Bloomberg News

Transocean Fighting Subpoenas in CSB Probe of Deepwater Horizon

April 11, 2012

Transocean Ltd. (RIG:US) asked a U.S. judge to block the U.S. Chemical Safety Board’s investigation of the fatal explosion of the Deepwater Horizon on claims the agency lacks authority to probe offshore rig disasters.

The world’s largest offshore drilling company has been fighting agency subpoenas for more than a year. The CSB seeks information related to the 2010 explosion that killed 11 workers and sparked the BP Plc (BP/) oil spill in the Gulf of Mexico, the worst offshore spill in U.S. history.

“The CSB lacks jurisdiction to investigate the Macondo incident,’’ Steven Roberts, one of Transocean’s lawyers, said in a court filing yesterday, referring to the BP well that blew out off the coast of Louisiana. Transocean contends the CSB only has investigative authority on shore and can’t probe either marine oil spills or disasters involving facilities floating outside of U.S. territorial waters.

Transocean’s lawyer David Baay told U.S. District Judge Lee Rosenthal in a hearing in Houston federal court today that the agency can’t “unilaterally expand’’ its authority to the outer continental shelf without Congressional authorization. He said CSB would’ve investigated earlier fatal hazardous-substance releases in non-territorial waters if the agency believed it had authority there.

“Have there been similar releases of this magnitude?’’ Rosenthal asked Baay.

Unique Magnitude

“The magnitude here may be unique but there have certainly been ambient releases before’’ in outer continental shelf waters, Baay replied. The Deepwater Horizon blast occurred “where they’ve never conducted an investigation before.’’

Rosenthal asked CSB’s lawyer why the agency had skipped investigating earlier offshore disasters. “So you are saying, ‘We had the authority but we didn’t use it because there was never a release of sufficient magnitude and with these consequences to justify it?’’’ she said.

Assistant U.S. Attorney Adam Goldman, CSB’s attorney, confirmed that was the agency’s position.

Transocean Deepwater Drilling didn’t fully comply with “38 of 39 specific demands’’ in five subpoenas CSB issued between November 2010 and April 2011, Donald Holmstrom, the agency’s lead investigator for the Deepwater Horizon, said in court filings. Among other “critical’’ information, CSB said, the Vernier, Switzerland-based driller has refused to turn over contact information for rig witnesses or safety studies on Transocean’s policy of requiring crews to work 21 consecutive days of 12-hour shifts while offshore.

Began Investigation

The CSB began investigating the April 20, 2010, blowout in June of that year, at the request of several representatives of the U.S. Congress. A year later, Transocean’s lawyers told the agency it should leave any investigation to the Environmental Protection Agency or the U.S. Coast Guard, which has authority over marine spills.

CSB counters that it is investigating the deadly explosion, not the oil spill that followed.

“The reason we’re here has nothing to do with the oil spill,’’ Goldman, CSB’s lawyer, told Rosenthal. “The reason we’re here has to do with the loss of 11 lives’’ in an explosive release of hazardous substances.

CSB and Transocean also disagree on whether the Deepwater Horizon, as a floating drilling rig, should be considered a vessel or a stationary installation. Transocean said the rig is a vessel, which would place it outside of CSB’s investigative reach. The agency said it considers it a stationary installation because the rig was attached to the sea floor by several miles of drill pipe and seabed-based equipment at the time of the blast.

Statutory Responsibility

BP, which has acknowledged statutory responsibility for the oil spill, sued Transocean and other contractors on the Macondo project over actions BP claims helped cause the blast. Both London-based BP and Transocean face potentially billions of dollars in fines for alleged violations of U.S. pollution laws in the incident.

The New Orleans judge in charge of hundreds of consolidated oil-spill damage lawsuits postponed a trial, originally set to begin in February, over which companies share fault for the Deepwater Horizon explosion. That trial may be rescheduled after a hearing next month over details of BP’s out-of-court settlement with victims of the spill.

The case is U.S. v. Transocean Deepwater Drilling Inc., 4:11-cv-3638, U.S. District Court, Southern District of Texas (Houston).

To contact the reporter on this story: Laurel Brubaker Calkins in Houston federal court at

To contact the editor responsible for this story: Michael Hytha in San Francisco at

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