US Deepwater Horizon explosion & oil spill lawsuits

Deepwater Horizon Source: US Coast Guard, Creative Commons

In 2010, hundreds of lawsuits were filed against companies involved in the explosion of the offshore drilling rig Deepwater Horizon which killed 11 workers and injured 17. Plaintiffs have a range of concerns, from requesting compensation for their injuries to economic harm resulting from the explosion. Several U.S. government criminal investigations have been launched as well. BP agreed to pay $4.5 billion dollars to the US Deparment of Justice and Securities and Exchange Commission. BP will also pead guilty to 14 criminal charges and will pay an additional $1.26 billion fine to the US Department of Justice. 

 

On 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
16 December 2011

BP announces Cameron settlement over Gulf oil spill [USA]

Author: BBC News

Oil giant BP has agreed a settlement with contractor Cameron International over the Gulf of Mexico oil spill. Cameron was the designer and manufacturer of the blow-out preventer on the Deep Water Horizon project, which failed during the spill. Under the agreement, which settles all claims between the firms, Cameron will pay BP $250m (£161.3m). The money will be put into the $20bn trust BP set up for victims of the disaster, in which 11 people died. The agreement is not an admission of liability by either Cameron or BP for last year's explosion, which led to the release of an estimated 780 million litres (206m gallons) of crude oil into the Gulf of Mexico. The firms say the blast was the result of "complex and interlinked causes" involving multiple companies. [also refers to MOEX, Andarko, Halliburton, Weatherford International]

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Article
15 December 2011

Chevron, Transocean in $11 billion Brazil oil suit

Author: Reuters

Brazilian prosecutors sued Chevron Corp…and…Transocean Ltd for 20 billion reais ($10.6 billion) over their alleged roles in a November oil spill near Rio de Janeiro. The civil suit filed by federal prosecutors in Rio de Janeiro state also seeks to suspend the companies from operating in Brazil...Some legal experts said the action may be a politically motivated suit…The suit could also jeopardize oil companies' plans to step up their presence in Brazil after the discovery of huge offshore reserves…Chevron, which has said it takes full responsibility for the spill, said it has not received any formal notice of the suit and that the spill was staunched in four days with minimal or no damage to the environment. Transocean had similar comments…The document outlining the prosecutor's case…said the fine was to compensate for environmental and social damage. [also refers to Texaco (part of Chevron), Petrobras, Frade Japao, BG Group, Galp]

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Article
12 December 2011

Transocean Says It Doesn’t Owe Fines for Below-Surface Spill [USA]

Author: Margaret Cronin Fisk, Laurel Brubaker Calkins, Bloomberg

Transocean...said it can’t be forced to pay federal fines or penalties for oil spilled below the surface of the Gulf of Mexico in the Deepwater Horizon incident because of an indemnity contract with BP...Transocean asked a federal judge in New Orleans to find that the indemnity provision in the drilling contract requires BP to pay virtually all damages and cleanup costs. BP has argued that Transocean’s conduct voided the agreement. The indemnity provision doesn’t cover liabilities that resulted from willful misconduct, the U.S. Justice Department said...asking the court to delay ruling on the indemnity provision. Transocean isn’t asking to be held harmless for such misconduct, the company said in a court filing today...“The drilling contract does not provide for indemnity in the event of intentional or willful misconduct in excess of gross negligence,” Transocean’s lawyers said. The company’s claim for indemnity for Clean Water Act fines “arises only if Transocean is held liable” for “underwater discharge from the well,” the company said.

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Article
8 December 2011

New lawsuit filed in Gulf oil spill [USA]

Author: Eric Heisig, HoumaToday.com [USA]

More than 100 people and businesses have filed a new lawsuit against BP, saying the company's Gulf oil spill damaged their livelihoods...The suit, which names BP, Transocean and Cameron International...as defendants, was filed on behalf of fishermen and business owners from Terrebonne, Lafourche and other parts of Louisiana, as well as Texas, California and Florida. It says the companies' negligence caused the oil rig in Venice to explode on April 2010. The suit says the companies “owed a duty to exercise reasonable care to plaintiffs in the design, construction, operation, management, use, maintenance and inspection of the Deepwater Horizon.”...Hutchinson said the lawsuit was filed because the amount of money the Claims Facility is offering does not take into account future loss of wages due to unforeseen environmental and economic problems that may yet result from the spill...Requests for comment made to BP and Transocean were not answered...

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Article
7 December 2011

Halliburton Responds to BP Motion for Sanctions [USA]

Author: Halliburton in Business Wire

Halliburton...responded...to court filings by BP saying: BP recently filed a motion for sanctions against Halliburton alleging that Halliburton destroyed evidence relating to post-incident testing of the foam cement slurry. BP has been aware of post-incident tests for some time, but has chosen this late date in the litigation to mischaracterize the results of such tests. Contrary to BP’s assertions, the post-incident testing referred to in its motion was not conducted on rig samples or in a manner approved by Halliburton. Rather, the informal testing BP refers to used off-the-shelf materials that yielded results which Halliburton believes have little or no relevance to the case, particularly when pre-incident testing using rig samples and formal lab processes showed that the cement slurry was designed to be stable. In September 2011, the U.S. Department of Interior reported testing done on the actual Deepwater Horizon rig sample, confirming Halliburton's position that the slurry was designed to be stable. The Department further concluded that the cement likely did not fail in the annulus part of the well.

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Article
5 December 2011

BP says Halliburton destroyed well data [USA]

Author: Jennifer A.Dlouchy, Houston Chronicle [USA]

BP...accused Halliburton of destroying test results showing that the oil field services company used unstable cement to secure the Macondo well that blew out in the Gulf of Mexico last year. BP made the allegations in a 310-page legal filing at the U.S. District Court in New Orleans that is overseeing a class action lawsuit tied to the 2010 oil spill. BP accused Halliburton of "steadfastly" refusing to turn over its internal results from testing on the cement mix and subsequently destroying the data from those examinations. "Halliburton intentionally destroyed the evidence related to its non-privileged cement testing, in part because it wanted to eliminate any risk that this evidence would be used against it at trial," BP said in its filing. In response, Halliburton spokeswoman Beverly Stafford said...that the company is reviewing details of BP's filing, but that "we believe that the conclusion that BP is asking the court to draw is without merit and we look forward to contesting their motion in court."

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Article
30 November 2011

U.S. to seek more fines in Gulf oil spill

Author: Jennifer A. Dlouhy, Hearst Newspapers

The federal government will seek new penalties against BP, Transocean and Halliburton for alleged safety and environmental violations in connection with the 2010 Gulf oil spill, an Obama administration official said...Michael Bromwich, the outgoing head of the Interior Department's Bureau of Safety and Environmental Enforcement, told reporters the government was on track to send notices of additional infractions of offshore drilling rules within the ''next several weeks.'' The three companies already face up to $45.7 million in fines for 15 previously alleged offshore safety and environmental violations. The government now is poised to build on the earlier cited infractions, which were tied to the conclusions of a joint oil spill probe conducted by the Interior Department and Coast Guard...Halliburton did not respond to requests for comment. BP and Transocean declined to comment. [also refers to Chevron]

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Article
26 November 2011

After BP Oil Spill, Future Uncertain for Vietnamese Fishers [USA]

Author: Nina Kahori Fallenbaum, Hyphen Magazine

When the BP oil spill started gushing into fishing waters, it hammered an industry that had been struggling for years...Vietnamese Americans had been picking up the slack in a backbreaking industry few Americans wanted to do, but these economics have made it even harder for them to make a living...A group of pro bono lawyers and community activists are now advocating for Asian American fishing families who’ve suffered significant loss of subsistence use...For families whose income came in both dollars and fish, it’s difficult to quantify the losses from the spill...They hope to convince Kenneth Feinberg, claims administrator for BP’s compensation fund, that not all losses can be shown in ledger books...There are laws designed to protect victims of large-scale environmental disasters...but their parameters are hard enough for native English speakers to understand, let alone those that struggle with written English...While over 16,000 subsistence use claims have been submitted to the Gulf Coast Claims Facility, just two Vietnamese families have been paid so far, at less than $5,000 each.

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Article
21 November 2011

Halliburton wants Barbier to disqualify engineer for 'switching sides' to BP [USA]

Author: Steve Korris, Louisiana Record [USA]

Halliburton Energy Services...claims an employee who helped develop strategy for litigation over the Deepwater Horizon explosion quit his job and joined a firm that helps rig operator BP develop an opposing strategy. On Nov. 15, Halliburton asked U.S. District Judge Carl Barbier to disqualify engineer Michael Viator, CSI Technologies, and CSI owner Fred Sabins as experts for BP. "HESI recently learned that Viator, after switching sides, revealed confidential information to Sabins and CSI as they assisted BP in formulating its claims and defenses against HESI," Donald Godwin of Dallas wrote.

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Article
17 November 2011

BP not entitled to insurance coverage under Transocean, Barbier rules

Author: Alejandro de los Rios, Louisiana Record [USA]

U.S. District Judge Carl Barbier has ruled that BP is not eligible for millions of dollars in coverage for the 2010 Deepwater Horizon oilrig explosion and oil spill under oilrig owner Transocean's insurance policies. Transocean was leasing the Deepwater Horizon to BP when its blowout preventer failed and led to the largest offshore oil spill in U.S. history...Barbier concluded that BP is not correct in its interpretation that the lease they signed with Transocean indemnifies the oil company for some $750 million for damages caused by the oil spill in the Gulf of Mexico. "One cannot definitely conclude that there is, in fact, an insurance obligation," Barbier wrote. "Therefore, it is unreasonable to adopt BP's interpretation, that there is unlimited-in-scope coverage just because in the abstract Transocean is obligated to name BP as an additional insured." BP argued that the drilling contract that it signed with Transocean means that it is insured for oil spill damages under policies Transocean has taken out on the Deepwater Horizon.

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