Transocean’s Titanic Solution

As a child I rarely spent time on the water, but I knew a thing or two about boats. 

Boats were little. Imaginary boats made of paper or leaves were small enough to skim down rain-filled gutters in the streets. Plastic boats fitted nicely into bathtubs or backyard wading pools. Even real boats were small. Fabricated from metal or wood, they plied their way up and down the Raccoon River or across the vast expanse of Red Rock Lake in tiny, buzzing swarms. You could fish from a boat, or go water skiing, but sometimes you just filled it with people and drove it around, like a family taking a Sunday outing in the car.

On the other hand, ships were big. Ships lived on the ocean. They carried things, or fought wars. My great-aunt Fannie, who adopted Louisiana as her home, hung a tire swing under her moss-draped oak and happened to be walking through the State Capitol the day Huey Long was assassinated, traveled to Europe on ships. So did great-aunt Sigrid, whose accounts of her travels we kids only could imagine, since she wrote her postcards in Swedish.

Eventually I grew more sophisticated in ways of the water and added “yacht” to my vocabulary. Bigger than a boat but not utilitarian in the same way as ships, yachts could cross oceans, too, and in a style fully as impressive as the great passenger liners. Later, when I began sailing and varnishing boats for a living, I expanded my vocabulary with another boat-related word.   The abbreviations M/V and S/V should have been clear, but they weren’t. Eventually I queried someone and was embarassed by the obviousness of the answer:  the abbreviations stood for Motor Vessel and Sailing Vessel.

In time I discovered a whole variety of “vessels” plying the waters, a variety far larger than I’d ever imagined. Afternoons spent lazing along the edge of the Houston Ship Channel  turned up car carriers, petroleum tankers, container ships, LNG barges,  and Coast Guard buoy tenders as well as the familiar shrimpers and fishing boats.

Despite their differences, these boats, ships, tankers and carriers had one thing in common. They moved by their own power. The source of the power might vary – the sails on pleasure craft hardly would do for a tanker – but still, they propelled themselves.  There were other interesting sights on the waterways – barges, jackup rigs and such – but when they moved, they needed assistance.  

When Bullwinkle, a remarkable offshore platform originally belonging to Shell Oil and now the property of Superior Energy Services, was fabricated in Ingleside, Texas, it served for months as a landmark for offshore sailors because of its size. Watching the completed Bullwinkle move seaward through the Port Aransas jetties,  pulled along by some of the snazziest ocean-going tugs ever, I knew two things with certainty: the tugs were vessels, and Bullwinkle was not.

My long-standing and somewhat lazy assumption that all vessels move by their own power finally was called into question last Thursday. On May 13, when Transocean filed suit in Houston federal court to limit liability in the explosion and sinking of their semi-submersible Deepwater Horizon drilling rigthe basis for the filing was an old and somewhat arcane law known as the  Limitation of Liability Act of 1851.  Under that law,  a vessel owner is liable only for the post-accident value of the vessel and cargo, provided the owner can show he or she had no knowledge of negligence in the accident.

I was somewhat startled to find Deepwater Horizon, a semi-submersible drilling platform, listed as a “vessel”.  And yet, according to Maritime law, that’s precisely what it is.  In fact, the list of “vessels” covered by maritime law includes a host of platforms, pontoons, barges, dredges, rigs and docks that aren’t going anywhere unless Tubby the Tugboat comes along to help them out.  David Robertson of the University of Texas at Austin School of Law, points out that the definition of “vessel” as including “every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water” has been on the books since 1873.  In 2005, in Stewart v. Dutra Construction Company, the Supreme Court held that the 1873 statute “codified the meaning that the term ‘vessel’ had acquired in general maritime law”  and it became the default definition of “vessel”.

Prior to the sinking of  Deepwater Horizon, the most widely known use of the Limitation of Liability Act of 1851 involved the Oceanic Steam Navigation Company, owner of the ill-fated Titanic.  In an article entitled Legal Consequences of R.M.S. Titanic, Jeffrey A. Weiss, Professor of Maritime Law at SUNY Maritime College, makes several points about the statute.

First, the law provides that all persons having claims in connection with the casualty must pursue those claims in the court in which limitation proceedings were filed, or risk a default. In other words, the petitioner (Oceanic Steam Navigation Company in the case of the Titanic, Transocean in the case of Deepwater Horizon) gets to determine where the case will be heard.

Secondly, court proceedings take place before a Federal judge rather than a jury.

Finally, the law allows a ship owner to limit liability arising out of a marine casualty to “the value of the vessel and her pending freight”.  In the case of the Titanic, the owners alleged the loss was incurred “without the privity or knowledge of the vessel’s owners”.  Going further, they argued that, even if they were at fault, their liability should be limited to the Titanic’s post-catastrophe valuation. That figure totaled around $95,000,  the value of the ship’s surviving lifeboats and related equipment.  Obviously, $95,000 was far less than claims brought by survivors and the families of those who perished.

In the press release which accompanied last week’s court filing, the points raised by Weiss in regard to the Titanic case were obvious to anyone familiar with the law. In the following citations taken from that press release, I’ve highlighted points of Titanic/Transocean similarity: 

(Transocean notes) that one of the primary goals of this filing is to consolidate in a single court many of the lawsuits that have been filed following the Deepwater Horizon casualty to initiate an orderly process for these lawsuits and claims before a single, impartial federal judge. The filing also would establish a single fund from which legitimate claims may be paid. Transocean believes this type of orderly process is in the best interests of all parties involved…

Among other things, the complaint asks that the Court issue an injunction restraining certain lawsuits underway against these companies in any jurisdiction other than the Southern District of Texas. The petitioners noted in the complaint that more than 100 lawsuits have been filed against the companies in multiple states and courts…

As set forth under Federal Law, the complaint also asks that the companies be judged not liable on claims for certain, defined losses or damages relating to the casualty or, if they are judged to be liable, that the liability for such claims be limited to the value of their interest in the Deepwater Horizon rig and its freight including the accounts receivable and accrued accounts receivable as of April 28, 2010. The petitioners assert in the filing that the entire value of their interest does not exceed $26,764,083.  (NB: Before the accident, the rig was worth around $650 million.)

It is a desperate irony that despite all our knowledge, all our experience and all our technological advancements recent events so closely resemble a tragedy from 1912 and will be litigated in the context of an 1851 law. 

Whatever Transocean, British Petroleum, Halliburton and their lawyers think, of course, the first order of business must be stemming the tide of oil gushing from the uncapped well in order to prevent further environmental and economic damage.  Once that is accomplished, the process of sorting out responsibility, compensating individuals, restoring communities and demanding future accountability can begin in earnest.

Just as in the years following the sinking of the Titanic, there certainly will be changes in procedures, changes in equipment, changes in sensitivities and perhaps even changes in the law before this is finished. As with the Titanic, there is little question complexities of maritime and corporate law will be used as much to delay justice as to ensure justice. Certainly the application of American law to foreign companies, the natural inclination of corporations to limit their liability and the needs of victims will confront one another in the courtroom, as they always have.

But in the end, seen from the perspective of history, the explosion and sinking of Deepwater Horizon bears a far more striking resemblance to events surrounding the sinking of the Titanic than simple law.  It stands as a reminder that no matter the nature of the vessel, when disaster strikes, the views from the boardroom, the courtroom and the lifeboat are rarely the same.

 

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11 CommentsLeave a comment

  1. Hey, Shores,

    I’m down with the buffoonish conspirator, ‘Dick the Butcher’ – (Shake-a-speare did have a way with words) – in Henry VI, Part II that ‘… first thing we do, let’s kill all the lawyers …’

    The obscenity that’s happening now in the Gomex is as much a product of “lie-yerin” around slack regulation as any equipment failure or operator error. And while the little dog n’ pony shows about tents, top-hats, and siphons keep the media busy, the real deal is being worked out beyond any public view by the best legal minds money can buy to stall real penalties, civil and criminal, and reform of the corrupt ‘regulatory’ agencies that enabled this horrific event. Heck of a job, bushies.

    Matt,

    Lawyers are a favorite target, of course. We can add to them the regulators, the bureaucrats, the politicians, and the corporate interests of “big oil” – lots of folks love to hate them all. But my own reading of this one is that it wasn’t the lawyers’ fault it happened as much as it was the number-crunchers’, the ones toting up those $500,000 a day rig costs and muttering under their breath, “So what if the cement’s only hardened for 20 hours?”

    The fact is that the best regulations in the world aren’t good enough if people are going to try and cut corners, ignore safety procedures or presume that because something hasn’t happened, it won’t happen. I’m not in oil and gas and my ignorance is breathtaking. Nevertheless, I can work my way through discussions on energy forums, and I can recognize the truth of statements like, “there was as much pressure on the workers as there was on the oil and gas”.

    It may well be that the only ones who really know what happened on that drilling floor were the toolpusher and the company man. It may be that we’ll never know what happened. But it has to be sorted out, and since the lawyers will do the sorting, we need to understand what they’re up to. A matter of great curiosity to me now is why this 1851 law, written to protect American shipping in the days before insurance, never has been significantly revised. I don’t have a clue – but I do believe I may spend a little time trying to find out!

    Good to see you – thanks for stopping by.

    Linda

  2. You are lucky to live in a way that’s closer to the sea. Living by the water is like a dream come true to me. I wouldn’t mind varnishing boats too. Haha!

    Lex,

    The sea is wonderful, although if I had my choice I’d be right on the coast, overlooking the water. As a matter of fact, I’ve always thought lighthouse keeper might be a nice way of life.

    The varnishing’s fun. I’m at a point in my life where I’d like to not do so much of it, but only because I have other things I’d like to do. For now, I’ll keep varnishing, though, and keep tucking my other interests in around the edges!

    Thanks for stopping by!

    Linda

  3. Excellent post and food for thought and despair at the processes about to be unleashed on an unsuspecting public who will, eventually, end up paying the tab.

    oldsalt,

    Nothing’s better for getting a sense of complexities than trying to describe them to someone else. And nothing’s truer than what you suggest – that the complexities are going to increase on a daily basis, until the public either goes numb or finally demands some accountability.

    Not that demanding accountability hasn’t been tried.

    In a new and related note, suits were filed today in Alabama and Texas, seeking to shut down BP’s Atlantis platform and revoke deepwater permits issued since the Deepwater Horizon explosion and fire.

    It seems clear to me that one reason for the massive use of dispersants is to limit surface slicks – out of sight, out of mind, as it were. Now that oil trapped farther beneath the surface appears to be encountering the loop current, we’ll see what happens. None of it will be good, I’m afraid.

    Pretty soon I’m going to make myself feel better by coming over and looking at those nice mountains I saw in your new post!

    Linda

  4. Just read the post below this before reading this one. As usual, what you write threads together seamlessly.

    I know what Varnish John would say, and he’d be exactly right. Some things seem so big, insurmountable, that all you can do is “start where you can start, and do what you can do”.

    Jeannine,

    Exactly so. It’s funny – even writing about my recent trip to Louisiana seemed to be an insurmountable chore after the oil spill got thrown into the mix. I just wasn’t able to begin with the fun and frivolity, so I started where I could start – with John. It worked out pretty well – what a wise old man he was. ;-)

    Linda

  5. INEXCUSABLE!!! All of it, the finger pointing, the exhortation (exhumation?) of arcane statutes and abstruse points of law. The Titanic never crossed my mind until you brought it up, but the Challenger did (remember Richard Feynman and the O-ring?)…

    60 Minutes had a fascinating interview with a Horizon survivor this week. Have been mourning the Gulf for weeks. Will get to Varnish John another time. Just wanted you to know that this–and you–have been on my mind.

    ds,

    I’m becoming convinced that, just as most of the oil is invisible to us, much of what is happening in this situation is “invisible” to all but those who are managing the news far better than they’re managing the spill.

    One point I might not have been clear enough about in my piece – the law that forms the basis for the court action (the 1851 law) is actually very well known to those who practice maritime law. It’s invoked in every sort of case, from this huge disaster to quite small, quite pedestrian cases involving only a few thousand dollars.

    The law itself was written in a time before insurance as we know it today, and was meant to help American shipping be more competitive. As so often happens, another law has kicked in – the law of unintended consequences. What I’m most curious about now is why the law hasn’t been changed, to take account of new circumstances. My suspicion would be that someone has a vested interest in keeping things as they are. I can only speculate about who that might be.

    I’ve been having a terrible time getting myself back into my blogging “routine”, for an assortment of reason. I’m so glad you stopped by – it’s a good nudge to work a little harder on that routine! ;-)

    Linda

  6. Linda, after several reads, I can finally gather my thoughts. First off, thanks so much for this succinct and informative piece capturing the legal blowout of the disaster. I’ve never read a legal brief before, but I have a sense that it’s something like this.

    Just one note about lawyers: If we kill them all you wouldn’t have a President. Considering Barack Obama graduated the top of his class at Harvard Law School, hopefully as President, he can shed some light on this issue and would be willing to intervene with some legal counsel in the case. It would definitely need someone with a legal mind to find the appropriate way to lay the responsibility, legal and moral, and extract from among the massive entanglement, the necessary compensations and penalties.

    It is tragic indeed that when something like this happens, the value of life (human and nature) is being set aside, superseded by monetary considerations and corporate interests.

    Arti,

    Trust me – there are legal minds galore ready to engage this battle, in a multitude of ways. If I had suffered directly because of this disaster, President Obama’s the last one I’d call on. Being top of your Harvard class is one thing – having courtroom experience and deep knowledge of a specific area of law is another.

    Besides, despite attempts to minimize the impact of their contributions, the fact is that US lawmakers have been recipients of a rising tide of oil money, and much of it comes from BP. Money’s one reason the Senate has been less aggressive with BP than the House. Louisiana’s Senator Mary Landrieu is a prime example of a Senator given to miniimizing the impact of BP’s spill from the beginning. And the top recipient of BP money? Barack Obama. What’s important about that, from my perspective, is that it so clearly shows BP’s shift away from contributions to Republicans (who certainly got their share!) to Democrats. Every large political contributor gives that money for a reason, and they calculate on a daily basis where they can get the “biggest bang for their buck”.

    However, as the oil continues to flow, there appears to be an inverse relationship developing between the amount of oil and the influence of BP money in the investigative process and attempts to hold them accountable. We can only hope.

    Linda

  7. What I can’t understand is why the collective voice of the people is not shouting, “NO MORE OIL!” because then we wouldn’t have this problem to begin with. Granted, the rich (oil people) are powerful, but our poor numbers are so much bigger. If even half of the people supported/paid for wind energy on their electric bills and purchased hybrid type cars, we would be well on our way. grrrrrrrrrr

    (Oh, thanks for the informative piece, Linda! I had no clue about maritime law…. well, now I have a smidgen of a clue, thanks to you. You have been very busy!! :-)

    qugrainne,

    I really can’t see oil and gas as the problem. I’m as eager as anyone for the development of alternate energy sources, but what has brought us to this pass is lack of regulation, non-enforcement of regulations which do exist, the willingness to cut safety corners by people with an unfounded trust in their own judgement, the influence of money on the legislative process and a willingness of bureaucrats to ignore the warnings of the scientific and environmental communities.

    Many, many people equate deep-water drilling with the rig tucked into a corner of the back pasture. They’re entirely different creatures. And even offshore, the nearshore rigs have a number of things going for them when it comes to cleaning up a spill – water depth being just one. There will be changes coming, that’s for sure.

    And one other thing I have to say – those obnoxious oil execs who showed up in Congress are rich and powerful, but the world of oil stretches far beyond their boardrooms. The eleven men who died on that rig weren’t rich or powerful, but they chose to work there to support themselves and their families. We’ve heard little about them, but they represent the thousands upon thousands of roughnecks, roustabouts, engineers, drillers, engineers and such who support the life of the rigs. If you add in the number of people employed in the support industries such as Cameron, the transport companies, the pipeline workers – well, their life matters too.

    I guess the truth is I don’t have anything against “rich” any more than I have anything against oil. On the other hand, I have a whole lot against arrogance, irresponsible behavior, lack of concern for the well-being of the world and blind, utter selfishness and greed. Sigh.

    As I keep saying – first we get that danged well capped. Then we clean up the mess as best we can. Then, we figure out how to move on.
    Double sigh.

    Linda

  8. Thanks for the ‘insider’ perspective, Linda… things do get complicated when money’s involved… especially when it’s in the form of political contributions.

    Arti,

    I’m not much of an insider, but the corrupting power of money in the political process is undeniable. It isn’t just oil and gas, of course. There are powerful, well-heeled lobbyists working the Hill for NASA, Wall Street, the pharmaceutical companies – ad nauseum. Most of the time, their activity seems more or less acceptable, depending on how people feel about their cause.

    Worse, we seem now to have moved into a time when even frank vote-buying isn’t something to be ashamed of – it’s how the health care bill was passed. People on both sides of that issue do agree that many of the deals were shameful.

    How to stop it? I haven’t a clue. I’m going to just do the dishes, pat the cat and talk to Plato about what I should write about next. And I might go get some ice cream ;-)

    Linda

  9. Your original post about the 1851 statute and all the discussion that has followed provide a valuable context for anyone following the aftermath of this incident. I especially appreciate the balanced way in which you analyze this situation — not aiming at easy targets but examining the radical causes of what has already happened and what is likely to happen next.

    charlespaolino,

    I enjoyed your use of the phrase, “examining the radical causes…” I’ve long cherished a quotation from Jose Marti, the Cuban statesman, poet and journalist. In his words, “A genuine man goes to the roots. To be a radical is no more than that: to go to the roots. He who does not see things in their depth should not call himself a radical.”

    Depth of perception and clarity of thought will be critical in the days ahead. Working my way through this piece reminded me how difficult those can be to attain.

    Linda

  10. Boats and ships — yes, I grew up with that, too. But you’ve spent far more time on both! (And yachts! And vessels, I suspect — or at least closer to them.)

    This situation in the gulf makes me heartsick. It simply hurts to even listen to it — yet, I am compelled, for it is far too easy to turn off things that disturb us.

    I hope they fix this soon. Too much damage has been done already.

    jeanie,

    We have to look, and listen, and it is painful. Worst of all is that we did this to ourselves, and even our solutions (like the dispersants being used) may have consequences we can’t begin to comprehend.

    I’ve spent entirely too much time fixated on discussions taking place on oil and gas sites like The Oil Drum, and have received quite an education. The comments there, many from people with obvious knowledge of the field, provide the kind of commentary that’s missing from the video feeds. You can’t hold someone accountable if you are ignorant of what they’ve done, and a world of people are choosing knowledge over ignorance in this situation. That’s all good!

    Linda

  11. I’m reading backwards through your blogs to catch up. I love and appreciate the homework on this one. The crowd mentality, whether it be the crowd of lawyers and finger pointers, the crowd of capitalists, the crowd of environmentalists, the crowd of “us” who see the ongoing damage and want it stopped, the crowd mentality captures only one focus at a time. I couldn’t agree more: “let’s get this danged thing capped” and then deal with all the fallout. First things first.

    Hugs to all who are moving this forward in every positive way possible, thinking about life before money.

    oh,

    And “homework” it was! The weekend I spent on this one reminded me of what it means to do real research – and also how investigative journalism has degraded over the years.

    The ability to prioritize, to distinguish the critical need of the moment from the non-critical, is such an important part of leadership. And yet it is clear to me that both BP and our government have failed in this regard. In the beginning, BP forced Deepwater rig workers to sign legal documents before reuniting them with their families and minimized the extent of the threat rather than providing useful information. Despite protestations that they have been there from “day one”, the government was noticeably absent and completely ineffective in setting up early containment measures.

    I’m pragmatic enough to understand that BP must be involved in the on-going process of killing this well, but I’m smart enough to understand how often they have lied. It’s also vaguely amusing that all the “power-to-the-people” sorts in our government have been stubbornly reluctant to hand over a lick of power to the people of Louisiana and the scientists who do have a clue how to approach this situation.

    So on we go, with prayers and hopes for the decent, thoughtful and no doubt utterly stressed people who are trying to cope with this.

    Linda


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