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US Deepwater Horizon explosion & oil spill lawsuits

Deepwater Horizon Source: US Coast Guard, Creative CommonsOn 20 April 2010, the offshore drilling rig Deepwater Horizon exploded and caught fire in US waters of the Gulf of Mexico.  11 workers were killed in the explosion and 17 injured.  The rig was owned by Transocean on lease to BP, which was the main operator and developer of the site, with Anadarko Petroleum and MOEX Offshore (part of Mitsui Oil Exploration) as minority co-owners.  Work on the well had been performed just before the explosion by Halliburton.  The “blowout preventer” was built by Cameron International.  On 22 April, the rig sank.  Oil leaked from the ruptured well head until 15 July when it was temporarily stopped; approximately 4.9 million barrels of oil had leaked into the Gulf.  On 19 September 2010, the US government declared the well “effectively dead”.  Oil directly affected coastal areas in Louisiana, Mississippi, Alabama, Florida and Texas.  People dependent on fishing and tourism have been severely affected, along with those in other industries, including some farther from the Gulf Coast.  Concerns have also been raised in relation to health hazards for clean-up workers and coastal residents, including harms allegedly caused by chemicals used to disperse the oil (made by Nalco).  Coverage of the human rights impacts of the disaster is available here.

The explosion and spill have given rise to many lawsuits.  By early December 2010, hundreds of lawsuits had been filed against the companies involved; this number is likely to increase further.  Lawsuits have been brought in both federal and state courts (for a selection see below).  People claiming to have suffered economic harm from the spill can also seek compensation through the Gulf Coast Claims Facility.  There are two possible claims through the Claims Facility; emergency payments and long-term settlement.  Emergency payments do not prevent the claimants from suing for additional or future losses; however, if a long-term settlement offer is accepted and received, the claimant forgoes the right to sue BP.  More information on the Claims Facility is available here.

Several U.S. Government investigations have been launched into the oil spill including civil and criminal probes conducted by the Justice Department.  The criminal investigation looks into whether improper relations between corporate officials and federal regulators contributed to the accident and breaches of environmental laws.  On 15 December 2010, the US Justice Department filed a civil lawsuit against BP, Transocean, Anadarko, MOEX (part of Mitsui Oil Exploration) and the insurer of the rig QBE Underwriting/Lloyd’s Syndicate 1036 (part of Lloyds of London).  The lawsuit will be included in the consolidated proceedings and includes claims under the Clean Water Act and the Oil Pollution Act.  BP says that it will answer the allegations in a timely manner and will continue to cooperate with government investigations.  BP’s partners in the well, Anadarko and MOEX, as well as Transocean, say BP is to blame for the spill and should be held liable.  On 15 November 2012 BP announced it had reached a $4.5 billion settlement with the US Department of Justice and Securities and Exchange Commission.  BP agreed to plead guilty to 14 criminal charges and to pay a $1.26 billion fine to the Department of Justice.  The company will also pay $2.4 billion to the National Fish and Wildlife Foundation and $350 million to the National Academy of Sciences.  BP will also pay $525 million to the Securities and Exchange Commission.

BP has a general policy not to comment on pending litigation, but information about their response to the explosion and spill is accessible on this part of BP’s website.  The site includes a section on claims and links to BP’s internal investigation of the accident.  On 18 October 2010, BP filed a statement with Court saying they will pay all legitimate claims, regardless of the Oil Pollution Act’s limits on liability.  The filing specifically states that “by making this statement, BP and its affiliates are not admitting anything about their conduct”, and expressly denies gross negligence.  On 13 May 2010, Transocean filed a federal court petition (full text here) seeking to limit its liability arguing it did not cause the disaster and should not be responsible for injuries and damages.  On 24 August 2010, the petition was transferred to the federal Multidistrict Litigation consolidated proceedings until further notice.  According to Bloomberg, Transocean commented in September 2010 that it is awaiting clarity on the “complex litigation landscape” and will then “defend its position vigorously”.  Further information on Transocean’s position is available on a section of its site.  In an October 2010 press release, Halliburton argued that the responsibility for the disaster lies with BP, which failed to perform a key test on the cementing.  In May 2010 testimony to Congress, Cameron’s President and CEO outlined Cameron’s general position.  When contacted by Bloomberg in May 2010, a Cameron spokesperson referred to company policy not to comment on litigation.  In a June 2010 statement, Anadarko claimed that the accident was a “direct result of BP’s reckless decisions and actions”.  On 4 September 2014, the judge in the federal Multidistrict Litigation proceedings issued a ruling finding BP grossly negligent and guilty of wilful misconduct in the Deepwater Horizon disaster.  The judge also found Halliburton and Transocean guilty of negligence.

Below are profiles of a representative selection of lawsuits against companies raising human rights concerns that arise out of the explosion and spill.  This is not a comprehensive listing of lawsuits bringing human rights claims.

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Article
20 January 2012

BP, Anadarko Should Be Held Liable Before Trial, U.S. Says [USA]

Author: Margaret Cronin Fisk, Allen Johnson Jr., Bloomberg

BP...Transocean...and Anadarko...should be found liable before trial for violations of federal pollution laws stemming from the April 2010 Gulf of Mexico oil spill, lawyers for the U.S. argued...The Justice Department is asking U.S. District Judge Carl Barbier to find the companies violated the Clean Water Act on the basis of so-called strict liability because they were operators of the doomed project. Barbier, who’s overseeing much of the spill litigation, has scheduled a nonjury trial for Feb. 27 to determine liability and apportion fault for the disaster.A ruling by Barbier against the companies would mean they couldn’t fight allegations of Clean Water Act violations at the trial and would allow the U.S. to seek fines of as much as $1,100 from each company per barrel of oil spilled. The government has also asked Barbier to find Anadarko and Transocean liable under the Oil Pollution Act, a separate environmental law, for cleanup costs and damages. BP already accepted responsibility for those costs...Even if Barbier does rule for the U.S. on its bid for a pretrial decision, the question of gross negligence...will be considered at trial.

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Article
20 January 2012

Judge denies BP request to penalize Halliburton [USA]

Author: Associated Press

A federal judge shot down BP's request to penalize Halliburton for allegedly destroying damaging evidence about the quality of its cement slurry that went into drilling the oil well that blew out last year and caused the nation's worst offshore oil spill. BP did not prove that it had been "prejudiced" by Halliburton's actions, U.S. Magistrate Judge Sally Shushan wrote in a ruling...But Shushan told Halliburton to turn over a computer that ran tests on the cement slurry. The judge ordered a third party to run forensics tests on the computer to see if data Halliburton says was lost can be retrieved...BP...and its two main contractors on the ill-fated well, Halliburton...and Transocean...have been sparring in advance of a trial that starts Feb. 27. U.S. District Judge Carl Barbier will decide fault for the spill in the first phase of the non-jury trial. BP accused Halliburton employees of doing an internal investigation and discarding and destroying early test results after the blowout that found problems with the cement slurry.

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Article
19 January 2012

BP may double oil spill pay-out [USA]

Author: Sylvia Pfeifer, Financial Times

BP may agree to pay up to $25bn to settle all charges, including possible criminal charges, with the US government over the devastating Gulf of Mexico spill, according to an analyst at Morgan Stanley, double the figure the company has set aside. Martijn Rats, head of European oil research at Morgan Stanley, predicted there was a 70-80 per cent possibility that BP would agree a deal on civil and criminal charges before the end of February, ahead of the start of the civil litigation over the accident. Bob Dudley, BP’s chief executive, has repeatedly said that BP would be willing to settle, but not at any price. Asked about the possibility of a settlement earlier this week in London, Mr Dudley declined to comment, saying it was too sensitive a time to talk about it. However, a person familiar with BP’s thinking said that the idea that the company was negotiating over a settlement worth about $25bn was “completely unfounded.” The person added: “There is no factual basis for the suggestion that there is discussion in that range.” Some other analysts also cast doubt on whether BP would be willing to agree to pay that amount of money before the trial had even begun.

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Article
18 January 2012

Strange leaves door open to Gulf Coast oil spill settlement [USA]

Author: Montgomery Advertiser [USA]

There's less certainty on how much, if anything, the state could collect from the firms, and how the money would be split. The [Alabama] attorney general [General Luther Strange] also suggested the possibility of a trial being avoided entirely: Strange said a number of settlement discussions were ongoing between the parties. "I'm not opposed to a settlement," he said. "It will all depend on whether it's fair or not." Former Attorney General Troy King sued BP and other companies and contractors over the oil spill in August 2010, accusing the companies of damaging the state's economy and coastline through negligence...Attempts to obtain comment from BP were unsuccessful...Trial before U.S. District Judge Carl Barbier is set to begin Feb. 27. The trial will move in three phases: First, a phase that will determine the causes of the blowout; second, a phase that will focus on efforts to stop the oil leak from the floor and the Gulf; and finally a phase dealing with the oil spill cleanup.Liability for the incident among the companies would be determined on a percentage basis.

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Article
13 January 2012

Claimants challenge holdback in BP oil spill case [USA]

Author: Reuters

...[L]awyers for claimants before the $20 billion BP oil spill fund asked a federal judge to reconsider his December order requiring that six percent of future settlements be placed in a reserve account...On January 4, Barbier amended his order to clarify the order would only affect claimants who hadn't received a determination letter from the BP fund as of December 31. That clarification has not appeased lawyers for clients seeking compensation from the fund, known as the Gulf Coast Claims Facility, which is being administered by Kenneth Feinberg. At least seven motions were filed...asking Barbier to reconsider his order..."It would be ironic, as well as grossly unfair and contrary to prior pronouncements of this Court, for claimants whose only possible recovery for their economic damages is through OPA and the GCCF to have those recoveries reduced for work that even this Court has ruled cannot benefit them," he [Daniel Becnel, Jr., an attorney for Gulf Coast Claims Facility claimants] wrote in a filing...Lawyers for the U.S. Department of Justice, which is a party to the oil spill litigation, objected to Barbier's order as well.

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Article
9 January 2012

BP Makes Amends

Author: Joe Nocera, New York Times

As horrific as the Deepwater Horizon accident was in April 2010…BP has performed quite admirably in its aftermath. It has spared no expense in cleaning up the oil. It has set aside $1 billion to restore the environment and coastal ecosystem…BP also agreed to set up a $20 billion fund to compensate anyone who could show that they’d been economically harmed by the accident. Ken Feinberg…was put in charge of the Gulf Coast Claims Facility, as it was named. Feinberg has since paid out $6.3 billion to nearly 200,000 claimants…[T]he Gulf Coast Claims Facility has been a remarkably effective alternative to the cumbersome way damages are usually meted out after a corporate accident: through the tort system.

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Article
9 January 2012

Halliburton: Disqualify attorneys as well as BP experts [USA]

Author: Steve Korris, Southeast Texas Record [USA]

Disqualification of BP's cement experts from Deepwater Horizon litigation should extend to lawyers who gained information from the experts, Halliburton Energy Services pleaded in federal court...Halliburton asked Magistrate Judge Sally Shushan to disqualify all counsel involved with CSI Technologies of Houston, owner Fred Sabins and engineer Michael Viator. "The attorneys who worked with Sabins and CSI will inevitably taint the substitute expert," Donald Godwin of Dallas wrote. "BP's counsel necessarily discussed and analyzed Sabins' opinions with him in detail as he developed his expert reports, which were served after he employed Viator," he wrote. "Consequently, any counsel having direct contact with Sabins and CSI are equally tainted, and therefore constitute a potential source of contamination of the substitute expert," he wrote. Shushan disqualified Sabins and his firm on Dec. 8, writing that his decision to hire Viator was the sole cause for her decision. Viator had worked at Halliburton, developing software and strategy for its defense against BP's claims that the failure of its cement caused the explosion.

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Article
4 January 2012

Kenneth Feinberg freezes payments from BP oil spill fund [USA]

Author: Rebecca Mowbray, Times-Picayune [USA]

The Gulf Coast Claims Facility has halted all payments for oil spill damage in the wake of a ruling by U.S. District Judge Carl Barbier...that 6 percent of all settlements reached after Nov. 7 be set aside to finance the work of plaintiff attorneys in the oil spill litigation in New Orleans. The move means that thousands of people and businesses waiting to be compensated outside of court for harm they endured when the Deepwater Horizon oil rig exploded and sank in April 2010 will have to wait longer for their money. Payments to about 9,000 people and businesses who have received final determination letters from the Gulf Coast Claims Facility, but have yet to sign the award, are now in play...Freezing payments also escalates a battle between the committee of plaintiff attorneys pressing the case in the trial scheduled to start Feb. 27, and other plaintiff attorneys outside the case, BP, Louisiana Attorney General Buddy Caldwell, and several local parishes, all of whom oppose earmarking money to pay for the plaintiff committee's fact-finding before any determinations of liability are made at trial.

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Article
3 January 2012

BP sues Halliburton for Deepwater Horizon oil spill clean-up costs [USA]

Author: Dominic Rushe, Guardian [UK]

BP has handed the bill for clearing up the disastrous 2010 Deepwater Horizon oil spill to Halliburton, the US contractor it claims botched the cement work on the failed rig. The oil group has filed a suit in New Orleans seeking "the amount of costs and expenses incurred by BP to clean up and remediate the oil spill, the lost profits from and/or diminution in value of the Macondo prospect, and all other costs and damages incurred by BP related to the Deepwater Horizon incident and resulting oil spill", according to the filing.BP did not specify the amount of damages it is seeking from Halliburton, which provided cement contracting services on the well in the Gulf of Mexico. But it previously estimated the clean-up will cost $42bn (£27bn). The oil firm wants Halliburton to pay damages "equal to, or in the alternative proportional to Halliburton's fault," to cover clean-up costs and any government fines BP may face. A Halliburton spokeswoman said: "Halliburton stands firm that we are indemnified by BP against losses resulting from the Macondo incident."[also refers to Cameron Intl., Anadarko, Weatherford, Transocean]

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Article
3 January 2012

Crucial year for BP in gulf spill legal fight [USA]

Author: Jeremy Lemer & Ed Crooks, Financial Times

For BP, 2012 will be a crucial year as the UK oil major defends itself against a barrage of civil lawsuits and the looming threat of criminal charges relating to the Deepwater Horizon disaster in the Gulf of Mexico in which 11 people died…The company is already a defendant in more than 600 private civil suits…All eyes will be on New Orleans where, on February 27, the US district court will begin to hear a consolidated amalgam of civil claims for damages…In an effort to unravel the tangle of competing claims and counter-claims, the trial is set to proceed in three phases covering blame for the disaster, the amount of oil spilt and the extent of the damage caused by the disaster…A wild card for BP and its employees in 2012 will be the criminal investigations that federal regulators launched in 2010…BP…declined to comment on the status of the criminal investigations. [also refers to Transocean, Anadarko Petroleum, Cameron Intl, Weatherford Intl, Halliburton]

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