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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21 January 2014

USA: BP seeks rehearing in oil spill settlement dispute

Author: Associated Press

BP on Tuesday asked an appeals court to review a ruling upholding a multibillion-dollar settlement to compensate victims of the company’s 2010 oil spill in the Gulf of Mexico...BP argued that the...decision will force the company to pay hundreds of millions of dollars to businesses that weren’t harmed by the massive spill...BP has argued that [Judge] Barbier and [the] court-appointed claims administrator...have misinterpreted settlement terms in ways that would force the company to pay for billions of dollars in inflated or bogus claims by businesses...Last month, Barbier rejected BP’s argument that the settlement shouldn’t compensate businesses if they can’t directly trace their losses to the spill.

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18 April 2014

Four years after the BP disaster, experts say it could happen again

Author: Peter Moskowitz, Al Jazeera

Four years after BP’s Deepwater Horizon offshore drilling rig exploded…experts are warning that similar disasters could happen again…[G]overnment regulations and companies’ safety cultures have not kept pace with increases in global offshore oil production and rapid changes in the technology…Without more regulations and changes at the top of multinational corporations, experts believe that another disaster like the Deepwater Horizon explosion is imminent…[W]hile there were…recommendations, reports and regulatory action in the months following the Deepwater Horizon disaster, fervor surrounding deepwater drilling safety has since faded…[B]eyond the bifurcation of one agency and the creation of several industry-backed groups as well as the proliferation of dozens of consortiums, panels and white papers on offshore drilling safety, some say that tangible regulations are still sorely lacking and that the culture of oil companies is focused more on profit than safety…

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20 May 2014

US court rejects BP appeal to limit Deepwater Horizon costs [subscription required]

Author: Ed Crooks, Financial Times (USA)

BP has suffered a decisive setback in its court battle to limit the cost of its settlement for victims of the 2010 Deepwater Horizon disaster…The…appeals court…rejected BP’s request for a full review of the company’s case, as it seeks to establish that the compensation settlement it agreed with plaintiffs’ lawyers in 2012 is being interpreted unfairly…The company said in a statement it was “disappointed” by the decision and was considering its options…BP argues that…the…administrator of claims…has been misinterpreting [the settlement] in ways that have allowed businesses that suffered no losses as a result of the spill to be awarded compensation…The contentious claims…have been suspended under an injunction since last October, but could now restart after seven days, unless BP decides to try to persuade the Supreme Court to hear the case. BP most recently estimated the quantifiable cost of the settlement at $9.2bn…but said the final charge would end up being significantly more than that.

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22 May 2014

BP to ask Supreme Court to hear claims issue [USA]

Author: Kevin McGill, Associated Press

BP PLC said Wednesday it will ask the U.S. Supreme Court to decide whether businesses must prove they were directly harmed by the 2010 Gulf Of Mexico oil spill to collect payments from a 2012 settlement. The announcement came two days after judges of the 5th U.S. Circuit Court of Appeals voted 8-5 against reconsidering the issue…BP initially estimated it would pay roughly $7.8 billion to resolve spill claims. The company later said the claims administrator was misinterpreting the settlement in ways that could add billions of dollars worth of bogus or inflated claims and it could no longer estimate the deal's ultimate cost…

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27 June 2014

BP seeks repayment on 'inflated' oil spill payouts [USA]

Author: Times-Picayune (USA)

BP urged a federal judge Friday (June 27) to order the repayment -- plus interest -- of hundreds of millions of dollars the company says were overpaid to claimants as a result of "erroneous implementation" of the 2010 Gulf of Mexico oil spill settlement. The British oil giant argues that repayment is necessary after the court in May approved a revised policy for calculating losses under the settlement. BP argues some claimants received "inflated or unwarranted awards" prior to the change…[A]ttorneys Steve Herman and Jim Roy, members of the steering committee that represented the thousands of claimants in negotiating the 2012 settlement, say the motion is "another attempt by BP to back out of the commitment it made to the Gulf."…

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Author: Anne-Hélène Pommier, Le Figaro (France)

La compagnie pétrolière britannique [BP] responsable de la plus grande catastrophe écologique des États-Unis après l'explosion de sa plateforme Deepwater Horizon en 2010 réclame devant la justice la restitution des indemnités qu'elle estime indûment payées mais aussi des intérêts…Cette nouvelle action vient s'ajouter au combat que la compagnie britannique mène depuis plus d'un an pour obtenir la révision des conditions d'indemnisations. Fixées par un accord soutenu par BP et approuvée en 2012 par la justice américaine, elles permettent à des entreprises de demander à être indemnisées sans avoir à apporter la preuve du lien de leur sinistre avec la marée noire de 2010…Les avocats des victimes quant-à eux, dénoncent une autre tentative de BP pour ne pas assumer les dégâts qu'elle a infligé au Golfe du Mexique…

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22 July 2014

USA: Judge orders company claimant & law firm to return settlement payments from BP over Deepwater Horizon oil spill

Author: Amanda Bronstad, National Law Journal (USA)

"BP Claimant, Attorneys, Ordered to Return Settlement Cash", 21 Jul 2014 [Subscription required]

A New Orleans law firm at the center of an investigation into misconduct surrounding the processing of payments from BP PLC's Deepwater Horizon oil spill settlement must return $357,000 paid to a client based on allegedly fraudulent claims. U.S. District Judge Carl Barbier ordered that shrimper Casey Thonn return the payments within 30 days. Barbier also found that the AndryLerner firm, which received $35,700 in fees, and principals Jonathan Andry and Glen Lerner were responsible for the restitution. The judgment also applied to Lionel “Tiger” Sutton, an attorney who received fees for referring Thonn to AndryLerner, as well as Thonn’s accounting firm. Attorneys for Andry, Lerner and Sutton did not respond to requests for comment...BP, which continues to assert in court filings that fraud has tainted its estimated $9.2 billion settlement, praised the judgment—the first to order the return of an oil spill claim payment...All four have denied allegations of fraud...

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2 September 2014

Halliburton agrees to $1.1bn settlement for role in US Deepwater Horizon oil disaster

Author: Al Jazeera

"Halliburton to pay $1.1bn for US Gulf spill", 2 Sep 2014

Halliburton says it has agreed to pay $1.1bn to settle a substantial portion of claims arising from its role in the 2010 Gulf of Mexico oil spill...It is subject to court approval. Halliburton was BP's cement contractor on the drilling rig that exploded in the Gulf in April 2010. The blast killed 11 workers and triggerred the largest offshore oil spill in US history with 4.9 million barrels of oil spilling into the sea. Halliburton was responsible for the placement of "centralisers" that help stabilise the well bore during cementing. It had earlier blamed BP's decision to use only six centralisers - to save "time and money" - for the blowout. The deal will settle claims assigned to Halliburton as a result of BP's settlement in 2012 and punitive damages from the loss of property or commercial fishing activity resulting from the oil spill...


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4 September 2014

In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010

Author: US District Court for the Eastern District of Louisiana

The Court’s conclusions relative to the Phase One trial…: BP Exploration & Production, Inc. (“BPXP”) is subject to enhanced civil penalties under the Clean Water Act (“CWA”)…as the discharge of oil was the result of BPXP’s gross negligence and BPXP’s willful misconduct…BP (meaning BPXP and BP America Production Company, but not BP p.l.c.), Transocean (meaning Transocean Holdings LLC, Transocean Deepwater Inc., and Transocean Offshore Deepwater Drilling Inc., but not Transocean Ltd. or Triton Asset Leasing GmbH) and Halliburton (meaning Halliburton Energy Service, Inc. and Halliburton’s Sperry division) are each liable under general maritime law for the blowout, explosion, and oil spill. BP’s conduct was reckless. Transocean’s conduct was negligent. Halliburton’s conduct was negligent.

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5 September 2014

US court finds BP grossly negligent & guilty of willful misconduct in the 2010 Deepwater Horizon spill

Author: Petrol Global News

"Judge: BP 'grossly negligent' in Deepwater Horizon spill", 4 Sep 2014

A U.S. District Court judge found BP grossly negligent and guilty of willful misconduct Thursday for the 2010 Deepwater Horizon spill, a ruling that could hit BP with penalties of up to $18 billion...BP said it “strongly disagrees” with the ruling and said the ruling is “not supported by the evidence at trial.” BP said it will appeal. Texas-based Halliburton and Switzerland-based Transocean were found negligent but not reckless. The judge divided fault for the spill at 67 percent for BP, 30 percent for Transocean and 3 percent for Halliburton. The judge called BP “reckless” for failing to properly test the Macando well that blew out, killing 11 workers and igniting a fire...The judge must still issue rulings on BP’s effort to stop the spill and on how much oil was spilled...Under the Clean Water Act, BP could face a fine of $4,300 per barrel...“During the penalty proceedings, BP will seek to show that its conduct merits a penalty that is less than the applicable maximum after application of the statutory factors,” BP said...  [The court's decision is available here.]


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