By Rebecca Mowbray, The Times-Picayune, February 22, 2012
In a major ruling in the oil spill litigation, U.S. District Judge Carl Barbier ruled Wednesday that BP and Anadarko are responsible parties under the Oil Pollution Act of 1990 and are liable for civil penalties under the Clean Water Act for the undersea discharge of oil from the ill-fated Macondo well.
Liability for Transocean, the owner of the Deepwater Horizon rig, is yet unresolved. Transocean is not a responsible party under OPA for oil discharge below the surface of the water, Barbier said, but the company may still be responsible for the cost of removing the oil. The court has not yet determined whether Transocean is liable for penalties under the Clean Water Act as an operator of an offshore facility. Barbier, who was appointed to the federal bench by President Bill Clinton in 1998, made these rulings in response to motions by the U.S. Department of Justice for partial summary judgment. The government had argued in court in January that the companies had already admitted enough information about the facts of the incident to be held liable.
Barbier didn't agree with everything the federal government asserted, but his ruling increases the pressure on BP five days before the massive trial over allocating fault in the April 2010 sinking of the Deepwater Horizon and subsequent oil spill is scheduled to begin. In its motion, the government argued that BP, Anadarko and Transocean were "joint and severally" liable under OPA for the cost of removing the oil and the cost of the damage that the oil caused. Joint and several liability means that each company is responsible for the entire amount of the debt, meaning that the cost of the debt can be collected several times over.
The court agreed that more than one company can be found liable for damages under OPA. Although BP had already been declared a responsible party under OPA as the primary lease holder in the Macondo well, Barbier said that Anadarko, which owned a 25 percent stake in the well, is also a responsible party. A the third partner in the well, Moex, sold its stake to BP when the companies settled their differences in May 2011. "OPA is rooted in economic theory -- the parties benefitting most from oil production and transportation are exploded to the greatest liability," Barbier wrote. BP and Anadarko are also responsible for the cost of removing the oil, Barbier said.
Barbier largely disagreed with the government on Transocean. He said that Transocean is not a responsible party for the damages caused by sub-surface discharge of oil, meaning oil that came from the well rather than fuel that spilled from the rig. But, under another section of OPA, Transocean could still be responsible for the cost of cleaning up the oil that was spilled as an "owner or operator" of a vessel. Not enough information was available to answer the question at this time, Barbier said.
Transcoean does not believe it is an "operator" of the vessel under the law. The government had also argued that BP and Anadarko were liable without limit under OPA, but Barbier didn't buy it. Although BP has stated that it will waive the liability cap, Barbier said the government will need to prove that BP and Anadarko caused the well blowout by violating federal regulations. As for the government's Clean Water Act claims, Barbier's thinking was identical. As responsible parties under OPA, BP and Anadarko are responsible for penalties under the Clean Water Act. And Transocean could be responsible as the "operator" of an offshore facility, but it's not yet clear.
Although these rulings are important steps in determining who's responsible for the costs of the spill, its clean up and penalties associated with the incident, the amount of economic and environmental damage caused by the spill still needs to be determined before companies can be handed the bills. The court also needs to determine how much oil was actually spilled before it can determine penalties, and whether the oil was dumped with ordinary negligence, which would cost $1,100 per barrel spilled, or gross negligence, which could raise the bill to $4,300 per barrel.
The ruling also puts Anadarko back on the hook, even though BP and Anadarko settled their claims against each other last October. Anadarko agreed to pay BP $4 billion in exchange for BP fully indemnifying Anadarko for damage claims under OPA, claims for natural resource damages and associated damage-assessment costs, and any claims arising under the companies' joint operating agreement. The ruling means that Anadarko is still liable under the Clean Water Act. Anadarko didn't respond to an e-mail seeking comment.