NEW ORLEANS (CN) – Halliburton Energy Services and Transocean Offshore Deepwater Drilling on Friday sought to dismiss two states’ economic damage claims in the consolidated Gulf of Mexico oil spill litigation. Both companies seek dismissal of claims from Alabama and Louisiana in Pleading Bundle C, which covers claims for economic damages filed by governmental entities.
Halliburton and Transocean, echoing arguments made previously by BP, said the oil spill is a matter for federal or maritime law, not state law, and is governed by the Oil Pollution Act.
The companies say Louisiana did not follow proper presentment procedure under the Oil Pollution Act, so its claims should be dropped.
If the claims are not dropped, Halliburton and Transocean say they should not be held liable anyway, because they are not considered “responsible parties” under the Oil Pollution Act.
Congress enacted the Oil Pollution Act after the 1989 Exxon-Valdez oil spill off the coast of Alaska. It was meant to provide a prompt, federally coordinated response to oil spills and to compensate innocent victims. One purpose was to identify a “responsible party” as a way of promoting settlement, to avoid litigation.
Ideally, the “responsible party” would take care of immediate payments to victims of the spill and would work out indemnification from other liable parties in private, down the road.
While BP is considered the “responsible party” according to OPA, Halliburton and Transocean have been named with several other defendants in the massive litigation that followed last year’s explosion of the Deepwater Horizon drilling rig that killed 11 and set off the worst oil spill in history.
Transocean was the manufacturer and owner of the Deepwater Horizon. Halliburton was responsible for the cement used to seal the well shortly before the explosion.
Transocean stated in its motion to dismiss: “BP has been designated the ‘responsible party’ under the Oil Pollution Act (OPA) for the downhole release of oil from the Macondo well. OPA’s § 2713 provides that all claims for removal costs or damages shall be presented first to the responsible party or guarantor of the source designated under § 2714 of OPA. Presentment of a claim in accordance with OPA’s § 2713 is a ‘mandatory condition precedent’ for commencing an OPA action in court against a responsible party. OPA’s presentment requirement is jurisdictional. For the state to be able to file suit, it must first satisfy OPA’s presentment requirement.”
At a hearing in May related to another pleading bundle, attorneys for BP said that thousands of plaintiffs had joined the litigation improperly and should be disqualified. Attorneys told the judge that litigants should have filed initial claims through BP’s Gulf Coast Claims Facility (GFFC), overseen by Kenneth Feinberg.
Also mimicking previous arguments on claims from other pleading bundles, Halliburton and Transocean claim that federal law overrides state law and that OPA governs how the oil spill litigation will be handled.
OPA “provides the exclusive federal remedy for the categories of oil spill-related damages,” the plaintiffs say. “As the exclusive federal remedial scheme for such damages, OPA specifically preempts or displaces maritime tort claims seeking damages such as those asserted by plaintiffs here,” Halliburton says in its motion to dismiss.
The master complaints filed by Alabama and Louisiana seek punitive damages for harm to the states’ water, beaches, marshlands and wildlife, and for loss of jobs, tax revenue and tourism.
But Halliburton and Transocean say the Clean Water Act expressly prevents state law from applying in any circumstance where a source of pollution comes from outside of the state.
Halliburton claims, “Supreme Court jurisprudence applying the Clean Water Act makes it clear that an affected state’s law cannot apply to a source of pollution outside the state’s territory. Moreover, pursuant to OCSLA [Outer Continental Shelf Lands Act], federal law applies to those cases that arise beyond the borders of any state’s territory on the OCS [Outer Continental Shelf], and OCSLA’s choice of law provisions plainly demonstrate that plaintiffs’ claims arise, if at all, under maritime law (not state law). Therefore, plaintiffs’ claims are maritime law claims, and are, therefore, preempted or displaced by OPA.” (Parentheses in original.)
Halliburton cites a 1987 Supreme Court ruling in Int’l Paper Company v. Ouellette, in which owners of lakeside property on the Vermont side of Lake Champlain asserted a nuisance claim against a paper company whose paper mill discharged pollutants into Lake Champlain from the New York side of the lake.
The Vermont landowners sought compensatory damages for diminution of property values, and punitive damages for the release of pollutants.
“After noting that ‘the control of interstate pollution is primarily a matter of federal law,’ the court concluded that ‘the CWA [Clean Water Act] precludes a court from applying the law of an affected state against an out-of-state source.’ … The court noted that the only state law that can be applicable to an interstate discharge is the ‘law of the state in which the point source is located,'” Halliburton says.
Halliburton and Transocean say that OPA will ultimately trump even federal or maritime law.
But should the court find the plaintiffs’ claims were not offset by OPA, the oil-spill plaintiffs would still have no claim against the companies because the plaintiffs seek economic damages but fail to show physical injury that warrants the damages, Halliburton says.
Both Halliburton and Transocean cite Robbins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 309 (1927): “It is unmistakable that the law … does not allow recovery of purely economic claims absent physical injury to a proprietary interest in a maritime negligence suit.”
Specific allegations in the consolidated litigation are grouped into “bundles” as a way for presiding U.S. District Judge Carl Barbier to organize the almost 400 civil complaints filed in this matter.
At the last status hearing, Barbier estimated plaintiffs in this litigation number somewhere between 120,000 and 130,000.
Halliburton’s motion was filed in Federal Court by Donald Godwin of Dallas.
Transocean’s motion was filed by Kerry Miller of New Orleans.