Stretching the Boom? Limiting Liability for Offshore Drilling Disasters

Richard Faulk, Gardere Wynne Sewell LLP

Abstract

Offshore drilling is a tremendously complicated and potentially lucrative process. Unfortunately, it is also dangerous. Harvesters of fossil fuels face massive risks, not only to their lives and properties, but also to our environment and the livelihoods of all those who depend upon it. On balance, our “modern” sense of justice might insist that those who realize wealth should bear the risks that their exploration and production poses to others. But when a product, like petroleum, is inextricably woven into our national fabric, legislators sometimes reach surprising compromises.

So, it seems, the owner of the Deepwater Horizon will argue in a Texas court as it seeks to limit its liability for one of the 21st century’s greatest environmental catastrophes – by relying on the “Shipowners’ Limitation of Liability Act of 1851” – an antiquated federal law that Transocean hopes may limit its potential liability for personal injuries and deaths associated with the disaster. Laypersons may have reacted with alarm, anger and disbelief at Transocean’s suit – but from a lawyer’s perspective, the initiative deserves some study. As we will see below, such studies even suggest solutions under other laws, such as the Oil Pollution Act, that may dispel the thick “fog of litigation” that threatens to engulf the Deepwater Horizon incident