Feds Move to Block Transocean's Bid To Cap Damages For Gulf Oil Spill

Hours after Attorney General Eric Holder disclosed ongoing criminal and civil probes related to the Gulf oil spill, the Justice Department has filed motions to block Transocean from seeking to limit their liability in the unfolding disaster. The documents were filed late Tuesday night in federal court in Houston, Texas.

The motion filed by the Justice Department follows Transocean's May 13 motion to seek limited liability of just $26.7 million. The Justice Department initially signaled to Transocean that it would oppose this in a May 24 letter to Transocean's counsel. Transocean has asked for limited liability under the Limitation of Liability Act of 1851, the same act invoked by the owners of the RMS Titanic when they awarded a paltry $95,000 to the survivors of the Titanic tragedy.

The May 24 letter said, "It is simply unconscionable, in the circumstances of this case, that Transocean is attempting to use this same shield of liability potentially leaving thousands of people who have been damaged by your clients' actions with no remedy."

Transocean owned the Deepwater Horizon, the mobile offshore drilling platform that exploded April 20, killing 11 workers. The explosion triggered the ongoing oil spill that has become the worst environmental disaster in U.S. history.

In the Tuesday filing, the Justice Department said, "Transocean seeks to absolve ('exonerate') itself from liability concerning the Deepwater Horizon explosion, fire, and oil spill, or, alternatively, limit its liability to approximately $27 million. This it cannot do."

"We shall dispense with any lengthy description of the facts of the case," says the Justice Department's motion, "as the Court, and indeed the country, is fully aware of the April 20th explosion, fire, and oil spill involving the Deepwater Horizon."

"Suffice it to say, eleven crewmembers lost their lives in the immediate disaster stemming from the explosion and fire aboard the vessel. As for the oil spill, we shall forego a cascade of words like 'catastrophic' and 'cataclysmic' as they simply do not do justice to the magnitude of economic, health, and environmental devastation wrought upon the nation's waters, across a swath of States, and upon entire communities."

The DOJ filing asserts, "The Limitation Act and environmental laws cannot be reconciled in establishing the extent of a shipowner's liability for polluting the United States' navigable waters."

The filing also raises questions about Transocean's decision to dole out money to shareholders days after seeking a limit of liability in the oil spill. The motion says that Transocean is trying to follow in the footsteps of the Titanic's owners.

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"After lengthy, drawn-out litigation," says the motion, recounting the Titanic case, "the ship's owners paid the paltry sum of approximately $95,000 -- to be shared by all of the survivors and each of the estates of the deceased. Now, nearly one hundred years after the sinking of the Titanic, Transocean has followed in its predecessors' footsteps and sought refuge under the Limitation Act, but with an added Dickensian twist. Within days of filing its Petition in this Court, Transocean publicly announced (from Switzerland) that it would be issuing approximately $1 billion in dividends to its shareholders."

Contacted by ABC News, Transocean director of corporate communications Guy Cantwell declined to comment about the Justice Department filing.

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