Two weeks ago, Transocean Ltd., the company that owns the sunken Deepwater Horizon oil rig, filed a motion in federal court seeking to limit its courtroom losses to $26.7 million. Today, a Transocean lawyer said that underwriters forced the company's hand.
Rachel Clingman, a partner at Sutherland Asbill & Brennan, outlined the company’s position in written testimony submitted to the House Judiciary Committee. She has temporarily gone in-house for Transocean — taking on the title “acting co-general counsel” — and is scheduled to testify in person later this morning.
Clingman said in the written testimony that Transocean has third-party liability insurance applicable to claims arising from the Deepwater Horizon’s explosion.
“Our underwriters instructed us to file such an action, and failure to do so could have resulted in the loss of insurance coverage to help pay claims,” she said of the court motion.
Clingman said the proposed $26.7 million limit would not apply to claims filed under the Oil Pollution Act, a 1990 federal law that outlines a process for compensation after oil spills. But, she added, the company doesn’t expect to pay much in damages under the act, because it has accepted responsibility only for contamination coming from the rig itself, while BP is responsible for oil and gas coming from the underwater well. There has been “no indication thus far of any contamination from the rig,” Clingman said.
The U.S. Department of Justice opposes Transocean’s motion, Associate Attorney General Thomas Perrelli said this week.
Clingman, who heads up Sutherland’s Houston office, also added some insight into the company’s hiring of the law firm to handle litigation from the oil spill. “Transocean has only a small number of U.S. lawyers,” she said. “Given the investigations, inquiries and litigation that ensued in the aftermath of the Deepwater Horizon accident, I was asked to manage Transocean’s response.”
Skadden, Arps, Slate, Meagher & Flom is also advising Transocean on the various congressional investigations.
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