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Managed by Paul J. Loftus, a partner at Dinsmore & Shohl LLP, Transportation Law Today provides professionals in the rail, transit, inland maritime, and trucking industries with current news and analysis of laws, rulings, and regulatory policies.

Friday, June 6, 2014

Civil Penalties Against Deepwater Horizon Well Owners Upheld

The U.S. Court of Appeals for the Fifth Circuit in New Orleans ruled Wednesday that BP and Anadarko, the owners of the well involved in the Deepwater Horizon disaster, were liable for civil penalties for release of oil into the Gulf of Mexico under the Clean Water Act. The Court's opinion is attached here.

Despite noting the Clean Water Act was "not a model of clarity" the Court rejected the arguments by the well owners that oil was not discharged from any vessel they owned, and that they were not responsible for the cause of the spill (i.e. the failed blow-out preventer). The Court concluded that well-owner liability is unaffected by the path the oil takes before reaching the water, and that the Act does not permit the shifting of liability for releases of oil to third parties, regardless of the well owner's "knowledge, intent, or fault" in causing a spill. Although the law does permit shared fault as a mitigating factor in assessing a penalty, there is no exception for third party fault for civil penalty liability for a well owner.

Penalty figures, adjusted for inflation, in effect in 2010 when the spill occurred provide for penalties of up to $32,500 per day or $1,100 per barrel. Just estimating the maximum civil penalty for the spill which lasted from April 22 to July 15, 2010 equals an approximate maximum penalty of up to $5.4 billion, if calculated on the barrels of oil spilled.