By Daniel Stanton

In the most recent ruling of the BP DEEPWATER HORIZON/Macondo Well blowout and spill, Judge Barbier of the Eastern District of Louisiana recently dismissed certain claims made by the plaintiffs under the Oil Pollution Act of 1990, or “OPA 90.”

On April 20, 2010, the BP’s Macondo Well suffered a tragic blowout resulting in an explosion aboard and ultimately the sinking of the offshore drilling rig, the DEEPWATER HORIZON. Following the sinking, the Macondo Well released millions of barrels of oil into the Gulf of Mexico before it could be plugged, nearly three months later. In the weeks following the blowout, at the direction of President Obama, the U.S. Secretary of the Interior conducted an exhaustive review of precautions and technology that should be used to improve the safety of offshore oil and gas exploration and production. Based on his findings, the Secretary of the Interior concluded that a six-month moratorium on new offshore well permits and an immediate cessation of drilling activity at 33 permitted wells was warranted to implement proposed safety measures and consider the findings of ongoing investigations related to the DEEPWATER HORIZON incident (the “Moratorium”).

Following the DEEPWATER HORIZON incident, many thousands of plaintiffs filed suit against BP, and many of those plaintiffs who work in the offshore exploration and production environment included claims under OPA 90 for economic losses resulting from the Moratorium. In an effort to test the sufficiency of these claims, Judge Barbier considered the specific claims of a select group of six test plaintiffs, including an offshore diving company, platform drilling rig provider, an offshore equipment salvage company, an offshore oil and gas exploration and production company, a drilling services provider, and an offshore heavy machinery inspection and service company.

Under OPA 90, a plaintiff may recover economic damages “due to the injury, destruction, or loss of real property, personal property, or natural resources.” And unlike under general maritime law, as established by the historic case of Robins Dry Dock & Repair v. Flint, 275 U.S. 303 (1927), the plaintiff need not own or lease the property or resource damaged to state a cause of action under OPA 90. Based on these precepts, plaintiffs argued that their damages were “due to” injury to a natural resource (the Gulf of Mexico) by an oil spill caused by the “responsible party” (BP). But, the Court disagreed.

Judge Barbier found that while the DEEPWATER HORIZON blowout and oil spill was in fact an OPA 90 “incident,” plaintiffs’ damages did not result from the “discharge or substantial threat of discharge of oil from the Macondo well.” Instead, their damages “resulted from the perceived threat of discharge from other wells.” This “threat” prompted the Secretary of the Interior’s Moratorium, which was designed to address “the risk of possible future blowouts and oil spills from wells other than Macondo. These perceived threats from other wells are different OPA 90 “incidents” than the DEEPWATER HORIZON incident for which BP is a responsible party. Thus, BP could not be held liable to the plaintiffs under OPA 90 for their alleged economic damages incurred as a result of the US Government’s Moratorium on offshore drilling and production.

The Court found support for its decision in the U.S. 5th Circuit’s opinion in In re Taira Lynn Marine Ltd. No. 5, 444 F.3d 371 (5th Cir. 2006). The plaintiffs in Taira Lynn sought economic damages under OPA 90 when their businesses were shut down due to a mandatory evacuation. The evacuation was prompted by the allision of a barge with a bridge and the subsequent discharge of poisonous gas from the barge. The 5th Circuit found none of the plaintiffs’ claims in Taira Lynn compensable because their damages resulted not from the release of harmful gases, but instead by the mandatory evacuation. Comparing the present claims to those made by the plaintiffs in Taira Lynn, the Court found them to be “even more attenuated” because unlike the evacuation in Taira Lynn, the Moratorium was instituted to prevent future danger, not to deal with the present danger, like the evacuation. The Court also found compelling the existence of no previous case where economic damages had been awarded as a result of a drilling moratorium – even though a moratorium had been instituted every year from 1982 to 2008 for a variety of reasons.

With this latest decision it appears that the potential for a plaintiff to recover damages against the “responsible party” of an OPA 90 incident for the subsequent actions of governmental actors – even when the government’s actions are in response to an OPA 90 “incident” – is reaffirmed as being not unlimited.