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.

Crew Member Sentenced and Ship Owner Fined in "Magic Pipe" case

The U.S. Attorney's Office for the District of Maryland recently announced a six month sentence for a crew member who obstructed the investigation into a "magic pipe" case, and a $2.4 milliion dollar fine against the ship owner. The "magic pipe" was a bypass hose which permitted waste oil to be dumped directly overboard, the presence of which was concealed by doctored oil logs, which are requried by both U.S. law and the International Convention for the Prevention of Pollution from Ships.