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
28 October 2013

BP Takes Aim at Spill Settlement [USA]

Author: Amanda Bronstad, National Law Journal (USA)

A federal appeals court this month agreed with BP PLC that there were serious problems with the processing of claims on its $9.6 billion Deepwater Horizon settlement, especially because some Gulf Coast businesses apparently were being compensated for economic losses from the oil spill that they never actually suffered. In coming to that conclusion, a split panel of the U.S. Court of Appeals for the Fifth Circuit ran into a separate problem: If they weren't truly victims, why were these claimants included in a class settlement premised on compensating victims of the spill? Wouldn't that undermine the settlement entirely?...A separate three-judge Fifth Circuit panel has set oral arguments on those objectors' challenge for Nov. 4…

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Article
3 October 2013

BP wins reprieve over Gulf spill payouts: U.S. appeals court

Author: Jonathan Stempel, Reuters

BP Plc won a legal reprieve in its effort to force the administrator of a settlement related to the 2010 Gulf of Mexico oil spill to tighten standards in assessing claims, potentially sparing the oil company billions of dollars of extra costs. A divided 5th U.S. Circuit Court of Appeals in New Orleans on Wednesday directed U.S. District Judge Carl Barbier…to take a fresh look at which claims are legitimate…[and] to halt payments on those claims that don't meet stricter standards…The 5th Circuit said Barbier should issue a narrower injunction to allow recoveries by claimants with "actual injury" from the spill, and not punish BP and its shareholders by allowing potentially "hundreds of millions of dollars of unrecoverable awards."…

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Article
1 October 2013

Judge hears claims BP lied to feds about oil spill [USA]

Author: Michael Kunzelman, Associated Press

The focus of a trial over BP’s massive 2010 oil spill has shifted from the causes of the deadly disaster to the company’s struggle to plug its blown-out well while millions of gallons of crude gushed into the Gulf of Mexico for nearly three months. The trial’s second phase opened…with claims that BP could have capped the well much sooner if it hadn’t ignored decades of warnings about the risks of a deep-water blowout or withheld crucial information about the size of the spill from federal officials. BP attorney…denied those allegations and said the company’s efforts to stop the flow of oil were guided by an overriding principle: “Don’t make it worse.”…The April 20, 2010, blowout triggered an explosion that killed 11 workers on the Deepwater Horizon drilling rig and spawned the nation’s worst offshore oil spill. BP used a capping stack to seal the well July 15 after other methods failed…[Also refers to Transocean]

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Article
27 September 2013

BP battles for billions in new Gulf trial phase [USA]

Author: Terry Wade & Andrew Callus, Reuters

BP will battle to hold down fines that could hit $18 billion (11 billion pounds) in a new phase of the Gulf of Mexico trial that will rule on how much oil it spilled in 2010 and judge its efforts to plug its well. Starting on Monday in New Orleans, this second of three phases of a trial determining responsibilities for the worst marine pollution ever seen in the United States, could - in the worst outcome for the British firm - land BP with a bill five times greater than the $3.5 billion it has set aside for fines…Much depends on how the court rules on a dispute between BP and the U.S. government over how many million barrels of oil were actually spilled, and on just how culpable BP was in failing to stop it for 87 days…[Also refers to Halliburton, Transocean]

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Article
19 September 2013

Halliburton pleads guilty to destroying Gulf spill evidence [USA]

Author: Reuters

Halliburton Co pleaded guilty on Thursday to federal charges of destroying evidence, stemming from its role in the 2010 BP oil disaster that killed 11 men and sent more than 4 million barrels of oil spewing into the Gulf of Mexico. A former Halliburton cementing technology director in Texas also was charged on Thursday with destroying evidence. U.S. District Judge Jane Triche Milazzo…accepted the company's guilty plea from Halliburton legal counsel Marc Mukasey, imposed the agreed-upon maximum fine of $200,000 and placed the company on a three-year probation term. Mukasey did not make a statement on the company's behalf…In its plea, Halliburton admitted to the misdemeanor charge of "intentionally causing damage without authorization to a protected computer."...In an ongoing, multi-phase civil trial over the cause of the well explosion in federal court in New Orleans, both the government and BP contend that faulty cement work by Halliburton contributed to the disaster.

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Article
19 September 2013

[PDF] Corporate Legal Accountability Quarterly Bulletin – Issue 10, Sep 2013

Author: Business & Human Rights Resource Centre

Welcome to the 10th issue of the Corporate Legal Accountability Quarterly Bulletin. To assist all those following corporate legal accountability issues, we send this bulletin to highlight key developments, new cases profiled on our site, updates to existing profiles, and other news. Our Corporate Legal Accountability Portal is an online information hub providing resources for non-lawyers as well as lawyers – including victims, advocates, NGOs, businesspeople, lawyers bringing lawsuits against companies and lawyers defending companies. The portal provides impartial, concise information about lawsuits against companies in which human rights abuses are alleged – its aim is to demystify these lawsuits. Each case profile includes materials from both the plaintiffs and defendants, to the extent they are available…This bulletin is now available in Spanish and French. [Refers to African Barrick Gold, Alstom, BP, CACI, Chevron, Coca-Cola, COMILOG (part of ERAMET), Daimler, Danzer, Dow Chemical, Drummond, ERAMET, Ford, HudBay Minerals, IBM, KBR, Ledesma, Mercedes-Benz (part of Daimler), Monterrico Metals, Nestlé, PA Child Care, Qosmos, Rio Tinto, Shell, Sinter Metal, SNCF, Texaco (part of Chevron), Thomson Safaris, Total, Union Carbide (part of Dow), Vedanta Resources, Veolia (part of Veolia Environnement), Veolia Environnement, Walmart]

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Article
28 August 2013

BP Loses Renewed Bid to Halt Spill Settlement Payments [USA]

Author: Margaret Cronin Fisk, Bloomberg

BP Plc lost a renewed bid to suspend payments from the court-supervised program administering its settlement of claims tied to the 2010 Gulf of Mexico oil spill. An investigation of alleged wrongdoing at the Mobile…claims assistance center didn’t find “any credible evidence of fraud,”…[Judge] Barbier last month rejected the company’s request to stop the payments while…former director of the Federal Bureau of Investigation, probes allegations of misconduct in the claims program. BP renewed the request Aug. 5…BP faces thousands of lawsuits over damages caused by the explosion and sinking of the Deepwater Horizon rig in 2010...BP reached the agreement with most private party plaintiffs last year, initially estimating the cost of the settlement at $7.8 billion. The company has since raised the estimate to $9.6 billion…

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Article
26 August 2013

Gulf oil spill settlement claims administrator says BP's allegations of fraud are 'spurious,' 'unfounded' [USA]

Author: Mark Schleifstein, Times-Picayune (USA)

Patrick Juneau, court-appointed administrator of the BP Deepwater Horizon oil spill claims settlement program...[responded] to BP allegations that his payment program is rife with fraud, charging the company with making "spurious allegations of breaches of duty" and "broad, unfounded criticisms..." Juneau was responding to an Aug. 5 BP motion asking U.S. District Judge Carl Barbier to suspend payments in the claims program -- which has averaged payouts of $100 million a week -- until an independent investigation of fraud allegations involving the program...is completed…[I]n their filing, Juneau's attorneys insist that BP has gone too far in its allegations that the claims payment program is improperly run…Juneau said his own staffers and a company hired by his office to investigate fraud has found no evidence of what BP is calling widespread fraud in the payment of subsistence fishing claims…

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Article
30 July 2013

BP's Deepwater compensation fund running dry

Author: Angela Monaghan, Guardian (UK)

BP has revealed that there is just $300m (£196.7m) left in its Gulf of Mexico oil spill compensation fund as it vowed to fight "false and fictitious" claims related to the disaster. The oil company took another $1.4bn in provisions related to the Deepwater Horizon disaster in the second quarter, nearly exhausting a $20bn fund set aside to deal with damages payments…"There are a significant number of business economic loss claims which have been received but have not yet been processed, and further claims are likely to be received," the company said. BP's chief executive, Bob Dudley, said…that while BP was happy to pay out for legitimate claims from hotels, restaurants and shops along the coastline, it was appealing against claims from larger businesses such as construction companies and farms that were claiming economic loss despite being located "far away from the coast"…

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Article
26 July 2013

Gulf of Mexico oil spill: Halliburton pleads guilty to destroying evidence

Author: Adam Withnall, Independent (UK)

The US cement contractor working for BP on the drill that caused the 2010 Gulf of Mexico oil spill has agreed to plead guilty to destroying evidence relating to the investigation of the disaster. The Department of Justice said yesterday that…Halliburton Energy Services agreed to pay the maximum statutory fine, believed to be $200,000, to be on probation for three years and that it would continue to cooperate with the government's criminal investigation…Halliburton issued a statement saying it had accepted guilt for “one misdemeanour violation associated with the deletion of records” and that the Justice Department had agreed it will not pursue further criminal prosecution of the company or its subsidiaries.

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