Bloomberg News

BP Must Face Gulf Spill Claims From Alabama and Louisiana

November 17, 2011

(Updates with Alabama comment in 11th paragraph.)

Nov. 15 (Bloomberg) -- BP Plc must face claims under federal maritime law, though not under state law, in suits brought by Louisiana and Alabama over the 2010 oil spill in the Gulf of Mexico, a judge said.

The states can sue for negligence and products liability under general maritime law and are eligible for punitive damages, U.S. District Judge Carl Barbier said yesterday. He dismissed claims brought under state environmental laws, including demands for civil penalties, finding they were preempted by federal law governing the Outer Continental Shelf.

“Because the source of this discharge occurred within an exclusive federal jurisdiction, the OCS, the only available law is federal law,” Barbier said in a written decision. “The state-law claims are dismissed.”

The Macondo well blowout and the explosion that followed killed 11 workers and set off the worst offshore oil spill in U.S. history. The accident and spill led to hundreds of lawsuits against London-based BP and its partners and contractors, including claims brought by Alabama and Louisiana alleging state law violations.

Also sued were Transocean Ltd., the Switzerland-based owner and operator of the Deepwater Horizon drilling rig that exploded; Halliburton Co., which provided cementing services; Cameron International Corp., which provided blowout-prevention equipment; and BP’s minority partners in the well, Anadarko Petroleum Corp. and Mitsui & Co.’s Moex Offshore LLC unit.

Most of the defendants argued that the federal Clean Water Act and Outer Continental Shelf Act trumped all claims under state law and that the Oil Pollution Act displaced maritime law claims as well, the judge said in his order.

Claims of Negligence

Barbier noted that he previously decided in suits brought by private parties that “claims of negligence and products liability under general maritime law were not preempted by OPA, provided that the plaintiff alleged either physical injury to a proprietary interest or qualified for the commercial fisherman exception.”

He applied this finding to the states’ claims yesterday. He also dismissed their claims of nuisance and trespass brought under maritime law.

“The court’s opinion makes clear, as BP has long maintained, that state law penalties are unavailable to plaintiffs who have sought them,” Scott Dean, a BP spokesman, said in an e-mail.

Louisiana ‘Disappointed’

“We are disappointed with the judge’s ruling,” Amanda Papillion Larkins, a spokeswoman for Louisiana Attorney General Buddy Caldwell, said in a e-mail today. “Our attorneys are reviewing the decision to recommend an appropriate course of action.”

Alabama Attorney General Luther Strange said he was also reviewing the decision. “My primary concern regarding the oil spill is that BP and other defendants must be held responsible for the damage and harm caused to our states,” Strange said in an e-mail. State officials are “evaluating our options,” he said.

John Christiansen, a spokesman for The Woodlands, Texas- based Anadarko, declined to comment on the ruling.

Brian Kennedy, a spokesman for Transocean, said the company “continues to have full confidence in the strength of its contractual indemnities.” Transocean has said in court filings that its drilling contract with BP protects it from paying any damages related to the spill.

‘Variety of Damages’

“The states allege that the oil spill caused a variety of past, present, and future damages, including damage to natural resources and property, economic losses (including lost revenues, such as taxes), costs associated with responding to the oil spill and performing removal actions, costs associated with providing increased or additional public services, and the long-term reputation damage or ‘stigma’ associated with the oil spill,” Barbier said.

The states are likely to recover all their removal costs under OPA, Barbier said yesterday.

“If OPA’s liability cap does not apply, then the states may recover all OPA damages as well,” he said. BP has waived the $75 million damage cap under the Oil Pollution Act, he noted.

Under OPA, the states can recover “damage to natural resources and property, lost revenues and profits, and the cost of providing additional public services,” 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).

--With assistance from Laurel Brubaker Calkins in Houston. Editors: Peter Blumberg, Stephen Farr

To contact the reporters on this story: Margaret Cronin Fisk in Detroit 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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