Another ruling came down from the Texas Supreme Court involving BP’s Macondo accident. This time, the courts ruled that BP couldn’t claim the estimated US$700 million in insurance carried by Transocean at the time of the spill in 2010.
Deepwater Horizon response efforts.
Image from USCG.
The courts ruled that BP was only covered by Transocean’s insurance for pollution on the water’s surface, not under it.
The ruling states that BP is not entitled to coverage under the Transocean insurance policies for damages arising from subsurface pollution because BP, not Transocean, assumed liability for such claims.
According to the courts, Transocean and its insurers dispute that BP is entitled to coverage for liabilities it expressly assumed in the drilling contract, but not entitled to additional-insured coverage for pollution-related liabilities arising from subsurface oil releases in connection with the Deepwater Horizon incident.
BP was the operator of the Macondo well. Transocean owned and operated the Deepwater Horizon rig that caught fire after an explosion and fully submersed after burning for more than a day.
The 2010 Deepwater Horizon accident spilled millions of barrels of oil into the Gulf of Mexico at alarming rates for three consecutive months and claimed 11 lives. It’s known as the largest and worst oil spill to occur in US history.
Last month, a US federal district court judge in Louisiana ruled that Macondo discharged 3.19 million barrels of oil into the Gulf of Mexico, in which BP faces a maximum $13.7 billion fine under the US Clean Water Act. Under the act, the maximum penalty is $1100 per barrel for simple negligence and $4300 per barrel for gross negligence or willful misconduct.
Judge Carl Barbier, representing the Eastern District of Louisiana, wrote in his 44-page ruling that BP was not “grossly negligent, reckless, willful, or wanton in its source control planning and preparation.” The judge continued that there was no way to know exactly how much oil spilled into the Gulf of Mexico, but that the court relied on expert testimony to come to an approximate amount.
In January 2013, the US Department of Justice announced that Transocean agreed to plead guilty for its role in the Macondo accident and pay $1.4 billion in both criminal and civil fines.
Transocean pled guilty to one misdemeanor violation of the Clean Water Act for negligent discharge of oil into the Gulf of Mexico and receive five years probation in addition to the fines. Transocean agreed to pay fines over a five-year period.