Judge Rules Twice Against BP Regarding Gulf Oil Spill

NEW ORLEANS -- BP plc lost two rulings that would have sheltered the company from the possibility of paying out billions of dollars more in damages related to its 2010 Gulf of Mexico oil spill.

According to the Associated Press, a federal judge ruled yesterday that BP is not entitled to coverage for the spill under insurance policies totaling $750 million held by Transocean Ltd. Transocean owns the Deepwater Horizon rig that BP leased at the time of the spill.

"Because Transocean did not assume the oil pollution risks pertaining to the Deepwater Horizon Incident -- BP did -- Transocean was not required to name BP as an additional insured as to those risks," U.S. District Judge Carl Barbier wrote in his ruling, as the AP reported. "Because there is no insurance obligation as to those risks, BP is not an 'insured' .... for those risks. Therefore, BP is not entitled to the declarations of coverage it seeks."

That wasn't the only ruling made against BP. Barbier also ruled that the states of Alabama and Louisiana can pursue punitive damages against BP and other companies involved in the oil spill.

There was one possible silver lining for BP, though. The judge hinted that any punitive damages awarded against BP could be limited. That's because Barbier allowed states to make claims under the Oil Pollution Act, but he prohibited each state from making claims under its own laws.

According to the AP, Barbier backed up his decision regarding punitive damages by noting the source of the oil that damaged coastlines in several states was not actually in those states. He also cited a host of legal reasons why claims under state law are trumped by federal laws.

During the April 2010 tragedy, 11 rig workers were killed when the Deepwater Horizon exploded approximately 50 miles off the cost of Louisiana. According to government estimates, the spill led to more than 200 million gallons of oil leaking from a BP well a mile under the Gulf of Mexico.