Environmental Law

Legal Fallout of the Gulf Oil Spill

Update

Transocean Ltd. is the company that owns the oil drilling rig that exploded in April 2010 in the Gulf of Mexico. British Petroleum (BP) hired Transocean to run the drilling operations.

In its defense in several lawsuits filed against it, Transocean has turned to a rarely-used maritime law to limit its liability to $27 million. According to Transocean, the law makes the owner of a sea vessel, like a ship or oil rig, only liable for the value of the vessel and its cargo after the accident. It claims the value of oil rig after the explosion is just under $27 million.

As of late May 2010, the federal court in Texas handling the lawsuits against Transocean and others hasn't made on decision on Transocean's argument.

Update

There are reports that BP and several other companies were allowed to drill in the Gulf without legally required federal permits. The Minerals Management Service (MMS), which is part of the US Department of the Interior, is in charge of making sure that drilling and other off-shore operations don't harm the environment or endangered species. It's supposed to get permits from the National Oceanic and Atmospheric Administration (NOAA) before drilling operations can start.

In May 2010, Ken Salazar, the Secretary of the Department of the Interior, announced new MMS rules to toughen the agency's oversight of offshore oil and gas drilling.

Original Article

News of the April oil spill in the Gulf of Mexico spread across the world. The spill has fishermen, tourist trade and coastline businesses worried. What legal battles will now result?

The Oil Pollution Act of 1990

In the days before the internet, news of the world's then-greatest oil spill still traveled rapidly. The 1989 massive spill of the Exxon Valdez in frigid Alaskan waters brought out images of oil-soaked wildlife. Angry finger-pointing was directed mostly toward the ship's captain.

The public outrage over that spill led Congress to enact a law known as the Oil Pollution Act of 1990 (OPA). A main point of the Act says every party responsible for a vessel or a facility losing oil is liable for cleanup costs. In other words, whoever was in charge of where the spill or leak occurred pays for all cleanup efforts. And not just its own costs, but the costs of others, including state and federal governments.

Lawsuits from the Gulf of Mexico Spill

Lawsuits have already been filed for the harm the spill caused and will cause. Commercial fishermen, shrimpers and injured workers filed suit against one or more companies for their injuries and losses. Among the companies defending against these lawsuits are BP, Transocean, Cameron (the company that made the "blowout preventer"), and companies drilling, including Halliburton.

Senate hearings on the oil spill began on May 11, and three CEOs each pointed the finger at the others. There was news that the blowout preventer had been modified, and each CEO claimed that someone else was in charge of preventing the accident.

Finger-pointing is usually an ideal scenario from the viewpoint of lawyers filing suit for an injured or damaged party. The fact the defendants don't say it was just an accident that couldn't be helped, but instead say that it was somebody else's fault, often gives an impression that at least one party is indeed at fault.

The Senate hearings gave us a first look at how these companies respond to lawsuits. Upon repeated questioning by a Washington State Senator, asking whether the companies would pay for losses incurred by fishermen and others whose businesses were harmed, one CEO repeated, "We will pay all legitimate claims." When the Senator asked him whether they would pay state and local governments for their cleanup costs, he replied, "Question mark."

The Government's Final Say

Controversy has erupted over whether the oil companies have too much control over monitoring the cleanup efforts. The main federal government office in charge of monitoring oil companies, the Minerals Management Service (MMS) has taken heat recently for its dual role of collecting revenue from oil companies in the form of taxes and fees, and policing their compliance with laws and regulations.

The MMS is a bureau of the US Department of the Interior. It collects a substantial amount of money for the federal government, second only to the IRS. The MMS web site indicates that it collects, manages and disburses $13.7 billion per year, including fees and revenues from oil leases.

Some respond that the oil companies are best at directing cleanup efforts because they have more and better resources and technology that the government. The US Coast Guard has the ultimate say and approval of cleanup efforts.

Questions for Your Attorney

  • My shrimp farm was harmed by the oil spill. How do I sue those responsible?
  • Can I testify before Congress during the hearings?
  • What does the oil spill and payment of claims mean for future gas prices?
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