BP, feds appeal ruling limiting Transocean’s spill liability

The Justice Department and BP are appealing a court ruling limiting Transocean’s liability for oil spilled into the Gulf of Mexico in the 2010  Deepwater Horizon disaster.

In  filings Wednesday with the 5th U.S. Circuit Court of  Appeals, the government and BP challenge a February interpretation of the Oil Pollution Act by the federal judge overseeing litigation arising from the oil spill.

U.S. District Judge Carl Barbier ruled that Transocean — which owned and operated the Deepwater Horizon drilling rig that was working on BP’s Macondo deep-water well– is not liable for oil discharged below the surface of the water, effectively shielding it from billions of dollars of fines for environmental and economic damage to the Gulf Coast.

The judge also ruled then that BP and Macondo co-owner Anadarko Petroleum would be held liable for Clean Water Act fines. Another co-owner, MOEX Offshore 2007, a unit of Japan’s Mitsui, settled previously with BP and with federal and state governments.

The Macondo blew out on April 20, 2010, triggering an explosion that destroyed the rig and killed 11 workers. The government estimates that almost 5 million barrels of crude gushed into the Gulf before the well was capped nearly three months later.

Loyola University law professor Blaine LeCesne, who is following the case closely, said the government may be trying to raise the pressure on Transocean to agree to a settlement.

“If they can get Transocean back on the hook for the full scope of Clean Water Act penalties and Oil Pollution Act damages, it will give the government significant leverage in settlement negotiations,” LeCesne said. “And if there isn’t a settlement, they would have another deep pocket to look to for payment.”

BP long has contended that Transocean should share liability.

While the filings with the 5th Circuit Wednesday don’t detail the legal issues, the Justice Department argued in the past that Transocean should be held liable for oil spilled under the water because it was an owner and operator of the drilling rig involved in the accident.

The court will set a schedule for the parties to submit their briefs spelling out their arguments.

Transocean spokesman Jared Allen said the company “remains fully confident in the merits of its case.”