Liability issues raised by the Deepwater Horizon blowout

• Author: Martin Davies
• Position: Admiralty Law Institute Professor of Maritime Law, Tulane University Law School; Director, Tulane Maritime Law Center; Professorial Fellow, Melbourne Law School
• Pages: 35-48

(2011) 25 A&NZ Mar LJ

LIABILITY ISSUES RAISED BY THE DEEPWATER HORIZON BLOWOUT

Martin Davies*

1 Introductio n

The mobile offshore drilling unit (MODU) Deepwater Horizon sank off the coast of Louisiana on 20 April 2010

after a massive explosion and fire. At the time, there were 126 crew members on board. Eleven were killed in the

explosion and many were injured. The drill pipe and riser connecting the MODU to the undersea oil and gas

reservoir fractured and oil and gas began to pour from the subsea well into the ocean. The blowout continued for

three months until the we ll was finally capped on 15 July 2010. The oil caused extensive damage to marine and

wildlife habitats, closed down the rich fishing grounds off the coast of Louisiana and had a significant impact on

tourism along the Gulf of Mexico coast. The liability issues raised by the blowout are very complex. Hundreds of

lawsuits have been commenced in both federal and state courts against B.P., the lessee of the well site, Transocean,

the owner of the Deepwater Horizon, Halliburton, the contractor in charge of cementing the ri ser pipe that failed,

Cameron International, the manufacturer of the blowout preventer that failed, and others. The federal cases have

been consolidated in the U.S. District Court for the Eastern Distr ict of Louisiana in New Orleans. 1

They will all be

heard by one judge, Judge Carl Barbier. Many cases continue in state court.

The principal cause of the complexity attendi ng the liability issues is the fact that, unlike Australia and New

Zealand, the United States d oes not have a single common law. Each state has i ts own common la w. Louisiana, the

state most badly affected by the blowout, is a mixed jurisdiction, as it also has a civil code. Altho ugh the law varies

considerably from state to state, maritime cases are governed by federal law: either Acts of the federal U.S.

Congress or uniform ge neral maritime la w. There is no federal common law except for general maritime law. The

constitutional and federalism issues raised by a case like the Deepwater Horizon are al most bizarrely complex. This

article will give an overview of the main liability issues.

2 The Outer Continenta l Shelf La nds Ac t (OC SLA)

The Deepwater Horizon was positioned about 41 nautical miles off the coast of Louisiana, outsid e the territorial

waters of the United States, which end at 12 nautical miles. T he vessel was registered in the Marshall Islands. There

would be no basis for applying U.S. law to a foreign-flagged vessel on international waters were it not for the Outer

Continental Shelf Lands Act (OCSLA).

OCSLA, 43 U.S.C. § 1333(a)(1) makes ‘the Constitution and laws and civil and po litical jurisdiction of the United

States’ apply to the subsoil and seabed of the Outer Continental Shelf (OCS) and to ‘all installations and other

devices permanently or temporarily attached to the seabed’. The Deepwater Horizon wa s ‘temporarily attached to’

the OCS by the drilling apparatus. As a result, 4 3 U.S.C. § 1333(1) makes the laws of the United States – i.e. federal

law – apply to it.

OCSLA, 43 U.S.C. § 1333(a)(2)(A) applies ‘the civil and criminal laws of [the] adjacent State’ as surrogate federal

law to the extent tha t they are not inconsiste nt with federal law. This provision applies only to ‘artificial islands and

fixed structures’ – i.e. onl y to fixed rigs. That was the phrase used througho ut § 1333 when the statute was first

passed in 1953. The reference to ‘installations and other devices permanently or temporarily attached to the seabed’

was added by amendment to § 1333(a)(1) in 1978 to make provision for new technology such as drill ships,

semisub mersib le drillin g rigs, jack-up rigs, etc. Section § 1333(a)(2)(A) was not amended in 1978. It still uses the

* Admiralty Law Institute Professor of Maritime Law, Tulane University Law School; Director, Tulane Maritime Law Center; Professorial

Fellow, Melbourne Law School.

1 On 10 August 2010, the Judicial Panel on Multidistrict Litigation transferred 45 of the federal cases to the U.S. District Court for the Eastern

District of Louisiana for consolidation a s In re Deepwater Horizon Incident Litigation. Later that month , the Panel transferred an additional 71

cases. In September 20 10, the panel transferred an addition al 70 cases to the multidistrict liti gation (MDL). Thus, all federal cases will b e heard

in New Orleans.

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