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Appeals Court Refuses to Rehear BP, Anadarko on Macondo Liability

By one vote, the federal appeals court in New Orleans refused to reconsider a request by BP plc and Anadarko Petroleum Corp. about whether they may avoid Clean Water Act (CWA) penalties for the Macondo well blowout because of a contractor's failed equipment.

The U.S. Court of Appeals for the Fifth Circuit upheld by a 7-6 vote a ruling issued last June by a three-judge circuit panel (see Daily GPIJune 5, 2014). BP owned and operated Macondo with a 65% stake with partners Anadarko (25%) and Japan's Mitsui Ltd. (10%). The defendants have argued that liability for the oil spill should be shifted to Transocean Ltd., owner/operator of the Deepwater Horizon drilling rig and the blowout preventer (BOP) that failed.

A trial is set to begin later this month to determine CWA penalties before U.S. District Judge Carl Barbier. Last year he ruled that BP acted with gross negligence in the Macondo tragedy, which killed 11 men. Barbier's original ruling regarding liability under the CWA was issued in early 2012 (see Daily GPIFeb. 24, 2012). The ruling may lead to billions in penalties for the Macondo owners under CWA mandates. Other factors that would be used to determine the federal penalties would include how much oil may have leaked into the Gulf of Mexico (GOM) before the well was capped four months after the explosion.

The three-judge circuit panel last June had concluded that the Macondo well fit the definition under the CWA as a facility "from which oil or a hazardous substance is discharged." The court at that time also said it was "immaterial" as to whether oil had flowed through other parts of a vessel before entering the GOM.

Writing for the six judges in dissent, Fifth Circuit Judge Edith Brown Clement argued that there was an issue with liability because oil had moved through the failed BOP and riser before entering the GOM.

In its dissent of the en banc ruling issued last Friday, Clement said denying a review leaves the liability precedent under the CWA unclear. "The panel opinion's 'controlled confinement' test does not follow from the text of the CWA. Compounding this, the panel's supplementary opinion conflicts with the panel opinion," which is "no abstruse, metaphysical distinction."

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