UK Wants U.S. Supreme Court To Limit BP Liability For Deepwater Horizon

The British government is urging the U.S. Supreme Court to limit payments by BP, the UK's second-largest oil producer, to some victims of the 2010 Deepwater Horizon oil spill in the Gulf of Mexico, arguing that rulings by lower courts undermine confidence in judicial fairness.

In a "friend-of-the-court" brief dated Sept. 4, the government contended that decisions so far to pay compensations to individuals who had not been hurt by the spill undermines "confidence in the vigorous and fair resolution of disputes."

BP wants the court to limit compensation payments that were mandated in 2012 by a U.S. District Court judge in New Orleans and later upheld by an appeals court. The oil company says many of the payments were ordered for individuals whose businesses could not have been affected by the spill.

In its brief, the UK government agreed, saying the rulings by the lower courts have broadened BP's liability "far beyond anything that would seem to be appropriate under our shared common-law traditions or that anyone would reasonably expect."

The brief is not related to the Sept. 4 decision by U.S. District Judge Carl Barbier that BP's role in the explosion aboard the Deepwater Horizon oil rig was grossly negligent. That ruling makes the oil company liable for additional fines of up to $18 billion, in addition to the $42 billion that it already must pay.

Instead, the British government focused on previous rulings by the lower courts, arguing that they could discourage spontaneous corporate responsibility by diminishing incentives for private companies to reach voluntary settlements in lawsuits.

"Her Majesty's government understands the importance of a fair and predictable legal climate," the British brief said. "[T]he combination of rulings now before this court has produced an untenable and exceptionally important result."'

The UK brief also reminded the Supreme Court that the United States and Britain enjoy more than $200 billion worth of trade each year, and that businesses in the UK provide more foreign direct investment in America than any other nation - 17 percent. It said the Louisiana courts' treatment of BP undermines the trust necessary to maintain that level of investment.

The filing also questioned the decision by the U.S. Environmental Protection Agency to maintain the suspension of BP Exploration & Production Inc. (BPXP) in the Gulf Coast region so long after the accident and after BPXP acted to fix problems caused by the spill.

"Her Majesty's Government questions whether initiating and continuing a suspension years after the incident, and immediately after BPXP entered into a plea agreement with the U.S. government accepting responsibility and agreeing to take wide-ranging remedial actions, is appropriate," it said.

Among these actions, the brief said, were the creation of an onshore drilling monitor for the Gulf and the appointment of third-party ethics and safety monitors. "Officials with numerous government agencies have acknowledged that BPXP has effectively implemented these changes," it said.

By Andy Tully of Oilprice.com