One of the biggest ways that our legal system contributes to enormous, high-risk accidents, is to allow those responsible to limit their financial liability. This allows them to raise money from investors, and obtain insurance, for high-risk activities that the government wishes to support. Canada does this for the nuclear industry with the Nuclear Liability Act. The US does it for offshore drilling with the Limitation of Shipowner’s Liability Act, 1851, now Title 46, U.S. Code, Sections 30501, et seq, and the 1990 Oil Pollution Act.
It is not yet clear how this limit will apply to the giant oil spill in the Gulf of Mexico. BP has said that it will pay all damages related to the spill, regardless of the $75 million statutory limit. Other potentially liability parties, however, are taking the opposite position.
Transocean Ltd., owner and operator of the MODU Deepwater Horizon oil rig, filed a petition in U.S. District Court for the Southern District of Texas (Houston), seeking to limit its liabilities for all claims (i.e., any loss of life, injury, loss, destruction and damage), resulting from the accident to approximately $27 million. With more than 100 lawsuits already filed against its companies in a number of states and courts, Transocean is seeking to limit its liability to the value of its interest in the rig and its freight, including accounts receivable as of April 28, or $26,764,083.
Moreover, the company wishes to consolidate many of the lawsuits that have been filed in a single court before one federal judge in Houston, where Transocean’s U.S. operations are based.
The Switzerland-based Transocean said it would establish a single fund from which legitimate claims may be paid.
U.S. District Judge Keith Ellison has agreed to allow Transocean and the other rig co-owners to deposit $26.7 million with the court to create a fund against which parties claiming spill-related damages may file claims.
On the other hand, the company’s proposal for a liability cap is still pending. Meanwhile, the U.S. Congress is considering laws to increase the liability cap, perhaps to $10 billion. in
Meanwhile, oil is still spewing from the exploded well.