SOMPO JAPAN INSURANCE COMPANY OF AMERICA and Sompo Japan Insurance, Inc., Plaintiffs,

v.

NORFOLK SOUTHERN RAILWAY COMPANY, Norfolk Southern Corporation and the Kansas City Southern Railway Company, Defendants.

Nipponkoa Insurance Company Ltd., Plaintiff,

v.

Norfolk Southern Railway Company and the Kansas City Southern Railway Company, Defendants.

 

Nos. 07 Civ. 2735(DC), 07 Civ. 10498(DC).

Sept. 4, 2012.

 

Maloof Browne & Eagan LLC, by: David T. Maloof, Esq., Thomas M. Eagan, Esq., Rye, NY, for Sompo Japan Insurance, Inc., Sompo Japan Insurance Company of America, and Nipponkoa Insurance Company, Limited.

 

Keenan Cohen & Howard P.C., by: Paul D. Keenan, Esq., Charles L. Howard, Esq., Jenkintown, PA, Gutterman & Associates, by: Barry N. Gutterman, Esq., New York, NY, for Norfolk Southern Railway Company, Norfolk Southern Corporation, and the Kansas City Southern Railway Company.

 

OPINION

CHIN, Circuit Judge Sitting by Designation.

*1 Plaintiffs Sompo Japan Insurance Company of America and Sompo Japan Insurance, Inc. (together, “Sompo”) and Nipponkoa Insurance Company Limited (“Nipponkoa”) insured cargo carried on a train that derailed near Dallas, Texas, on April 18, 2006. Defendants Norfolk Southern Railway Company, Norfolk Southern Corporation, and Kansas City Southern Railway Company operated the derailed train and the track on which it ran.

 

In these separate but related actions,FN1 Sompo and Nipponkoa, as subrogees of the insureds, sued defendants FN2 alleging claims under various federal laws and common law theories. Before the Court are the parties’ cross-motions for summary judgment. For the reasons stated below, defendants’ motions for summary judgment are granted in part and denied in part and plaintiffs’ motions are denied.

 

BACKGROUND

I have previously issued four opinions related to this train derailment: two in Sompo, one joint opinion in both Sompo and Nipponkoa, and a third opinion in an additional related case. See Sompo Japan Ins. Co. of Am. v. Norfolk S. Ry. Co., 652 F.Supp.2d 537 (S.D.N.Y.2009), vacated in part sub nom. Nipponkoa Ins. Co., Ltd. v. Norfolk S. Ry. Co., 394 F. App’x 751 (2d Cir.2010) (summary order); Sompo Japan Ins. Co. of Am. v. Yang Miner Marine Transp. Corp., 578 F.Supp.2d 584 (S.D.N.Y.2008), abrogated in part by Rexroth Hydraudyne B.V. v. Ocean World Lines, Inc., 547 F.3d 351 (2d Cir.2008); Sompo Japan Ins. Co. of Am. v. Norfolk S. Ry. Co., 553 F.Supp.2d 348 (S.D.N.Y.2008); Sompo Japan Ins. Co. of Am. v. Norfolk S. Ry. Co., 540 F.Supp.2d 486 (S.D.N.Y.2008). The relevant facts are described in detail in those opinions, particularly in this Court’s March 20, 2008 decision, see Sompo 540 F.Supp.2d at 488–91, and are not disputed. Familiarity with those opinions is assumed, and the facts and procedural history of these cases, to the extent they have been previously discussed, will be repeated here only to the extent necessary for an understanding of the issues.

 

A. Facts

 

1. Sompo–Insured Cargo

 

Sompo’s insureds include Kubota Tractor Corporation (“Kubota”), Hoshizaki Electric Co., Ltd. (“Hoshizaki”), Canon, Inc. (“Canon”), and Unisia of Georgia Corporation (“Unisia”), each acting as consignee and “notify party” for manufacturer and shipper Hitachi, Ltd. (“Hitachi”). (See Sompo’s Resp. to Defs .’ Rule 56.1 Statement ¶¶ 5, 20, 28, 35, 41, 44; Ex. 24 to Decl. of Charles L. Howard in Supp. of Defs.’ Mot. for Summ. J. in Sompo (“Howard Sompo Decl.”)). Transport of the insured cargo involved several carriers and different types of goods being shipped from Japan and China to various locations in the state of Georgia.

 

Kubota hired Yang Ming Marine Transport Corporation (“Yang Ming”), an ocean carrier, for the shipment of tractors from Japan to Jefferson, Georgia. (Sompo’s Resp. to Defs.’ Rule 56.1 Statement ¶¶ 24–25; Howard Sompo Decl. Exs. 3, 9), Canon engaged Nippon Yusen Kaisha (“NYK”), also an ocean carrier, for the carriage of copiers from China to Georgia.FN3 (Sompo’s Resp. to Defs.’ Rule 56.1 Statement ¶¶ 32–33; Howard Sompo Decl. Exs. 8, 10). Hoshizaki employed Sumitrans Corporation (“Sumitrans”), a non-vessel operating common carrier (“NVOCC”),FN4 for the transport of appliances from Japan to Griffin, Georgia. (Sompo’s Resp. to Defs.’ Rule 56.1 Statement ¶¶ 13–14; Howard Sompo Decl. Exs. 7, 12). And finally, Hitachi, through its consignee, Unisia, contracted Nippon Express U.S.A. (Illinois) (“Nippon Express”), also an NVOCC, for the shipment of auto parts from Japan to Monroe, Georgia. (Sompo’s Resp. to Defs.’ Rule 56.1 Statement ¶¶ 39–40; Howard Sompo Decl. Exs. 5, 11). Yang Ming, NYK, Sumitrans, and Nippon Express each issued a bill or several bills FN5 of lading to its respective customer. (Howard Sompo Decl. Exs. 3, 5, 7–12). Both Sumitrans and Nippon Express, subsequently engaged Yang Ming to execute shipment of the Hoshizaki appliances and Hitachi auto parts. (Sompo’s Resp. to Defs.’ Rule 56.1 Statement ¶¶ 17, 41).

 

*2 The cargo was transported by ship to California where it was discharged in the Port of Long Beach and placed on rail lines owned and operated by Burlington Northern Santa Fe Railway Company (“BNSF”). Sompo, 540 F.Supp.2d at 489–90. Each waybill generated by BNSF listed either Yang Ming or NYK as the shipper and consignee of the goods. Id. at 490. BNSF carried the cargo to Dallas, Texas, where it transferred the containers to defendant Norfolk Southern Railway Company (“NSR”) for the final leg of inland carriage. Id. Both NYK and Yang Ming had retained NSR to provide rail transportation of goods pursuant to general agreements, known as an Intermodal Transportation Agreements (“ITAs”), previously executed in 2003 and 2004, respectively. Id. (See also Howard Sompo Decl. Exs. 13–14). The train carrying the containers was operated by defendant Kansas City Southern Railway Company (“KCSR”) on behalf of NSR’ pursuant to an agreement between NSR and KCSR. Sompo, 540 F.Supp.2d at 490 n. 2.

 

2. Nipponkoa–Insured Cargo

Nipponkoa insured the shipment of auto parts manufactured by Enplas Corporation (“Enplas”) and engine parts manufactured by Fuji OOZX Inc. (“Fuji”) from Japan to locations in Georgia and Tennessee. (See Nipponkoa’s Resp. to Defs.’ Rule 56.1 Statement ¶¶ 4–6, 20, 30). Enplas and Fuji each hired Nippon Express to transport their respective goods. (Nipponkoa’s Resp. to Defs.’ Rule 56.1 Statement ¶ 7; Exs. 2, 4, 6 to Decl. of Charles L. Howard in Supp. of Defs.’ Mot. for Summ. J. in Nipponkoa (“Howard Nipponkoa Decl.”)). Nippon Express issued bills of lading to both Enplas and Fuji and, in turn, contracted Yang Ming to execute shipment of the goods. (Nipponkoa’s Resp. to Defs.’ Rule 56.1 Statement ¶¶ 7–8; Howard Nipponkoa Decl. Exs. 2–6). The cargo was transported to the Port of Long Beach, California aboard the same vessel as the Sompo-insured cargo shipped by Yang Ming. (See Howard Nipponkoa Decl. Exs. 2, 4). From there, the inland carriage of the goods, including transfer to NSR in Dallas, was identical to that of the Sompo-insured cargo described in the above section. (See Nipponkoa’s Resp. to Defs.’ Rule 56.1 Statement ¶¶ 10–12).

 

B. Procedural History

On September 10, 2009, this Court granted summary judgment to plaintiffs on their claims under the Carmack Amendment. See Sompo, 652 F.Supp.2d at 546. This Court based its decision on Second Circuit precedent holding that the Carmack Amendment applied “to the domestic inland portion of a foreign shipment regardless of the shipment’s point of origin.” Sompo Japan Ins. Co. of Am. v. Union Pac. R.R., 456 F.3d 54, 68 (2d Cir.2006). The parties had agreed that plaintiffs’ other claims were preempted by the Carmack Amendment. See Sompo, 652 F.Supp.2d at 540, 545–46.

 

The Supreme Court later abrogated that precedent, holding that “the [ Carmack] amendment does not apply to a shipment originating overseas under a single through bill of lading.” Kawasaki Kisen Kaisha Ltd. v. Regal–Beloit Corp., ––– U.S. ––––, ––––, 130 S.Ct. 2433, 2442, 177 L.Ed.2d 424 (2010); see also Royal & Sun Alliance, 612 F.3d at 140, 144 (recognizing Regal–Beloit ). The Second Circuit subsequently vacated this Court’s grant of summary judgment. Nipponkoa, 394 F. App’x at 752. Because “plaintiffs-appellees … raised further grounds they claim[ed] would support the judgment regardless of Regal–Beloit, but … did not present these grounds below,” the Second Circuit remanded the case for further proceedings so that this Court would “have the first opportunity to address them.” Id. On remand, the parties cross-moved for summary judgment in both cases.

 

DISCUSSION

A. Summary Judgment Standard

*3 The standards governing motions for summary judgment are well-settled. A court may grant summary judgment only where there is no genuine issue of material fact and the moving party is therefore entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); accord Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Summary judgment should be denied “if the evidence is such that a reasonable jury could return a verdict” in favor of the non-moving party. See NetJets Aviation, Inc. v. LHC Commc’ns, LLC, 537 F.3d 168, 178–79 (2d Cir.2008). In deciding a motion for summary judgment, the court must construe the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in the non-moving party’s favor. In re “Agent Orange” Prod. Liab. Litig., 517 F.3d 76, 87 (2d Cir.2008). The non-moving party cannot, however, “escape summary judgment merely by vaguely asserting the existence of some unspecified disputed material facts, or defeat the motion through mere speculation or conjecture.” W. World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir.1990) (internal citations and quotation marks omitted).

 

B. Carmack Amendment ClaimsFN6

Under Regal–Beloit, the Carmack Amendment “does not apply to a shipment originating overseas under a single through bill of lading.” 130 S.Ct. at 2422; see also Royal & Sun Alliance, 612 F.3d at 140, 144 (recognizing Regal–Beloit ). Here, the shipments at issue originated overseas and were governed by through bills of lading. Accordingly, defendants’ motions for summary judgment are granted with respect to plaintiffs’ claims for relief under the Carmack Amendment.

 

C. Contract, Tort, and Bailment Claims

Defendants also move for summary judgment dismissing plaintiffs’ remaining claims, arguing, in part, that liability limitations they describe as “covenants not to sue” in the bills of lading for the shipments at issue bar plaintiffs from suing any entity other than the carrier that issued the bill to the shipping party. In other words, according to defendants, plaintiffs only have recourse to sue Yang Ming, NYK, Sumitrans, and Nippon Express. On that basis, defendants assert that, as inland rail carriers contracted by the original upstream carrier or intermediary upstream carrier FN7 and not the shipping party, they cannot be sued by plaintiffs. Defendants also contend that these covenants not to sue apply to them through so-called “Himalaya Clauses” in each bill of lading that extend such liability limitations to downstream parties, such as defendants, contracted to complete carriage of the goods.FN8

 

Plaintiffs argue that the Nippon Express bill of lading contains no such covenant not to sue and that the Yang Ming bill of lading is ambiguous and should be construed so as not to include a covenant not to sue. Plaintiffs further assert that, regardless, all such covenants in the four governing bills of lading are void under the Harter Act. See 46 U.S.C. § 30702 et seq.

 

*4 For the reasons that follow, I hold that the relevant terms of the Yang Ming bill of lading constitute an agreement by plaintiffs’ insured not to sue any party other than the carrier that issued the bill. I further hold that the Nippon Express bill of lading is ambiguous with respect to such a liability limitation. Moreover, I conclude that such liability limitations that restrict suit by plaintiffs’ insureds to the carrier that issued the bill are valid and enforceable.

 

1. Interpretation of the Bills of Lading

 

a. Applicable Law

 

A multi-modal bill of lading requiring “substantial carriage of goods by sea” is a maritime contract. See Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 27, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004) (“[S]o long as a bill of lading requires substantial carriage of goods by sea, … it is a maritime contract. Its character as a maritime contract is not defeated simply because it also provides for some land carriage.”). Federal law controls the interpretation of maritime contracts when “the dispute is not inherently local.” Id. at 22–23.

 

Generally, “contracts for carriage of goods by sea must be construed like any other contracts: by their terms and consistent with the intent of the parties.” Id. at 31. Potential ambiguities should be interpreted to give “reasonable and effective meaning to all terms of a contract” and to avoid “leav[ing] a portion of the writing useless or inexplicable.” Hartford Fire Ins. Co. v. Orient Overseas Containers Lines (UK) Ltd., 230 F.3d 549, 558 (2d Cir.2000). Bills of lading, however, are “contracts of adhesion and, as such, are strictly construed against the carrier .” Allied Chem. Int’l Corp. v. Companhia de Navegacao Lloyd Brasileiro, 775 F.2d 476, 482 (2d Cir.1985).

 

b. Application

Plaintiffs only contest the interpretation of the language contained in the Yang Ming and Nippon Express bills of lading. (See Sompo Mem. at 20–23; Nipponkoa Mem. at 2–3). They do not dispute that the NYK and Sumitrans bills of lading contain covenants not to sue any party other than the carrier that issued the bill—here, NYK and Sumitrans. (See Sompo Mem. at 20–23; Nipponkoa Mem. at 2–3). Accordingly, I only address the Yang Ming and Nippon Express bills of lading, each in turn below.

 

i. Yang Miner Bill of Lading

The Yang Ming bill of lading expressly limits the liability of any entity Yang Ming engages to perform carriage of goods such that only Yang Ming can be held liable for damage to the goods during transit. I interpret such a limitation to be an express agreement by the plaintiffs’ insureds not to seek to hold any entity other than Yang Ming liable for damage to the goods in question.

 

Section 4(2) of the Yang Ming bill of lading provides the following:

 

It is understood and agreed that, other than the Carrier, no Person, firm or corporation or other legal entity whatsoever (including the Master, officers and crew of the vessel, agents, Underlying Carriers, Sub–Contractors, and/or any other independent contractors whatsoever utilized in the Carriage) is, or shall be deemed to be, liable with respect to the Goods as Carrier, bailee or otherwise.

 

*5 (Howard Sompo Decl. Ex. 9 (emphasis added)). This section clearly provides that, for liability purposes, only the Carrier—in this case, Yang Ming—can be sued, regardless of whether the Carrier employed “Underlying Carriers,” “Sub–Contractors,” or used other entities, such as “independent contractors,” to transport the goods.

 

Plaintiffs’ argument—that the bill of lading’s definition of “Carrier” ultimately encompasses rail carriers, and therefore, the bill permits suit against defendants (see Sompo Mem. at 20–22; Nipponkoa Mem. at 2–3)—is without merit. Specifically, plaintiffs reason that because “rail carrier” is included in the definition of “Underlying Carrier,” FN9 which is, in turn, included in the definition of “Carrier,” FN10 defendants ultimately qualify as the “Carrier” for liability purposes under Section 4(2) of the bill and therefore are eligible to be sued. (See Sompo Mem. at 20–21). Under plaintiffs’ argument, though, a rail carrier qualifies as the “Carrier” because it is categorized as an “Underlying Carrier.” In that regard, as discussed above, Section 4(2) expressly bars holding “Underlying Carriers,” much less any entity engaged by the Carrier, liable. The phrase “Underlying Carriers” appears in Section 4(2) in the parenthetical as a specification of the entities that are not liable.

 

To the extent there is ambiguity as to when an “Underlying Carrier” is also considered the “Carrier,” resolving this ambiguity in plaintiffs’ favor in the context of liability would render Section 4(2) “useless or inexplicable.”   Hartford Fire Ins. Co., 230 F.3d at 558. Moreover, under the present shipping arrangement, there can be no question that the Carrier “on whose behalf this [bill of lading] was issued” (see Howard Sompo Decl. Ex. 9 at Section 1(3) (definition of “Carrier”) (emphasis added)) was indeed Yang Ming and not NSR or KCSR and that plaintiffs’ insureds understood as much in hiring Yang Ming to transport their goods.

 

Accordingly, I hold that Section 4(2) of the Yang Ming bill of lading constituted an express agreement by plaintiffs not to sue any entity other than Yang Ming, including the defendant rail carriers, for damage to the goods in question.

 

ii. Nippon Express Bill of Lading

Unlike the Yang Ming bill of lading, the Nippon Express bill is ambiguous and susceptible to different interpretations as to what entities may be sued under its terms. Therefore, I deny the parties’ cross-motions for summary judgement on claims arising from the Nippon Express shipments—specifically, the Hitachi/Unisia shipment in Sompo and the Enplas and Fuji shipments in Nipponkoa.

 

We begin with the plain language of the bill of lading. See Kirby, 543 U.S. at 31–32. Section 4.2 of the Nippon Express bill of lading provides the following:

 

The Carrier shall be responsible for the acts and omissions of its agents or servants when, such agents or servants are acting within the scope of their employment as if such acts and omissions were its own and also shall be responsible for the acts and omissions of any other persons whose services it makes use of in the performance of the contract evidenced by this bill of Lading.

 

*6 (Howard Sompo Decl. Ex. 11). Section 1(a) of the bill defines “Carrier” as follows:

“Carrier” means Nippon Express U.S.A. (Illinois), Inc., the underlying Carrier, the ship, her owner, Master, operator, demise charterer and if bound thereby, the time charterer and any substitute carrier, whether, the owner, operator, charterer or Master shall be acting as carrier or bailee, as well as any of the agents, servants, and/or employees of the foregoing parties, including, but not limited to, stevedores, container yards, container freight stations, Intermodal inland carriers (rail, truck, local truckers and barge).

 

(Id. Ex. 11 (emphasis added)). Plaintiffs argue that the bill’s inclusion of inland rail carriers under the definition of “Carrier” and Section 4.2’s statement that the “Carrier shall be held responsible,” makes defendants, as inland rail carriers, “undeniably liable” for damage to the insured goods under the terms of the bill. (Sompo Mem. at 22–23; see also Nipponkoa Mem. at 2–3).

 

The plain wording of the bill of lading is ambiguous. Section 4.2 contemplates “Carrier” as a single entity that shall be responsible for all other entities it employs in the carriage of goods, whether those entities are agents, servants, or otherwise. The provision arguably implies that the Carrier is the responsible party in place of those entities. Such an interpretation, however, arguably must read the word “only” (or similarly restrictive terms) into the provision—i.e., that the Carrier and “only” the Carrier shall be responsible. Otherwise, the provision, as drafted, does not necessarily preclude other entities from also being held responsible for damage to the goods in transport—even though the Carrier is responsible.

 

Section 1(a), on the other hand, includes a range of entities in the definition of “Carrier,” thus broadly expanding, as plaintiffs argue, Section 4.2 to provide that “[t]he Carrier [and all its agents, servants, or otherwise] shall be responsible for the acts and omissions of [their] agents or servants.” (See Howard Sompo Decl. Ex. 11). Such an interpretation would arguably expand responsibility to an ever widening circle of

 

The point is that these provisions are ambiguous. In such instances, we look to evidence of the intent of the parties. See JA Apparel Corp. v. Abboud, 568 F.3d 390, 397 (2d Cir.2009). Based on the record before me, however, there is insufficient evidence to discern such intent, and therefore, summary judgment on this issue is not proper. See id. at 399 (holding that, in light of “conflicting interpretations” of and “ambiguity” in contract, “parties were entitled to submit extrinsic evidence as to the intent with which they entered the [a]greement”). I raise below some indicia of intent that, albeit not determinative for summary judgment purposes, may be relevant and inform the parties’ submissions of additional evidence on this point.

 

*7 First, Section 7.3(b) of the Nippon Express bill specifically contemplates liability for damage occurring during the inland carriage of goods by any entity other than the “Carrier,” such as an “inland carrier”:

 

If it can be proved where the loss or damage occurred, the liability of the Carrier for the loss [of] or damage to the goods will be as follows: … [w]ith respect to loss or damage occurring during the period of carriage by land … in any country for which this carrier has assumed responsibility of carriage, in accordance with the applicable law of that country, the inland carrier’s contract of carriage and tariffs in force, and this Bill of Lading.

 

(Howard Sompo Decl. Ex. 11). Here, the plain language appears to expressly consider an inland carrier, such as a rail carrier, to be a separate entity from the “Carrier” and not interchangeable for liability purposes. Like Section 4.2, however, the bill’s definition of “Carrier” contravenes this provision.

 

Second, Section 7.3(b) also directs that liability during the inland carriage of goods shall be determined in accordance with the inland carrier’s contract of carriage. Here, Nippon Express, as an NVOCC, engaged Yang Ming to perform the physical shipment of the goods. Yang Ming hired NSR for the relevant portion of inland carriage pursuant to the standing ITA executed between NSR and Yang Ming. See Background Section (A), supra. The ITA incorporates by reference NSR’s Intermodal Transportation Rules Circular No. 2. (See Howard Sompo Decl. Ex. 13 at NSGENL 0001). Section 8.3.3(j) of the Circular states that “[NSR] will not be liable for any loss, damage, or delay to lading to any party other than the Rail Services Buyer” and that it “will not be under any obligation to process any claim by any person other than the Rail Services Buyer.” (Id. Ex. 25 at NSGENL 0024). As the party with whom NSR contracted, Yang Ming is the “Rail Services Buyer,” not plaintiffs’ insureds. (See id. Ex. 13). Therefore, the ITA, as the applicable contract for inland carriage under Section 7.3(b) of the Nippon Express bill of lading, evidences the intent of at least the defendants that, under the present shipping arrangement, plaintiffs only look to Nippon Express in seeking damages for the cargo. FN11

 

Finally, I note that industry practice and custom regarding multimodal through bills of lading may be relevant in determining the intent of the parties here. See Christiana Gen. Ins. Corp. of N.Y. v. Great Am. Ins. Co., 979 F.2d 268, 274 (2d Cir.1992). The Supreme Court in Kirby acknowledged the “popularity of ‘through’ bills of lading, in which cargo owners can contract for transportation across oceans and to inland destinations in a single transaction” instead of having “to negotiate a separate contract—and to find an American railroad itself—for the land leg.” 543 U.S. at 25–26. To work, however, this “efficient choice,” see id. at 26, necessitates a similarly efficient structure for liability under that single contract. Cf. Regal–Beloit, 130 S.Ct. at 2447–48 (discussing efficiency implications of applying different liability regimes to different phases of international, multimodal transport). To what extent the parties intended to achieve such efficiencies here through a single through bill of lading may be relevant.

 

*8 Consequently, additional evidence is needed to determine the intent of the parties and whether the terms of the Nippon Express bill effectively limit who plaintiffs may sue under the bill, thus precluding summary judgment. See Scholastic, Inc. v. Harris, 259 F.3d 73, 83 (2d Cir.2001) (“When the language of a contract is ambiguous and there is relevant extrinsic evidence regarding the actual intent of the parties, an issue of fact is presented for a jury to resolve, thereby precluding summary judgment.”). Accordingly, I deny the parties’ cross-motions for summary judgement on claims arising from the Nippon Express shipments—specifically, the Hitachi/Unisia shipment in Sompo and the Enplas and Fuji shipments in Nipponkoa.

 

2. Enforceability of the Covenants Not to Sue

Plaintiffs assert that even if the Nippon Express and Yang Ming bills of lading are interpreted to prohibit suit against defendants, all such terms in any of the bills of lading in these matters are void under the Harter Act, 46 U.S.C. § 30702 et seq., which plaintiffs contend governs the shipments in question. (See Sompo Mem. at 23–31; Nipponkoa Mem. at 2–3). I need not reach the question of whether the Harter Act applies,FN12 as even if it does, the Act does not bar such provisions. Moreover, to the extent the parties suggest that the Carriage of Goods by Sea Act (“COGSA”), 46 U.S.C. § 30701 note, applies or that certain bills of lading incorporate the Hague Rules, FN13 I conclude that neither statutory regime prohibits the liability limitations in question.

 

a. Applicable Law

 

i. Himalaya Clauses

 

A Himalaya Clause is a contractual provision in a bill of lading that extends the bill’s liability limitations to downstream parties contracted by the carrier to assist in the carriage of goods, Kirby, 543 U.S. at 20 & n. 2. “A single Himalaya Clause can cover both sea and land carriers downstream.” Id. at 29. In Kirby, the Supreme Court held, in part, that an inland rail carrier subcontracted by an intermediary ocean carrier could be the “intended beneficiary” of Himalaya Clauses in both (1) the bill of lading issued to the cargo owner by the initial freight forwarder and (2) the bill of lading issued by the intermediary ocean carrier to the freight forwarder. Id. at 31–32, 34–36. Consequently, the rail carrier was “entitled to the protection of liability limitations” in both bills of lading. Id. at 36.

 

ii. The Harter Act, COGSA, and the Hague Rules

Under the Harter Act, “[a] carrier may not insert in a bill of lading or shipping document a provision avoiding its liability for loss or damage arising from negligence or fault in loading, stowage, custody, care, or proper delivery.” 46 U.S.C. § 30704. The Act, however, does not void “provisions limiting a carrier’s liability, but only those absolving a carrier of liability for its own negligence.” Great White Fleet, 2008 WL 2980029, at *11 (emphasis in original) (citing Ansaldo San Giorgio I v. Rheinstrom Bros., 294 U.S. 494, 4994–97, 55 S.Ct. 483, 79 L.Ed. 1016 (1935)).

 

*9 Similarly, COGSA voids any provision in a shipping contract “relieving” or “lessening” the carrier’s liability “arising from negligence, fault, or failure in [its] duties and obligations.” COGSA § 3(8), 46 U.S.C. § 30701 note. COGSA is also the United States’ codification of the Hague Rules, and therefore, the Hague Rules are “virtually identical.” Fed. Ins. Co. v. Union Pac. R.R., 651 F.3d 1175, 1178 n. 5, 1179 (9th Cir.2011). The Hague Rules’ prohibition on such liability limitations mirrors that of COGSA. Compare COGSA § 3(8), 46 U.S.C. § 30701 note, with Hague Rules, art. 3(8), 51 Stat. at 250, 120 L.N.T.S. at 165.

 

The Ninth Circuit recently held in Federal Insurance Co. v. Union Pacific Railroad Co. that “the Hague Rules and COGSA permit a carrier to accept exclusive liability for the negligence of its subcontractors.” 651 F.3d at 1180. In affirming the district court’s enforcement of the covenant not to sue, the court relied on the Supreme Court’s distinction in Vimar Seauros Y Reasecruros, S.A. v. M/V Skv Reefer, 515 U.S. 528, 115 S.Ct. 2322, 132 L.Ed.2d 462 (1995),FN14 “between impermissible contracts that reduce the carrier’s obligations and enforceable contracts that affect only the ‘mechanisms’ of enforcing a shipper’s rights.” Fed Ins. Co., 651 F.3d at 1179–80. It concluded that a covenant requiring suit against the carrier is an “enforcement mechanism rather than a reduction of the carrier’s obligations to the cargo owner,” and therefore, is permissible. Id. at 1180 (internal quotation marks omitted).

 

Other courts have reached similar conclusions with respect to the enforcement of clauses prohibiting suit against entities other than the carrier. See Nipponkoa Ins. Co. v. Norfolk S. Ry. Co., 794 F.Supp.2d 838, 843–44 (S.D.Ohio 2011); Mattel, Inc. v. BNSF Ry. Co., Nos. CV 10–0681–R, 10–3127–R, 2011 WL 90164, at *4 (C.D.Cal. Jan.3, 2011); St. Paul Travelers Ins. Co. v. M/V Madame Butterfly, 700 F.Supp.2d 496, 505 (S.D.N.Y.2010); Fed. Ins. Co. v. Union Pac. R.R., 590 F.Supp.2d 1292, 1294–95 (C.D.Cal.2008); Ltd. Brands, Inc. v. F.C. (Flying Cargo) Int’l Transp. Ltd., No. C2–04–632, 2006 WL 783459, at *8 & n. 7 (S.D.Ohio Mar.27, 2006); Allianz CP Gen. Ins. Co. v. Blue Anchor Line, No. 02 Civ. 2238(NRB), 2004 WL 1048228, at *6 (S.D.N.Y. May 7, 2004).

 

b. Application

First, as an initial matter, I find—and the parties do not dispute—that each bill of lading contains a valid Himalaya Clause extending the bill’s liability limitations, including the limitations on what entity can be sued under the bill, if enforceable, to downstream carriers, such as defendants. (See Howard Sompo Decl. Exs. 9 at Section 4(2), 10 at Section 6(2), 11 at Section 10.2, 12 at Section 5(2)).

 

Second, I agree with the Ninth Circuit’s rationale in Federal Insurance Co. Here, the various restrictions barring suit against defendants are enforceable and do not violate any of the foregoing statutory regimes, including COGSA and the Hague Rules as well as the Harter Act, because plaintiffs can still seek full recovery of damages from the carrier that issued the bill of lading. See Fed. Ins. Co., 651 F.3d at 1179–80. In other words, these clauses do not allow the carrier to “avoid,” “lessen,” or “relieve” its liability to plaintiffs. See COGSA § 3(8), 46 U.S.C. § 30701 note; id. § 30702; Hague Rules, art. 3(8), 51 Stat. at 250, 120 L.N.T.S. at 165. They merely direct suit against the carrier and leave the carrier to seek indemnification from the parties with whom it contracted to complete carriage of the goods. In short, plaintiffs are not “without a remedy” for their injury. See Nipponkoa Ins. Co., 794 F.Supp.2d at 843.

 

*10 Plaintiffs cite Royal & Sun Alliance Ins. PLC v. Ocean World Lines, Inc., 572 F.Supp.2d 379 (S.D.N.Y.2008), aff’d, 612 F.3d 138 (2d Cir.2010), to no avail. (See Pls.’ Combined Reply Mem. at 12–13). There, the through bill of lading issued to the cargo owner by the NVOCC did not contain a covenant not to sue. Royal & Sun Alliance. 572 F.Supp.2d at 397–98. The NVOCC subsequently hired Yang Ming to perform the ocean carriage of the goods. See id. at 384–85. Yang Ming issued a bill of lading to the NVOCC with liability terms identical to the ones at issue here. See id. The district court rejected Yang Ming’s argument that its bill of lading barred the cargo owner from suing the trucking company subcontracted by Yang Ming to perform inland carriage of the goods. See id. at 397–98. It reasoned that the bill of lading between the NVOCC and the cargo owner contained no such limitation and that the NVOCC “had no authority … to give up [the cargo owner’s] right to sue by accepting the contradictory term in Yang Ming’s bill of lading.” Id. That is not the case here. Under the present shipping arrangement, plaintiffs’ insureds entered into bills of lading in which they agreed not to sue any entity other than the carrier that issued the bill. See Nipponkoa Ins. Co., 794 F.Supp.2d at 844 (distinguishing Royal & Sun Alliance on identical grounds in response to the same argument by plaintiff Nipponkoa).

 

Similarly, plaintiffs’ citation to United States v. Atlantic Mutual Insurance Co. for the “ ‘general rule of law that common carriers cannot stipulate for immunity from their own or their agents’ negligence’ “ (Sompo Mem. at 32 (quoting United States v. Atl. Mut. Ins. Co., 343 U.S. 236, 239, 72 S.Ct. 666, 96 L.Ed. 907 (1952)); see also Pis.’ Combined Reply Mem. at 4–5) is also of no consequence here. In Atlantic Mutual, the Supreme Court invalidated a “both-to-blame” clause which ultimately “deprive[d]” cargo owners of a portion of any monetary judgment they obtain in a separate action against a “noncarrying vessel” that collides with the vessel transporting the cargo owner’s goods.FN15 Atlantic Mut. Ins. Co., 343 U.S. at 239 & n. 5, 241–42. Here, the provisions limiting suit to the carrier that issued the bill of lading do not deprive cargo owners of any portion of a potential damages award. Plaintiffs can still recover in full from the carrier that issued the bill of lading to the insureds, and that carrier, in turn, can seek indemnification from downstream entities, such as defendants. See Nipponkoa Ins. Co., 794 F.Supp.2d at 843 (distinguishing Atlantic Mut. Ins. Co. on identical grounds in response to the same argument by plaintiff Nipponkoa and concluding that “the rule against stipulations of immunity is not contravened by a clause that creates no immunity”).

 

Accordingly, I hold that such liability limitations are

 

enforceable with respect to defendants and do not violate any of the statutory regimes raised in the parties’ arguments or implicated in the bills of lading at issue.

 

3. Common Law and Public Policy Grounds

*11 Plaintiffs additionally argue that, notwithstanding liability limitations, they have a right, as a matter of common law and public policy, to sue defendants in tort and bailment. (See generally Pls.’ Combined Reply Mem. at 4–6; Sompo Mem. at 34–35). I reject this argument as it applies to shipments governed under the Yang Ming, NYK, and Sumitrans bills of lading.FN16

 

Although it is “well established that in certain situations a claim for cargo damage could sound in tort as well as in contract,” Associated Metals & Minerals Corp. v. Alexander’s Unity MV, 41 F.3d 1007, 1016 (5th Cir.1995), here, that argument does not overcome the fact that plaintiffs agreed to sue only the carrier that issued the bill of lading, see Nipponkoa Ins. Co., 794 F.Supp.2d at 844 n. 2 (“Nipponkoa’s assertion that it may bring suit against Norfolk Southern as a tortfeasor is correct, but does not help it avoid the consequences of the covenant not to sue.” (internal citation omitted)).

 

CONCLUSION

The contested provisions in the Yang Ming bill of lading preclude suit against any entities other than Yang Ming, the carrier that issued the bill. I further hold such liability limitations, as stated in the Yang Ming, NYK, and Sumitrans bills of lading to be valid and enforceable. Therefore, Sompo, as subrogee of Kubota, Hoshizaki, and Canon, may not sue defendants for damages sustained to the relevant goods during their inland carriage. As this conclusion is dispositive of all of Sompo’s claims arising from such shipments, I decline to address the parties’ remaining arguments on such claims.

 

The contested provisions in the Nippon Express bill of lading are ambiguous and require additional evidence of the parties’ intent, thus precluding summary judgment on the claims arising from the Nippon Express shipments—specifically, the Sompo-insured Unisia/Hitachi shipment and the Nipponkoa-insured Enplas and Fuji shipments. In addition, I defer ruling on the parties’ additional arguments regarding plaintiffs’ contract, tort, and bailment claims until resolution of the disputed interpretation of the Nippon express bill of lading.

 

For the foregoing reasons, defendants’ motions for summary judgment are granted in part with respect to claims arising from the Kubota, Canon, and Hoshizaki shipments and denied in part with respect to claims arising from the Unisia/Hitachi shipment in Sompo Japan Ins., Inc. v. Norfolk S. Ry. Co., No. 07 Civ. 2735(DC). Plaintiffs’ cross-motions for summary judgment are denied. All claims against defendants arising from the Kubota, Canon, and Hoshizaki shipments are dismissed.

 

In addition, defendants’ motions and plaintiffs’ cross motions for summary judgment are denied in Nipponkoa Ins. Co., v. Norfolk S. Ry. Co., No. 07 Civ. 10498(DC).

 

SO ORDERED.

 

FN1. In this decision, I refer to Sompo’s case against defendants as Sompo and Nipponkoa’s case against defendants as Nipponkoa.

 

FN2. Norfolk Southern Corporation, a holding company and parent corporation of Norfolk Southern Railway Company, is named as a defendant only in Sompo.

 

FN3. Defendants’ Rule 56.1 Statement indicates that the final destination for the shipment was Georgia. (Defs.’ Rule 56.1 Statement ¶ 32). The bill of lading, however, identifies Long Beach, California, as the “place of delivery.” (Howard Somp o Decl. Ex. 8). Sompo does not dispute that Georgia was the final destination for the goods. (See Sompo’s Resp. to Defs.’ Rule 56 .1 Statement ¶ 32). See also Sompo, 540 F.Supp.2d at 489 & n .1.

 

FN4. An NVOCC provides transportation for hire and assumes liability for the goods it agrees to ship but does not undertake actual transportation of the goods or operation of the vessel on which the goods are transported. Royal & Sun Alliance Ins., PLC v. Ocean World Lines, Inc., 612 F.3d 138, 140 n. 2 (2d Cir.2010) (citing 1–1 Saul Sorkin, Goods in Transit § 1.15(8)). It issues a bill of lading to the shipper and delivers the shipment to another carrier for transportation. Id.

 

FN5. Yang Ming issued multiple bills of lading to Kubota—one for each container of cargo in the shipment. (See Howard Sompo Decl. Ex. 3).

 

FN6. Although it appears the Second Circuit only remanded plaintiffs’ additional claims, see Nipponkoa, 394 F. App’x at 752, defendants, nevertheless, move for summary judgment with respect to plaintiffs’ claims under the Carmack Amendment (see Defs.’ Mem. in Sompo at 8; Defs.’ Mem. in Nipponkoa at 8). To avoid any doubt, I briefly address those claims here.

 

FN7. Here, only Yang Ming and NYK contracted with defendants. Yang Ming performed as both an original carrier and an intermediary carrier, as hired by Sumitrans and Nippon Express. NYK performed as an original carrier. See Background Section (A), supra.

 

FN8. I reject plaintiffs’ contention that because defendants failed to raise the covenants not to sue as an affirmative defense in their Answer, in the prior proceedings and summary judgment motions, and on appeal, defendants waived the issue. There is no evidence that defendants acted in bad faith nor will the Court’s consideration of the covenants at this juncture prejudice the plaintiffs or unduly delay the proceedings. See Saks v. Franklin Covey Co., 316 F.3d 337, 350 (2d Cir.2003) (“[A] district court may still entertain affirmative defenses at the summary judgment stage in the absence of undue prejudice to the plaintiff, bad faith or dilatory motive on the part of the defendant, futility, or undue delay of the proceedings.”).

 

Further, all parties previously conceded that plaintiffs’ common law claims were preempted by the Carmack Amendment, as applied under the law in effect at the time. Sompo, 652 F.Supp.2d at 540, 545–46. Therefore, the Court has not yet addressed any additional claims on the merits as instructed to do so on remand by the Second Circuit. See Nipponkoa, 394 F. App’x at 752 (“The parties … have agreed that we should decline to reach these [additional claims] so that the district court may have the first opportunity to address them on remand.”).

 

FN9. Section 1(17) of the Yang Ming bill of lading defines “Underlying Carrier” to include “any water, rail, motor, air or other carrier utilized by the Carrier for any parts of the transportation [sic] the shipment covered by this Bill.” (Howard Sompo Decl. Ex. 9).

 

FN10. Section 1(3) of the Yang Ming bill of lading defines “Carrier” as follows;

 

the party on whose behalf this Bill is issued, as well as the Vessel and/or her Owner, demise charterer (if bound thereby), the time charterer and an [sic] substituted or Underlying Carrier whether any of them is acting as Carrier or bailee.

 

(Howard Sompo Decl. Ex. 9).

 

FN11. While I have previously expressed concern regarding the shippers’ notice of either the ITAs or the rail carrier circulars in the context of Carmack liability, I have also acknowledged in the same vein that “[i]t is not lost on the Court that the parties contracting directly with the insureds and the rail carriers … are not parties in this case.”   Sompo Japan Ins. Co., 540 F.Supp.2d at 500; see also Kirby, 543 U.S. at 35 (“It seems logical that [the freight forwarder]—the only party that definitely knew about and was party to both of the bills of lading at issue here—should bear responsibility for any gap between the liability limitations in the bills.”). Nevertheless, I view the ITAs and circulars in this context as merely relevant in discerning the intent of the parties.

 

FN12. There is some question as to the applicability of the Harter Act to the shipment at issue here as “numerous courts have concluded … that the Harter Act does not apply to the inland phase of a multimodal carriage.” Fed. Ins. Co. v. Great White Fleet (US) Ltd., No. 07 Civ. 2415(GEL), 2008 WL 2980029, at *9 (S.D.N.Y. Aug.1, 2008) (collecting cases and citing, inter alia, Great Am. Ins. Co. of N.Y. v. A/P Moller–Maersk A/S, 482 F.Supp.2d 357 (S.D.N.Y.2007); Sony Computer Entm’t Inc. v. Nippon Express U.S.A. (Ill.), Inc., 313 F.Supp.2d 333 (S.D.N.Y.2004); Colgate Palmolive Co. v. M/V Atl. Conveyor, No. 95 Civ. 1497(MBM), 1996 WL 742861, at *3 (S.D.N.Y. Dec.31, 1996)). In all such cases, “the loss occurred after the completion of the ocean carriage.” Id. at *10. But see Anvil Knitwear, Inc. v. Crowley Am. Transp., Inc., No. 00 Civ. 3243(NRB), 2001 WL 856607, at *4 (S.D.N.Y. July, 27, 2001) (applying Harter Act to a clause governing liability for loss of cargo hijacked in foreign country during short inland portion of intermodal shipment just prior to ocean carriage); see also Great White Fleet, 2008 WL 2980029, at *10 (discussing how Supreme Court’s holding in Kirby “expanded the inland reach of general maritime law” and could “call into question the logic” of not applying the Harter Act to the inland phase of a multimodal shipment).

 

FN13. The Hague Rules are formally known as the International Convention for the Unification of Certain Rules Relating to Bills of Lading, Aug. 25, 1924, 51 Stat. 233, 120 L.N.T.S. 155 [hereinafter the Hague Rules].

 

FN14. In Sky Reefer, the Court upheld a bill of lading’s clause directing arbitration in a foreign country, holding that nothing prevents the parties from enforcing their duties and obligations under COGSA in a particular manner. 515 U.S. at 535 (“By its terms, [COGSA] establishes certain duties and obligations, separate and apart from the mechanisms for their enforcement.”).

 

FN15. In the event two ships collided and both were found negligent, the clause required a cargo owner to indemnify the ship carrying its goods against any loss or liability to the other vessel, to the extent that loss or liability represented payment of a claim for damages to the cargo owner that the other vessel sought to recover from the carrying ship. Atl. Mut. Ins. Co., 343 U.S. at 239 & n .5.

 

FN16. I defer ruling on this argument as it applies to shipments governed under the Nippon Express bill of lading until resolution of the disputed interpretation of the Nippon Express bill of lading.

United States Court of Appeals,

Ninth Circuit.

Arel PRICE, Petitioner,

v.

STEVEDORING SERVICES OF AMERICA, INC.; Eagle Pacific Insurance Company; Homeport Insurance Co.; Director, Office of Workers Compensation Programs, Respondents.

 

No. 08–71719.

Argued and Submitted Sept. 22, 2011.

Submission Vacated Sept. 29, 2011.

Resubmitted Aug. 27, 2012.

Filed Sept. 4, 2012.

Charles Robinowitz, Attorney, Portland, OR, for the petitioner Arel Price.

 

Russell A. Metz, Attorney, Metz & Assocs. P.S., Seattle, WA, John Randall Dudrey, Attorney, Williams Fredrickson, LLC, Portland, OR, Matthew W. Boyle and Mark A. Reinhalter, Counsel, LABR–U.S. Dep’t of Labor, Office of the Solicitor, Washington, DC, for the respondents Stevedoring Services of America, Inc., et al.

 

On Petition for Review of an Order of the Office of Workers’ Compensation Programs.

 

Before ALEX KOZINSKI, Chief Judge, MARY M. SCHROEDER, STEPHEN REINHARDT, DIARMUID F. O’SCANNLAIN, SIDNEY R. THOMAS, BARRY G. SILVERMAN, WILLIAM A. FLETCHER, RONALD M. GOULD, MARSHA S. BERZON, CARLOS T. BEA, and MARY H. MURGUIA, Circuit Judges.

 

OPINION

BERZON, Circuit Judge:

*1 We consider whether a claimant under the Longshore and Harbor Workers’ Compensation Act (“LHWCA,” “Longshore Act,” or “Act”), 33 U.S.C. § 901 et seq., (1) is entitled to the maximum compensation rate from the fiscal year in which he becomes disabled or from the fiscal year in which he receives a formal compensation award; (2) receives interest on past due compensation at the rate defined in 28 U.S.C. § 1961 instead of the rate set forth in 26 U.S.C. § 6621; FN1 and, (3) if interest is to be awarded at the § 1961 rate, whether it should be simple or compound. In the course of resolving these issues, we also consider the proper level of deference that should be accorded to the litigating position of the Director of the Office of Workers’ Compensation Programs (“Director”).

 

I. BACKGROUND

 

A. Statutory Scheme

 

The Longshore Act is a “ ‘comprehensive scheme’ “ to provide compensation for the disability or death of employees resulting from injuries occurring upon the navigable waters of the United States. Roberts v. Sea–Land Servs., Inc., –––U.S. ––––, ––––, 132 S.Ct. 1350, 1354, 182 L.Ed.2d 341 (2012) (quoting Metro. Stevedore Co. v. Rambo, 515 U.S. 291, 294, 115 S.Ct. 2144, 132 L.Ed.2d 226 (1995)); see also 33 U.S.C. § 903(a). Although the Department of Labor is charged with administering the Act, Chesapeake & Ohio Ry. Co. v. Schwalb, 493 U.S. 40, 45, 110 S.Ct. 381, 107 L.Ed.2d 278 (1989); 33 U.S.C. §§ 902, 939, the statute provides for a “split-function regime,” in which duties are divided between two “sub-agencies,” Ingalls Shipbldg. v. Dir ., OWCP, 519 U.S. 248, 268, 117 S.Ct. 796, 136 L.Ed.2d 736 (1997). “By statute and by regulation, the adjudicative and enforcement/litigation functions of the Department of Labor with respect to the LHWCA are divided between the ALJ[ ]s [Administrative Law Judges] and the Benefits Review Board on the one hand, and the Director on the other.” Id. at 269 (internal citations omitted); see also Dir., OWCP v. Newport News Shipbldg. & Dry Dock Co., 514 U.S. 122, 125, 115 S.Ct. 1278, 131 L.Ed.2d 160 (1995).

 

When seeking compensation under the Act, a worker must file a claim with a district director, a designee of the Director. 33 U.S.C. § 919(a); 20 C.F.R. §§ 701.301(a)(7), 702.105, 702.136. With respect to benefits, the LHWCA establishes a maximum limit on compensation for disability. 33 U.S.C. § 906(b)(1). Compensation is capped at twice the applicable national average weekly wage. Id. The Act requires that compensation “be paid periodically, promptly, and directly to the person entitled thereto, without an award, except where liability to pay compensation is controverted by the employer.” Id. § 914(a).

 

An employer controverting the right to compensation must file a formal notice with the district director. Id. § 914(d). Employers who do not do so become liable for an additional ten percent of “any installment of compensation payable without an award [that] is not paid within fourteen days after it becomes due.” Id. § 914(e). In addition to and separate from any penalty due under § 914, claimants are entitled under our case law to receive interest on past due payments, regardless of whether employers have controverted liability. See Matulic v. Dir., OWCP, 154 F.3d 1052, 1059 (9th Cir.1998).

 

*2 District directors are authorized by the Director to resolve disputes with respect to claims and generally do so through informal discussions. 20 C.F.R. §§ 702.311, 801.2. If parties are unable to reach a resolution through this informal process, a district director will transfer the case to an ALJ for formal adjudication. Id. § 702.316; see also 33 U.S.C. § 919(d). The ALJ will then issue a compensation order rejecting a claim or making an award. 33 U.S.C. § 919(e). Parties can appeal an ALJ’s order to the Benefits Review Board (“Board” or “BRB”), id. § 921(b)(3), and”[a]ny person adversely affected or aggrieved by a final order of the Board may obtain a review of that order in the United States court of appeals,” id. § 921(c).

 

B. Factual and Procedural History

Arel Price was injured in 1991 while employed as a longshoreman by Stevedoring Services of America, Inc. After undergoing surgery for his injury, he returned to work and continued to work until 1998, when he stopped working upon his physician’s advice.

 

After informal negotiations preceding adjudication by an ALJ, Stevedoring provided Price with weekly workers’ compensation payments of $676.89 from his date of injury until January 1992. The maximum weekly compensation rate at the time of Price’s injury was $699.96 per week. Price also received a lump sum payment for the period from January to November 1992.

 

The parties disagreed, however, as to whether the amount Stevedoring paid Price in benefits was correct, or whether the proper rate was higher. As a result, the case was referred to an ALJ, who issued a formal compensation award in 2000. Upon eventual appeal, we remanded the case for reconsideration of the national average weekly wage used to calculate Price’s disability payments.   Stevedoring Servs. of Am., Inc. v. Price, Nos. 02–71207 & 02–71578, 2004 WL 1064126, at *2–3 (9th Cir. May 11, 2004).

 

On remand, the ALJ revised the applicable national average weekly wage and awarded Price compensation at the 1991 fiscal year maximum, declining to apply the maximum compensation rate from fiscal year 2000, when Price received his formal compensation order. In addition, the ALJ awarded Price interest on past due payments at the rate set forth in 28 U.S.C. § 1961; the ALJ rejected Price’s argument that interest should be awarded at the higher rate set forth in 26 U.S.C. § 6621(a). The ALJ also refused to award Price compound interest at the § 1961 rate, requiring only simple interest instead. FN2 Price appealed each of these holdings to the BRB, which affirmed the ALJ’s order in its entirety.

 

Price then petitioned this court for review of the Board’s decision, challenging the maximum rate of compensation, the rate of interest on his past due compensation, and the award of simple rather than compound interest. Price named the Director, who had not been involved in the adjudicatory proceedings before the Board, as one of the respondents. See generally Ingalls, 519 U.S. at 269(holding that the Director may be named as a respondent in litigation before the courts of appeals). The Director filed a brief urging us to affirm the BRB’s decision. A three-judge panel affirmed the Board’s order as to all three issues, see Price v. Stevedoring Servs. of Am., 627 F.3d 1145 (9th Cir.2010), and Price petitioned for en banc review of the panel’s decision. We granted the petition, in large part to address the degree of deference due the Director’s litigating positions. See id. at 1150–51 (O’Scannlain, J., concurring).

 

II. DISCUSSION

 

A. Standard of Review

 

1. Chevron deference

 

*3 [1][2] Two administrative entities have weighed in on the issues here: the Board, through its order, and the Director, through his litigating position before this court. Because the Board is not a policymaking entity, we accord no special deference to its interpretation of the Longshore Act. See Matson Terminals, Inc. v. Berg, 279 F.3d 694, 696 (9th Cir.2002) (citing Potomac Elec. Power Co. v. Dir., OWCP, 449 U.S. 268, 279 n. 18, 101 S.Ct. 509, 66 L.Ed.2d 446 (1980)); see also Martin v. Occupational Safety and Health Review Comm’n, 499 U.S. 144, 154–55, 111 S.Ct. 1171, 113 L.Ed.2d 117 (1991). The Director, by contrast, is a policymaking entity under the Act; he has the “power to resolve legal ambiguities in the statute.” Newport News, 514 U.S. at 134. But having that authority does not mean that any reasonable statutory construction by the Director is entitled to what has become known as Chevron deference. See generally Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Although we have previously extended Chevron deference to the Director’s litigating positions interpreting the Act, see, e.g., Gilliland v. E.J. Bartells Co., Inc., 270 F.3d 1259, 1262 (9th Cir.2001); Mallott & Peterson v. Dir., OWCP, 98 F.3d 1170, 1172 (9th Cir.1996), we now overrule our precedent to that effect.

 

“[O]ur rule mandating deference to the Director’s reasonable litigating positions cannot be reconciled with Supreme Court precedent.” Price, 627 F.3d at 1150(O’Scannlain, J., concurring). In United States v. Mead Corp., the Supreme Court held that Chevron deference applies only when: (1) “it appears that Congress delegated authority to the agency generally to make rules carrying the force of law” and (2) “the agency interpretation claiming deference was promulgated in the exercise of that authority.” 533 U.S. 218, 226–27, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001). Whether an agency’s reasonable statutory interpretation satisfies Mead’s second requirement depends on the form and context of that interpretation. See Marmolejo–Campos v. Holder, 558 F.3d 903, 909 (9th Cir.2009) (en banc). Mead compels us to reconsider the deference we have previously accorded the Director’s statutory interpretations advanced during litigation. See Roberts, 132 S.Ct. at 1363 n. 12 (declining to resolve whether the Director’s litigating position is entitled to Chevron deference).

 

Mead held that tariff classification rulings by the U.S. Customs Service do not merit Chevron deference. 533 U.S. at 221. The relevant statute in that case provided that the Customs Service “shall, under rules and regulations prescribed by the Secretary [of the Treasury,] … fix the final classification and rate of duty applicable to … merchandise.” 19 U.S.C. § 1500(b). In addition, the Secretary had promulgated regulations authorizing the Customs Service to issue “ruling letters” setting tariff classifications for imports. See 19 C.F.R. § 177.8 (2000). In denying Chevron deference to the Service’s ruling letters, Mead first explained, “It is fair to assume generally that Congress contemplates administrative action with the effect of law when it provides for a relatively formal administrative procedure tending to foster the fairness and deliberation that should underlie a pronouncement of such force.” 533 U.S. at 230. Mead then observed that the Customs Service generally issued ruling letters without any notice-and-comment procedure. Id. at 230–31.

 

*4 Noting that the absence of any formal procedure did not categorically preclude extension of Chevron deference, the Court proceeded to examine whether there were “any other circumstances reasonably suggesting that Congress ever thought of classification rulings as deserving the deference claimed for them here.” Id. at 231; see also Barnhart v. Walton, 535 U.S. 212, 221–22, 122 S.Ct. 1265, 152 L.Ed.2d 330 (2002). Those circumstances, it concluded, were not present. See Mead, 533 U.S. at 232–34. Of particular importance, the Court explained, was that the agency’s regulations and practice made it clear that “a letter’s binding character as a ruling stops short of third parties.” Id. at 233. Specifically, the regulations provided that a ruling letter was to “be applied only with respect to transactions involving articles identical to the sample submitted with the ruling request or to articles whose description is identical to the description set forth in the ruling letter.” 19 C.F.R. § 177.9(b)(2) (2000). Even then, a letter was “subject to modification or revocation … without notice to any person, except the person to whom the letter was addressed,” id. § 177.9(c), and could usually be modified without notice and comment, id. § 177.10(c). The regulations, moreover, warned that “no other person should rely on the ruling letter or assume that the principles of that ruling will be applied in connection with any transaction other than the one described in the letter.” Id. § 177.9(c). Because the Court found no indication that the agency had “ever set out with a lawmaking pretense,” Mead, 533 U.S at 233, it concluded that the tariff rulings should be treated like interpretations contained in enforcement guidelines, agency manuals, and policy statements—that is, as “beyond the Chevron pale,” id. at 234.

 

The Director’s construction of the Longshore Act advanced through his litigating position falls even further “beyond the Chevron pale,” id., and evinces even less of a “lawmaking pretense,” id. at 233, than did the ruling letters in Mead. The Director does not adopt his litigating positions through any “relatively formal administrative procedure,” id. at 230, but through internal decisionmaking not open to public comment or determination. Cf. Didrickson v. U.S. Dep’t of Interior, 982 F.2d 1332, 1339 (9th Cir.1992) (“[L]itigation decisions are generally committed to agency discretion by law, and are not subject to judicial review under the APA.”). Nor are there any other indicia that Congress intended the Director’s litigating positions to “carry[ ] the force of law,” Mead, 533 U.S. at 227. Quite the contrary. In adjudications under the Longshore Act, it is the BRB’s decision, rather than the Director’s litigating position, that binds the parties in any given case and provides guidance to other claimants and employers. See 33 U.S.C. § 921(b)(3) (“The Board shall be authorized to hear and determine appeals raising a substantial question of law or fact….”).

 

*5 In practice as well as theory, it is the BRB’s published decisions—and not the Director’s litigating positions—that are precedential and determine the rights of future parties. See, e.g., B.C. v. Stevedoring Servs. of Am., 41 BRBS 107, 112 (2007) (“[W]e decline to overturn our longstanding precedent that, under normal circumstances, pre-judgment interest awards under the Act should be calculated on a simple basis.”). Any claimants or employers who ignore a Board precedent and rely instead on the Director’s contrary litigating position—assuming there is one—do so at their own peril. Furthermore, the Director’s arguments during agency adjudication inform but do not constrain the BRB’s decisions in any way. In Grant v. Portland Stevedoring Co., for example, the BRB decided to adopt the 28 U.S.C. § 1961 rate for calculating interest on past due disability payments, despite the Director’s position before the Board that it should rely on the 26 U.S.C. § 6621 rate. 16 BRBS 267, 270–71 (1984).

 

In addition, the Director’s maintenance of some litigating positions that are consistent with the Board’s precedential orders and others that are at odds with those orders is inconsistent with the “fairness and deliberation that should underlie a pronouncement of [law].” Mead, 533 U.S. at 230; cf. Marmelejo–Campos, 558 F.3d at 920. Returning to the previous example, the Director continued to advocate before the BRB for the § 6621 rate even after the Board’s decision in Grant. See Stone v. Newport News Shipbldg. & Dry Dock Co., 20 BRBS 1, at *5 (1987); Littrell v. Oregon Shipbuilding. Co., 17 BRBS 84, at *2 (1985). At some point, however, the Director changed his stance to accord with the BRB’s position. The agency’s Longshore Procedure Manual now cites Grant for the proposition that interest on past due payments is to be paid at the § 1961 rate. See Div. of Longshore and Harbor Workers’ Compensation, Dep’t of Labor, Longshore (DLHWC) Procedure Manual ch. 8–201, available at http:// www.dol.gov/owcp/dlhwc/lspm/pmtoc.htm (hereinafter Longshore Manual ). Nonetheless, the Director has not promulgated notice-and-comment regulations that undergird his current position, although he has the authority to issue interpretive regulations and has done so with respect to other issues. See 33 U.S.C. § 939(a); 20 C.F.R. §§ 701.201, 701.301.

 

Withholding Chevron deference from the Director’s litigating positions is consistent with the Supreme Court’s decision in Martin, 499 U.S. 144, 111 S.Ct. 1171, 113 L.Ed.2d 117 (1991). In Martin, the Court indicated that an agency’s interpretation of its own regulations is not undeserving of Chevron deference simply because it advances that interpretation as a litigating position during administrative adjudication. See id. at 156–57; see also Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 212–13, 109 S.Ct. 468, 102 L.Ed.2d 493 (1988). At first glance, Martin may appear to compel deference to the Director’s litigating position.

 

*6 “That an agency’s litigating position may be entitled to deference when the agency interprets its own regulations,” however, “says nothing about whether such a position may be entitled to deference when the agency interprets the statute itself.” Price, 627 F.3d at 1150 (O’Scannlain, J., concurring) (citing Coeur Alaska, Inc. v. Se. Alaska Conservation Council, 557 U.S. 261, 277–78, 129 S.Ct. 2458, 174 L.Ed.2d 193 (2009)); see also Gregory v. Ashcroft, 501 U.S. 452, 485 n. 3, 111 S.Ct. 2395, 115 L.Ed.2d 410 (1991) (White, J., concurring) (noting that an agency’s interpretation of a statute “is entitled to little if any deference” because “it is merely the [agency’s] litigating position in recent lawsuits”). Significantly, Martin relied on the “well established” premise that substantial deference must be given to an agency’s construction of its own regulations. 499 U.S. at 150. The Court “presume[d] that the power authoritatively to interpret its own regulations is a component of the agency’s delegated lawmaking powers.” Id. at 151.

 

[3] The principle that agencies’ interpretations of their own regulations are entitled to deference, even when their interpretation of statutes is not, underlies Auer v. Robbins, in which the Court accorded Chevron deference to the interpretation of Fair Labor Standards Act (FLSA) regulations set forth in the Secretary of Labor’s amicus brief. 519 U.S. 452, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997). In Auer, the Secretary’s amicus brief explained why regulations that he had promulgated gave exempt status to a class of law enforcement officers. See id. at 461. Deferring to that interpretation, Auer explained that, because the applicable test was “a creature of the Secretary’s own regulations, his interpretation of it is … controlling unless ‘plainly erroneous or inconsistent with the regulation.’ “ Id. (emphasis added) (quoting Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 359, 109 S.Ct. 1835, 104 L.Ed.2d 351 (1989)). Similarly, other cases in which the Supreme Court has deferred to agencies’ litigating positions have involved interpretations of regulations, not statutes.FN3

 

Since Auer, the Court has distinguished even more clearly between an agency’s informal interpretations of its own regulations and of its governing statute. In Gonzales v. Oregon, 546 U.S. 243, 255–58, 126 S.Ct. 904, 163 L.Ed.2d 748 (2006), for example, the Court held that an Interpretive Rule issued by the Attorney General was not entitled to Chevron deference. Notably, the government had argued that the interpretive rule was “an elaboration of one of the Attorney General’s own regulations,” rather than a direct interpretation of the statutory provision at issue, and was thus entitled to considerable deference under Auer. Id. at 256. Rejecting this argument, the Court explained that the underlying regulations in Auer “gave specificity to a statutory scheme the Secretary was charged with enforcing and reflected the considerable experience and expertise the Department of Labor had acquired over time with respect to the complexities of the Fair Labor Standards Act.” Id. at 256–57. In contrast, the Court continued, the underlying regulation at issue did “little more than restate the terms of the statute itself. The language the interpretive rule addresses comes from Congress, not the Attorney General, and the near equivalence of the statute and regulation belies the Government’s argument for Auer deference.” Id. at 257. Despite the government’s attempt to characterize the issue as one of regulatory interpretation, Gonzales concluded, the question was really one of statutory interpretation, and the interpretive rule did not merit Auer deference. Id.

 

*7 The rigors of rulemaking, Gonzales indicates, are relevant here. Gonzales explained that an agency does not acquire “special authority” to interpret its own regulations when it does not dedicate its “expertise and experience” to formulating those regulations and instead merely paraphrases statutory language. Id. In other words, an agency presumably undertakes careful deliberation about how best to effectuate statutory policies during the demanding process of promulgating regulations that go beyond simply restating a statute; through that process, it takes pains to understand and effectuate the congressional intent underlying the statute. See Chevron, 467 U.S. at 865(concluding that the agency’s “interpretation represents a reasonable accommodation of manifestly competing interests and is entitled to deference: the regulatory scheme is technical and complex, the agency considered the matter in a detailed and reasoned fashion, and the decision involves reconciling conflicting policies … [that] Congress intended to accommodate ….”) (footnotes omitted); Christopher v. SmithKline Beecham Corp., ––– U.S. ––––, 132 S.Ct. 2156, 183 L.Ed.2d 153 (2012). In addition, agencies are held accountable to the public through the formal rulemaking process. See 5 U.S.C. § 553(setting forth the requirements for notice-and-comment procedure); Safe Air for Everyone v. EPA, 488 F.3d 1088, 1097–98 (9th Cir.2007).

 

[4][5] Where that thorough groundwork has already been completed, the agency’s later litigating positions can ordinarily be understood as resting on its earlier research and consideration.FN4 Less formality is demanded of a subsequent interpretation because the existence of regulations indicates that the agency has already weighed and reconciled, with adequate care, the conflicting policy decisions implicated in its later interpretive decision. In contrast, in the absence of formal regulations applying a statutory provision, it is more difficult to determine whether an agency’s litigating position interpreting that provision is grounded in the same level of careful consideration as would be required in formal rulemaking. It is also harder to ascertain whether the agency’s position takes into account the interests of the public or the parties with adequate fairness.FN5 See Mead, 533 U.S. at 230; Thomas W. Merrill & Kristin E. Hickman, Chevron’s Domain, 89 Geo. L.J. 833, 886 (2001) (observing that modes of announcing agency statutory constructions other than formal regulations and adjudications “do not offer equivalent opportunities for public participation” and that “appellate or amicus briefs filed in the agency’s name typically offer no established forum for public input”).

 

Without a basis in agency regulations or other binding agency interpretations, there is usually no justification for attributing to an agency litigating position “the force of law,” Mead, 533 U.S. at 227, essential to Chevron deference. An agency can ordinarily change its litigating position from one case to another, without any party having grounds to complain that doing so violates the “law.” See Didrickson, 982 F.2d at 1339 (noting that “litigation decisions are generally committed to agency discretion by law”); cf. Bowen, 488 U.S. at 212–13 (observing that the litigating position of the Secretary of Health and Human Services interpreting a provision of the Medicare Act was contrary to his view of that provision advocated in previous cases, and that “[d]eference to what appears to be nothing more than an agency’s convenient litigating position would be entirely inappropriate”).

 

*8 Furthermore, deferring to agencies’ litigating positions interpreting statutes they are charged with administering would create a danger that agencies would avoid promulgating regulations altogether, given the comparative ease of announcing a new statutory interpretation in a brief rather than through formal rulemaking. This result would severely undermine the notice and predictability to regulated parties that formal rulemaking is meant to promote. See Christopher, 132 S.Ct. at 2167. The issues in this case are illustrative: The Director could have issued notice-and-comment regulations regarding interest on compensation awards long ago, see 33 U.S.C. § 939(a), rather than taking inconsistent positions on interest-related issues over the years.

 

Based on these considerations, we conclude that the Director’s litigating position interpreting the Longshore Act does not merit Chevron deference. In so holding, we join all other circuits that have addressed this issue.FN6

 

Our holding finds support in the Supreme Court’s analysis of the relationship between the Director and the Board under the Longshore Act. The Court has observed that the Director’s “lack of control over the adjudicative process does not … deprive [him] of the power to resolve legal ambiguities in the statute.” Newport News, 514 U.S. at 134. If the Director’s litigating position interpreting the Act were entitled to Chevron deference, then the Director would have some control over the adjudicative process. Further, the structure of the Longshore Act suggests that participation in litigation is not one of the means through which Congress intended the Director to make legally binding pronouncements on the statute’s meaning. The Director, as we have noted, “retains the rulemaking power, which means that if [his] problem with the … decision of the Board is that it has established an erroneous rule of law, [he] has full power to alter that rule.” Id. (internal citations omitted).FN7

 

In sum, neither the Board’s decision nor the Director’s litigating position interpreting the Longshore Act is entitled to Chevron deference.

 

2. Skidmore Deference

[6] Where Chevron is inapplicable, reasonable agency interpretations may still carry “at least some added persuasive force.” Metro. Stevedore Co., 521 U.S at 136. “An agency’s interpretation may merit some deference whatever its form, given the ‘specialized experience and broader investigations and information’ available to the agency, and given the value of uniformity in its administrative and judicial understandings of what a national law requires.”   Mead, 533 U.S. at 234(quoting Skidmore v. Swift, 323 U.S. 134, 139–40, 65 S.Ct. 161, 89 L.Ed. 124 (1944)).

 

i. The Director

[7] The Director’s interpretations of the Longshore Act may merit Skidmore respect, but only to the extent that they exhibit certain characteristics. “The weight of[an agency’s interpretive decision] in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control .” Skidmore, 323 U.S. at 140; see also San Luis & Delta–Mendota Water Auth. v. United States, 672 F.3d 676, 708 (9th Cir.2012).FN8

 

*9 As will appear, we ultimately conclude that the Director is entitled to Skidmore respect as to the proper rate of interest, first because some of his arguments are persuasive and second because the agency’s manual and practice have for some time consistently advanced a reasonable position as to that rate. But the Director is not entitled to Skidmore respect as to whether the interest should be simple or compound, because his position on that issue is simply unpersuasive, notwithstanding its inclusion in the agency’s manual and the Director’s consistent application of simple interest for some time. In particular, the Director’s position as to compound interest is flawed because it selectively adopts the § 1961 statutory rate without adopting the accompanying provision that specifies compounding. See 28 U.S.C. § 1961(a), (b).

 

ii. The Board

We have previously indicated that the BRB may also be entitled to Skidmore respect despite its lack of policymaking authority. See, e.g., Stevedoring Servs. of Am. v. Dir., OWCP, 297 F.3d 797, 801 (9th Cir.2002) (“Because the Board is not a policymaking agency, its interpretation of the LHWCA is not entitled to any special deference; the court must, however, respect the Board’s interpretation of the statute where such interpretation is reasonable and reflects the policy underlying the statute.”) (quoting McDonald v. Dir., OWCP, 897 F.2d 1510, 1512 (9th Cir.1990)). This approach is in tension with Skidmore, which accords deference to “the Administrator under [an] Act.” 323 U.S. at 140. Skidmore strongly suggests that it is an administrative entity’s statutorily delegated authority to administer a statute that qualifies it for any kind of deference in the first place. And here, it is the Director, not the Board, who administers the Longshore Act. See Ingalls, 519 U.S. at 262–63.

 

In Martin, the Court withheld Chevron deference from the Occupational Safety and Health Review Commission (OSHRC) on the basis that “Congress intended to delegate to the Commission the type of nonpolicymaking adjudicatory powers typically exercised by a court in the agency-review context.” 499 U.S. at 154. While Martin did not explicitly address whether OSHRC’s interpretations could still be entitled to Skidmore respect, its observation that OSHRC essentially functions as a court strongly suggests that, on review in this court, OSHRC’s legal conclusions merit no more special deference than do a district court’s legal holdings. Other circuit courts have relied on Martin to withhold both Chevron and Skidmore deference from OSHRC. See, e.g., Chao v. OSHRC, 540 F.3d 519, 526–27 (6th Cir.2008); Chao v. Russell P. Le Frois Builder, Inc., 291 F.3d 219, 226–28(2d Cir.2002).

 

Like OSHRC, the BRB possesses only “nonpolicymaking adjudicatory powers,” Le Frois, 291 F.3d at 227; see also Potomac Elec., 449 U.S. at 279 n. 18. It is therefore questionable whether the BRB should be entitled to any kind of special deference, however persuasive its reasoning.

 

*10 Another way of approaching this problem is to return to the two-step test Mead set forth for determining whether an agency is entitled to Chevron deference. Chevron deference is due only when (1) “it appears that Congress delegated authority to the agency generally to make rules carrying the force of law” and (2) “the agency interpretation claiming deference was promulgated in the exercise of that authority.” 533 U.S. at 226–27. Whereas the Director strikes out at step two here and receives Skidmore instead of Chevron deference to the extent that his interpretations are persuasive, the BRB strikes out at step one and therefore should probably get no special respect at all. Cf. Le Frois, 291 F.3d at 226 (“[W]e must first decide to which administrative actor—the Secretary or the Commission—Congress ‘delegated authority … to make rules carrying the force of law .’ Only then can we decide the nature or extent of that deference.” (quoting Mead, 533 U.S. at 226–27)).

 

Nonetheless, we need not definitively resolve this conundrum concerning whether the BRB is entitled to Skidmore respect. As we indicate below, the Board’s explanations as to the contested issues here are not persuasive and would thus not be entitled to deference in any event.

 

B. Maximum Compensation Rate

[8] The LHWCA caps disability benefits at twice the national average weekly wage for the fiscal year in which a worker is “newly awarded compensation.” 33 U.S.C. § 906(c). The parties’ disagreement over Price’s maximum rate of compensation arises from their diverging interpretations of the phrase “newly awarded compensation” with respect to when compensation is awarded.

 

In Roberts v. Sea–Land Services, Inc., the Supreme Court recently held that an employee is “newly awarded compensation” within the meaning of § 906(c) “when he first becomes disabled and thereby becomes statutorily entitled to benefits, no matter whether, or when, a compensation order issues on his behalf.” 132 S.Ct. at 1354. Roberts affirmed our decision in Roberts v. Dir., OWCP, 625 F.3d 1204, 1207 (2010), on which the three-judge panel in this case relied in agreeing with Respondents’ position. See Price, 627 F.3d at 1148. The Supreme Court’s holding in Roberts is dispositive. We therefore affirm the BRB’s determination that the ALJ properly applied the maximum rate of compensation for 1991, when Price became disabled.

 

C. Interest Rate

[9] We have held that interest on disability awards is mandatory under the LHWCA as a “ ‘necessary and inherent component of ‘compensation’ because it ensures that the delay in payment of compensation does not diminish the amount of compensation to which the employee is entitled.’ “ Matulic, 154 F.3d at 1059(quoting Sproull v. Dir., OWCP, 86 F.3d 895, 900 (9th Cir.1996)). We have extended this principle to “pre-judgment” interest, which in the LHWCA context means interest that accrues from the date a worker becomes entitled to compensation, rather than from the date of an ALJ’s award. See id. (citing Hunt v. Dir., OWCP, 999 F.2d 419, 421–22 (9th Cir.1993)). As discussed, the date that a worker becomes statutorily entitled to compensation is when he first becomes disabled. See Roberts, 132 S.Ct. at 1356.

 

*11 While the parties agree that Price should receive interest on his past due benefits, they disagree as to the proper rate of interest. The LHWCA contains no express provision regarding interest on past due compensation, nor any standards for calculating the rate of interest to be awarded.FN9 Found. Constructors, Inc. v. Dir., OWCP, 950 F.2d 621, 625 (9th Cir.1991).

 

1. Section 6621 or Section 1961

Price first argues that the ALJ should have awarded him interest on past due compensation at the rate set forth in 26 U.S.C. § 6621. Section 6621 defines the interest rate that the IRS uses with respect to compensation for overpayment and underpayment of taxes. See 26 U.S.C. § 6621(a). This rate is the federal “short-term rate” FN10 plus three percentage points. See id. The Director and other Respondents contend, in contrast, that the ALJ properly awarded Price interest at the rate set forth in 28 U.S.C. § 1961. Section 1961 provides that “[i]nterest shall be allowed on any money judgment in a civil case recovered in a district court … at a rate equal to the weekly average 1–year constant maturity Treasury yield.” 28 U.S.C. § 1961(a). The § 6621 rate is always higher than the § 1961 rate. Compare United States District Court, District of Utah, Post–Judgment Interest Rates, http://www.utd.uscourts. gov/documents/judgpage.html (last visited June 19, 2012) (documenting the § 1961 rate from 1994 to 2012), with IRS, Internal Revenue Bulletin: 2008–52 (Dec. 29, 2008), available at http:// www.irs.gov/irb/2008–52—IRB/ar07.html# d0e169 (tracking the § 6621 rate from 1975 to 2009).

 

As an initial matter, we are unpersuaded by the BRB’s reasons for applying the § 1961 rate rather than the § 6621 rate. The BRB settled on the § 1961 rate in Grant v. Portland Stevedoring Co., 16 BRBS 267 (1984), and has since consistently used that rate. See B.C. v. Stevedoring, 41 BRBS at 111. In Grant, the Board held that interest on past-due compensation for injured workers should be awarded at the § 1961 rate rather than at a fixed rate of six-percent, 16 BRBS at 270, which was the rate that the IRS had used to calculate interest on tax overpayments and underpayments prior to amendments of the Internal Revenue Code in 1975. See S. Rep. 93–1357, at 7494–97 (1974). It reasoned that the six-percent rate “does not take into account … economic trends and is therefore no longer appropriate to further the purpose of making the claimant whole.” Grant, 16 BRBS at 270. In contrast, the BRB explained, the § 1961 “rate is periodically changed to reflect the yield on United States Treasury Bills, and thus more accurately reflects the actual loss to claimant due to the employer’s use of claimant’s past due benefits.” Id.

 

The same, however, could also be said of the current § 6621 rate. Because the § 6621 rate is now tied to the “federal short-term rate,” 26 U.S.C. § 6621(a), it also fluctuates in accordance with changing economic conditions. Indeed, Congress abandoned its previous application of a flat six-percent interest rate to tax overpayments and underpayments precisely because the fixed rate could not be “kept in line with [changing] money market rates.” S. Rep. 93–1357, at 7496. Thus, although the BRB’s reasoning justifies applying the § 1961 rate instead of a flat rate, it does nothing to establish the propriety of the § 1961 rate over the § 6621 rate.

 

*12 Grant advanced a second rationale for adopting the § 1961 rate instead of the amended § 6621 rate, on which the Director relies: The § 1961 rate comports with past procedures for administering the LHWCA. See 16 BRBS at 271. Specifically, Grant noted that before Congress amended the Act in 1972, deputy commissioners had the authority to adjudicate compensation claims, and their decisions were appealed to the federal district courts. Id. Following the 1972 amendments, ALJs took over the adjudicatory functions of the deputy commissioners. Id. ALJ decisions are now appealed to the BRB, and the Board’s decisions, in turn, are reviewed by the federal circuit courts. Id. Based on this history, the Board concluded that it had assumed the role formerly exercised by district courts in adjudicating claims under the Act, and that its orders have the “force and effect” of federal judgments. Id. It therefore endorsed the § 1961 rate, which is used to calculate interest payments on district court judgments. Id.

 

The BRB’s reasoning, however, is now undermined by the Supreme Court’s decision in Roberts and by the Board’s own position on the issue decided in that case. See 132 S.Ct. at 1355. Interest on payments accrues as of a claimant’s date of injury rather than the date of a Board order. Id. at 1363. But § 1961 sets forth the post-judgment interest to be paid in civil cases. See 28 U.S.C. § 1961(a). Under the compensation rate rule approved in Roberts, the interest due to claimants is more appropriately analogized to pre-judgment interest. See also Matulic, 154 F.3d at 1059(reaching the same conclusion prior to Roberts ). The Board’s explanation also fails to take into account “the many cases in which no formal orders issue, because employers make voluntary payments or the parties reach informal settlements.”   Roberts, 132 S.Ct. at 1358.

 

We are likewise unconvinced by the Director’s argument in his briefs before us that § 914, which requires additional compensation for overdue payments, ensures that claimants will not be under-compensated and thus renders the higher § 6621 rate unnecessary. Section 914(e) imposes a ten percent penalty on late payments that are due without a compensation order. See 33 U.S.C. § 914(e). But this provision applies only when an employer fails to timely file a notice of controversion. See id. § 914(d), (e). The Director concedes that Price is not entitled to any additional compensation pursuant to § 914, because Stevedoring Services filed a timely notice of controversion. Section 914 is nevertheless relevant, the Director insists, because it impels employers quickly to notify the OWCP of their intention not to pay compensation voluntarily for alleged injuries. Once an employer has done so, the Director maintains, “[t]he claimant can then promptly invoke the Longshore Act’s dispute resolution procedures—procedures designed to resolve disputes quickly and informally.” According to the Director, the likelihood that parties will quickly resolve disputes over compensation obviates the need for the higher interest rates advocated by Price.

 

*13 But this case—like others in which the rate of interest is likely to matter—was resolved neither quickly nor informally. Although Stevedoring Services filed a notice of controversion in 1992, Price did not receive a formal compensation order until 2000. The existence of § 914 thus does little to bolster the Director’s position that Price, and others in his position, should be awarded interest at the lower § 1961 rate.

 

Nonetheless, we conclude that applying the § 1961 rate is most appropriate here. To begin, our precedents support the reasonableness of that rate. We have concluded, in the maritime context, “that the measure of interest rates prescribed for post-judgment interest in 28 U.S.C. § 1961(a) is also appropriate for fixing the rate for pre-judgment interest.” W. Pac. Fisheries, Inc. v. SS President Grant, 730 F.2d 1280, 1289 (9th Cir.1984). Comparison with the maritime context is appropriate because pre-judgment interest there serves the same purpose as it does here. As discussed, interest on disability is an essential part of compensation under the Longshore Act, “ ‘because it ensures that the delay in payment of compensation does not diminish the amount of compensation to which the employee is entitled.’ “ Matulic, 154 F.3d at 1059 (quoting Sproull, 86 F.3d at 900). In adopting the § 1961 rate in Western Pacific Fisheries, we similarly explained that “[a]n award of pre-judgment interest at below market rates does not fully compensate the prevailing party and, in addition, tends to … give [ ] an economic benefit to the debtor.” 730 F.2d at 1288. The clear implication of our explanation was that the § 1961 rate does reflect market rates and thereby “fully compensate[s]” aggrieved parties. Id.

 

We have also applied the § 1961 rate to prejudgment interest on awards under ERISA. See Blanton v. Anzalone, 813 F.2d 1574, 1576 (9th Cir.1987). ERISA, like the Longshore Act, has a remedial purpose, and both schemes provide payments on which recipients are likely to depend, in whole or in part, for their livelihood. Compare Honolulu Joint Apprenticeship and Training Comm. of United Ass’n Local Union No. 675 v. Foster, 332 F.3d 1234, 1239 (9th Cir.2003) (recognizing the “remedial purpose of ERISA in favor of participants and beneficiaries”), with Found. Constructors, 950 F.2d at 625(emphasizing “the remedial intent of the [Longshore] Act”). Our view that the § 1961 rate is adequate to effectuate the remedial purpose of ERISA supports the propriety of applying that rate under the Longshore Act.

 

For similar reasons, we have acquiesced to the application of the § 1961 rate with respect to pre-judgment interest in Title VII back pay cases. See, e.g., Estate of Reynolds v. Martin, 985 F.2d 470, 472 (9th Cir.1993); see also Saulpaugh v. Monroe Cmty Hosp., 4 F.3d 134, 145 (2d Cir.1993); cf. Ford v. Alfaro, 785 F.2d 835, 842–43 (9th Cir.1986). “An award of back pay is appropriate to advance Congress’ intent to make persons whole for injuries suffered through past discrimination.” Caudle v. Bristow Optical Co., Inc., 224 F.3d 1014, 1020 (9th Cir.2000) (internal quotation marks omitted). Insofar as interest at the § 1961 rate ensures that individuals are adequately compensated for lost employment opportunities due to discrimination, so too should it ensure that workers are sufficiently compensated for lost job opportunities due to disability.

 

*14 Pointing to another remedial scheme, Price contends that use of the § 6621 rate under the Black Lung Benefits Act (“Black Lung Act”) compels application of the same rate under the Longshore Act. The Black Lung Act is also administered by the Director, 30 U.S.C. § 936(a); 20 C.F.R. § 726.6, and provides benefits for the death or disability of coal miners resulting from the “black lung disease,” see 30 U.S.C. § 901. One attribute of the Black Lung Act is of particular importance in weakening the analogy to the Longshore Act for purposes of determining the appropriate rate of interest: Although “[s]ignificant portions of the Longshore Act have been incorporated unchanged in the Black Lung Benefits Act,” Nealon v. Cal. Stevedore & Ballast Co., 996 F.2d 966, 970(9th Cir.1993),FN11 the Black Lung Act and its implementing regulations, unlike the Longshore Act and its implementing regulations, expressly apply the § 6621 rate to interest due on late payments. See 30 U .S.C. § 934(b)(1)(5)(B); 20 C.F.R. § 725.608(d)(3). As the Director persuasively argues, the absence of a comparable provision mandating application of the § 6621 rate under the Longshore Act—despite the parallelism of many other aspects of the two statutes—undercuts any inference that the Black Lung Act’s incorporation of § 6621 has application by analogy here.

 

Furthermore, there are reasons for applying § 6621 that are unique to the Black Lung Act. The Director notes that “like unpaid taxes under section 6621, the [Black Lung Act] is concerned with interest on debts to the United States government.” (emphasis added). Specifically, payments under the Black Lung Act are sometimes made from the Black Lung Disability Trust Fund (“Trust Fund”). See 26 U.S.C. § 9501; 20 C.F.R. § 725.1. When those payments are later determined to be the liability of a mine operator, see 20 C.F.R. § 725.602, the operator is required to repay the Trust Fund with interest at the § 6621 rate. See 30 U .S.C. § 934(b)(1)(5)(B). Significantly, the Trust Fund was created as part of the Internal Revenue Code and is funded through tax receipts. 26 U.S.C. § 9501(b)(1). Operators’ repayments to the Trust Fund are thus considered obligations to the United States, 30 U.S.C. § 934(b)(1), and liens that automatically arise when the Trust Fund pays claimants on behalf of an operator “shall be treated in the same manner as a lien for taxes due and owing to the United States” in any bankruptcy or insolvency proceeding. Id. § 934(b)(3)(B).

 

As these statutory provisions make clear, Congress explicitly recognized the similarity between the obligations of mine operators to the Trust Fund and that of taxpayers to the United States. In contrast, although the Longshore Act also establishes a “special fund,” 33 U.S.C. § 918, the money in the fund “shall not be money or property of the United States,” id. § 944(a).

 

It is true that the Black Lung Act’s implementing regulations also apply the § 6621 rate to interest on late payments made directly to miners. See 20 C.F.R. § 725.608(d)(3). However, we find convincing the Director’s argument that this arrangement “is reasonable because it makes all interest calculations under the Black Lung Benefits Act consistent and therefore easier to administer.” Accordingly, that employers pay interest on late payments to claimants at the § 6621 rate under the Black Lung Act does not militate in favor of applying that rate under the Longshore Act, despite the many other similarities between the two statutory schemes.

 

*15 We acknowledge that there are also significant reasons favoring the § 6621 rate. Ensuring “certain, prompt recovery for employees” is a “central” purpose of the Longshore Act. Roberts, 132 S.Ct. at 1354. In its context of origin, the § 6621 rate has a parallel purpose of encouraging prompt payment of taxes and prompt return of tax overpayments.

 

The 1975 amendments to the tax underpayment rate, abandoning the flat six-percent rate in favor of the predecessor to the current rate of three percentage points plus the short-term rate, were largely motivated by a “trend in taxpayer postponement of tax payments.” S. Rep. 93–1357, at 7496. Due to changing economic conditions, the six-percent underpayment rate in effect at the time had fallen below the money market interest rate. See id. at 7495. The underpayment rate thus “no longer serve[d] the purposes for which it was originally intended” insofar as “[a]n increasing number of taxpayers [were] finding it more profitable to ‘borrow’ tax funds at the present 6 percent rate rather than paying their taxes when due, and rather than using their own funds or borrowing funds at prevailing commercial rates.” Id. at 7496. A similar trend applied to tax overpayments: Because the government had to pay more than six-percent interest to bondholders, it could “borrow” money more cheaply from taxpayers by delaying refunds of tax overpayments; “the incentive to make refunds promptly [was] no longer operative.” Id. Taxpayers who received six-percent interest on their overpayments were, in turn, not “receiving the value [they] could obtain by the use of [their] own funds.” Id. In light of these circumstances, Congress amended the tax underpayment rate to induce prompt payments by taxpayers, and it amended the tax overpayment rate to induce prompt refunds by the government. Insofar as interest is meant to facilitate prompt payments under both the Internal Revenue Code and the Longshore Act, applying the § 6621 rate could be apposite here.

 

At the same time, both § 1961 and § 6621 only approximate how much prompt payments would be worth to the respective “creditors” under those provisions (i.e., winners of district court money judgments in the § 1961 context; the government in the § 6621 underpayment context; and individuals who have overpaid their taxes in the § 6621 overpayment context). In the Longshore Act context, it is impossible to ascertain how much prompt payments would be worth to claimants, because it is impossible to know what they would have done with the money had they received it on time. Section 1961 approximates the value of prompt payments to prevailing parties by assuming that they would have invested the money and earned interest at the 52–week Treasury rate (or avoided borrowing money and paying interest at that rate). See 28 U.S.C. § 1961(a). Section 6621 approximates the value of prompt payments to the government and individuals who overpaid their taxes by assuming that these parties would have invested the money and earned interest at a rate equivalent to three percentage points above the federal short-term rate (or avoided borrowing money and paying interest at that rate). See 26 U.S.C. § 6621(a). Both provisions provide reasonable proxies.

 

*16 [10] Because Congress has not expressed an intent on the matter and the considerations favoring adoption of one statutory rate versus the other are in near equipoise, whether the § 1961 or § 6621 rate better approximates the value of prompt payments to claimants is in large part a policy determination best left to the agency. Here, the agency has expressed a preference for the § 1961 rate, as reflected in the Director’s assertion in his brief that he has consistently applied that rate for at least twenty years, following the BRB’s decision in Grant, 16 BRBS 267. The Director’s assertion is substantiated by incorporation of the § 1961 rate into the Longshore Manual. See Longshore Manual ch. 8–201. Ultimately, “[t]he agency’s interpretive position … provides a reasonable alternative that is consistent with the statutory framework. No clearer alternatives are within our authority or expertise to adopt; and so deference to the agency is appropriate under Skidmore.” Fed. Express Corp. v. Holowecki, 552 U.S. 389, 401–02, 128 S.Ct. 1147, 170 L.Ed.2d 10 (2008); see also Tablada v. Thomas, 533 F.3d 800, 808 (9th Cir.2008) (deferring to the agency’s reasonable interpretation of a statute rather than the petitioner’s “reasonable alternative interpretation,” because the agency had “consistently implemented its policy” for over twenty years).

 

In light of the forgoing, we hold that § 1961, not § 6621, is to be used to calculate interest on past due payments under the Longshore Act.FN12

 

2. Simple or compound interest

[11][12] Price next argues that he should be awarded compound interest on past due compensation, especially if this court upholds application of the § 1961 rate. We agree. DP1 A “central” purpose of the Longshore Act is to ensure “certain, prompt recovery for employees.” Roberts, 132 S.Ct. at 1354. The language and structure of the Act demonstrate a clear congressional intent that compensation be paid in a timely manner. Section 914 states, for example, that “[c]ompensation under this chapter shall be paid periodically, promptly, and directly to the person entitled thereto without an award, except where liability to pay compensation is controverted by the employer.” 33 U.S.C. § 914(a)(emphasis added). In addition, as we have seen, employers who controvert the right to compensation must file a notice with the deputy commissioner within fourteen days of learning of the alleged death or injury or otherwise pay a penalty. See id. § 914(d), (e).

 

The Longshore Act’s emphasis on timely payments reflects an understanding that “a dollar tomorrow is not worth as much as a dollar today,” when the injured worker could consume or invest it. Found. Constructors, 950 F.2d at 625. The Act’s interlocking provisions facilitating prompt payments thus furnish compelling evidence that Congress intended claimants to receive the full value of the compensation to which they are entitled. See 33 U.S.C. § 914. Although we have previously recognized that “[a]llowing an employer to delay compensation payments interest-free would reduce the worth of such payments to the claimant, undermining the remedial intent of the Act,” Found. Constructors, 950 F.2d at 625, we have never decided what kind of interest—simple or compound—would be sufficient to effectuate that purpose.

 

*17 We conclude that simple interest at the § 1961 rate is insufficient to effectuate the purpose of awarding interest under the Longshore Act. Section § 1961(a) uses the interest rate applied to Treasury bonds. “[B]ecause Treasury bonds have very little risk,” they have “a correspondingly low rate of return.” Fry v. Exelon Corp. Cash Balance Pension Plan, 571 F.3d 644, 646 (7th Cir.2009); Gorenstein Enters., Inc. v. Quality Care–USA, Inc., 874 F.2d 431, 437 (7th Cir.1989) (characterizing the § 1961 rate as “too low”). That simple interest at the Treasury bond rate is inadequate alone to compensate parties for the decrease in a judgment’s value over time is reflected in § 1961 itself. Subsection (b) of that provision requires that interest “shall be compounded annually.” 28 U.S.C. § 1961(b). Because the subsections of § 1961 work together to ensure that parties receive the money to which they are entitled, it is unreasonable for the Board to apply the § 1961(a) interest rate but to refuse to compound the resultant interest pursuant to § 1961(b).FN13

 

It is true, as the Director argues, that § 1961 requires compounding only of post-judgment interest. But that is a distinction that carries no significance here. The Supreme Court has indicated that formal judgments are not what determine a claimant’s entitlement to compensation under the Longshore Act. See Roberts, ––– U.S. ––––, 132 S.Ct. 1350, 182 L.Ed.2d 341. The Court observed in Roberts that many pending claims under the Longshore Act are settled through voluntary payments without a formal order. See id. at 1355. Individuals who receive compensation without a formal order are no less entitled to compensation than those who receive compensation via a formal order. It would thus be arbitrary, and disruptive to the uniform administration of the statute, to deny compound interest only to workers who have settled their claims through informal means. See also id. at 1358(“Construing any workers’ compensation regime to encourage gratuitous confrontation between employers and employees strikes us as unsound.”).

 

The BRB’s published decisions provide three reasons for not compounding interest on past-due payments awarded at the § 1961(a) rate, none of which we find persuasive.FN14 First, in Santos, the Board reasoned that “[a]lthough Section 1961 has provided guidance as to interest rate, it does not expressly authorize compounding interest in cases under the Act.” 22 BRBS at 228. But, of course, the Act does not explicitly authorize using the § 1961(a) rate in the first place; for that matter, the Act does not explicitly authorize the application of any particular interest rate. So the fact that § 1961 applies to the Act only by analogy is not a reason for bifurcating a single approximation of the time value of money by adopting part but not all of it.

 

Next, the Board has relied on the proposition that it is the “general American rule” to award simple rather than compound interest. Santos, BRBS at 228(citing Stovall v. Ill. Cent. Gulf R.R. Co., 722 F.2d 190, 192 (5th Cir.1984) (“[W]hen interest is allowable, it is to be computed on a simple rather than compound basis in the absence of express authorization otherwise.”)). Many courts have begun, however, to move away from this rule. FN15

 

*18 The growing recognition that compound interest can be necessary to compensate plaintiffs fully is justified by changing economic realities. The Eighth Circuit has explained:

 

[The] common law presumption against compound interest stemmed from a historical view that interest upon interest was “iniquitous and against public policy.” Whitcomb v. Harris, 90 Me. 206, 38 A. 138, 140 (1897). Courts did not wish to “hasten[ ] the accumulation of debt,” Abramowitz v. Washington Cemetery Ass’n, 139 N.J. Eq. 293, 51 A.2d 461, 463 (N.J.Ch.1947), and “sought to prevent an accumulation of compound interest in favor of negligent creditors who did not collect their interest when it became due.” State ex rel. Nw. Mut. Life Ins. Co. v. Bland, 354 Mo. 391, 189 S.W.2d 542, 548 (1945).

 

Am. Milling Co. v. Brennan Marine, Inc., 623 F.3d 1221, 1227 (8th Cir.2010).FN16

 

As the circumstances of Longshore Act claimants illustrate, the concern about “negligent creditors” has considerably less application in many of the situations in which compounding pre-judgment interest now arises. Although the Director argues that simple interest “reflects an amount a claimant could have realistically earned on the money had it been timely paid,” this assertion defies reality. Anyone with a savings account, credit card, mortgage, or student loan knows that the modern financial world employs compound interest as a general rule. In addition, injured stevedores, dockhands, and other longshore workers surviving off of disability payments but unable to collect them because of employer contravention until long after the injury occurred hardly fit the profile of “negligent creditors.” Id. (internal quotation marks omitted). If anything, disabled workers struggling to make ends meet have more to lose than to gain from delays in their compensation payments, and are more likely to encounter those delays not because of their own lassitude but because of the opportunities available to employers under the Act’s administrative scheme for putting off payment until a final adjudication.

 

Consistent with these observations, the movement in the case law away from the “American rule” against compounding pre-judgment interest reflects a growing consensus that the attitudes underlying the common law presumption are being displaced by the modern recognition that compound interest fosters fairness and efficiency. Modern commentators recognize that

 

[w]ith simple interest, the plaintiff is not fully compensated and the defendant does not fully pay for the harm caused. As a result, simple interest underdeters the defendant and overdeters the plaintiff from engaging in the activity that produced the harm. In addition, simple interest encourages the defendant to drag on legal proceedings.

 

Michael S. Knoll, A Primer on Prejudgment Interest, 75 Tex. L.Rev. 293, 308 (1996).FN17

Oliver Wendell Holmes once observed

It is revolting to have no better reason for a rule of law than that so it was laid down in the time of Henry IV. It is still more revolting if the grounds upon which it was laid down have vanished long since, and the rule simply persists from blind imitation of the past.

 

*19 Oliver Wendell Holmes, Jr., The Path of the Law, 10 Harv. L.Rev. 457, 469 (1897). That it is the “longstanding precedent,” B.C. v. Stevedoring, 41 BRBS at 112, of the BRB to apply simple interest is not, without more, an adequate reason to sustain that practice.

 

Finally, in B.C. v. Stevedoring, the Board asserted that claimants222 should receive simple interest on pre-judgment interest awards “under normal circumstances,” 41 BRBS at 112, suggesting that there are circumstances in which compound interest is available. Although the BRB has never explained in a published order what it means by “normal circumstances,” there is one unpublished order in which the Board alludes to circumstances meriting compound interest. See Harris v. Machinists, Inc. and Travelers Ins. Co., BRB No. 99–0305, 1999 WL 35136833 (BRB Dec. 7, 1999). Harris explained that “[c]ompound interest in cases has been allowed where the conduct of the party owing the interest has been egregious, i.e., an intentional patent or trademark infringement, and it has been found to be ‘particularly appropriate where violation was intentional and indeed outrageous.’ “ Id. at *2, 38 A. 138 (quoting Gorenstein, 874 F.2d at 436). Under Harris’s logic, compound interest may be levied only as a punitive measure.

 

[13] This essentially punitive standard for awarding compound interest is inconsistent with the general justification for compounding pre-judgment interest in the first place. As discussed, interest is awarded on past due payments to ensure that claimants receive the compensation to which they are entitled; waiting for money is costly to the injured worker. In other words, “prejudgment interest is not awarded as a penalty; it is merely an element of just compensation.” City of Milwaukee v. Cement Div., Nat’l Gypsum Co., 515 U.S. 189, 197, 115 S.Ct. 2091, 132 L.Ed.2d 148 (1995); accord In re Oil Spill, 954 F.2d 1279, 1331–32 (7th Cir.1992). Such interest compensates a claimant, who has been rendered an “involuntary creditor,” id. at 1331, by the employer’s delay. As we have indicated, courts have increasingly recognized that “[c]ompound interest generally more fully compensates a plaintiff,” Am. Nat. Fire Ins. Co., 325 F.3d at 938, especially when the interest rate is low, as it is under § 1961; there is no element of penalty or punishment in the justification for compound interest. We are thus unconvinced by the Board’s explanation that simple interest should be awarded absent exceptional circumstances.

 

For similar reasons, we are also unpersuaded by the Director’s argument that “full compensation is ensured by simple interest and the additional compensation available under section 14.” Section 914 provides for a “delinquency penalty,” Roberts, 132 S.Ct. at 1359 n. 6; 33 U.S.C. § 914, and thus advances a punitive goal separate from the purpose of ensuring full compensation. Moreover, § 914 applies only where employers have not controverted liability. See 33 U.S.C. § 914(e).

 

*20 Keeping in mind “the humanitarian purposes of the LHWCA” and “our mandate to construe broadly its provisions so as to favor claimants in the resolution of benefits cases,” Matulic, 154 F.3d at 1057, we hold that the Board erred in awarding Price simple interest on his past due payments at the § 1961 rate.

 

* * *

 

We affirm the Board’s order as to Price’s maximum compensation rate, reverse as to the interest rate on his past due payments, and remand for the agency to calculate the proper award of interest at a rate no lower than the compound § 1961 rate.

 

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

 

O’SCANNLAIN, Circuit Judge, dissenting in part:

I agree with the majority that the Director’s litigating position before this court is not entitled to Chevron deference and that the proper rate of interest on past-due compensation awards under the Longshore and Harbor Workers’ Compensation Act (LHWCA) is the rate set forth in 28 U.S.C. § 1961(a). That said, I cannot join the majority’s discussion of these issues because, in my view, it treats several matters that are unnecessary to the outcome of this case and thus should be left for another day. See, e.g., Op. at 10460–61 n.7 (discussing whether litigating positions taken in agency adjudications are entitled to Chevron deference); Op. at 10462–64 (discussing whether the position of the Benefits Review Board is entitled to deference).

 

More specifically, I disagree with the majority’s conclusion that the Director of the Office of Workers’ Compensation Programs is not entitled to deference with respect to the method of computing interest and, therefore, I respectfully dissent from the majority’s conclusion to the contrary.

 

I

In applying the LHWCA, the Director has long taken the position that interest on past-due compensation awards should be computed on a simple basis. That position accords with the general rule of awarding only simple interest when a statute does not expressly require otherwise; it aligns with the consistent position taken by the Benefits Review Board since 1989, see Santos v. General Dynamics Corp., 22 BRBS 226 (1989); and it is consistent with the LHWCA, which is silent on the rate and computation of interest. Nor is the Director’s position a novel litigating position; it has been embodied in the Longshore Procedure Manual, used by district directors nationwide, since at least 1989. See Div. of Longshore and Harbor Workers’ Compensation, Dep’t of Labor, Longshore Procedure Manual, ch. 8–201, available at http://www.dol.gov/ owcp/dlhwc/lspm/pmtoc.htm.

 

Given these features, in my view the Director’s position, though informal, is persuasive enough to merit our respect. See Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944) (noting consistency, thorough consideration, and valid reasoning as factors contributing to persuasiveness). We should defer to the agency’s consistent, long-standing implementation of simple interest. See Fed. Express Corp. v. Holowecki, 552 U.S. 389, 399–401, 128 S.Ct. 1147, 170 L.Ed.2d 10 (2008) (deferring under Skidmore to an informal agency interpretation because it was consistent with the agency’s responsibilities and had bound staff members for over five years); Tablada v. Thomas, 533 F.3d 800, 806–08 (9th Cir.2008) (“[T]he consistent and even application of the [agency’s] methodology promulgated in [its ] Program Statement … since 1992 convinces us that we must accord deference to the [agency’s] interpretation.”).

 

A

*21 To reach the contrary conclusion, the majority emphasizes the LHWCA’s remedial purpose and a growing trend toward the use of compound interest. With respect, the majority’s analysis is unpersuasive.

 

The majority first contends that simple interest does not fulfill the LHWCA’s purpose of fully compensating claimants. But fully compensating employees is not the Act’s only purpose. See Roberts v. Sea–Land Servs., Inc., –––U.S. ––––, ––––, 132 S.Ct. 1350, 1354, 182 L.Ed.2d 341 (2012). Rather, “the LHWCA represents a compromise between the competing interests of disabled laborers and their employers, [so] it is not correct to interpret the Act as guaranteeing a completely adequate remedy for all covered disabilities.” Dir., OWCP v. Newport News Shipbldg. and Dry Dock Co., 514 U.S. 122, 131, 115 S.Ct. 1278, 131 L.Ed.2d 160 (1995) (internal quotation marks omitted). The Act is not meant always to provide a “complete remedy,” but aims instead to ensure that workers receive some compensation for injuries, even if it is not “complete compensation for the wage earner’s economic loss.” Potomac Electric Power Co. v. Dir., OWCP, 449 U.S. 268, 281, 101 S.Ct. 509, 66 L.Ed.2d 446 (1980).

 

We must therefore consider the Director’s position in light of the bargain the Act represents, rather than treating the Act’s remedial purpose as an unbeatable trump. In this vein, the Supreme Court has cautioned against “add [ing] features that will achieve statutory ‘purposes’ more effectively.”   Newport News, 514 U.S. at 136. Whatever our views on the effectiveness of simple interest in compensating claimants, we should not add a compounding requirement to the statutory scheme just because we think it would better serve the Act’s remedial purpose. See id. at 135–36; Potomac Electric, 449 U.S. at 280–81.

 

B

The majority contends next that compound interest is warranted based on “changing economic realities” and a “growing recognition” that compound interest might more fully compensate plaintiffs. Op. at 10477. This too is not reason enough to reject the Director’s position. The Supreme Court has cautioned that a growing trend—even one that is “sound as a matter of policy” and is now a dominant view—is an insufficient basis for abandoning a settled rule. Potomac Electric, 449 U.S. at 279–80 & n. 20.

 

Whatever the “growing consensus,” op. at 10479, the Director, as administrator of the Act, is best positioned to evaluate changing circumstances and to determine whether simple interest continues to provide adequate compensation to claimants.FN1 Where the Act is silent and the agency has made a reasonable choice, we should not inject our policy views into the Act’s provisions.

 

C

The majority also faults the Director for adopting the rate set forth in section 1961(a) while not adopting section 1961(b)’s compound interest component. Again, the Director’s decision is reasonable. The Director has concluded that section 1961 provides useful guidance; that conclusion should not force the Director to swallow section 1961 whole. And by declining to adopt the section 1961(b) formulation, the Director has honored the general rule that simple interest applies unless a statute expressly authorizes compound interest. See, e.g., Cherokee Nation v. United States, 270 U.S. 476, 490–91, 46 S.Ct. 428, 70 L.Ed. 694 (1926); Stovall v. Ill. Cent. Gulf. R.R. Co., 722 F.2d 190, 192 (5th Cir.1984). Because the LHWCA does not expressly authorize interest awards, it is reasonable for the Director to look elsewhere for guidance, to make a considered choice based on that guidance, and to settle on the prevailing longstanding general rule. By contrast, we have no authority to force the Director to apply a different choice that conflicts with the agency’s long-standing default rule—especially given that the governing statute provides no support for such a judicial mandate.FN2 Cf. Newport News, 514 U.S. at 135–36.

 

D

*22 The majority’s failure to defer under Skidmore to the Director’s long-standing position is made all the more perplexing by its determination that the Director’s selection of the proper interest rate is entitled to Skidmore deference. The majority acknowledges that, because the LHWCA is silent on interest, the selection of interest rate is “in large part a policy determination best left to the agency.” Op. at 10473–74. The majority concludes that the Director’s selection of the section 1961 rate is “consistent with the statutory framework” and that there are “[n]o clearer alternatives … within our authority or expertise to adopt.” Op. at 10474. But the rate of interest and the method of computing it have each been consistently applied by the Director and the Board for over 20 years and have been contained within the Director’s manual for nearly as long. It is hardly reasonable to accept the one and to reject the other when the same reasoning supports both.

 

II

Proper application of Skidmore requires us to defer to the Director’s long-standing, consistent practice of awarding simple interest, recognizing that the Director is in the best position to determine whether, as a policy matter, the method of computing interest should be changed better to align with modern circumstances.

 

For the foregoing reasons, I respectfully dissent.

 

FN1. Section 1961 delineates the interest payable on federal district court judgments. See 28 U.S.C. § 1961(a). In contrast, § 6621 specifies the interest rate the Internal Revenue Service (“IRS”) uses with respect to the overpayment and underpayment of taxes. 26 U.S.C. § 6621(a).

 

FN2. Compound interest means “[i]nterest paid on both the principal and the previously accumulated interest.” Black’s Law Dictionary 887 (9th ed.2009). In contrast, simple interest is “[i]nterest paid on the principal only and not on accumulated interest.” Id.

 

FN3. See, e.g., Talk Am., Inc. v. Mich. Bell Tel. Co., –––U.S. ––––, ––––, 131 S.Ct. 2254, 2265, 180 L.Ed.2d 96 (2011) (“The [Federal Communications Commission] as amicus curiae has advanced a reasonable interpretation of its regulations, and we defer to its views.”);   Williamson v. Mazda Motor of Am., Inc., ––– U.S. ––––, ––––, 131 S.Ct. 1131, 1137, 179 L.Ed.2d 75 (2011) (relying, in part, on the Solicitor General’s amicus brief to interpret a Department of Transportation regulation); Chase Bank v. McCoy, ––– U.S. ––––, ––––, 131 S.Ct. 871, 880, 178 L.Ed.2d 716 (2011) (“Because the interpretation the [Federal Reserve] Board presents in its brief is consistent with the regulatory text, we need look no further in deciding this case.”)

 

FN4. At times, however, “there is reason to suspect that the agency’s interpretation ‘does not reflect the agency’s fair and considered judgment on the matter in question.’ “ Christopher, 132 S.Ct. at 2166 (quoting Auer, 519 U.S. at 462). Indicia of inadequate consideration include conflicts between the agency’s current and previous interpretations, id.; signs that the agency’s interpretation amounts to no more than a “ ‘convenient litigating position,’ “ id. (quoting Bowen, 488 U.S. at 213); or an appearance that the agency’s interpretation is no more than a” ‘post hoc rationalization advanced by an agency seeking to defend past agency action against attack,’ “ id. (quoting Auer, 519 U.S. at 462). Where such indicia are present, Auer deference is inappropriate. See id.

 

FN5. Consistent with Mead and Barnhart, we have determined that some agency interpretations advanced through means other than formal rule-making or adjudication are entitled to Chevron deference. See, e.g., Davis v. EPA, 348 F.3d 772, 779 n. 5 (9th Cir.2003) (“The mere fact that the EPA engaged in informal agency adjudication of California’s waiver request does not vitiate the Chevron deference owed to the agency’s interpretation of [a Clean Air Act provision].”); Schuetz v. Banc One Mortgage Corp., 292 F.3d 1004, 1012 (9th Cir.2002) (“Chevron deference is due even though HUD’s Policy Statements are not the result of formal rulemaking or adjudication.”). But there remains a significant gap between the “lawmaking pretense,” Mead, 533 U.S at 233, embodied in those forms of interpretation and that manifested in an agency’s litigating position.

 

FN6. See Wheeler v. Newport News Shipbuilding and Dry Dock Co., 637 F.3d 280, 290–91 (4th Cir.2011) (according only Skidmore deference to the Director’s litigating position interpreting the term “compensation” under the Longshore Act); Day v. James Marine, Inc., 518 F.3d 411, 418 (6th Cir.2008) (accepting the Director’s concession that his litigating position was not entitled to Chevron deference, but only Skidmore deference); Pool Co. v. Cooper, 274 F.3d 173, 177 n. 3 (5th Cir.2001) ( “[I]t is now clear that when the Director advances interpretations of the LHWCA in litigation briefs, such interpretations merit not Chevron deference, but Skidmore deference.”); Ala. Dry Dock & Shipbldg Corp. v. Sowell, 933 F.2d 1561, 1563 (11th Cir.1991) (“We owe deference to official expressions of policy by the Director, who does administer the statute, but settled law precludes us from affording deference to an agency’s litigating position.”) (internal citation omitted), abrogated on other grounds by Bath Iron Works Corp. v. Dir., OWCP, 506 U.S. 153, 113 S.Ct. 692, 121 L.Ed.2d 619 (1993).

 

FN7. This case does not directly involve the question whether courts must accord Chevron deference to agency litigating positions advanced during agency rather than appellate adjudication. In Martin, the Supreme Court explained that because agency litigating positions furnished at the appellate level “occur after agency proceedings have terminated, they do not constitute an exercise of the agency’s delegated lawmaking powers” and are thus not entitled to Chevron deference. 499 U.S. at 156–57. In contrast, Martin noted, the Secretary of Labor’s “interpretation of OSH Act regulations in an administrative adjudication … is agency action, not a post hoc rationalization of it.” Id. at 157.

 

The distinction in Martin between administrative and court adjudication did not survive Mead, Auer, and Auer’s progeny, although the deference accorded the Secretary’s litigating position in Martin is fully consistent with those cases. Notably, Martin involved interpretation of regulations, not a statute. Under Auer and its progeny, the line Martin drew between agency interpretations advanced during administrative versus court adjudications no longer obtains when interpretation of regulations is at issue. And, as Martin involved interpretation of regulations, it comports with our analysis concerning the difference between the Chevron deference due litigating positions interpreting statutes as opposed to regulations.

 

Our precedents that have relied on Martin to hold “that the Director’s interpretation of the LHWCA is entitled to deference if it is contained … in the Director’s litigation position within an agency adjudication, so long as the interpretation is reasonable,” Gilliland, 270 F.3d at 1262, have not recognized this distinction. See also, e.g., Alexander v. Dir., OWCP, 297 F.3d 805, 807–08 (9th Cir.2001); Mallott, 98 F.3d at 1172. We overrule those precedents because they granted Chevron deference to litigating positions interpreting a statute rather than regulations. For similar reasons, we have in our analysis treated the issue of whether to defer to the Director’s litigating position as a unitary one and have drawn on both those cases in which the Director advanced his position before the Board and those cases in which he did so before this court.

 

FN8. Of course, “the ‘weight’ assigned to any advocate’s position is presumably dependent upon the ‘thoroughness evident in its consideration’ and the ‘validity of its reasoning.’ … The argument’s pedigree adds nothing to the persuasive force inherent in its reasoning.” Colin S. Diver, Statutory Interpretation in the Administrative State, 133 U. Pa. L.Rev. 549, 565 (1985) (quoting Skidmore, 323 U.S. at 140). For that reason, special Skidmore deference to agency litigating positions is more likely to turn on factors such as the consistency of its position and its application of that position through administrative practice than on the quality of its court advocacy.

 

FN9. Nonetheless, all the parties have treated the interest rate issues in this case as questions of statutory interpretation. We therefore do so as well.

 

FN10. The federal short-term rate is “the rate determined by the [IRS] Secretary based on the average market yield … on outstanding marketable obligations of the United States with remaining periods to maturity of 3 years or less.” 26 U.S.C. § 1274(d)(1)(C)(i).

 

FN11. See 30 U.S.C. § 932(a) (adopting parts of the Longshore Act “except as otherwise provided … by regulations of the Secretary [of Labor]”).

 

FN12. Should the Director consider altering his position, however, our holding does not preclude him from adopting the § 6621 rate through the formal rulemaking process or other appropriate means.

 

FN13. Price points out that the § 6621 rate is higher than the § 1961 rate even when the latter is compounded.

 

FN14. Because the BRB’s reasoning is not persuasive, we need not and thus do not address whether the BRB is entitled to Skidmore deference.

 

FN15. See, e.g., Am. Nat’l Fire Ins. Co. v. Yellow Freight Sys., Inc., 325 F.3d 924, 938 (7th Cir.2003) (“We believe that, absent special circumstances, compound, not simple, interest ought to be awarded in Carmack Amendment cases.”); Cement Div., Nat’l Gypsum Co. v. City of Milwaukee, 144 F.3d 1111, 1116 (7th Cir.1998) (“It is, of course, settled in the case law that compounding of pre-judgment interest is acceptable.”); EEOC, 80 F.3d at 1098 (affirming trial court’s assessment of compound pre-judgment interest on state troopers’ back pay award and emphasizing that compound interest should “ordinarily” be awarded on back pay); Sands v. Runyon, 28 F.3d 1323, 1328 (2d Cir.1994) (holding that the postal service violated the Rehabilitation Act by refusing to hire a disabled worker and that the district court abused its discretion in not awarding back pay with compound pre-judgment interest); Gorenstein, 874 F.2d at 437 (affirming an award of compound pre-judgment interest under the Lanham Act and criticizing the treasury rate of § 1961 as being “too low”); Saulpaugh, 4 F.3d at 145 (explaining, in the context of Title VII, that “[g]iven that the purpose of back pay is to make the plaintiff whole, it can only be achieved if interest is compounded”); Todd Shipyards Corp. v. Auto Transp., S.A., 763 F.2d 745, 753 (5th Cir.1985) (affirming an award of compound pre-judgment interest in the admiralty context); R.R. Dynamics, Inc. v. A. Stucki Co., 727 F.2d 1506, 1510 n. 1 (Fed.Cir.1984) (upholding, in the patent context, a district court award that included compound pre-judgment interest).

 

FN16. Even more pernicious than “negligent creditors,” in the eyes of the common law, were those who intentionally reaped the gains of interest upon interest. See Charles Dickens, Bleak House 332–33 (Penguin Books 1996) (1853) (describing the great-grandfather of a greedy moneylender as a “horny-skinned, two-legged, money-getting species of spider who spun webs to catch unwary flies and retired into holes until they were entrapped” and asserting that “[t]he name of this old pagan’s god was Compound Interest”).

 

FN17. See also David S. Reid, Dissenters’ Rights: An Analysis Exposing the Judicial Myth of Awarding Only Simple Interest, 36 Ariz. L.Rev. 515, 523 (1994) (“If the use of interest is not paid for by the borrower, the borrower will effectively receive a “free loan” of that interest…. The lender can only be compensated for this cost by computing interest on the interest already owed, and this is accomplished through the use of compound interest.”).

 

FN1. In reading the majority’s opinion, one might think that the Director is an adversary of claimants who seek to receive their full entitlement. To the contrary, the Director often intervenes in lawsuits seeking interpretations or compensation more favorable to the employee than what the employee received from the Board. See, e.g., Ingalls Shipbldg., Inc. v. Dir., OWCP, 519 U.S. 248, 253, 117 S.Ct. 796, 136 L.Ed.2d 736 (1997); Stevedoring Servs. of Am. v. Dir., OWCP, 297 F.3d 797, 801 (9th Cir.2002); McDonald v. Dir., OWCP, 897 F.2d 1510, 1511 n. 2 (9th Cir.1990).

 

FN2. The majority also suggests that we can tell that simple interest is unreasonable because the Board has indicated that compound interest might be warranted in exceptional circumstances. Op. at 10480–81. But compounding interest in exceptional circumstances, such as when a party engages in willful misbehavior, accords with the general rule giving trial judges discretion to select an interest award within a range of reasonable options. See W. Pac. Fisheries, Inc. v. SS President Grant, 730 F.2d 1280, 1288–89 (9th Cir.1984); Gorenstein Enters., Inc. v. Quality Care–USA, Inc., 874 F.2d 431, 436 (7th Cir.1989) (concluding that compound interest was appropriate where the violation of federal law was “intentional, and indeed outrageous” and where the appellant had engaged in dilatory tactics); cf. also NLRB v. Seven–Up Bottling Co. of Miami, 344 U.S. 344, 348–49, 73 S.Ct. 287, 97 L.Ed. 377 (1953) (eschewing the “debate about what is ‘remedial’ and what is ‘punitive’ “ and instead noting that a proper remedy should be formulated with the unique circumstances of the case in mind). Though we deal with pre-judgment interest rather than post-judgment interest, the distinction, as the majority notes, “carries no significance here.” Op. at 10476.