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BP, Anadarko Petroleum Liable for Pollution Law Violations, Judge Rules

BP Plc (BP\) and Anadarko Petroleum Corp. (APC) are liable for Clean Water Act violations, a judge ruled, allowing the U.S. to seek fines of as much as $1,100 per barrel of oil spilled in the Gulf of Mexico in 2010.

BP and Anadarko, partners in the doomed Macondo Well project, are responsible by law for polluting the water because they owned the well, U.S. District Judge Carl Barbier in New Orleans said yesterday. The ruling allows the government to seek fines without having to prove the issue of liability at trial.

Transocean Ltd., the Switzerland-based owner and operator of the Deepwater Horizon drilling rig that exploded, can’t be held liable for Clean Water Act violations yet, Barbier wrote in yesterday’s ruling. The issue has to be determined at trial.

BP (BP/) and Anadarko are liable for civil penalties under the law “because they are both owners of the offshore facility from which oil discharged,” Barbier said.

“There are disputed facts as to whether Transocean meets” the definition of an operator of the offshore facility, Barbier said. “Accordingly the court cannot resolve this issue on summary judgment.”

The Justice Department asked 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. Strict liability is a legal term for automatic responsibility.

Enhanced Fines

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. He will also determine whether any defendants were grossly negligent, which would leave the companies subject to enhanced fines under the Clean Water Act.

“This decision states clearly that BP is the responsible party and reaffirms the long-standing legal, regulatory and economic framework that has been employed by parties in the offshore oil and gas industry for decades,” Lou Colasuonno, a Transocean spokesman, said in an e-mail. “It is a vital win for Transocean.”

John Christiansen, Anadarko’s spokesman, said he hadn’t seen the judge’s ruling and couldn’t immediately comment.

“Long before this motion and its resolution today, BP had committed to paying all legitimate claims and helping economic and environmental restoration efforts in the Gulf Coast,” Daren Beaudo, a spokesman for London-based BP, said in an e-mail yesterday. “BP continues to stand behind that commitment.”

$8 Billion Paid

“To date, BP has paid out more than $8 billion in claims to individuals, businesses, and governments,” he said.

Wyn Hornbuckle, a Justice Department spokesman, said “We’re reviewing the ruling.”

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) and Anadarko, which owned 25 percent of the well.

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 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.

Anadarko’s Argument

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

“Anadarko cannot be held liable for penalties under the Clean Water Act,” David Salmons, a lawyer for the company said at a Jan. 19 hearing. Anadarko had no control over the operation, he said. Salmons said the discharge of oil began from the top of the rig.

Transocean isn’t liable for penalties under the Clean Water Act, because the discharge was below the water’s surface, Kerry Miller, the company’s attorney, said at the hearing.

“The source of this discharge was the Macondo well,” Miller told Barbier.

For purposes of the Clean Water Act, “and with respect to the subsurface discharge, oil discharged from the Macondo well, an offshore facility,” Barbier said. “The subsurface discharge was not from the vessel, the Deepwater Horizon.”

This leaves BP and Anadarko liable for penalties under the law, Barbier said. Transocean “might” be liable, depending on whether the company is determined to be an operator of the facility, he said.

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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