam coal to Inkoo, Finland.

PARTIES

The plaintiff Ente Nazionale Per L’Energia Elettrica (“ENEL”) is an Italian corporation involved in the production, transmission and distribution of electricity. ENEL was the consignee of the cargo of approximately 45,254.03 long tons of steam coal loaded aboard the M/V KUNIANG.

The defendant Rex Shipping Company S.A. of Panama (“Rex”) is a Panamanian corporation which was the registered owner of the M/V KUNIANG.

The defendant Wheelock Marine Services Ltd. (“Wheelock”) of Hong Kong was the managing agent for the owner of the M/V KUNIANG.

The defendant Baliwag Navigation, Inc. (“Baliwag”) of Manila, The Phillipines was appointed the crewing agent for the M/V KUNIANG by Wheelock.

The M/V KUNIANG is an ocean-going bulk carrier of approximately 29,000 gross tons, registered under the flag of the Republic of Panama.

Third-party defendant Almare S.p.A. di Navigazione (“Almare”) is an Italian corporation which time-chartered the M/V KUNIANG from Rex. Almare voyage-chartered the M/V KUNIANG to ENEL.

Third-party defendant Cravat Coal Company (“Cravat”) is an Ohio corporation which contracted to sell approximately 200,000 metric tons of steam coal to ENEL in four approximately equal shipments. The coal on the M/V KUNIANG represented the second of the four scheduled shipments. Cravat is a producer and seller of coal in the domestic and export markets.

Third-party defendant Alla-Ohio Valley Coals, Inc. (“AOV”) is a Florida corporation presently operating as a debtor-in-possession under bankruptcy proceedings in the United States District Court for the District of Columbia pursuant to Chapter 11 of the Bankruptcy Code. AOV actually supplied the coal loaded on the M/V KUNIANG, pursuant to an agreement with Cravat.

Third-party defendant Cooper Stevedoring Co., Inc. (“Cooper”) is an Alabama corporation which loaded the coal aboard the M/V KUNIANG at Darrow, Louisiana between March 25 and April 2, 1981.

ACTIONS

This action was initiated by the filing of a complaint by ENEL on May 19, 1981 against Rex in personam and the M/V KUNIANG in rem. ENEL brought suit under the Carriage of Goods by Sea Act (“COGSA”), 46 U.S.C. § 1303, alleging that the shipowner violated its common carrier duties to make the M/V KUNIANG seaworthy; to man, equip and supply the vessel properly; and to load, handle, stow, carry, keep, care for, and discharge the cargo of coal properly and carefully. ENEL later by amendment added Baliwag and Wheelock as defendants. On October 6, 1983, a settlement agreement between ENEL, Rex and Almare was filed with the Court. By the terms of the agreement, Rex agreed to pay ENEL $1,115,000.00 to settle the cargo claim, plus $150,000.00 in prejudgment interest. By Order of January 18, 1984, the complaint of ENEL was dismissed with prejudice. As a result, ENEL is no longer a party to this action.

Rex originally filed a counterclaim against ENEL, third-party complaints against Cravat and Cooper, and a counterclaim against AOV. In addition, Rex’s third-party complaint against Almare was stayed pending arbitration by Order of May 14, 1982. Rex’s counterclaim against ENEL was dismissed without prejudice, but subject to Rex’s covenant not to sue ENEL, as set forth in the October 6, 1983 settlement agreement, by Order of January 18, 1984. The lodged third-party complaint against Almare was withdrawn, also by Order of January 18, 1984. Finally, a settlement agreement between Rex and Cooper, in which Cooper agreed to pay Rex $40,000.00 and the parties agreed to dismiss with prejudice their claims against each other, was filed in open Court on January 18, 1984. By Order of May 7, 1984, the third-party claim of Rex against Cooper and the cross-claim of Cooper against Rex were dismissed with prejudice.

Consequently, Rex’s only remaining claims are its third-party complaint against Cravat and its counterclaim against AOV. Rex alleges that the coal loaded on board the M/V KUNIANG was unusually susceptible to spontaneous combustion. Rex seeks to recover from Cravat and AOV the costs it incurred in handling the coal once it heated, including its required contribution in General Average, the cost of discharging the coal at ERT, and the cost of ground storage. Additionally, Rex seeks to recover the amount it paid to ENEL pursuant to the settlement agreement.

Cravat has filed a counterclaim against Rex, as well as third-party claims against Cooper, Almare, AOV, Baliwag and Wheelock.

AOV has filed third-party claims against Cooper, Almare, Rex and Cravat. AOV’s crossclaim against ENEL was dismissed without prejudice by Order of January 18, 1984.

Cooper has filed erossclaims against Cravat, AOV and Almare. Its counterclaim against ENEL was dismissed without prejudice by Order of January 18, 1984. Pursuant to a settlement agreement filed in open Court on January 18, 1984, Cooper agreed to dismiss with prejudice its claim against Rex. By Order of May 7, 1984 Cooper’s claim against Rex was dismissed with prejudice.

Almare, which did not appear during the trial, has outstanding counterclaims against AOV, Cooper and Cravat. Its counterclaim against ENEL was dismissed without prejudice by Order of May 12, 1983.

FINDINGS OF FACT

Many of the material facts in this case are not in dispute and have been agreed to by stipulation of the parties. The chain of events leading to the present controversy is complex, and must be discussed in some detail.

On June 17, 1980, Cravat contracted to sell approximately 200,000 metric tons of Pond Creek type steam coal to ENEL in four approximately equal shipments. Although the contract between Cravat and ENEL originally called for Cravat to ship the coal through the port of Hampton Roads, by a November 1980 amendment to the contract the parties agreed to ship the coal through the port of New Orleans. Commercial Testing and Engineering Co. (“CTE”), a commercial testing laboratory, was designated to test the coal to determine whether it met the contract specifications.

In November 1980, Cravat determined that it would be unable to supply the coal called for in its contract with ENEL. Consequently, Cravat and AOV entered into an agreement on November 28, 1980, in which AOV agreed to supply the coal called for in the ENEL contract. AOV and Cravat agreed that Cravat was to be listed as the shipper on the bill of lading and other shipping documents. AOV’s involvement was not revealed to either ENEL or Rex.

AOV contracted with various coal suppliers to buy barge loads of coal. AOV obtained the coal for the shipment in question from nine suppliers. The coal was carried aboard barges to the loading site.

The M/V KUNIANG, which Almare had time-chartered from Rex and then voyage-chartered to ENEL, arrived at the Mississippi River on March 21, 1981. The vessel proceeded to LaGrange Anchorage, Belle Chase, Louisiana. From there the M/V KUNIANG proceeded to its loading berth at Darrow, Louisiana, where it arrived on March 25. Prior to loading, each of the vessel’s cargo holds were inspected for cleanliness and readiness to load coal by SGS Control Services, Inc. (“SGS”) and Deep Sea Marine Surveyors, Inc. The last of the holds passed inspection on March 26.

Cooper’s berth at Darrow is a mid-stream loading berth. Coal is transferred from the barges to the vessel by floating cranes, which lift the coal into the ship using clam-shell type buckets. The loading of the M/V KUNIANG began on the morning of March 25, and was completed on April 2, 1981. The coal was stowed in the holds in a peaked fashion. Cooper failed to trim the coal or compact it, although it admits that this is normal practice. Trimming the cargo of coal would have entailed leveling the cargo across the hold so that the cargo would have been at the same level at the walls or bulkheads of the hold as at the center of the hold. Such leveling is done with a tractor or bulldozer, which also compacts the coal.

Prior to loading, the coal was sampled and analyzed by CTE and SGS, both commercial testing laboratories. The testing companies reported that the coal met the contract specifications. Neither company reported any problems with the coal.

During the loading of the vessel, the Master of the M/V KUNIANG, Capt. Jose A. Calbes, observed what appeared to be steam coming from the coal aboard two of the barges. At the Captain’s request, AOV arranged for the examination of the coal aboard the two barges by SGS and CTE. Both loads of coal were examined by the testing lab employees and were reported by SGS to be “in good exportable condition.” The Master thereafter accepted the coal aboard the two barges for loading aboard the M/V KUNIANG.

Almare and Rex had appointed Strechan Shipping Co. as their husbanding agents. The Master of the M/V KUNIANG, Capt. Calbes, authorized Strachan to sign the bill of lading on his behalf. Both AOV and Cravat had appointed M. G. Maher & Co. to act as their representative. M. G. Maher & Co. prepared the shipping documents, with Cravat listed as the shipper. After the completion of loading on April 2, the Master authorized the Strachan representative to sign the several copies of the bill of lading tendered by the M. G. Maher & Co. agent. No comments were made on the bill of lading concerning the quality of the coal or its suitability for shipment. The bill of lading was completely “clean”.

In addition, upon the completion of the loading of the M/V KUNIANG, SGS issued a certificate of loading, dated April 2, 1981, stating that the vessel was loaded “in accordance with all known practices of good seamanship, with observance of all known rules and regulations for loading coal in bulk.” The certificate was signed by the Master of the M/V KUNIANG.

The M/V KUNIANG departed Darrow for La Linea, Gibraltar on the morning of April 2, 1981 with the cargo of approximately 45,254.03 long tons of steam coal, with a final destination of either Vado Ligure or La Spezia, Italy. The vessel expected to arrive in Italy in approximately 15 to 18 days.

Shortly after the vessel got underway on April 2, the ship developed an engine problem. It was determined that seawater had contaminated the vessel’s main engine lube oil. The lube oil purifiers were unable to remove the seawater from the lube oil, and it became necessary to shut down the main engine. The M/V KUNIANG was then located west of Florida in the Gulf of Mexico. Beginning April 4, during the time the vessel was in the Gulf of Mexico, temperatures were periodically taken of the coal by the Chief Mate, at the Captain’s direction.

The contaminated lube oil was drained and replaced by spare lube oil which had been carried aboard the vessel. On the morning of April 4, the M/V KUNIANG resumed her voyage. Two hours after the vessel resumed her voyage, however, the Chief Engineer informed Capt. Calbes that the ship did not have enough spare lube oil on board to complete the transatlantic crossing. The Captain decided to divert the vessel to Freeport, Bahamas where additional lube oil could be obtained to replenish the M/V KUNIANG’s supply.

The vessel had almost arrived in Free-port when Capt. Calbes received a message from Wheelock, the managing agent for Rex, directing the ship to divert to Miami, Florida to obtain the additional lube oil. The vessel’s owners had a contract with Exxon for the supply of lube oil and Wheelock advised the Captain that there was no Exxon facility in Freeport.

The vessel turned around and headed for Miami, where it arrived on the afternoon of April 5, 1981. The vessel did not have on board adequate pilot charts of the Miami area. The vessel anchored once, dragged anchor, and reanchored. On April 6, the M/V KUNIANG dragged anchor again and grounded. The bottom of the vessel was severely damaged by the grounding. Hold 8 was completely flooded by seawater, and Holds 6 and 7 were partially flooded.

The M/V KUNIANG remained anchored off Miami from April 5 to April 13, 1981. During this period the hatch covers of the vessel’s cargo holds were periodically opened. It was determined that the vessel could not continue the voyage and would have to be drydocked for repairs. The vessel left Miami in tow on April 13, 1981, headed for Norfolk, Virginia.

Problems during the towing of the vessel required the vessel to anchor off Jacksonville, Florida on April 13. The tow resumed on April 14. During the tow to Norfolk the hatch covers of the vessel’s cargo holds were periodically opened. The ship arrived at Sewell’s Point Anchorage, Norfolk, Virginia on April 21, nineteen days after departing Darrow.

It was necessary to offload all of the coal from the M/V KUNIANG in order for the ship to enter dry dock for repairs. It was decided that the coal from the M/V KUNIANG would be offloaded to another ship. The M/V GARDEN NEPTUNE was selected to receive the coal and carry it to its destination in Italy. The M/V GARDEN NEPTUNE was moored parallel to the M/V KUNIANG, with a bucket crane between the two vessels. The transfer of the coal from the M/V KUNIANG to the M/V GARDEN NEPTUNE began on May 7, 1981. During the transshipment process the hatch covers of the cargo holds were left open continually.

During the transshipment operation, the two vessels suffered considerable physical damage from being struck by the crane and barges. On May 13 the Master of the M/V GARDEN NEPTUNE refused to accept any more coal from the M/V KUNIANG because the coal had begun to heat. The transshipment operation was thereafter terminated, due to a combination of factors, including the heating of the coal, and the damage sustained by the vessels. On May 14, discharge of the M/V KUNIANG continued into barges.

On May 16, the M/V KUNIANG was towed to Elizabeth River Terminals, Chesapeake, Virginia, where the remainder of the vessel’s cargo of coal was discharged to ground storage. The vessel completed discharging all of the coal, with the exception of approximately 100 tons of seawater wetted coal remaining in Hold 8, on May 27. The barges which had received coal from the M/V KUNIANG at Sewell’s Point were discharged to ground storage at ERT from May 18 to 24. The M/V GARDEN NEPTUNE discharged the approximately 14,418 long tons of coal she had received from the M/V KUNIANG at ERT from May 30 to June 5. On June 5, 1981, after all of the coal had been discharged to ground storage at ERT, Rex declared the voyage abandoned.

While in ground storage at ERT, the coal was reblended. AOV repurchased the coal in ground storage from ENEL. The coal was resold by AOV at a substantial profit. Beginning September 12, 1981, the coal was transported by barge from ERT to Lambert’s Point Dock, Norfolk, Virginia, where it was loaded aboard the M/V NORDVARD. Loading was completed on September 22, and the M/V NORDVARD departed for Inkoo, Finland. The M/V NORDVARD carried the cargo of 41,974.-29 metric tons of steam coal safely to Finland.

After thoroughly examining all of the testimony and evidence, the Court FINDS that the heating of the coal was caused by the combined acts of Cooper, Rex, AOV and Cravat.

Cooper’s failure to trim and compact the coal contributed to the heating of the coal. Eugene Dalton, Sales Manager for Cooper, and other Cooper representatives testified that Cooper was aware that coal is subject to spontaneous combustion. Although Cooper admits that it was normal practice to tractor trim and compact coal after loading, Cooper failed to trim or compact the coal after it was loaded aboard the M/V KUNIANG. Instead, Cooper left the coal peaked in the holds.

Dr. William F. Berry, who appeared as the expert for Rex, testified that if coal is loaded in a peaked form it can create a chimney effect, which, when combined with ventilation of the coal, causes the coal to heat more rapidly. Harold David Wilkins, Operations Manager for Cooper, testified that Cooper normally tractor trimmed and compacted a coal cargo to “keep oxygen out of it.” Cooper was therefore aware of the chimney effect Dr. Berry testified about. Cooper alleges that the M/V KUNIANG was a self-trimming bulk carrier, and as such it would be expected to assist in trimming itself. Cooper admits, however, that even when a vessel is self-trimming it is necessary to at least bucket trim the cargo. The Court has found that Cooper failed to trim the coal cargo. The failure of Cooper to trim and compact the coal in the holds was a contributing cause of the heating.

Rex contributed to the heating of the coal by ventilating the coal cargo and by delaying the voyage. Capt. Calbes first ordered that the coal be ventilated on April 4, 1981, while the vessel was in the Gulf of Mexico, because he thought that the temperature readings taken by the Chief Mate were “a little bit high.” The coal was ventilated in Miami and while in tow to Norfolk. Furthermore, the hatchcovers were open every day during the transshipment process.

Dr. Berry testified that his opinion as to the cause of the heating would have been different if he had known that the coal had been ventilated. He opined that ventilation, especially of a coal cargo which has not been trimmed and compacted, increases the likelihood of spontaneous combustion. Ventilation of the coal by the crew of the M/V KUNIANG was a contributory cause of the heating.

Rex also contributed to the heating of the coal by delaying the voyage. Rex was initially responsible for the delay because the vessel’s main engine lube oil became contaminated by seawater as a result of a hole in a pipe in the vessel’s water cooling system. Rex ordered the vessel to Miami to obtain lube oil despite the absence of adequate pilot charts of the area aboard the vessel. Without adequate charts to guide the crew, the vessel ran aground and was severely damaged. As a result, the transshipment operation became necessary. The need to transship the coal caused the voyage to be substantially delayed.

AOV and Cravat contributed to the heating of the coal by their failure to warn the ship’s Master that the steam coal loaded aboard the M/V KUNIANG contained a relatively large percentage of fines. The Master of the vessel was not aware of the fine content of the coal cargo. AOV and Cravat specifically should have warned the Master to avoid ventilation of the coal.

The Court FINDS that if the coal had not heated, the transshipment operation would have been successful and the coal would have reached Italy safely. The Court further FINDS the responsibility for the heating of the coal to be apportioned as follows:

Cooper ⅓
Rex ⅓
AOV & Cravat ⅓

CONCLUSIONS OF LAW

This is an action for contribution and indemnification brought by defendant and third-party plaintiff Rex. The Court has jurisdiction pursuant to general federal maritime jurisdiction, 28 U.S.C. § 1333 and the Carriage of Goods by Sea Act (“COG-SA”), 46 U.S.C. §§ 1300-1315.

Rex advances three legal theories under which it seeks to recover from Cravat and/or AOV. First, it asserts that Cravat is absolutely liable to Rex under COGSA, 46 U.S.C. § 1304(6). Second, it claims that Cravat and AOV are liable to Rex under the products liability doctrine of strict liability. Finally, it alleges that Cravat and AOV are liable to Rex under general maritime law for their negligence.

I. COGSA, 46 U.S.C. § 1304(6)

Under this theory, the primary issue is whether the coal loaded aboard the M/V KUNIANG had an unusually high propensity to combust spontaneously, and, if so, whether Cravat failed to warn Rex of this propensity.

Should the Court find that the coal loaded aboard the M/V KUNIANG was highly susceptible to spontaneous combustion, and that the vessel was not so warned, the Court must decide whether Cravat is liable to Rex. Rex contends that as the shipper of record on the bill of lading Cravat is liable to Rex. Cravat contends that it assigned its obligations under its contract with ENEL to AOV, and that, therefore, it is relieved of its obligations under the contract. AOV, on the other hand, contends that it was not assigned the Cravat-ENEL contract, and that Cravat remained responsible to ENEL to execute the contract.

Rex originally claimed in the alternative that the heating of the coal was caused by Cooper’s failure to properly blend and compact the coal prior to loading. The Court need not address this claim because it has been rendered moot by the settlement agreement Rex and Cooper entered into on January 18, 1984. Rex is barred from seeking any additional recovery from Cooper by virtue of the settlement agreement.

Thus, the Court need only determine if Cravat is liable under the theory of recovery Rex asserts. Rex bases its claim against Cravat on the theory that the coal supplied by AOV under the Cravat-ENEL contract had an unusually high propensity toward spontaneous combustion because it contained an excessive amount of fines. Rex claims that Cravat failed to warn Rex of this propensity and is therefore liable to Rex pursuant to § 1304(6) of COGSA.

Section 1304(6) of COGSA provides:

Goods of an inflammable, explosive, or dangerous nature to the shipment whereof the carrier, master or agent of the carrier, has not consented with knowledge of their nature and character, may at any time before discharge be landed at any place or destroyed or rendered innocuous by the carrier without compensation and the shipper of such goods shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment. If any such goods shipped with such knowledge and consent shall become a danger to the ship or cargo, they may in like manner be landed at any place, or destroyed or rendered innocuous by the carrier without liability on the part of the carrier except to general average, if any.

Rex alleges that the coal which was loaded aboard the M/V KUNIANG was highly susceptible to spontaneous combustion and therefore “inflammable” and “dangerous” within the meaning of § 1304(6). Rex further alleges that the master of the vessel did not consent to the carriage of the coal with knowledge of its “inflammable” and “dangerous” nature within the meaning of § 1304(6).

Cravat counters that the evidence does not justify the conclusion that the coal which was loaded aboard the M/V KUNIANG was unusually susceptible to spontaneons combustion. Cravat further alleges that the evidence that the master of the M/V KUNIANG consented to the carriage of the coal knowing that all coal is subject to spontaneous combustion.

Cravat argues that although it was listed on the bill of lading as the shipper of record it should not be held liable to Rex under 46 U.S.C. § 1304(6) because it assigned its obligations under its contract with ENEL to AOV. This position is groundless. The evidence is clear that Cravat did not assign its contract with ENEL to AOV. Rather, Cravat entered into a separate agreement with AOV in which AOV agreed to supply the coal called for in the amended ENEL-Cravat contract. Cravat did not manifest an intent to assign its contract with ENEL to AOV. Cravat requested that it remain on the bill of lading as shipper. In addition, AOV’s participation was not disclosed to ENEL.

The Court can find only one reported case in which a court considered whether a shipper had breached 46 U.S.C. § 1304(6). In Skibs A/S Gylfe v. Hyman-Michaels Company, 304 F.Supp. 1204, 1221 (E.D.Mich.1969), aff’d., 438 F.2d 803 (6th Cir.), cert. denied, 404 U.S. 831, 92 S.Ct. 73, 30 L.Ed.2d 61 (1971), a cargo of steel turnings spontaneously heated. The shipowner alleged that the shipper had failed to adequately inform the Master concerning the “nature and character” of the steel turnings prior to loading. Id. at 1221. The Court found that § 1304(6) had not been violated because the Master was aware of the hazard presented by the steel turnings. Id.

Rex relies principally on the testimony of its expert, Dr. William Berry. Dr. Berry testified that the coal loaded aboard the M/V KUNIANG had an unusually high propensity to spontaneously combust. This propensity, Dr. Berry opined, was due to the presence of 50% fines in the coal loaded aboard the vessel. Fines were described by Dr. Berry as being small particles of steam coal. Dr. Berry testified that steam coal containing fines should be intimately blended before loading. He further testified that because the coal carried aboard the M/V KUNIANG was not intimately blended prior to its loading, it had a propensity to heat five times greater than that of the coal specified in the ENEL-Cravat contract. Dr. Berry indicated that if the M/V KUNIANG’s coal cargo had been blended properly it could have been transferred successfully to the M/V GARDEN NEP-TLTNE and delivered to its destination in Italy, despite the high percentage of fines it contained.

Cravat contends that the evidence does not justify the conclusion that the coal loaded aboard the M/V KUNIANG was unusually susceptible to spontaneous combustion. Cravat cites the testimony of Roy Potter, head of Quality Control for the Mineral Division of SGS, who stated that a chemical analysis of the coal did not indicate that it was unusually susceptible to spontaneous combustion. Cravat also points out that Dr. Berry admitted that all coal is susceptible to spontaneous combustion, and that some coal is even more likely to combust spontaneously than that carried aboard the M/V KUNIANG. Dr. Berry admitted further that the coal could have been shipped safely, and in fact was eventually shipped to Finland without mishap.

Assuming arguendo that the coal loaded aboard the M/V KUNIANG was unusually susceptible to spontaneous combustion, and therefore “dangerous” and “inflammable” within the meaning of § 1304(6), Rex must prove that the Master, Capt. Calbes, did not consent to the carriage of the coal with knowledge of its “inflammable” and “dangerous” nature. See Skibs A/S Gylfe v. Hyman Michaels Company, 304 F.Supp. at 1221. Rex has failed to prove by a preponderance of the evidence that the Master lacked knowledge of the susceptibility of coal to spontaneous combustion. Rather, the evidence is to the contrary.

First, Capt. Calbes admitted that he was aware that coal might spontaneously com-bust. He further testified that he knew that coal can become dangerous to carry if it reaches certain temperatures. Second, the Master of the vessel conceded that he noticed what he thought was coal steaming on two of the barges during the loading. Yet, he accepted the coal aboard the M/V KUNIANG. Finally, the evidence is clear that the crew took temperature readings of the coal cargo, at the Master’s direction, on a regular basis. All of these facts demonstrate knowledge on the part of Rex of the coal’s “inflammable” nature.

In conclusion, the Court FINDS that the Master of the M/V KUNIANG consented to the carriage of the coal with knowledge of its propensity to spontaneously combust. Rex has therefore failed to establish by a preponderance of the evidence the second element necessary to prove a case under 46 U.S.C. § 1304(6). Rex may not recover against Cravat pursuant to 46 U.S.C. § 1304(6).

II. PRODUCTS LIABILITY

Although Rex did not include a strict products liability claim in its triable issues in the Final Pretrial Order, the Court will consider the claim. Specifically, Rex asserts that AOV and Cravat should be held strictly liable under Section 402(A) of the Restatement (Second) of Torts. Section 402(A) provides:

402(A). SPECIAL LIABILITY OF SELLER OF PRODUCT FOR PHYSICAL HARM TO USER OR CONSUMER.
(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if
(a) the seller is engaged in the business of selling such a product, and
(b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.
(2) The rule stated in Subsection (1) applies although
(a) the seller has exercised all possible care in the preparation and sale of his product, and
(b) the user or consumer has not bought the product from or entered into any contractual relation with the seller.

Rex correctly asserts that strict products liability has been applied in the admiralty context. See, e.g., Pan-Alaska Fisheries, Inc. v. Marine Construction & Design Co., 565 F.2d 1129, 1134-35 (9th Cir.1977) and cases cited therein. Rex relies upon Alfa Romeo, Inc. v. S.S. TORINITA, 499 F.Supp. 1272 (S.D.N.Y.1980), as an admiralty case in which § 402(A) was applied. In that case, two cargo interests sued a third cargo interest for damages to a cargo of automobiles caused by a fire which occurred while the automobiles were aboard the ship, claiming that the fire was due to the defective design and manufacture of the automobiles. Id. at 1274. The Court held that the third cargo interest could not be held liable on a theory of strict liability because the plaintiffs had failed to prove that a design or manufacturing defect was the cause of the fire. Id. at 1279. The Court did recognize, however, that the doctrine of strict liability may be applied in a case involving an injury to a non-consumer when there is evidence of a manufacturing or design defect. Id. at 1277-78.

AOV and Cravat correctly assert that § 402(A) is inapplicable to the facts of .this case. First, the damages which Rex seeks to recover consist of neither damages for “physical harm” nor “property” damage, the items of damage which are compensable under § 402(A). Second, strict liability is not usually applied in commercial cases. It is ordinarily limited to dealings between a commercial seller and a non-commercial consumer. See Purvis v. Consolidated Energy Products Co., 674 F.2d 217, 222 (4th Cir.1982).

In the cases in which the doctrine has been applied to dealings between two commercial entities, there has been an allegation that the product involved was defectively designed or manufactured. See, e.g., Pan-Alaska Fisheries, Inc. v. Marine Construction & Design Co., 565 F.2d 1129, 1134 (9th Cir.1977); Langford v. Chrysler Motors Corp., 513 F.2d 1121, 1124 (2nd Cir.1975); Alfa Romeo, Inc. v. S.S. TORINITA, 499 F.Supp. at 1277-78. Such an allegation was not made by Rex. Furthermore, it is not clear that coal can be considered a “product,” because it is a naturally occurring organic substance.

The Court declines to adopt strict liability in this case for the foregoing reasons.

III. NEGLIGENCE

Rex alleges that Cravat and AOV are liable under general maritime law for their negligence because they failed to ascertain the nature and characteristics of the coal and because they failed to warn the shipowner of the hazards inherent in the cargo of steam coal. AOV and Cravat contend that no warning was necessary because the Master of the M/V KUNIANG knew that coal has a propensity to self-heat.

Under maritime common law, a cargo owner has a duty to warn a shipowner of the foreseeable hazards inherent in a cargo of which the ship’s Master was not aware and could not reasonably have been expected to be aware. See, e.g., Ionmar Compania Naviera, S.A. v. Olin Corp., 666 F.2d 897, 904 (5th Cir.1982). The Court has found that Cravat and AOV failed to notify the Master of the M/V KUNIANG that the steam coal loaded aboard the vessel contained a relatively large percentage of fines, and that this was a contributing factor in the heating of the coal. The Court further found that the vessel’s Master was not aware of the fine content of the cargo. Cravat and AOV knew that fines were more susceptible to spontaneous combustion, yet failed to warn the vessel’s Master of this fact. Although, as AOV and Cravat correctly assert, the Master knew that coal was susceptible to spontaneous combustion, he did not know that the presence of fines would increase the cargo’s susceptibility. AOV and Cravat were negligent in failing to warn the Master about the cargo’s fine content. Furthermore, AOV & Cravat were negligent in failing to warn the Master about the hazards of ventilation. The Court holds that AOV and Cravat are jointly and severally liable.

The Court has also found that Cooper's failure to trim and compact the coal once it was loaded into the vessel’s holds was a contributing factor in the heating of the coal. Cooper admits that it failed to follow its ordinary procedures. A stevedore is liable for its negligence in breaching its duty of workmanlike performance. Complaint of Delphinus Maritima, S.A., 523 F.Supp. 583, 597-98 (S.D.N.Y.1981). Cooper was negligent in failing to trim and compact the coal after it was loaded aboard the M/V KUNIANG.

Finally, the Court has found that Rex contributed to the heating of the coal by ventilating it and by causing a delay in its transport. Rex was negligent in contributing in this regard to the heating of the coal.

ALLOCATION AND ELEMENTS OF DAMAGES

The Court has found that the negligence of Cravat and AOV in failing to warn the Master about the fine content of the steam coal cargo was only one of the contributing causes of the coal’s heating. Specifically, the Court found that Cravat and AOV bear only one-third of the responsibility for the heating of the coal. Damages in maritime cases are to be allocated proportionately among the parties based upon their comparative fault. See, e.g., Leger v. Drilling Well Control, Inc., 592 F.2d 1246, 1249 (5th Cir.1979); Griffith v. Wheeling Pittsburgh Steel Corp., 521 F.2d 31, 44 (3d Cir.1975), cert. denied, 423 U.S. 1054, 96 S.Ct. 785, 46 L.Ed.2d 643 (1976). Therefore, any recovery by Rex as against AOV and Cravat is limited to one-third of amount of damages awarded in the subsequent trial on the issue of damages.

Damages are further limited to those items which can be directly attributed to the costs of handling the coal after it became too hot to be transshipped aboard the M/V GARDEN NEPTUNE. Rex’s recovery is limited to the costs of handling the coal following the May 13, 1981 refusal by the Master of the M/V GARDEN NEPTUNE to accept any further coal from the M/V KUNIANG because it was heating. These costs include the costs of carrying the coal by barge to ERT, the cost of discharging the coal at ERT, the cost of ground storage at ERT, and the cost of caring for the coal while it was in ground storage. Any other costs directly attributable to the handling of the coal after it became too hot to be transshipped to Italy aboard the M/V KUNIANG, if proven during the trial on the issue of damages, may also be recovered.

To the extent that Rex can establish that its payment to ENEL was based on these principles, it can recover one-third of such payment from Cravat and AOV.

All claims, counterclaims, and cross-claims herein, except Rex’s claims against Cravat and AOV and the claims of Cravat and AOV against each other are DISMISSED with prejudice.

Cravat and AOV have not fully briefed the matter of their claims against each other. Accordingly, Cravat and AOV are granted two weeks in which to submit simultaneous briefs on the issue. The Court will decide the matter on the briefs. IT IS SO ORDERED.

       Although Baliwag Navigation, Inc. was named as a defendant by ENEL in its second amended complaint, and as a third-party defendant by Cravat, the parties agreed in the Final Pretrial Order that Baliwag is not a party to this action. Wheelock Marine Services, Ltd. was also named as a defendant by ENEL in its amended complaint. Pursuant to its settlement agreement with Rex and Almare, ENEL's complaint was dismissed by Order of January 18, 1984. Cravat named Wheelock as a third-party defendant, but did not press its claim against Wheelock either during the trial or in its post-trial briefs. Additionally, the Court notes that counsel for Rex represented Baliwag and Wheelock.


source: Caselaw Access Project

author: PROPST, District Judge.

license: Public Domain

text:
    A.J. TAFT COAL COMPANY, Plaintiff, v. UNITED STATES of America, Defendant.
    Civ. A. No. CV82-PT-2145-J.
    United States District Court, N.D. Alabama, Jasper Division.
    June 14, 1984.
    On Application for Attorney Fees, Aug. 22, 1984.

      Charles A. Powell, III, Stephen A. Rowe, Lange, Simpson, Robinson & Somerville, Birmingham, Ala., for plaintiff.
    Frank W. Donaldson, Sharon Lovelace, Caryl P. Privett, Asst. U.S. Attys., Birmingham, Ala., Karl L. Kellar, Tax Div., Dept. of Justice, Washington, D.C., for defendant.
    Fournier J. Gale, III, Roy J. Crawford, Cabaniss, Johnston, Gardner, Dumas & O’Neal, Birmingham, Ala., amici curiae for Alabama By-Products Corp., Drummond Coal Co., McWane Coal Co. and Mulga Coal Co.
   FINDINGS OF FACT AND CONCLUSIONS OF LAW

PROPST, District Judge.

UNDERLYING FACTS

During the years in question, April 1, 1978 through June 30, 1980, A.J. Taft Coal Company (Taft) was engaged in the business of surface mining coal in Walker County, Alabama (RT. 22). Taft’s only customer was Alabama Power Company, which also owned the mineral rights to the land mined by Taft (Plaintiff’s Exhibit [hereinafter “P.Ex.”] 3; RT. 22, 25).

. Taft sold coal on a washed and on an unwashed basis during the audit period (RT. 22). Coal to be sold on a washed basis was hauled by Taft trucks to the Bankhead washer where the trucks were weighed, loaded and unloaded, to determine tons of raw, unwashed coal (RT. 22). The Bank-head washer was neither owned nor operated by Taft, but rather was an independent facility (RT. 23). Alabama Power Company paid approximately $2.00 per ton to have Taft’s coal washed (RT. 124). After the coal reached the washer, a float-sink test was performed on the Taft coal to determine the ratio of coal to refuse (RT. 24). Using this ratio, Alabama Power Company estimated the tons of coal that would remain after washing, for which it paid Taft (RT. 128). Taft was paid nothing for the refuse separated from the coal in the washing process and the Internal Revenue Service (hereinafter “I.R.S.”) does not here seek to tax the refuse (RT. 50, 54).

Taft was paid based on the BTU content of the washed coal (RT. 82). The amount of BTU’s per ton of coal is a measure of the quality of said coal; coal having a higher number of BTU’s per ton is of better quality than coal with a lower number of BTU’s per ton. (Transcript, 83; 122-23). The quality of coal, and its ability to release BTU’s, is determined by the purity of said coal; the greater the amount of impurities in the coal, the fewer BTU’s will be produced per ton of coal. (Transcript 122-123; 138-139; 141-143). Sulfur, ash, dirt, rocks, and refuse are all considered to be impurities which reduce the quality of coal. Water has no BTU content. (Transcript 122-123; 224-225; 226; 292-294; 56; 60). In paying its Black Lung Tax, Taft reported to the I.R.S. based on the calculated dry tons of coal which it sold to Alabama Power Company (RT. 50). Raymond Clemmons, the I.R.S. agent who audited Taft’s records, adjusted the tonnage reported by Taft for washed coal sold by increasing the tonnage by six percent (RT. 13, 51). Clemmons arrived at the six percent figure by estimation (RT. 13, 78). The six percent gross up of the weight of washed coal resulted in the addition of 1325.68 tons to the 22,094.68 tons of coal already reported (RT. 308-311; P.Ex. 21). The addition of these tons caused an additional tax of $331.43 to be assessed against Taft (RT. 308; P.Ex. 21).

Coal sold on an unwashed basis was delivered to the Gorgas Steam Plant or the Segco Mine where it was weighed and sampled by Alabama Power Company (RT. 53, 55). Taft was paid for this coal on the basis of the BTU value of the coal determined by Alabama Power Company, the purchaser (RT. 55). The unwashed coal was not processed by Taft before delivery and was sampled and analyzed in its raw, as-received state (RT. 56). The contract under which the coal in question was sold provides, in reference to the unwashed coal, that

... Trucks delivering coal hereunder shall be weighed both loaded and empty, and the difference in weight shall be the governing weight hereunder.... The aggregate weights determined during any payment period shall be accepted as the quantity of coal sold and purchased during such period for which invoices are to be rendered and payments to be made.... (emphasis supplied).

The as-delivered weight of coal, as opposed to the dry weight, was used in determining the price paid Taft for unwashed coal (RT. 145). Taft paid its Black Lung Tax by eliminating, by mathematical calculation, all moisture in excess of 2.88%, which it estimated to be the inherent or bed moisture of the coal it mined (RT. 64). For purposes of the Federal excise tax, Taft originally reported gross tons of coal sold, without any adjustment for moisture. Only after, learning that the State of Alabama had decided to allow for severance tax purposes a “moisture adjustment” for all moisture in excess of 2.88 percent, did Taft attempt to claim an equivalent adjustment for federal tax purposes. (Transcript, 91). Agent Clemmons added back the 2.88% which Taft eliminated and recalculated the tax due (RT. 66). This adjustment resulted in the addition of 3,557.83 tons to the tons of coal previously reported by Taft and in the imposition of an additional tax due of $889.46 (P.Ex. 21).

The total tax adjustment resulting from Agent Clemmons’ changes was $1,220.89 (RT. 310). The difference between the Excise Tax Examination changes and the $1,400.80 additional excise tax levied against Taft is a result of the addition of interest.

Both the washed and unwashed coal in question was mined in the Warrior Basin coal field from the Pratt, America, Nickel Plate and Cob seams. Harry Raykes, Principal Mining Engineer for Southern Company Services, testifying as an expert witness, testified that these seams have been mined since the beginning of mining in Alabama (RT. 263). The seams cover an extensive area and have reasonably consistent bed moisture (RT. 264). Based on Mr. Raykes’ experience in the Warrior Basin coal field, it was Mr. Raykes’ testimony that bed moisture in the seams in question would vary from 1.75% to 2.75% with an average moisture of 2.25% (RT. 249, 264-265). Mr. Raykes also testified that he performed a study for Alabama Power Company of the reserves later mined by Taft (RT. 265). Based on this study, it was Mr. Raykes’ opinion that the coal mined by Taft and involved in the audit in question had an average bed or inherent moisture of 2.25% (RT. 265).

Jack Davis of Tuscaloosa Testing testified that he analyzed core samples from the Taft mine in question for total moisture (RT. 195). Mr. Davis utilized test procedures prescribed by ASTM, which is a reasonable standard accepted in the coal industry (RT. 192-193, 279). The analysis of 123 samples resulted in an average total moisture of 2.30% (RT. 199; P.Ex. 20).

The samples taken by Mr. Davis were obtained from the same seams from which the coal in question was mined. However, the samples were taken from different sections of the mine, since the coal in question had already been mined and sold at the time the samples were taken (RT. 175, 181— 185). Harry Raykes testified that the prior mining would not affect the average bed moisture of the unmined coal remaining in the area (RT. 272). Likewise, Mr. Raykes testified that the analysis on the remaining coal seams, performed by Jack Davis and Tuscaloosa Testing, would yield a reliable measure of the bed or inherent moisture of the coal involved in this case (RT. 271-272).

Coal lying in an undisturbed state contains inherent or bed moisture (P.Ex. 4, para. 2). The testimony of expert witnesses Raykes and Davis was to the effect that the Pratt, America, Nickel Plate, and Cobb seams are consistent in general with regard to bed moisture and could be expected to have an average bed moisture of 2.25% (RT. 200, 264). Test results performed by Tuscaloosa Testing of the specific coal seam in question showed an average total moisture of 2.30%. Bed moisture or inherent moisture is a component of total moisture (RT. 256, 302). Reynold Shotts testified that Alabama coals contain, on the average, 2.88% inherent or bed moisture (P.Ex. 4). Taft utilized this average when calculating its Black Lung Tax (RT. 66). Taft reported washed coal based on a removal of all moisture including bed moisture.

Harry Raykes and Dan Thornburgh testified that it is the custom and practice in the utility industry, both in Alabama and elsewhere, for coal purchases to be made on the basis of the BTU value of the coal (RT. 110, 282-284). Water has no BTU value (RT. 284). Accordingly, although it is always expected to be present in some quantity with coal delivered, a producer operating pursuant to a BTU contract does not profit financially by shipping water with coal (RT. 120-121, 127, 285). Water added to coal increases the apparent tonnage, but decreases the number of BTU’s per ton (RT. 127, 285). Moreover, according to all definitions of coal before the court, water in excess of bed moisture or inherent moisture is not a part of the coal (RT. 281, 306; P.Ex. 4; Shotts’ Stipulation).

The coal tonnages reported to the I.R.S. by Taft for Black Lung Tax purposes were determined by Alabama Power Company upon its receipt of the coal (RT. 59, 63-65). This is true whether the coal was sold on a washed or unwashed basis (RT. 111). Alabama Power Company samples each lot of coal received and performs an analysis of the sample (RT. 111, 114). The results of the analysis performed on the coal in question are before the court in Plaintiff’s Exhibits 6, 7, and 13.

CONCLUSIONS OF LAW

The section of the Internal Revenue Code here involved is § 4121 (I.R.C. § 4121) which reads:

(a) Tax imposed—There is hereby imposed on coal sold by the producer a tax at the rates of—
(1) 50 cents per ton in the case of coal from underground mines located in the United States, and
(2) 25 cents per ton in the case of coal from surface mines located in the United States.
(b) Limitation on tax—The amount of the tax imposed by subsection (a) with respect to a ton of coal shall not exceed 2 percent of the price at which such ton of coal is sold by the producer.
(c) Tax not to apply to lignite—The tax imposed by subsection (a) shall not apply in the case of lignite.
(d) Definitions—For purposes of this subchapter—
(1) Coal from surface mines—Coal shall be treated as produced from a surface mine if all of the geological matter above the coal being mined is removed before the coal is extracted from the earth. Coal extracted by auger shall be treated as coal from a surface mine.
(2) Coal from underground mines— Coal shall be treated as produced from an underground mine if it is not produced from a surface mine.
(3) United States—The term “United States” has the meaning given to it by paragraph (1) of section 638.
(4) Ton—The term “ton” means 2,000 pounds.
(e) Temporary increase in amount of tax—
(1) In general—Effective with respect to sales after December 31, 1981, and before the temporary increase termination date—
(A) subsection (a) shall be applied—
(i) by substituting “$1” for “50 cents”, and
(ii) by substituting “50 cents” for “25 cents”, and
(B) subsection (b) shall be applied by substituting “4 percent” for “2 percent”.
(2) Temporary increase termination date—For purposes of paragraph (1), the temporary increase termination date is the earlier of—
(A) January 1, 1996, or
(B) the first January 1 after 1981 as of which there is—
(i) no balance of repayable advances made to the Black Lung Disability Trust Fund, and
(ii) no unpaid interest on such advances.

Pursuant to I.R.C. § 4121, the Secretary of the Treasury has issued a Treasury Regulation which states:

Tonnage sold and sales price. For purposes of determining both the amount of coal sold by a producer and the sales price of the coal, the point of sale is f.o.b. mine, or f.o.b. cleaning point if the producer cleans the coal before selling it. This is true even if the producer sells the coal on the basis of a delivered price. Accordingly, f.o.b. mine or cleaning point is the point at which the number of tons sold is to be the applicable tonnage rate, and the point at which the sales price is to be determined for purposes of the tax under the 2 percent rate.

Treas.Reg. § 48.4121-l(d)(4).

This court has previously indicated that “[tjhere is a certain implausibility to defendant’s interpretation of the Regulation....” See Memorandum Opinion filed May 18, 1983. The court, however, considered it appropriate to await a trial to “[establish an adequate basis upon which to resolve a difficult question of statutory construction.” Bingham, Ltd. v. United States, 724 F.2d 921 (11th Cir.1984).

The court has heretofore had two primary concerns with regard to the interpretation of the statute and the regulation.

(1) Is it reasonable to broadly apply the term “coal” to include water which is not inherently a part of the mineral in its unmined state in the absence of a clear intention expressed in the statute or the regulation?

(2) Was there a reasonable basis in this case on which to determine the weight of the coal sans non-inherent moisture or water (excess water)?

The defendant elected to present no evidence at the trial, apparently relying on either the court finding plaintiff's evidence to be so tenuous as to not meet its burden or, in any event, to merely clearly establish the appropriateness of the defendant’s application of the statute and regulation. The court did not find plaintiff’s evidence to be tenuous with regard to the two primary concerns expressed above, and concludes that the plaintiff at least established an unrebutted prima facie case that there was a reasonable basis in this case on which to determine the weight of the coal without including the weight of the excess water.

The court certainly does not fault the defendant for relying on the facts as developed during plaintiff’s case in chief in asserting its primary position that: “The coal sold by the producer in this case is the gross tonnage delivered by Taft, not the net amount after any claimed moisture deduction. There is no language in the relevant statute or regulation which even suggests that such moisture deduction can be taken.” (emphasis added). See Defendant’s Post-Trial Brief at 6. For reasons which will be hereinafter discussed, the court cannot agree with its secondary argument that “[p]laintiff failed completely to establish that the claimed adjustments actually represented ‘excess moisture.’ ” Id. at 6.

The court’s initial factual concern was whether the 2.88% moisture calculation had a reasonable factual basis. The evidence in support of this position was credible and not rebutted. Defendant did not take the position at the trial that the 2.88% figure is incorrect; only that all water weight should be included. (R.T. 176-177). Defendant has now argued that the figure should not be accepted because it is only an “approximation.” The court finds that it is a reasonable percentage and is high for the coal which was being sold. To the extent that it is high, the defendant is advantaged. The court ultimately finds and concludes that plaintiff has satisfied the court by a preponderance of the evidence in this case that the “coal” here at issue had an inherent moisture content of 2.88% or less. The court has not based this finding on the acceptance of the 2.88% figure by the State of Alabama. The court’s acceptance of 2.88% is based on the undisputed evidence in this case. The evidence was consistent with Alabama’s policy in severance tax collection.

Neither plaintiff nor defendant has cited to the court any cases which are directly apposite. The defendant has argued that the case of Drummond Coal Company v. Watt, CV82-H-1838-S (N.D.Ala.1983) supports its position. Drummond, however, was a case in which Judge Hancock was asked to declare invalid revised regulations promulgated by the Secretary of the Department of the Interior. These regulations governed a reclamation fee imposed by statute on coal produced in the United States. The regulations, as revised, clearly provided that “Impurities, including water, that have not been removed prior to the time of initial bona fide sale, transfer of ownership, or use by the operator, shall not be deducted from gross weight.” The question in Drummond was whether the regulation was arbitrary, capricious and inconsistent with the law. There is no clear intent in § 48-4121-l(d)(4), as there was in the Drummond regulation, to tax water or any other “impurities.”

In the instant case, there is no such clearly defined regulation. The court is called upon to interpret a statute and a regulation which make reference only to “coal.” Whether the court does or does not agree with the decision in Drummond is immaterial. It is not applicable here.

Plaintiff has cited Harrison Combs, et al. v. Sun-Up Coal Company, Inc., CV80-P-0126-J (N.D.Ala.1980) as being supportive of its position. In Sun-Up, Judge Pointer construed an agreement which required the defendant to make benefit payments to a union benefit plan and trust based on the number of tons of coal sold. Judge Pointer allowed the employer to exclude moisture from the tonnage amounts, saying that when adequate proof is made, a reduction, based upon loss resulting during the washing process and reduction for moisture content”, was proper. Although Sun-Up involved the construction of a private agreement, it did involve the construction of similar language as that here under consideration.

Both plaintiff and defendant make the usual contradictory arguments concerning Congress’s intent. The court will not attempt to bolster its own conclusions with sophistical arguments about legislative intent. The court has based its ultimate conclusion on what appears to be the plain language of the statute and the regulation. See Hanover Bank v. Commissioner of Internal Revenue, 369 U.S. 672, 82 S.Ct. 1080, 8 L.Ed.2d 187 (1962). In the absence of clear Congressional intent and in the further absence of clear regulatory language, the court concludes that “coal” as used in the statute and the regulation does not include water which is excess to its inherent moisture content and which is reasonably measurable.

Defendant has argued: “Similarly, plaintiff not only failed to show the inherent moisture contained in the actual coal in dispute; it failed in the case of washed coal to show what the actual level of ‘excess moisture’ was. In the case of washed coal, coal from various producers was commingled after washing, with the result that there was no way to distinguish Taft’s coal from other coals. (Transcript 26; 35; 41-42; 80; 94-95; 103-104; 131-132; 133; 135). Therefore, the plaintiff cannot even show that the moisture content determined by Alabama Power’s analysis actually applied to Taft’s coal. Rather those tests merely resulted in an approximation or average. (Transcript 97; 100-101; 146-147; 148).”

The court finds and concludes that the amount of excess moisture was independently determined by Alabama Power Company in a commercially reasonable fashion. There was no evidence that the method used was irrational or that there is a more reasonable alternative method to determine the total moisture content. The court has not based its decision merely on the fact that water does not increase the coal’s BTU content. The decision is based on a determination that “coal,” by definition, does not include excess water. No expert testified that the term “coal” includes water in excess of its inherent moisture content.

The court ultimately finds and concludes that:

(1) Neither the statute nor the regulation can be reasonably interpreted to require the inclusion of water which is excess to inherent moisture content as being “coal,” when the weight of the excess water can be reasonably ascertained and there is no clear statutory or regulatory language to the contrary; and

(2) In this case there was a reasonable basis for determining the weight of the excess water.

The court will enter a judgment in favor of the plaintiff and against the defendant. Said judgment will allow for the recovery of any amounts paid as a result of including in the tonnage measurements, of both washed and unwashed coal, moisture in excess of 2.88%. There was perhaps some confusion as to how the plaintiff and/or the defendant made moisture calculations for the “washed” and “unwashed” coal. The proposed judgment should be consistent in including as a part of the “coal,” the 2.88%. Within one week after the filing of the Findings of Fact and Conclusions of Law, plaintiff will submit a proposed judgment. Defendant will have one week to file objections as to form.

ON APPLICATION FOR ATTORNEY FEES

This cause comes on to be heard on plaintiff’s application for attorney fees under the provisions of 28 U.S.C. § 2412. This section provides for the award of attorney fees against the United States in any civil action brought by or against the United States unless the trial court finds that the position of the United States was “substantially justified” or that “special circumstances make an award unjust.” “The burden of proving that a fee award should not be made rests with the government.” Enerhaul, Inc. v. N.L.R.B., 710 F.2d 748-750 (11th Cir.1983). “The test of whether the Government position is sustantially justified is essentially one of reasonableness.” Enerhaul, supra, 710 F.2d at 750.

The court notes that the facts of this case are substantially different from those in Enerhaul. In Enerhaul, the court held that the N.L.R.B.’s position in that case was unreasonable under the law of the Eleventh Circuit because of prior Fifth Circuit decisions. In this case, plaintiff never cited a case to this court which was clearly contrary to the position of the Government. On the other hand, the Government consistently maintained its position and ultimately relied upon a decision by another judge of this court. This court determined that the case of Drummond Coal Company v. Watt, No. CV82-H-1838-S (N.D.Ala.1983) was not decisive of this case. It does, however, contain language which would indicate that the Government was substantially justified in its position in this case. The Drummond court stated:

Congress chose to tax tonnage of “coal.” Obviously there are impurities mixed with coal—dirt, sulfur, water, etc. Congress made no attempt to remove from taxation this small percentage of impurities found in the mined coal. Had Congress been concerned that the inclusion of impurities would work an undue hardship on the coal operators, the tax could have been calculated in other ways. For example, Congress could have taxed the coal on its BTU content. Since Congress refused to distinguish coal from its impurities, the regulation requiring the inclusion of impurities in calculating gross weight at the time of initial sale, transfer, or use, is within the scope of the agency’s authority. The fact that the impurities involved here are “added” to the coal after it is mined does not change the result. Again, Congress was well aware that after mining and before sale or use, coal is exposed to water from a variety of sources.

In this case, the ultimate result was to effectively tax the coal based on its BTU content. The language in Drummond would indicate that the Government was substantially justified in perceiving the intent of Congress with regard to § 4121.

The Government’s ultimate reliance on Drummond and its initial reliance on the rationale adopted in the Drummond case causes its position to pass the essential test of reasonableness. The Government also relied upon Revenue Rulings which were not binding on this court.

The Government did not rely on a legal theory which “has been clearly and repeatedly rejected by this court.” While this court denied the Government’s motion for summary judgment and indicated that there might be some question as to the merit of the Government’s position, it also denied a request in briefs by the plaintiff for summary judgment. The court ultimately finds and concludes that there was a reasonable basis in fact and in law for the Government’s position and that it was substantially justified. The application will be DENIED.

      . The six per cent figure is not at issue per se. The plaintiff disputes that any percentage should be added.

      . There was no evidence that this characteristic likely changed between 1980 and 1982.

      . Taft acknowledges that it was inconsistent for it to calculate Black Lung Tax for washed coal on a totally dry basis while calculating the same tax for unwashed coal on a dry coal plus inherent moisture basis.

      . Washed coal was analyzed in a commingled status with coal produced by others.

      . The conclusions of law will be commingled with some ultimate findings of fact.

      . The parties acknowledged during the course of the hearings on the motion for summary judgment that the facts were relatively undisputed. Although it may be a matter of semantics, the court does not necessarily view plaintiffs reliance on Alabama Power Company’s moisture calculations as taking a deduction. It may be better described as a method by which the amount of coal was determined.

      . Inherent moisture has also been referred to as "bed moisture” and “equilibrium moisture.” It is that moisture which naturally occurs in coal in its unmined state. Moisture which is not inherent is “free moisture,” and would include surface water. "Equilibrium moisture” was defined by one witness as "The maximum amount of moisture that the coal itself can hold.” Inherent moisture is tested by an equilibrium test.

      . This finding is supported by the opinion of Professor Shotts attached to the stipulation.

      . The court assumes that the regulation involved in Drummond was adopted only after the Secretary met the usual requirements of the Administrative Procedures Act. This assumption is not necessary to the court’s decision.

      . The court does not detect any clear intent in the cited history. It is apparent that Congress was concerned with coal that can contribute to black lung disease and classified it accordingly.

      . There was no evidence, by expert opinion or otherwise, presented by defendant which would justify the necessity of a contrary interpretation.

      . Enerhaul interpreted 5 U.S.C. § 504(a)(1) which uses similar language as found in 28 U.S.C. § 2412.

      . Drummond was reversed in Drummond Coal Co. v. Watt, 735 F.2d 469 (1984) on jurisdictional grounds.

      . There is a certain irony in plaintiff’s argument that it spent over 400 hours in refuting a position that was not substantially justified. This was in addition to time spent by a party which filed an amicus curiae brief to oppose the Government’s position.


author: NEALON, Chief Judge.

text:
    Khasheem Aaa AL SHAKIR, et al., Plaintiffs, v. Norman A. CARLSON, Director Bureau of Prisons, and Harold Miller, Warden U.S. Penitentiary, Lewisburg, Defendants.
    Civ. No. 80-0033.
    United States District Court, M.D. Pennsylvania.
    June 29, 1984.
    See also 762 F.2d 992.
    Khasheem AAA Al Shakir, a/k/a Robert B. LaVan, Jihad D.A. Mu’mit, a/k/a David Bryant, Hajj M.M. Hakim, a/k/a Robert M. Palmer, pro se, and for all plaintiffs.
    Frederick M. Stanczak, Douglas Schoppert, Susquehanna Legal Services and Lewisburg Prison Project, Inc., Williamsport, Pa., for plaintiffs.
    Barbara L. Kosik, Asst. U.S. Atty., Harrisburg, Pa., David Essig, Regional Counsel, Northeast Regional Office, Philadelphia, Pa., for defendants.
   MEMORANDUM AND ORDER

NEALON, Chief Judge.

Plaintiffs filed a civil rights action dated January 10, 1980, pursuant to 28 U.S.C. § 1331, alleging that the defendants’ policies and practices at the U.S. Penitentiary, Lewisburg, violate their right to practice their religion under the First Amendment of the United States Constitution and their right to equal protection of laws under the Fifth Amendment to the United States Constitution. In previous rulings, the court dismissed all of plaintiffs’ claims except: (1) the plaintiffs’ allegation that defendants have provided Jewish inmates with a kosher kitchen but have refused to supply Muslim inmates Halal food and separate kitchen facilities and, (2) plaintiffs’ contention that the defendants excused Jewish and Christian inmates from work assignment on the holy days of their respective faiths but have refused to allow work excuse on the Islamic holy days of Eid-ul-Fitr and Eid-ul-Adah.

Several subsequent conferences were held in an effort to resolve the remaining issues and in April, 1982, the Bureau of Prisons voluntarily adopted a policy excluding Muslim inmates from work assignments on the above-mentioned holy days. Efforts were made to reach an agreement on the dietary issue but proved unsuccessful. Accordingly, the case was listed for trial on June 4, 1984, preceded by a pretrial conference on June 1, 1984. At the pretrial conference, after extensive discovery, counsel for the parties reached a tentative settlement prompted by the adoption by the Bureau of Prisons on May 30, 1984, of Operations Memorandum No. 110-84 (5360) which provided for a Modified Common Fare Religious Diet Program. This program would serve foods that largely require no preparation, contain no pork or pork derivatives, do not mix meat or dairy products in the service of food items, and are served with utensils that have not come in contact with pork or pork derivatives.

To the extent practicable, this diet would contain approximately three hot entrees a week to accommodate the religious diet needs of the Muslim and Jewish inmates and would meet or exceed the required dietary allowances established by the Food and Nutrition Board of the National Academy of Sciences. This dietary program would be conducted for a period of at least three to six months as a continuation of a similar pilot project initiated in the South Central Region of the United States in December, 1983. If the program is successful it would be continued indefinitely. The cost of the Modified Common Fare Religious Diet is projected to cost substantially more per inmate than the non-religious diet. Because of the ostensible agreement between counsel, the trial set for June 4, 1984, was continued and plaintiffs’ counsel was to meet with plaintiffs to seek their approval of the settlement.

On or about June 5, 1984, the court was advised by plaintiffs’ counsel that his clients had refused the proposed settlement because defendants (a) won’t expressly concede on the record that plaintiffs’ religious beliefs are sincerely held and (b) won’t promise the Bureau of Prisons will never revert to the prior practice of refusing to excuse plaintiffs from work on the holy days of Eid-ul-Fitr and Eid-ul-Adah. On that same day, at the court’s request, David R. Essig, Esq., Regional Counsel for the Bureau of Prisons, filed an affidavit in which he stated that the Bureau of Prisons would continue to recognize the two Islamic holy days as non-work days and would implement the Common Fare Diet as proposed. In light of these concessions, the court directed the parties to file briefs on the issue of mootness. Defendants filed a Motion to Dismiss and a Brief in Support Thereof on June 12, 1984, and plaintiffs filed their brief on June 13, 1984. The motion is now ripe for disposition.

Plaintiffs profess to be members of the Sunni Muslim faith. They contend that the dietary requirements of their religion are as follows: (a) foods which the plaintiffs are allowed to eat are known as Halal and foods which plaintiffs are not allowed to eat are known as Haram; (b) Sunni Muslims are forbidden to eat meat from an animal which has not been slaughtered according to Islamic law; and, (c) the Qur’an, which to the Muslims is the word of God, provides that one of the purposes that animals were given to man is for nourishment and consumption. Plaintiffs interpret this as an affirmative command to consume meat in their diet. At the time this litigation commenced, the federal prison regulations attempted to identify objectionable food items by providing, at 28 C.F.R. § 547.11, that food items on the menu at federal prisons identified with an asterisk are food items to be prepared or seasoned with pork or pork derivatives. Plaintiffs, nevertheless, assert that the meat items on the menu at United States Penitentiary, Lewisburg, are not Halal but that pursuant to 28 C.F.R. § 547.12, Jewish inmates are entitled to and receive kosher foods (foods prepared and slaughtered in accordance with Jewish dietary law).

The plaintiffs’ other allegation concerns work assignments for holidays. They assert that prior to the commencement of this litigation, defendants have excused Jewish inmates from work assignments for the Jewish holy days. Sunni Muslim inmates were not accorded comparable treatment. As previously noted, in April of 1982, defendants did adopt a policy of excusing plaintiffs from work assignment on the Muslim holy days and this remains the policy of the defendants to date. Plaintiffs assert, however, that the defendants have the authority to revert to their prior policy of refusing to excuse plaintiffs from work on their holy days. In their brief, plaintiffs acknowledge that: “[t]he only remaining issues are whether there is a First Amendment freedom of religion or a Fifth Amendment equal protection claim of entitlement to a particular diet and whether there is a First Amendment freedom of religion or a Fifth Amendment equal protection claim of entitlement to work proscription on Muslim holy days.” It is also conceded that plaintiffs have been excused from work assignments on the holy days of Eid-ul-Fitr and Eid-ul-Adah. In his affidavit, Mr. Essig represented that defendants agree plaintiffs have a First Amendment and a Fifth Amendment equal protection right to a religious diet and work proscription which conforms to their religious belief on an equal basis with other religious groups at Lewis-burg. In this regard, the Jewish kosher kitchen will be closed. Consequently, it would appear that the parties are in agreement and that no dispute remains. However, plaintiffs want defendants to concede affirmatively that they are sincere in their religious beliefs and, apparently a guarantee, that defendants will never revert to their prior policy of refusing to excuse plaintiffs from work on two recognized holy days. Because-defendants refuse to accede to these demands, plaintiffs maintain that the remaining issues are not moot. The court does not agree.

The law is clear that the court has no jurisdiction to hear a case in which there is no justiciable case or controversy. A controversy must exist not only at the commencement of the action but also must remain real and substantial at all stages of litigation. Therefore, when actions of the parties or a subsequent law or regulation causes the controversy to cease, the action is no longer justiciable for the reason that it is moot. It is true, however, “that voluntary cessation of allegedly illegal conduct does not deprive the tribunal of power to hear and determine the case, i.e., does not make the case moot.” See United States v. W.T. Grant Co., Inc., 345 U.S. 629, 632, 73 S.Ct. 894, 897, 97 L.Ed. 1303 (1953). In such a case, a controversy may remain to be settled, as the defendant is free to return to its old ways. Id. Jurisdiction may not be properly invoked, though, when it can be clearly shown that there is no reasonable expectation that the violation will recur and the relief granted has completely eradicated the effects of the alleged violation. Id. See also County of Los Angeles v. Davis, 440 U.S. 625, 631-32, 99 S.Ct. 1379, 1383-84, 59 L.Ed.2d 642 (1979); Hudson v. Robinson, 678 F.2d 462, 465-66 (3d Cir.1982). The Third Circuit Court of Appeals, in a case involving prisoners’ rights within the law library, addressed the mootness issue stating: “the district court specifically found that defendants have no intention of reversing any of the changes in policy or physical layout concerning the operation of the law library at Huntingdon. In light of this finding, we hold that this issue is moot.... There is no reason to believe that the institution will change its policy.... Where there is no constitutional violation and no reason to believe that a prison will alter its procedures in any manner that is violative of the Constitution, a federal district court should not question the wisdom of a state’s prison policies.” See Hudson v. Robinson, 678 F.2d at 465-66.

In the case sub judice, the plaintiffs are not seeking damages but are seeking a declaratory judgment that their allegedly disparate religious treatment was unconstitutional and an injunction against the continuation of such treatment. The Bureau of Prisons in recognition of the plaintiffs’ constitutional rights has implemented policies which afford the plaintiffs the requested dietary and work proscription practices of their religion on an equal basis with other religious groups at the United States Penitentiary at Lewisburg. This is more than a mere cessation of a challenged practice ... it is an affirmative policy that recognized plaintiffs’ constitutional rights and adopted a program to implement that recognition. Based on the affidavit of David Essig and the proposed Stipulation of Dismissal submitted by the Government, the court finds that there can be no reasonable expectation that the Bureau of Prisons will alter its policies in a manner that is violative of the Constitution. In light of the fact that the Bureau of Prisons has completely eradicated the effects of the alleged disparate treatment and that the plaintiffs have and will continue to be afforded the opportunity to practice their religious beliefs on an equal basis with other religious groups at the United States Penitentiary at Lewisburg, the court finds that the issues remaining in this case are moot.

A recognition, for settlement purposes, of plaintiffs’ sincerity is implicit in the concessions made in Essig’s affidavit. Defendants should not be precluded from questioning sincerity past or present, in the event that future litigation develops. It is sufficient for the purpose of disposing of this litigation that defendants do not question plaintiffs’ sincerity. As to an inflexible commitment that either present work proscription or dietary policies will not be changed, that, similarly, cannot be “cast in concrete.” Budget limitations and other presently unforseeable circumstances developments may make a change in position necessary and could be appropriately raised in futuro even if this court were to grant injunction in favor of plaintiffs. Denial of work proscription benefits to all religions may also be required under certain conditions. In sum, I believe defendants have gone as far as they are constitutionally required to under the facts of this case.

An appropriate Order will enter.

ORDER

In accordance with the reasoning set forth in the accompanying Memorandum, IT IS HEREBY ORDERED THAT:

(1) Defendants’ motion to dismiss for mootness is granted.
(2) The Clerk of Court is directed to close this case.
(3) Any appeal from this Order is deemed frivolous, lacking in probable cause and not in good faith.