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.

BP Pleads Guilty to Criminal Charges - to Pay in Excess of $4 Billion

The Department of Justice announced today the entry of a guilty plea by BP Exploration and Production, Inc., to criminal charges of felony manslaughter, environmental crimes, and obstruction of Congress. The DOJ press release is attached here. The agreement calls for BP to pay in excess of $4 billion dollars in fines and penalties. The penalty is subject to court approval, and is the largest criminal penalty in U.S. History. The Guilty Plea filed with the federal court in Louisiana is attached here. Three individual BP employees have been indicated, including the 2 highest ranking supervisors aboard the Deepwater Horizon, and a BP executive who served as Deputy Incident Commander after the incident, who is charged with obstruction of Congress and making false statements to law enforcement officials.

BP on the Hook for Some Transocean Spill Costs

A federal judge in New Orleans has ruled that BP is responsible for paying third party damages asserted against oil rig owner Transocean, even if the cause of the damages to the third parties was the negligence, including gross negligence, of Transocean. The Order from District Judge Barbier is attached here. The basis of the Court's ruling is the contractual indemnity provision between BP and Transocean, allocating certain liabilities for injuries, accidents, and pollution from the operation of the rig.

This litigation of course arises from the April 20, 2010 explosion and fire of the Deepwater Horizon rig in the Gulf of Mexico and the subsequent oil spill from the sea floor.

The Court also ruled that BP is not required to compensate Transocean for any punitive damages levied against Transocean, nor is BP required to reimburse Transocean for any potential fines under the Clean Water Act.

The Court deferred ruling on whether BP's indemnity obligation could be voided by Transocean's acts that could be construed to have breached the drilling contract, and thereby prejudiced BP's rights. The Court did not rule on this issue as it involved factual determinations which cannot resolved by Summary Judgement under Fed. R. Civ. P. 56.