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Deepwater Horizon Oil Spill Ruling: BP and Andarko Are Responsible Parties and Liable For Civil Penalties Under Clean Water Act

NEW ORLEANS - (Mealey's) The federal judge in Louisiana presiding over litigation stemming from the explosion of the Deepwater Horizon oil rig and ensuing oil spill in the Gulf of Mexico held Feb. 22  that BP PLC and Andarko Petroleum Co. are liable for civil penalties under the Clean Water Act (CWA) because they are both owners of the Macondo well, from which the oil was being discharged (In re:  Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico on April 20, 2010, MDL 2179, Case No. 10-md-2179;  United States of America v. BP Plc., et al., No. 10-4536, E.D. La.).

U.S. Judge Carl Barbier of the Eastern District of Louisiana also found that a question remains as to whether Transocean Ltd. is an "operator" under the CWA and if the company can therefore be held liable for civil penalties.  Judge Barbier explained that the statute's definition of an "operator" provides little guidance and that there are factual disputes as to whether Transocean meets the definition.  In reaching his decision, the judge also rejected Andarko's argument that Transocean's role as owner of the Deepwater Horizon warranted a finding that it was the operator of the rig.

"They [BP and Andarko] were the mineral lessees, they owned the well, and they stood to profit from the oil it produced," Judge Barbier said.  "Thus, Congress intended that the cost of pollution would be borne by these parties.  By contrast, Transocean was involved in the 'enterprise' by virtue of its contract with BP.  Transocean was a paid charter hire by BP; it did not stand to profit directly from the oil."

Offshore Drilling Rig Explosion and Oil Spill

The U.S. government sued BP, Andarko, Transocean, Halliburton Energy Services Inc. and MOEX Offshore 2007 LLC in December, claiming that the defendants were liable for penalties under the CWA and Oil Pollution Act of 1990 (OPA).  The government then moved for partial summary judgment against BP, Andarko and Transocean.  In the motions, the government requested declarations from the court that the defendants were liable under the statutes.

Judge Barbier found that BP and Andarko are responsible parties under the OPA for the subsurface discharge of oil from the Macondo well.  The judge also held that Transocean was not a responsible party under the act because it was the owner of the Deepwater Horizon oil rig, not the well. 

As a result of Judge Barbier's CWA ruling, BP and Andarko can be subject to penalties of $1,100 per barrel of oil spilled and up to $4,300 per barrel if there is a finding of gross negligence.  

The government is represented by Assistant Attorneys General Ignacia S. Moreno and Tony West in Washington, D.C., R. Michael Underhill and Patrick M. Casey of the Department of Justice in Washington and Steve O' Rourke of the Department of Justice in San Francisco. 

BP is represented by Don K. Haycraft and R. Keith Jarrett of Liskow & Lewis in New Orleans; Richard C. Godfrey and J. Andrew Langan of Kirkland & Ellis in Chicago; Granta Y. Nakayam, Stuart A.C. Drake and Jeffrey Bossert Clark of Kirkland & Ellis in Washington; Robert C. "Mike" Brock of Covington & Burling in Washington; and Joel M. Gross and Allison Rumsey of Arnold & Porter in Washington.  

Steven L. Roberts, Rachel Giesber Clingman, Kent C. Sullivan and Teri L. Donaldson of Sutherland, Asbill & Brennan in Houston, Kerry J. Miller of Frilot in New Orleans and Edward G. Preis Jr. and Edward F. Kohnke IV of Preis & Roy in Lafayette, La., represent Transocean. 

Ky E. Kirby, David B. Salmons, Michael B. Wigmore, Warren Anthony Fitch and Randall M. Levine of Bingham McCutchen in Washington represent Andarko. 

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