The Deepwater Horizon Oil Spill and the Limits of Civil Liability

By Perry, Ronen | Washington Law Review, February 2011 | Go to article overview

The Deepwater Horizon Oil Spill and the Limits of Civil Liability


Perry, Ronen, Washington Law Review


Abstract: This Article uses the unprecedented disaster in the Gulf of Mexico as an opportunity to critically evaluate the law pertaining to civil liability for oil pollution before and after the enactment of the Oil Pollution Act. This topic is analyzed as a derivative of a more general concern, namely the internal harmony of civil liability regimes. The Article unveils a general incongruity in American land-based and maritime tort law that surfaced through the Exxon Valdez litigation, and examines whether subsequent statutory reform has eliminated the problem in the limited context of marine oil pollution, using the Deepwater Horizon incident as a test case.

Part I systematically discusses pre-OPA law. It focuses mainly on two salient features of the Exxon Valdez litigation, namely exclusion of liability for purely economic losses, and punitive damages. Part II explains why pre-OPA maritime law gave rise to incongruity on the justificatory level, delineates the contours of the problem, and proposes a conceptual framework for resolution. Part III examines whether the enactment of the OPA has created a more defensible liability regime.

Following the Deepwater Horizon oil spill, there have been calls for raising the OPA liability caps or an even more comprehensive legislative reform. While some of the initiatives seem to have waned, this catastrophic incident, like the earlier Exxon Valdez case, will surely leave its mark. This article, which highlights relevant policy concerns, will undoubtedly serve policymakers in reassessing the limits of civil liability for marine oil pollution.

INTRODUCTION .................................................................................... 2

I. LIABILITY IN THE PRE-OPA ERA ............................................... 9

A. General Maritime Law ........................................................... 10

1. Purely Economic Losses ............................................. 10

a. The Exclusionary Rule .................................... 10

b. The Commercial Fishermen's Exception ........ 21

c. The Exxon Valdez Litigation ........................... 22

2. Punitive Damages ....................................................... 24

a. The Punitive Damages Doctrine ...................... 24

b. TheExxon Valdez Litigation ........................... 31

B. Federal Legislation ................................................................. 33

C. State Law ................................................................................ 35

II. THE GENERAL PROBLEM: SIMULTANEOUS APPLICATION OF THE EXCLUSIONARY RULE AND THE PUNITIVE DAMAGES DOCTRINE ..................................... 37

A. The Adverse Consequences of Simultaneous Application ..... 38

B. The Scope of the Problem ...................................................... 43

C. Guidelines for Resolution ....................................................... 46

III. OIL POLLUTION LIABILITY IN THE OPA ERA ....................... 48

A. The Current Liability Scheme ................................................ 49

1. The Oil Pollution Act .................................................. 49

2. State Law .................................................................... 59

B. A Critical Appraisal of the Current Scheme .......................... 62

CONCLUSION ....................................................................................... 66

INTRODUCTION

On April 20, 2010, while drilling at the Macondo Prospect, a seabed location about forty-one miles off the southeast coast of Louisiana, an explosion occurred on the Deepwater Horizon, a mobile offshore drilling rig.1 The rig was owned and operated by Transocean, the world's largest offshore drilling contractor, and leased to BP, one of the world's largest energy companies and the lessee and principal operator of the Macondo field. …

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