New Orleans lawyer details scrutiny sure to follow Deepwater Horizon accident

A wave of litigation, enforcement, new regulation and even congressional hearings could follow

A wave of litigation, enforcement, new regulation and even congressional hearings is certain to follow the fire on, and subsequent sinking of, Transocean-owned Deepwater Horizon. A slow down of the move by the Obama administration to loosen restrictions over offshore oil and gas exploration may also follow.

New Orleans attorney Keith Hall of Stone Pigman, a law firm that represents some of the country's largest oil and gas companies, shared his thoughts on the potential, and likely, aftermath of an accident of such magnitude.

Hall has represented major energy companies and others in class actions and injury cases. He is an environmental lawyer who knows the regulatory landscape.

"This week's disaster could throw a monkey wrench into Obama administration's recently announced plan to have the Minerals Management Service open up new areas for off-shore drilling on the Outer Continental Shelf," he said. "An accident of this magnitude, involving some of the biggest players in the business, will unfortunately provide ammunition for those opposing any form of expanded energy exploration in the Gulf and other areas."

In addition to spawning litigation, the explosion is sure to incite a major government probe of what went wrong and what equipment components may have been behind the fiery blast. Hall notes that while oil spills are generally exempt from Superfund regulations, the Clean Water Act as well as the Oil Pollution Act, a federal law passed after the enormous Exxon Valdez spill in Alaska impose express liability for offshore oil spills, regardless of whether the oil reaches shore. "Under these laws, the federal government could impose fines, in addition to significant clean-up and emergency response costs," Hall noted.

"The industry has been banking on deepwater exploration in recent years, with massive new fields discovered in the Gulf that have given hope to major producers and prompted the Obama administration to green light drilling in waters that had previously been off limits," he said. This accident will certainly bring more scrutiny to one of the fastest-growing segments of the domestic energy business, he said.

"The New Orleans plaintiffs bar, already one of the most robust in the country, is sure to get a shot in the arm with this accident," he observed, noting that cases will likely follow alleging everything from toxic tort and wrongful death to negligence. From there, lawsuits over insurance coverage may follow as carriers may look for exclusions. 

One federal lawsuit has already been filed. On Wednesday, a lawsuit on behalf of one of the 11 still-missing crewmembers. The lawsuit claims negligence by companies connected to the oil rigs that caused the explosion. Transocean Ltd. and BP PLC are named as defendants.

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