BP Anadarko MOEX Transocean Liable Without Limitation
Federal government files suit against companies involved in BP oil spill
The federal government filed suit Wednesday in New Orleans against the partners in the failed Macondo well and against Transocean Ltd. and its insurers to recover costs associated with the 86-day oil release after the Deepwater Horizon rig explosion.
The suit seeks to hold BP, Anadarko, MOEX and Transocean liable without limitation under the Oil Pollution Act of 1990 for the costs of cleaning up the world’s largest accidental oil spill and resulting damage to natural resources and the economy. The suit also seeks to hold Transocean’s insurer, QBE Underwriting Ltd/Lloyd’s Syndicate 1036, liable up to the value of the policy.
In addition, the Justice Department is suing under the Clean Water Act, which prohibits the unauthorized discharge of oil into waterways. Civil penalties can be assessed against each of the eight companies named the suit to the tune of $1,100 per barrel of oil spilled or $4,300 per barrel lost as a result of “gross negligence or willful misconduct.”
Attorney General Eric Holder said that the civil and criminal investigations into the oil spill are continuing. “While today’s civil action marks a critical step forward, it is not a final step,” Holder said. “Our work to ensure that the American taxpayers are not forced to bear the costs of restoring the gulf area — and its economy — goes on.”
In a written response, BP sought to downplay the significance of the suit. BP, which owned 65 percent of the lease on the Macondo well, noted that the suit was filed against those designated as “responsible parties” under the law, and that the government’s allegations don’t constitute any finding of liability. The company said it will respond to the suit “in a timely manner and will continue to cooperate with all government investigations and inquiries,” and noted that it has set aside $20 billion to pay all legitimate claims.
The government was required to file its suit by December 15 in order to participate in the discovery in the consolidated litigation in New Orleans overseen by Judge Carl Barbier. While the Justice Department’s suit was filed as a separate action, it is expected to be brought into the consolidated case.
The lead plaintiff attorneys in that case, Steve Herman and Jim Roy, said they looked forward to continuing to work with the U.S. government in pursuing justice for all victims of the Deepwater Horizon tragedy.
The suit’s omissions are noteworthy. It does not name other companies that provided services in drilling the well, such as Halliburton, which poured the cement at the failed well, or companies that manufactured components of the well that malfunctioned, such as Cameron International, manufacturer of the blowout preventer.
The Justice Department also didn’t draw from its full arsenal of environmental laws, but reserved the right to do so in the future under the Endangered Species Act of 1973, the Marine Mammal Protection Act, the National Marine Sanctuaries Act, the Park System Resource Protection Act, the Outer Continental Shelf Lands Act and the Federal Oil and Gas Royalty Management Act.
In seeking to hold the defendants liable “without limitation,” the Justice Department also didn’t attempt to quantify the amount of money that it’s seeking. Efforts to tally the oil spill’s toll on the environment are ongoing, so the Justice Department simply said that damages to the environment, real property and personal property far exceeded $75 million.
David Pettit, a senior attorney for the Natural Resources Defense Council, said he expects that the federal government will add claims under other environmental laws once the natural resource damage assessment is further along. Unlike the cost per barrel of oil that’s spelled out in the Clean Water Act, the Marine Mammal Protection Act doesn’t say how much a dolphin is worth, Pettit said, so claims under many environmental laws are typically settled rather than going to trial.
Although the Justice Department said in its suit that the other partners in the well were provided with detailed technical information about the drilling at the Macondo well and had to approve BP’s activities, Anadarko and MOEX pointed fingers back at BP.
Anadarko Petroleum, which held a 25 percent stake in the Macondo well, described itself as “a non-operating minority interest holder” that was “not involved in the operations or decisions that occurred on the drilling rig.” Anadarko said that while it may have obligations under federal law, ultimate responsibility rests with the operator, BP, and it looks to BP to pay all legitimate claims. Anadarko said it stands by statements it made in June that “the operator’s decisions and actions on the rig likely amount to gross negligence and/or willful misconduct,” which it believes will have a direct bearing on responsibility under the joint operating agreement between the leaseholders.
MOEX Offshore, which held a 10 percent stake in the lease, said it “had no authority or responsibility to direct activities on the Deepwater Horizon,” and was reviewing the lawsuit.
Transocean, the company that owned the Deepwater Horizon rig, said it’s only responsible for oil emanating from the rig on or above the surface of the water, and not from the wellhead. The company also said that when BP hired Transocean as its drilling contractor, BP indemnified it and agreed to assume full responsibility. “The calculations, blueprints and step-by-step construction procedures for the Macondo well were crafted by BP engineers and approved by federal regulators. As contractors to BP, Transocean employees executed various steps in those plans at the instruction of BP engineers on the rig and on shore,” Transocean said in a statement.
Rebecca Mowbray can be reached at email@example.com or 504.826.3417.