Seattle Maritime Law Blog : Seattle Maritime Lawyers & Attorneys : Mikkelborg Broz Law Firm : Collision and Salvage, Fisheries, Jones Act : Seattle, Washington

By Mark Fahrenkrug and Lafcadio Darling

On June 2, 2010, U.S. District Judge Martin Feldman ruled that the Federal government had acted in an arbitrary and capricious manner when deciding to impose a deep water drilling moratorium in the Gulf of Mexico, and concluding it therefore could not stand.  This ruling was the result of a legal challenge to the moratorium mounted by several parties who work in the oil extraction industry in the Gulf. 

In his ruling, Judge Feldman took particular note of disagreement by some members of the panel advising the “National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling,” as to the scientific support for the hazards posed by deep drilling.  Based on this finding, the Judge enjoined the moratorium; not surprisingly, the government plans an emergency appeal, which will no doubt ask the 5th Circuit Court of Appeals to enter an injunction until a full appeal can be entertained.

In a statement issued on the same day, U.S. Secretary of the Interior Ken Salazar defended the moratorium, vowing to issue a further moratorium order that addresses the District Court's concerns.

This case not only involves one of the largest environmental and economic disasters in United States history, but also implicates other issues such as separation of powers and the proper role of regulators of activity on public land after permits have been issued but in the face of changing circumstances.

Stay tuned, as this story is bound to quickly develop in interesting ways.

The text of the District Court's ruling can be found here.
 

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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.

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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.

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