Transocean Seeks To Cap Oil Spill Liability At $27M


Facing pressure from their insurers, several Transocean Ltd. units moved Thursday to limit to about $27 million their potential liability for the BP PLC-operated Deepwater Horizon rig blast that has spewed thousands of barrels of oil into the Gulf of Mexico.

The complaint, filed in the U.S. District Court for the Southern District of Texas, seeks protection from the more than 100 suits the Transocean units already face over the spill, which by early projections may cost more than $3 billion to clean up.

Triton Asset Leasing GmbH, Transocean Holdings LLC, Transocean Offshore Deepwater Drilling Inc. and Transocean Deepwater Inc., which owned or operated the Deepwater Horizon, assert that under the federal maritime Limitation of Liability Act they should have either no or limited liability for any claims stemming from the April 20 explosion.

The companies also say they should not be liable for claims brought under the Oil Pollution Act — passed in 1990 in the wake of the Exxon-Valdez spill — over the oil leaking from the damaged BP well.

The oil spill liability limit under that law is currently capped at about $75 million, but the Obama administration has supported a retroactive alteration of that benchmark that could raise it to as much as $10 billion.

The Transocean units maintain that they were not negligent and neither caused nor contributed to "any and all injury, loss, destruction and damage" from the blast.

The rig — a fifth-generation mobile offshore drilling unit — was in "good order and condition and suitable for the service in which the vessel was engaged," the complaint alleges.

The petition also seeks an injunction blocking current or future suits against the Transocean companies over the spill and asks the court to instruct all interested parties to file their claims against the Transocean units with the Texas court.

The plaintiffs have agreed to stipulate to their roughly $26.8 million interest in the ship and provide that amount plus about 6 percent yearly interest as a security payment to the court.

Transocean said Thursday that its insurers had instructed it to file the petition for limited liability, describing the move as "necessary to protect the interests of its employees, its shareholders and the company."

The company has disclosed that the fully insured value of the rig is $560 million, and its major insurers, including Lloyd's of London, are expected to offset most of its tab, according to John G. Nevius, an environmental insurance expert and shareholder at Anderson Kill & Olick PC.

Part of Transocean's goal is to consolidate the various suits over the spill in one court and create a single fund to pay legitimate claims, the company said.

BP has already asked the U.S. Judicial Panel on Multidistrict Litigation to consolidate all the cases over the Deepwater Horizon blast, currently scattered mainly in courts around the Gulf area, in the Southern District of Texas.

Transocean said Thursday that it would still offer "all possible support" to BP and the Unified Command dealing with the spill. A BP spokesman declined to comment on Transocean's suit Thursday, but said his company had no plans to file a similar limitations action.

Transocean said its focus was on helping its injured employees and the family members of its deceased workers. The company plans to try to resolve matters with its employees as quickly as possible but said it would wait until after the upcoming memorial service to do so.

Attorneys representing the family of one of the Transocean workers believed to have been killed in the blast, however, questioned the company's commitment. Kurt Arnold of Arnold & Itkin LLP said the current "shameful legal filing ... is intended solely to protect the company's interests."

"They haven’t even said they’re sorry, much less take responsibility," Arnold said. "Now, they’re running off to court in hopes of getting a ruling that will limit their liability to what is on the bottom of the ocean."

Arnold also pointed out that Transocean waited to file the limitation petition until the day after CEO Steven Newman faced questions from the House Energy and Commerce subcommittee on oversight and investigations.

Transocean Holdings LLC and the other plaintiffs are represented by Preis & Roy PLC, White Mackillop & Gallant PC and Phelps Dunbar LLP.

The case is Triton Asset Leasing GmbH et al., case number 4:10-cv-01721, in the U.S. District Court for the Southern District of Texas.

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