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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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13 November 2011

Attorneys sue BP on behalf of Gulf fishermen

Author: Jeremy Alford, HoumaToday.com [USA]

...Faegre and Benson law firm has filed suit against BP over the Vessels of Opportunity program. BP set up the program in the wake of its 2010 oil spill in effort to both stop the encroaching crude and to pay out-of-work fishermen for their assistance and for the use of their boats. The...complaint...alleges that BP reneged on contractual commitments to shrimpers, crabbers and oystermen. The firm represents the interests of 495 fishermen who relied upon the Gulf of Mexico for their livelihoods. Attorneys from Faegre and Benson argue the fishermen were deceived by BP when the oil company asked them to sign substitute contracts relinquishing rights they had obtained under their initial agreements...[T]he fishermen, a great number of whom are Vietnamese-American, have not yet been paid the amounts they were promised, nor have their vessels been decontaminated at BP’s expense...BP’s counsel contends that the Gulf Coast Claims Facility has not offset payments earned through the Vessels of Opportunity program when determining economic loss awards.

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8 November 2011

BP wants US probes barred from oil spill lawsuits [USA]

Author: Harry R. Weber, Associated Press

The companies involved in the worst offshore oil spill in U.S. history are trying to prevent government investigations blaming them for the disaster from being used against them by the people and businesses who are suing them. Billions of dollars are potentially at stake in a trial scheduled for February to determine whether rig owner Transocean can limit what it pays those making claims under maritime law and to assign percentages of fault to Transocean and other companies involved...BP, Transocean and cement contractor Halliburton filed motions...in federal court in New Orleans seeking to keep certain government oil spill reports out of the civil case. BP also wants a judge to bar plaintiffs' lawyers from using past criminal, civil and regulatory proceedings against the British firm in the civil case. The filings deal with the two most comprehensive federal investigations of the disaster...There was no immediate ruling.

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2 November 2011

Fight Over Gulf Spill Grows [USA]

Author: Russel Gold, Wall Street Journal

Transocean...which owned and operated the deepwater drilling rig that exploded in the Gulf of Mexico, filed a legal motion...asking the federal court in New Orleans to let the company off the hook for costs related to the cleanup of the roughly 4.9 million barrels of oil that escaped from the well into the gulf last year. Transocean says that energy giant BP...which hired it to drill the well, indemnified it against pollution-related costs if a spill occurred underwater. BP has set aside about $41 billion to pay for environmental cleanup, compensation and penalties, but is seeking to get others involved in the spill to share the costs, which remain unknown...BP said that letting Transocean off the hook for cleanup costs "would be inconsistent with the law and sound public policy." In a statement...BP added that "to enforce the indemnification would be to allow Transocean to escape the consequences of its actions and avoid meeting its obligations in the Gulf." [also refers to Anadarko, Halliburton, Mitsui]

Read the full post here

31 October 2011

Judge dismisses Deepwater Horizon-related claims [USA]

Author: Amanda Bronstad, The National Law Journal

Barbier has not issued a final judgment. He gave both sides until Oct. 31 to propose language for that document, which when finalized would allow the unhappy party to appeal. But the lawyers began sparring over the details — in particular, whether the judge had exonerated the emergency responders for negligence or whether he had simply declared that they were not liable for damages. Also unresolved was whether the plaintiffs should pay the responders' legal costs...The 13 plaintiffs in those cases — a group of landowners, commercial fishermen and employees in the oil and gas industry — sued six emergency responders, alleging that they should have known that the water they sprayed for 36 hours on the Deepwater Horizon would cause the rig to sink, uncapping a riser pipe and allowing oil to gush into the Gulf of Mexico. The plaintiffs filed a proposed class action seeking economic and property damages under general maritime law and the U.S. Oil Pollution Act of 1990...[T]hey claimed negligence under Louisiana state law...Barbier concluded that the Oil Pollution Act claims should be dismissed because the oil had discharged from the Deepwater Horizon, not the emergency responder vessels. He ruled that federal maritime law pre-empted the claims under Louisiana law...The dismissal was with prejudice, but plaintiffs still could file their claims against BP...and some of the other defendants, according to Barbier's order.

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30 October 2011

Transocean eyes more action against BP [USA]

Author: Ed Crooks, Financial Times

Transocean, the owner of the Deepwater Horizon drilling rig that sank in the Gulf of Mexico last year, is planning to take further legal action against BP as it seeks to prove that the British company should be liable for almost all the costs of the disaster. Legal arguments from Transocean, which could be filed in the next few days, will be based on the contract that it signed with BP to work on the Macondo well, which it says protects it against claims for damages, fines and other penalties...Transocean said in a statement: “Through legally binding contracts with both Transocean and the US government, BP agreed to assume full responsibility for the costs and liability of any pollution...caused by hydrocarbons that leaked from the Macondo well.” BP argues that no court would protect Transocean against fines and charges handed down by the US authorities, saying: “If Transocean has materially breached the contract containing the indemnity or prejudiced BP’s rights, then Transocean cannot take advantage of the indemnification clauses.” [also refers to Anadarko]

Read the full post here

24 October 2011

Plaintiffs' committee wants past testimony admitted in BP suits [USA]

Author: Steve Korris, Southeast Texas Record

Plaintiff lawyers preparing for trial over liability for the Deepwater Horizon explosion seek to admit past testimony of witnesses who now refuse to testify because they might incriminate themselves...[L]eaders of a plaintiff committee urged U. S. District Judge Carl Barbier to allow witness statements from a report of a U.S. Coast Guard investigation board. Attorneys James Roy of Domengeaux Wright Roy & Edwards in Lafayette and Stephen Herman of Herman, Herman Katz & Cotlar in New Orleans asked Barbier to grant an exception to the rule against hearsay. "Because a witness who invokes the Fifth Amendment privilege against self incrimination is deemed unavailable under the federal rules of evidence, previous testimony before the board is admissible at trial," they wrote. They conceded that Barbier can't admit the full report as evidence, but they asked him to admit it for impeachment purposes. They also asked him to admit "photographs and other raw materials" from it.

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18 October 2011

Deepwater a warning for junior partners [USA]

Author: Ed Crooks, Sheila McNulty, Financial Times

As the consequences for legal liabilities and regulatory enforcement start to become clear, the [Deepwater Horizon] disaster is having a renewed impact on oil companies’ strategic and operational decisions. BP’s agreement...with...Anadarko...was a warning to any company acting as a junior partner with a minority stake in a project operated by someone else. Anadarko has agreed to pay $4bn to BP to settle claims between the two companies and is still liable for its share of civil and criminal penalties imposed by the government. Jim Noe, executive director of the Shallow Water Energy Coalition, representing smaller companies operating in the Gulf of Mexico, said: “The significant liability faced by the non-operating partners on the Macondo well should make exploration companies think even harder about who they are partnering with, especially on prolific wells.”He said non-operating partners would ensure they were fully comfortable that the operator had properly designed the well, and was ready to respond to a blow-out with systems to cap the well and capture any oil spilt.

Read the full post here

17 October 2011

BP agrees $4bn Anadarko settlement

Author: Michael Stothard, Financial Times

Anadarko...the part-owner of the oil well at the centre of the Gulf of Mexico spill, has agreed to pay BP $4bn to settle all claims relating to the accident last year, which led to the death of 11 workers...The out of court settlement marks the end of a long-running dispute between the companies over responsibility for the blow-out at the Macondo well. As part of the settlement, US-based Anadarko will drop its allegations of gross negligence against BP...Earlier this year, BP announced a $1bn settlement with Moex Offshore, a subsidiary of Japan’s Mitsui...“This settlement represents a positive resolution of a significant uncertainty and it resolves the issues among all the leaseholders of the Macondo well,” said Bob Dudley, BP chief executive...“This settlement agreement with BP is the right action for our stakeholders, as it removes significant uncertainty regarding future liabilities and associated risks,” said Jim Hackett, Anadarko chief executive. [also refers to Transocean, Halliburton]

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17 October 2011

BP to end payments to oil spill fund early [USA]

Author: Sylvia Pfeifer, Michael Stothard, Financial Times

BP will be able to cease its payments into a $20bn compensation fund to help meet claims from last year’s Gulf of Mexico oil spill one year earlier than expected after striking an out-of-court settlement with Anadarko...Anadarko, one of BP’s minority partners in the Macondo well, will pay $4bn to settle claims between the two companies...BP will apply the single cash payment to the $20bn trust fund it set up last year. As a consequence, it will be able to finish paying into the fund by the end of 2012, a year earlier than expected...BP, which has always denied gross negligence, has set aside $41bn for total estimated costs associated with the accident. As a 25 per cent partner in the well, Anadarko would have been on the hook for 25 per cent of the costs of cleaning up the spill, compensating people affected and paying government fines. However, it would have been able to avoid these responsibilities if it proved BP had been grossly negligent. [also refers to MOEX (part of Mitsui), Transocean, Weatherford International]

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13 October 2011

BP and partners face $45m in fines over Gulf oil spill [USA]

Author: Suzanne Goldenberg, Guardian [UK]

BP and its partners on the...Deepwater Horizon oil rig face fines of up to $45m after receiving formal notice of a series of safety violations leading up to the Gulf of Mexico disaster. In a first step of a long legal battle, the interior department said BP, rig operator Transocean and contractor Halliburton between them broke 15 rules governing offshore drilling ahead of the 20 April 2010 explosion...[The] notices mark the first time the US government has gone after contractors – in this case Transocean and Halliburton – in addition to oil companies. The tactic could influence lawsuits between BP and its partners over their responsiblility...The companies have 60 days to appeal against the sanctions. Transocean said it would appeal. All three companies are pursuing lawsuits against one another and BP said in a statement that the notices showed its partners were partly to blame. "We continue to encourage other parties, including Transocean and Halliburton, to acknowledge their responsibilities in the accident."

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