Louisiana Says Transocean’s Trying|to Limit Its Liability to the Surface

NEW ORLEANS (CN) - Louisiana wants to be sure that Transocean and the co-owner of the Deepwater Horizon oil rig are held responsible for the "underwater discharges of oil in the Gulf of Mexico." The state attorney general claims that "Transocean incorrectly construes its liability" under the Oil Pollution Act of 1990 "to mean that its liability is restricted to surface discharges only."

Attorney General Buddy Caldwell wants three Transocean entities and Triton Asset Leasing held liable under the Oil Pollution Act and the Louisiana Oil Spill Prevention and Response Act for oil that spilled not only from the Deepwater Horizon rig, but from the Macondo Prospect well that burst in the rig's explosion.

The broken well leaked millions of barrels of oil into the Gulf of Mexico.

"Transocean Holdings and BP have been designated by the U.S. Coast Guard as responsible parties," under the Oil Pollution Act, according to the federal complaint.

The Oil Pollution Act of 1990 defines "discharge" broadly, to include "'any emission (other than natural seepage), intentional or unintentional, and includes, but is not limited to, spilling, leaking, pumping, pouring, emitting, emptying, or dumping,'" the complaint states.

But "Transocean incorrectly construes its liability under OPA Section 2704(b), to mean that its liability is restricted to surface discharges only," according to the complaint.

The Deepwater Horizon, which exploded, carried about 700,000 gallons of fuel. But "The discharge from the Macondo Prospect is estimated at 5 million barrels of oil, or 210 million gallons of oil," the complaint states.

Citing letters from Transocean's attorneys, the attorney general says, "Transocean has denied that it is a responsible party for the discharge emanating from the Macondo Prospect. Transocean claims it is responsible only for discharges emanating from the rig."

The attorney general doesn't buy it: "Transocean's denial of liability contravenes OPA and OSPRA. That denial is also at odds with the State of Louisiana as it affects Louisiana's ability to seek recovery of costs and damages related to this oil spill from the responsible parties designated under OPA and OSPRA."

The complaint states: "Counsel for Transocean Holdings LLC responded to the United States Coast Guard on May 3, 2010, confirming Transocean Holdings LLC fka Transocean Holdings Inc. as a responsible party for oil discharge that occurs on or above the surface of the water but stating: 'To the extent your letter of April 28, 2010 is intended to designate Transocean as a responsible party for any underwater discharges of oil from the well head, Transocean [sic] denies your designation of it as a responsible party.'" (The word "sic" is in brackets in the complaint.)

BP America Production Company had a drilling contract with Transocean Holdings LLC for the Deepwater Horizon, to perform offshore drilling services at the Macondo Prospect. BP holds a 65 percent ownership and operation stake in the Macondo well, according to the complaint.

"Under the terms of the contract, Transocean Holdings LLC was responsible for the operation of the Deepwater Horizon and had responsibility for the safety of all its operations. Transocean was also required to maintain well control equipment in accordance with good oil field practices and to use all reasonable means to control and prevent fire and blowouts," the complaint states.

The attorney general says Transocean's Quarterly Report of Aug. 4, 2010 says the '"OPA imposes strict liability on responsible parties of vessels or facilities from which oil is discharged into or upon navigable waters or adjoining shorelines. ... We believe that the owner or operator of a mobile offshore drilling unit ('MODU'), such as Deepwater Horizon, is only a responsible party with respect to discharges from the vessel that occur on or above the surface of the water. As the responsible party for the Deepwater Horizon, we believe we are responsible only for the discharges of oil emanating from the rig. Therefore, we believe we are not responsible for the discharged hydrocarbons from the Macondo well.'" (Ellipsis in complaint.)

The Oil Pollution Act caps liability at $75 million in addition to the costs of removal. The limitation of liability does not apply if the incident was caused by gross negligence, willful misconduct, or violation of an applicable federal regulation, according to the complaint.

"The State of Louisiana and the State Trustees, through the Louisiana Attorney General, are authorized and obligated to take affirmative action in order to protect those resources that are held in trust for the citizens of Louisiana. The claims for declaratory relief sought herein against defendants are asserted so that the State may properly and adequately protect, assess and recover for those public resources injured by defendants," the complaint states.

Louisiana sued Transocean Holdings LLC, Transocean Offshore Deepwater Drilling Inc. and Transocean Deepwater Inc., along with Triton Asset Leasing GmbH, based in Zug, Switzerland.

It seeks "declaratory judgment that Transocean is a responsible party under the Oil Pollution Act for all hydrocarbons discharged from the Macondo well, including underwater discharges of oil from the well head," and a similar declaration under the Louisiana Oil Spill Prevention and Response Act.

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