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.

Increased Rail Haz Mat Penalties Published

The Federal Railroad Administration (FRA), published today revised civil monetary penalties for the violation of the Hazardous Materials Transportation Act. The FRA rule implements the increased penalties enacted in July 2012 with the passage of the MAP-21 Act (Moving Ahead for Progress in the 21st Century Act). The increased penalties, which apply to all violations of the federal haz mat transportation laws after October 1, 2012, increase the maximum civil penalty from $50,000 to $75,000 for "knowing violations," and from $100,000 to $175,000 if the violation "results in death, serious injury or severe injury to any person, or substantial destruction of property." Also, the prior minimum penalty of $250 has been eliminated, except that a $450 minimum penalty will apply to training violations.