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In re Oil Spill by the Oil Rig "Deepwater Horizon"

ELR Citation: 41 ELR 20340
Nos. 2179, (E.D. La., 11/15/2011) (Barbier, J.)

A district court held that an oil company may not seek insurance coverage for damages it incurred following the Deepwater Horizon oil spill under the oil rig owner's insurance policies. The underlying insurance policies refer to the drilling contract between the rig owner and the oil company to determine the scope of coverage. Under the drilling contract, the owner is liable for pollution originating on or above the surface of the water. Because the Deepwater Horizon incident entailed a subsurface release, the owner did not assume pollution liabilities arising from the spill. Accordingly, because the owner did not assume the oil pollution risks pertaining to the Deepwater Horizon incident—the oil company did—the owner was not required to name the oil company as an additional insured as to those risks. The oil company, therefore, may not seek coverage.