TransOcean Petitions to Limit Oil Spill Liability

TransOcean Ltd., owner of the doomed Deepwater Horizon oil rig, has filed a petition in federal court asking that its liability for the disaster be limited to just under $27 million. According to a press release issued by TransOcean, the step is necessary to protect the interests of its employees, its shareholders and the company.

The Deepwater Horizon drilling rig, which TransOcean leased to BP PLC, exploded off the coast of Louisiana on April 20 and sank two days later. Eleven rig workers missing since the blast are presumed dead. The explosion also spawned a massive oil spill that now threatens much of the Gulf Coast.

According to a report in The Wall Street Journal, TransOcean’s petition was filed in U.S. District Court in Houston under a century-and-a-half-old federal law, the Limitation of Shipowner’s Liability Act, that was originally aimed at helping U.S. ship owners compete with foreign-flagged vessels. Under that law, a vessel owner is liable only for the post-accident value of the vessel and cargo, so long as the owner can show he or she had no knowledge of negligence in the accident, the Journal said.

According to the Journal, drilling rigs count as vessels under U.S. maritime law. The petition puts the value of the sunken Deepwater Horizon rig and its contents at no more than $26,764,083. The rig had been valued at $650 million before the accident.

While the law very rarely helps companies limit liability, it can allow a defendant to gain some control over the legal process. Limitation of Liability proceedings not only give the petitioners first say in a venue for litigation, but they also keep the case in front of a judge and away from a jury, the Journal said.

In its press release, TransOcean said one of the primary goals of the filing is to consolidate in a single court many of the lawsuits that have been filed following the Deepwater Horizon accident. To that end, TransOcean has asked the court for an injunction restraining certain lawsuits underway against it and several affiliated companies in any jurisdiction other than the Southern District of Texas.

The petitioning companies in the action are Triton Asset Leasing GmbH, owner; Transocean Holdings LLC, contract operator; Transocean Deepwater Inc., employer of Deepwater Horizon crew, and Transocean Offshore Deepwater Drilling Inc., employer of land-based crew.

According to the petition, more than 100 lawsuits stemming from the Deepwater Horizon disaster have been filed against TransOcean and its affiliated companies in multiple states and courts.