Limitation of Liability and the Gulf Oil Spill
Transocean (RIG), which owns the platform that exploded in the Gulf and caused the massive ongoing oil spill, is seeking to invoke the Limitation of Liability Act of 1851. This law, which has never been amended with respect to property or environmental damage claims, provides that a carrier cannot be held liable for anything more than the value of the vessel and its contents if the ship is involved in an accident that causes those sorts of harms. It probably goes without saying that the value of the oil platform (more specifically, what’s left of it) is way less than RIG’s probable share of the cleanup costs.
I am very skeptical that the statute applies to an offshore oil platform, in part because that is not navigable and does not involve “traditional maritime activity.” More broadly, though, this might be the right time to abolish this doctrine entirely. Maritime scholars (me included) have long held that in a modern world of insurance and corporate organization, the limitation of liability is obsolete. The problem is that Congress hasn’t had any reason to repeal the 1851 Act — it’s a pretty obscure area of law. A high-profile incident like the Gulf spill, though, might change that, especially if a court somewhere accepts RIG’s defense.