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Macondo Drilling Moratorium Not BP’s Fault, Judge Says

BP plc will not face lawsuits by energy firms over losses they have attributed to the six-month drilling moratorium imposed in the Gulf of Mexico (GOM) following the 2010 Macondo well blowout, a district court judge has ruled.

The 17-page ruling by U.S. District Court Judge Carl Barbier of the Eastern District in New Orleans eliminates one of the largest remaining set of claims faced by BP. The oil major already has paid close to $56 billion to settle various lawsuits and pay U.S. fines related to the tragedy.

Following the blowout, federal regulators imposed a drilling moratorium that lasted almost six months to enable staff to conduct a review of offshore regulations (see Daily GPI, July 13, 2010). The moratorium did not prevent ongoing work, but it delayed permitting for new development.

Many operators sued BP claiming extensive losses related to delaying work and sidelining employees. However, BP argued that under federal law, claims had to be limited to the economic losses that resulted from the spill, not from the action of a third party, such as the federal government.

Barbier agreed with BP’s argument. The judge, who has overseen the multi-district litigation involved in the BP cases, cited the Oil Pollution Act (OPA), which was enacted following the 1989 Valdez spill offshore Alaska.

“There is nothing to suggest that Congress intended the OPA to go so far as to hold a discharger liable for the financial consequences of subsequent government actions aimed at preventing similar tragedies in the future and which broadly affect an entire industry,” Barbier wrote.

Support for the argument, Barbier said, also relies on actions by  the U.S. Coast Guard (USCG), which administers the federal fund to compensate oil spill victims. The USCG has denied all BP spill claims that were “a direct result of the moratorium, not a result of an oil discharge.”

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