BP, Anadarko Should Be Held Liable Before Trial, U.S. Says

BP Plc (BP\), Transocean Ltd. and Anadarko Petroleum Corp. (APC) should be found liable before trial for violations of federal pollution laws stemming from the April 2010 Gulf of Mexico oil spill, lawyers for the U.S. argued today at a hearing in federal court in New Orleans.

The Justice Department is asking U.S. District Judge Carl Barbier to find the companies violated the Clean Water Act on the basis of so-called strict liability because they were operators of the doomed project. Barbier, who’s overseeing much of the spill litigation, has scheduled a nonjury trial for Feb. 27 to determine liability and apportion fault for the disaster.

A ruling by Barbier against the companies would mean they couldn’t fight allegations of Clean Water Act violations at the trial and would allow the U.S. to seek fines of as much as $1,100 from each company per barrel of oil spilled. The government has also asked Barbier to find Anadarko and Transocean liable under the Oil Pollution Act, a separate environmental law, for cleanup costs and damages. BP (BP/) already accepted responsibility for those costs.

Made Admissions

“They have admitted they are owners. They have admitted they discharged oil into the Gulf of Mexico,” Steven O’Rourke, a Justice Department attorney, told Barbier today. “Each should be punished according to his own culpability.”

Referring to the Clean Water Act fines, Barbier asked, “So one could be penalized for $1,100 [per barrel] and another defendant higher?”

“Yes, sir,” O’Rourke replied.

The judge said he wouldn’t rule today.

“Interesting arguments,” Barbier said. “Interesting issues. I will take this under advisement.”

Even if Barbier does rule for the U.S. on its bid for a pretrial decision, the question of gross negligence, which will determine whether the companies are subject to enhanced fines under the Clean Water Act, will be considered at trial.

If Barbier denies the U.S. motion, he’ll determine at trial which companies can be held liable and thus subject to fines.

The April 2010 Macondo well blowout and explosion killed 11 workers and caused the worst offshore oil spill in U.S. history. The accident spurred hundreds of lawsuits against BP and its partners, including Transocean Ltd. (RIG), the Switzerland-based owner and operator of the Deepwater Horizon drilling rig that exploded, and Anadarko, which owned 25 percent of the well.

Responsible Parties

The U.S. sued BP, Transocean and Anadarko in December 2010, alleging violations of federal pollution laws. The Clean Water Act allows the government to seek per-barrel spilled fines of as much as $1,100 on a finding of strict liability to $4,300 for gross negligence. The Oil Pollution Act holds responsible parties liable for damages, cleanup and restoration costs.

Strict liability is a legal term for automatic responsibility.

The government estimates that 4.1 million barrels were spilled before the well was capped. BP set aside $3.5 billion for Clean Water Act fines, assuming $1,100 a barrel and its own estimate of 3.2 million barrels, according to an annual report extract posted on the company website.

BP, Anadarko and Transocean argued that they should be able to defend themselves at trial against the federal claims.

Barbier shouldn’t grant the government’s motion on pollution responsibility before trial, Andrew Langan, a BP lawyer, said at today’s hearing.

“We think this can ought to be kicked down the road,” he told Barbier.

Top of Rig

“Anadarko cannot be held liable for penalties under the Clean Water Act,” David Salmons, a lawyer for the company said. Anadarko had no control over the operation, he said. Salmons said the discharge of oil began from the top of the rig.

“I think Transocean will disagree with you,” Barbier said. “I think they will say it began down in the well.”

“What matters is when it enters the marine environment,” Salmons said.

Transocean isn’t a responsible party under the Oil Pollution Act or liable for penalties under the Clean Water Act, because the discharge was below the water’s surface, Kerry Miller, the company’s attorney, said.

“The source of this discharge was the Macondo well,” Miller told Barbier. “That is where it came from.”

“Under the Clean Water Act, the lessee or permittee is liable,” which means Transocean doesn’t have exposure to that law’s penalties, he said.

‘Undisputed Facts’

An owner or operator of a mobile offshore drilling unit can only be a responsible party under the Oil Pollution Act if the discharge is on or above the water’s surface, Transocean said in a Jan. 9 filing.

“The undisputed facts submitted by the United States do not establish any above-surface discharge,” the company said.

The U.S. said in court papers that oil came from the Deepwater Horizon in addition to the well, making the company liable for violations of federal pollution laws.

Transocean is liable by law under OPA because it was an owner and operator of the Deepwater Horizon rig, the government said. The Deepwater Horizon was a vessel for the purposes of OPA and a responsible party under that law means anyone owning, operating or chartering a vessel, the U.S. said in a Dec. 8 filing.

The companies “are liable as a matter of law, because there is no genuine dispute as to the material facts on which their liability rests,” government lawyers said.

The owner or operator of any vessel is subject to Clean Water Act penalties, O’Rourke, the government lawyer, said at the hearing todeay.

The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporters on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net; Allen Johnson Jr. in New Orleans at allenmct@gmail.com.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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