In re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf Mexico, on April 20, 2010, MDL No. 2179

• Decision Date: 10 March 2016
• Docket Number: MDL No. 2179
• Citation: 168 F.Supp.3d 908
• Parties: In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010 This Document Relates to: Nos. 13-706 , 13-810, 13-1143, 13-1185, 13-1386, 13-2006 (OPA Test Cases)
• Court: U.S. District Court — Eastern District of Louisiana

168 F.Supp.3d 908

In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010

This Document Relates to: Nos. 13-706 , 13-810, 13-1143, 13-1185, 13-1386, 13-2006 (OPA Test Cases)

MDL No. 2179

United States District Court, E.D. Louisiana.

Signed March 10, 2016

ORDER & REASONS

[As to the OPA Test Cases/Moratorium Claims]

CARL BARBIER

, United States District Judge

Before the Court is BP Exploration & Production, Inc.'s (“BP”) “Motion to Dismiss Moratoria/Permitoria Claims” (Rec. Doc. 15663), the OPA Test Case Plaintiffs' “Renewed Motion to Strike Affirmative Defenses and Motion in Limine Regarding Potential Third-Party Fault, Including Application of any Alleged ‘Superseding’ Cause Defense Premised on Governmental Action or Inaction Following the Spill” (Rec. Doc. 15655), and related briefing. At issue is whether a “responsible party” is liable under the Oil Pollution Act of 1990 (“OPA”), 33 U.S.C. § 2702(a)

, (b)(2)(E), for a claimant's economic loss that resulted from the moratorium on offshore drilling imposed by the federal government in the aftermath of the DEEPWATER HORIZON/Macondo Well blowout and oil spill. Because the Court answers this question in the negative, it will grant BP's motion and deny the OPA Test Case Plaintiffs' motion(s).

I. BACKGROUND

A. The HORIZON/Macondo Incident and the Moratorium

On the evening of April 20, 2010, a blowout, explosions, and fire occurred aboard the mobile offshore drilling unit DEEPWATER HORIZON as it was in the process of temporarily abandoning an exploratory well, known as Macondo, it had drilled in the Gulf of Mexico, some 50 miles from the Louisiana coast and in 5,000 feet of water. Eleven men died in the incident and at least seventeen others were seriously injured. At the time of the blowout, a 5,000 foot-long pipe, called a marine riser, connected the HORIZON to the well. Hydrocarbons from the well travelled up the riser to the rig, fueling the massive fire until the HORIZON capsized and sank on April 22. As it descended, the marine riser collapsed and fractured. Oil and gas then poured into the Gulf via breaks in the riser near the seafloor. BP, the majority owner and operator of the Macondo Well, is a “responsible party” for this incident under OPA, 33 U.S.C. § 2702(a)

.

These events triggered a massive response—unprecedented in size and complexity—to combat the oil spill. On April 29, 2010, the incident was declared a “Spill of National Significance” under the National Contingency Plan.¹ This was the first oil spill to receive such a designation. Efforts to regain control of the well and stop the source of the discharge finally succeeded on July 15, 2010, nearly three months after initial blowout. By that time, approximately 3.19 million barrels of oil had entered the Gulf.² In Re: Oil Spill by the Oil Rig “Deepwater Horizon,” 77 F.Supp.3d 500, 525 (E.D.La.2015)

, appeal docketed sub. nom,

In Re Deepwater Horizon , No. 15–30139 (5th Cir. Feb. 13, 2015).

The HORIZON/Macondo incident also provided the impetus for certain regulatory actions that would affect the offshore drilling industry. Ten days after the blowout, the President ordered the Secretary of the Interior to review the incident and report “what, if any, additional precautions and technologies should be required to improve the safety of oil and gas exploration and production operations on the outer continental shelf.” Hornbeck Offshore Servs. v. Salazar , 713 F.3d 787, 789 (5th Cir.2013)

(internal quotations omitted). On May 6, 2010, the Secretary announced that “as a result of the Deepwater Horizon explosion and spill ... no applications for drilling permits [would] go forward for any new offshore drilling activity” pending his report to the President. Id. (internal quotations omitted). On May 27, the Secretary issued his report, “Increased Safety Measures for Energy Development on the Outer Continental Shelf,” which recommended immediate and long term reforms to improve drilling safety. Id. The report also recommended “(1) a six-month moratorium on permits for new wells being drilled using floating rigs and (2) an immediate halt to drilling operations on the 33 permitted wells that [were] currently being drilled using floating rigs in the Gulf of Mexico.” I

d. (internal quotations omitted). The report stated, “The moratorium would allow for implementation of the measures proposed ... and for consideration of the findings from ongoing investigations ....” (Pls. Mot., Ex. 1 at 3, Rec. doc. 15655-2). The next day, May 28, the Secretary issued the so-called “May Directive,” wherein he found that, under then-existing conditions, “offshore drilling of new deepwater wells poses an unacceptable threat of serious and irreparable harm to wildlife and the marine, coastal, and human environment” and directed

a six month suspension of all pending, current, or approved offshore drilling operations of new deepwater wells in the Gulf of Mexico and the Pacific regions .... For those operators who are currently drilling new deepwater wells, they shall halt drilling activity ... [and] the [Mineral Management Service (“MMS”) ] shall not process any new applications for permits to drill consistent with this directive.

Hornbeck , 713 F.3d at 790

. The May Directive was executed by way of a Notice to Lessees, which explained that “MMS would not consider any new drilling applications for six months in ‘deepwater,’ defined as depths greater than 500 feet.” Id. MMS also notified the operators of the 33 wells that were being drilled at the time that their activities were temporarily suspended. Id.

Certain offshore businesses challenged the moratorium as violative of the Administrative Procedure Act. On June 22, 2010, another judge of this Court agreed and issued a preliminary injunction blocking the moratorium.

Hornbeck Offshore Servs. v . Salazar , 696 F.Supp.2d 627 (E.D.La.2010)

(Feldman, J.). Judge Feldman noted that he was “unable to divine or fathom a relationship between the [Secretary's] findings and the immense scope of the moratorium,” id. at 637, and concluded that the plaintiffs had established a likelihood of successfully showing that the Secretary's decision to issue the moratorium was arbitrary and capricious. Id. at 638. On July 12, the Secretary rescinded the May Directive and issued a new moratorium that “was the same in scope and substance,” but contained a more thorough explanation of reasons and referred to more evidentiary support. Hornbeck , 713 F.3d at 791. On September 29, the Fifth Circuit held that the rescission of the May Directive mooted the preliminary injunction of the first moratorium. Id. On October 12, 2010, the Secretary lifted the second moratorium, mooting the Hornbeck case. Id. at 792,. Nevertheless, permit delays continued to impede drilling activity. See

Ensco Offshore Co.v. Salazar , No. 10–1941, 2011 WL 1790838, at *7 (E.D.La. May 10, 2011) (Feldman, J.) (“Because all nine permit applications have encountered delays ranging from four months to over one year, the government has unlawfully and improperly delayed a non-discretionary function....”), vacated per consent decree and settlement, 2011 WL 12675678 (E.D.La. June 16, 2011). Permit approvals returned to pre-2010 levels toward the end of 2011.

This Order and Reasons will refer to the government-imposed suspensions and delays of offshore drilling and permitting as the “Moratorium.”

B. Moratorium Claims in the B1 Master Complaint

Early on in this multidistrict litigation, the Court instructed the Plaintiffs' Steering Committee (“PSC”) to file several master complaints, including the “B1 Master Complaint” on behalf of private individuals and business who claimed to suffer economic loss or property damage. (Pretrial Order No. 11, Rec. Doc. 569). The B1 Master Complaint asserted multiple claims on behalf of different types of individuals and businesses. Relevant here are the “Moratorium Plaintiffs,” described as “deepwater drilling rig workers, rig support personnel, transport personnel, ...” and others who “suffered losses and damages as the result of the Six-Month Deepwater Drilling Moratorium issued by the United States Department of Interior on May 28, 2010, in response to the Spill.” (Amend. B1 Master Compl. ¶ 521, Rec. Doc. 1128). The Master Complaint alleged that the Moratorium was imposed “as a direct, proximate and foreseeable result of the Deepwater Horizon/Macondo Well blow-out and spill.” (Id . ¶ 522). Defendants subsequently moved to dismiss the B1 Master Complaint, raising numerous and complex legal arguments. The Court's Order and Reasons of August 26, 2011 ruled on many of these issues. (Rec. Doc. 3830) Relative to the Moratorium Plaintiffs' claims, however, the Court declined at that time (the pleading stage) to define the precise contours of OPA causation and simply held that the Moratorium Plaintiffs had alleged sufficient facts to state plausible claims under OPA. In re Oil Spill by the Oil Rig “Deepwater Horizon,” 808 F.Supp.2d 943, 966 (E.D.La.2011)

.

C. The OPA Test Case Plaintiffs and the Instant Motions

In June 2014—after two massive class settlements and two major trial proceedings—the Court issued an “Agreed Upon Scheduling Order for OPA Test Case Trials,” which established a case management procedure for six³ “OPA Test Case Plaintiffs” (sometimes referred to as “Plaintiffs”). (Rec. Doc. 12972). The OPA Test Case Plaintiffs are Bisso Marine, LLC (“Bisso,” No. 13–706), Blake International Rigs USA, LLC and its affiliated entities (“Blake,” No. 13–1185), Certified Platform Services, LLC (“Certified Platform” No.13-1143), Black Elk Energy Offshore Operations, LLC (“Black Elk,” No. 13–2006), Seahawk Liquidating Trust, successor to Seahawk Drilling, Inc. and its subsidiaries (“Seahawk,” No. 13–1386), and Wadleigh Industries, Inc. (“Wadleigh,” No. 13–810).

According to its complaint, Bisso “was engaged in the marine salvage and commercial diving business, which includes all pipeline and offshore...