U.S. Slams Transocean’s Attempt to Limit Liability for Oil Spill

By | May 26, 2010

The Obama administration Tuesday slammed as “inappropriate” an attempt by Transocean Ltd to limit its liability for its role in the BP Plc oil spill in the Gulf of Mexico to under $27 million.

Noting that the law the company cited was famously used by the owners of the Titanic cruise ship after it sank, Associate Attorney General Thomas Perrelli told the Senate Energy and Natural Resources Committee that the administration would soon file its opposition to the move.

“We are not a party to that action, but we have already responded to Transocean and I imagine we will also make a filing in that case explaining in the strongest possible terms that what Transocean is attempting to do there is inappropriate,” he said.

Transocean filed on May 13 in a U.S. district court in Houston to limit its liability under federal law to the value of its interest in the rig and its freight, including accounts receivable, as of April 28, or $26,764,083.

The company cited an 1851 law that originally was passed to help U.S. shipping firms compete abroad. Perrelli said that a later law repealed the liability limits in the 160-year-old measure and set new ones.

Many lawmakers have been angered that a 1990 law caps economic damages for responsible parties at $75 million per spill.

“On this question of whether they can limit their liability through this action that they have filed, we believe in the strongest possible terms, and will make that clear, that they cannot,” Perrelli said.

The companies involved in the spill — triggered after an explosion aboard Transocean’s Deepwater Horizon rig that killed 11 people — face scores of lawsuits for liabilities and damages.

Perrelli declined to answer senators’ questions about whether the Justice Department has begun or would begin an investigation of Transocean and BP for the spill that is now in its fifth week.

Senators on the panel excoriated Transocean for its tactics.

“For a company that said it did nothing wrong, this company is working pretty hard to insulate itself from being held responsible for an accident involving its own drill rig and crew,” said Democratic Senator Ron Wyden.

The case is 10-cv-01721 in U.S. District Court for the Southern District of Texas.

(Reporting by Jeremy Pelofsky; Editing by Xavier Briand)

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