By David Hammer
In a major decision that likely saves BP billions of dollars, a federal district judge has dismissed hundreds of so-called “moratorium” claims against BP – claims for losses from the government shutting down deepwater drilling after BP’s catastrophic 2010 well blowout.
The decision, announced Thursday evening by U.S. District Judge Carl Barbier, clears the largest remaining potential liability for BP from the massive Gulf oil spill. So far, BP has agreed or been ordered to pay more than $52 billion for cleanup, restoration, fines and compensation for the spill.
The question still remaining was whether BP was liable for the government’s decision to block exploratory drilling after the spill and allegedly slow-walk permits to resume that activity. The moratorium not only blocked the drilling, but, by extension, many of the support services and supply business for deepwater drilling that is the lifeblood of many coastal Louisiana businesses.
The Obama administration imposed a six-month moratorium on deepwater drilling in May 2010 -- and lifted it after five months – because the explosion of the Deepwater Horizon rig on April 20, 2010, raised major concerns about the safety of all oil and gas exploration in deep sections of the Gulf of Mexico.
After hearing test moratorium cases in court, Barbier decided BP was not liable for the moratorium losses under the Oil Pollution Act of 1990, the law that made the company liable and grossly negligent for the damage caused by its 87-day oil spill.
Most important to his reasoning, Barbier said the moratorium after the BP spill was different from other kinds of government shutdowns after oil spills, such as closing a river after a tanker crash.
“There can be no doubt that the Government would not have imposed the Moratorium had the (BP well) blowout and oil spill not occurred,” he wrote in his decision. “However, the Moratorium addressed the risk of possible future blowouts and oil spills from wells other than (BP’s) and was motivated by perceived weaknesses of industry-wide safety measures.”
In other words, Barbier attributed the moratorium to other, yet-to-happen incidents, which, if there is any liability under the law for them, would not be BP’s.
BP spokesman Geoff Morrell declined comment Friday. Lead plaintiffs' attorneys Steve Herman and Jim Roy were unavailable for comment.
Two of the test moratorium claims Barbier considered came from ATP Oil and Gas and Black Elk, oil and gas companies that have ceased operations or gone bankrupt since the spill. But both of those firms had major incidents of their own after the moratorium.
ATP blamed the moratorium for its 2012 bankruptcy, but the trustee sued the company’s executives for reckless spending after the moratorium was over. The company also was charged with illegally dumping pollution into the Gulf and faces a potential $55 million fine.
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