Judge ruling on Anadarko liability may move settlement talks


Anadarko’s incentive to settle with the federal government likely increased with Wednesday’s court decision finding it liable for the Deepwater Horizon accident as a partial owner of BP’s Macondo Well.

U.S. District Judge Carl Barbier ruled that Anadarko and BP are both liable under the Clean Water Act for oil pollution resulting from the April 20, 2010 explosion and oil spill. The act sets fines up to  $1,100 per barrel spilled through negligence, or $5.5 billion based on the federal estimate that about 5 million barrels of crude gushed into the Gulf before the blown-out well was capped.

The fine can rise significantly with a finding of gross negligence.

Barbier is scheduled to begin  trial Monday in a case combining multiple government, corporate and individual lawsuits, after which he will apportion liability for the disaster.

In his ruling Wednesday, he put off until he hears evidence a decision on whether Transocean, which owned and operated the Deepwater Horizon drilling rig, was an operator of the well and therefore also liable for Clean Water Act penalties.

Barbier’s decision that Anadarko does share liability was a pre-trial summary judgment, meaning that the fact of Anarako’s co-ownership of the well was undisputed and he could apply appropriate law to that fact.

An analyst said the decision may speed up a settlement between Anadarko and the federal government, especially in light of the government’s settlement last week with Mitsui, the third Macondo co-owner. Mitsui paid $90 million – roughly $180 per barrel – to the U.S. and five states for violating the Clean Water Act.

“If I were Anadarko, I would be happy to settle on the $180 dollar per barrel precedent,” said Robert Kessler, an analyst with Tudor Pickering, who calculated Anadarko’s potential fine on the basis of its share of ownership. “That would seem to work out to $225 million. If I am an Anadarko attorney, there is no real distinction between myself and Mitsui, who also had a non-operating interest in the well. Anadarko already agreed to settle with BP at $4 billion, so $225 million is a relatively small item to remove what has the potential to be very large fines. The Mitsui precedent for Anadarko is very reasonable.”

BP, by contrast, could still face liability for gross negligence as the owner with operating interest in the Macondo well.

BP’s ownership share in the Macondo well was 65 percent, Andarko’s was 25 percent and Mitsui’s was 10 percent.

Emily Pickrell

9 Responses

  1. Trail_Tramp says:

    It’s “co-ownership” of the well not the lease. Anadarko signed contracts with BP forming a partnership for the drilling of the well. For example, someone with an override royalty on the lease, would not be liable for pollution caused by a blow out from the drilling of the well.

  2. Adler says:

    The problem with attempting to assess this penalty is that there is no definite volume for the spill. It defintely appears to be exaggerated.

    The PEMEX Ixtoc 1 well flowed for nearly a year, yet somehow given nearly identical well parameters, Macando flowed more in 3 months. Highly unlikely.

  3. theallknowingone says:

    Love to watch the RWNJs run to back their corporate masters.

  4. KB says:

    It’s kind of funny that we debate and litigate how much someone should pay for “spilling” what the earth made to begin with.

  5. ntangle says:

    HS7 – Why so surprised? Financial responsibility (to the USG) has been defined at least as far back as OPA-90. Its “responsible parties” are DEFINED as the leaseholders or fractional leaseholders. As the article states, Anadarko’s ownership stake wasn’t in dispute.

  6. CAD1936 says:

    We need SAFE EXPLORATION AND DEVELOPMENT. BP has shown little effort toward that end. Even their courtroom agreements to increase safety in certain places was not live up to and forced the court to fine them $50M.

    I feel like the Brazilians. If a foreign company comes in and grossly abuses our environment, employee safety and the health and/or welfare of the American people, they should not be allowed to do business in this country!

    They cannot let this case go to trial because the American people will be shown just how arrogant, abusive and how those in the industry so commonly violate laws, rules and regulations. I just hope the judgment of the court will be large enough to get the CEOs and Board Members of these monolithic companies and that no part of the evidence is put under seal.

    They justify their conduct simply by saying we are too important for you common citizens and your government to mess with and we can buy our way outa anything so scr+w you.

  7. Observer says:

    And please don’t forget to pull in the Federal and State Governments as interested parties since they stood (stand when and if BP is finally allowed by Obama to develop this very valuable and potentially productive lease)to be huge beneficiaries from future royalties and taxes.

    Surely they had just as much responsibility for the Macondo fiasco as did limited partners Mitsui and Anadarko.

    Oh yeah, the Obama administration has done so much to facilitate and encourage the exploration and development of the offshore.

  8. Hotshot007 says:

    Stupid is as stupid does.

    Will this ruling extend ‘negligence’ to 1% working interest owners, 0.001% owners and 0.00001 working interest owners who have elected to ‘non-consent’ on a drilling prospect? Is everybody now ‘NEGLIGENT’? It is a LIMITED partnership.

    That ruling is really going to cause some trouble in the oil patch. The operator is, and has always been, the culprit. Responsibility without authority … is absurd!

    Is every partner in a law firm NEGLIGENT because one lawyer did something stupid?

    Dangerously STUPID …

  9. mark says:

    More money to fuel the EPA machine. Where does all the money from the fines go. Not to the people affected, but into some unknown general fund that gives it all to foreign aid.