Washington's Legislative Response to the "Deepwater Horizon" Wellhead Blowout

The Washington State House of Representatives is considering Engrossed Second Substitute House Bill 1186 as a result of the "DEEPWATER HORIZON" wellhead blowout, explosion, and oil spill in the Gulf of Mexico.  The Bill is in response to any potential threat of a major spill to Washington's environment and lessons learned from the spill in the Gulf of Mexico. House Bill 1186 undertakes to amend RCW 88.46.060, 88.46.100, 88.46.090, 90.48.366, and 90.56.370, reenacting and amending our 46.10.010, adding new sections to Chapter 88.46 RCW.

Of particular interest is the addition of “vessels of opportunity response system” as defined in Section 2(27), a fleet of non-dedicated commercial vessels and crew under contract with and equipped by contingency plan holders to assist with oil spill response activities; Section 2(28) defines “regional vessels of opportunity response group”; Section 2(29)Volunteer coordination system”; and Section 2(30)Umbrella plan holder”.

New Section 3 requires the owner or operator of a tank vessel to establish or fund a vessel of opportunity response system with a sufficient number of participating vessels, at least six capable participating vessels are required to have best achievable technology for booming storage and recovery of oil with response equipment readily available to the individual vessels. The contingency plans for a tank vessel operating in Washington waters must provide for the organization and contracting of a vessel of opportunity response system to be fulfilled by one or more private organizations, non-profit corporations providing umbrella coverage under contract to single or multiple tank vessels. Each original vessel of opportunity response group must undergo a minimum of two drills a year with a planning goal of deploying six capable vessels at any one time.

New Section 4 empowers the Department of Ecology (“DOE”) to establish a volunteer coordination system as part Washington’s overall oil spill response strategy; empowering local governments to receive, screen and register volunteers who will be exempt from liability, except in the instance of gross negligence or willful and wanton misconduct.

New Section 5 sets forth provisions for rapid access to oil spill response and oil spill response equipment located within the State, the capacity for storage and proper disposal of oils.

New Section 6 sets out the department’s responsibility for ordering joint large-scale multiple plan equipment deployment drills of tank vessels every three years.

Old Section 7 has a new provision at (6)(b), whereby the department must notify the plan holder within 65 days of an initial or amended plan submittal to the department, as to whether the plan is disapproved, approved or conditionally approved.

New Section 8 requires that both tank vessels and covered vessels that are not tank vessels must, in addition to satisfying all other requirements of this chapter, specify the maximum worst case discharge volume from covered vessels that are not tank vessels, pursuant to the umbrella plan holders’ contingency plan and the maximum worst case discharge volume from tank vessels pursuant to the umbrella plan holders contingency plan.

Old Section 9 adds, in addition to notifications by the owner or operator of a covered vessel, that in addition to any notifications that the owner or operator of a covered vessel must provide the Coast Guard regarding a vessel emergency, the owner or operator of a covered vessel must notify the State of any vessel emergency that results in the discharge or substantial threat of discharge of oil to State waters, or that may affect the natural resources of the State.

Old Section 10 is revised to authorize the director to assess a civil penalty of $300,000 instead of $100,000 against the owner or operator of a vessel in violation of subsection (1) and (2) of Section 10.

Section 11 has amended the compensation schedule for the discharge of oil in violation of this chapter; for spills totaling 1,000 gallons or more in any one event, no less than $3 instead of $1 per gallon of oil spilled, and no greater than $300 as opposed to $100 per gallon of oil spilled; and for spills totaling less than 1,000 gallons in any one event, no less than $1 per gallon of oil spilled and no greater than $100 per gallon of oil spilled.

Old Section 12 has been amended to include the assessment of damages for which responsible parties are liable under this section to include loss of income, revenue, the means of producing income or revenue, or an economic benefit resulting from an injury or loss of real or personal property or natural resources. Recoverable costs include the costs to collect, investigate, perform surveillance over, remove, contain, treat, or disburse oil discharged into waters of the State.

New Section 13 requires the director of the DOE to formally request that the federal government contribute to establishment of regional oil spill response equipment caches of equipment.

New Section 15 requires all affected vessels to have new contingency plans approved by the DOE or updates to existing contingency plans, in compliance with Sections 3 and 5(3) by January 1, 2013, whereas all other Sections of the proposed Act must be complied with by October 1, 2011.

I believe Substitute House Bill 1186 warrants monitoring in light of some of the changes identified above and the costs to tank and covered vessel operators and owners as well as the potential opportunities opened up to vessel owners and operators to participate in the vessels of opportunity response system.

Gulf Oil Spill: U.S. government calls limitation request "unconscionable" - Transocean backs down

As was previously discussed on our firm website, Transocean--the owner of the oil rig DEEPWATER HORIZON--made waves by filing an action in U.S. federal court seeking to limit its liability for the catastrophic oil spill in the Gulf of Mexico to $26.7 million.

Recently, the U.S. Department of Justice decisively condemned this attempt to limit liability as "unconscionable."  Comparing Transocean to the owners of the infamous ocean liner RMS TITANIC, who also tried to use the Limitation of Liability Act, a letter from the Attorney General's office strongly criticized Transocean's move and sought confirmation from Transocean that it was not trying to limit its liability under the Oil Pollution Act of 1990.

Transocean responded quickly by "clarifying" that it never intended to limit its liability under the OPA through this filing and seemed to hastily retreat from the apparently broad sweep of its original limitation filing.

It seems that Transocean is trying to cover its bases legally, while avoiding too much heat from the authorities or from the general public.  Regardless of whether the limitation action succeeds, this will be a difficult tight-rope for Transocean to walk.

A longer discussion of these recent developments can be found on our website.

 

 

Transocean files for Limitation of Liability for Gulf Oil Spill damages

On May 13, Transocean, owner of the Deepwater Horizon rig that sank and caused the ongoing Gulf oil spill, has filed for limitation of liability under federal maritime law in a Houston court, seeking to limit its liability and stay all pending lawsuits against the company.

Many of the news reports to date have referred to limitation of liability as a "legal loophole" and suggested that it  is some obscure, little-used and out-of-date rule.  Although I am horrified by this disaster like most people, I think we should be wary of condemning the limitation of liability rule so simplistically.  Limitation has a long history and a valuable function.  It should not be abandoned or curtailed on the basis of one case, no matter how disastrous.

More to the point, limitation may well not apply. Many of the media reports do not mention that Transocean will only be able to limit its liability if it can show that the incident occurred without the "privity or knowledge" of the company.  This will be an uphill climb for Transocean, and limitation is far from certain.

While I certainly hope that the victims of this terrible disaster (including the U.S. taxpayer) are able to obtain fair damages from all responsible parties, we should be careful not to "throw the baby out with the bathwater" in our zeal to see wrongdoing punished and harm compensated.

A longer article about this case can be found at our website.