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In re Oil Spill by the Oil Rig “Deepwater Horizon”

ELR Citation: 44 ELR 20200
Nos. MDL 2179, (E.D. La., 09/04/2014) (Barbier, J.)

A district court issued its findings of fact and conclusions of law regarding phase one of the Deepwater Horizon oil spill trial, holding various companies liable for the spill. In the 150+-page opinion, the court determined that BP Exploration & Production, Inc., is subject to enhanced civil penalties under the CWA, concluding that the discharge of oil was the result of its gross negligence and willful misconduct. In addition, the oil company, a drilling contractor (Transocean), and an oilfield service company (Halliburton) were each liable under general maritime law for the blowout, explosion, and oil spill. Specifically, the court concluded that BP's conduct was reckless and apportioned its fault at 67%, and concluded that Transocean’s and Halliburton’s conduct were negligent, apportioning their fault at 30% and 3%, respectively. The court also clarified that its finding is premised on its previous conclusion that oil discharged “from” BP's offshore facility for purposes of the CWA. Should it be determined on appeal that the discharge was instead “from” the vessel, the court further ruled that BP was an operator and person in charge of the vessel. In addition, while BP’s conduct warranted the imposition of punitive damages under general maritime law, Fifth Circuit precedent bars it from being liable for such damages. But to the extent the standards of the First Circuit or Ninth Circuit would apply to a particular claim, the court ruled that BP would be liable for punitive damages under those rules. Moreover, Transocean’s and Halliburton’s indemnity and release clauses in their respective contracts with BP are valid and enforceable against BP. The court also held that a violation of 30 C.F.R. §250.420(a)(2) can remove OPA’s liability cap; it therefore reversed its prior holding to the contrary. And the court ruled that Transocean was an “operator” of an “Outer Continental Shelf facility” under OPA and therefore liable to the United States for removal costs.