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Owner of gulf oil drilling rig tries to limit liability for spill

By Steven Mufson
Washington Post Staff Writer
Thursday, May 13, 2010; 3:27 PM

Transocean, owner of the drilling rig that caught fire and sank in the Gulf of Mexico three weeks ago, has asked a Houston federal court to limit its liability for the resulting oil spill to $26.8 million, a small fraction of the anticipated damages from the accident.

The petition, made under a law more than a century old, marked a key step for big oil companies seeking to establish jurisdiction in Houston for what promises to be years upon years of litigation.

Transocean said its insurers demanded that the company file the petition in order to keep intact the insurance coverage on the rest of its fleet of 139 offshore drilling rigs. The amount represents the company's interest in the rig and its cargo, after taking into account the roughly $560 million in insurance it had taken out on the rig.

Transocean, the world's largest offshore drilling contractor, made the filing at the U.S. District Court for the Southern District of Texas, an important legal maneuver. By doing so, Transocean said it was also seeking to consolidate all lawsuits growing out of the spill in a single court in Houston. The company said its goal was to bring the cases "before a single, impartial federal judge" and to "establish a single fund from which legitimate claims may be paid."

But lawyers for plaintiff groups said that Transocean was trying to consolidate the more than 100 lawsuits in a Houston court because Houston juries would be the most sympathetic to the oil industry. Plaintiffs' lawyers will try to consolidate the lawsuits in New Orleans or Washington, according to one of the attorneys.

Transocean said that its move would not affect lawsuits filed under the Oil Pollution Act of 1990. That legislation, passed after the Exxon Valdez oil tanker spill off the coast of Alaska, limited corporate liability to $75 million for economic damages resulting from an oil spill. BP has already said that it will pay out well in excess of that amount for "legitimate claims."

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