Deepwater Horizon has interesting joint and several liabilities ramifications

With several companies potentially responsible for the Deepwater Horizon (DH) rig explosion that killed 11 workers and injured 17 on April 20, the courts will have a challenge to determine who will be held to pay and for what amount. Under "joint and several liability" guidelines, that would seem to split damages up equitably among the degrees of negligence.

But the Limitation of Liability Act of 1851 (LOLA) could effectively shield platform owner Transocean from the majority of damages, even if it were held to have the most blame among the other players including operator BP, cementer Halliburton and blowout preventer maker Cameron. Under LOLA, the owner of a vessel (which the DH was) is liable for only its present value; for the now sunken DH that’s only $27 million. Just before the explosion it was worth over $500 million.

Let’s say 150 workers on another rig are killed and the owner is found to be 90% to blame while the operator is 10% at fault. Total pecuniary (lost wages) are determined to be $200 million. The destroyed rig is valued at $10 million. Since the owner is shielded to just that $10 million, is the operator on the hook for the remaining $190 million?

This is the issue that will have to be worked out in the DH process. Presently, S 3600—The Fairness in Admiralty and Maritime Law Act—awaits a Senate vote. If passed, it would repeal LOLA and make vessel owners subject to far greater damages.