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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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16 September 2011

BP Wins U.S. Dismissal of Some Investors’ Derivative Suits

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

BP...convinced a federal judge that it shouldn’t have to face some lawsuits in the U.S. brought by institutional investors on behalf of the company over last year’s Gulf of Mexico drilling-rig explosion and oil spill. U.S. District Judge Keith P. Ellison in Houston agreed with BP’s arguments that the claims should be filed in U.K. courts because the company is based in London. Ellison said he may reverse this dismissal if English courts “refuse to accept jurisdiction” for reasons other than the plaintiffs’ failure to comply with procedural requirements. “Because this derivative lawsuit involves the internal governance of an English corporation, the convenience of the parties and the interests of justice favor England as a more convenient forum,” Ellison said...Investors sued BP claiming that the company’s management and board caused the spill by knowingly putting profits ahead of safety...Mark Lebovitch, a lawyer for the investors, said...” The plaintiffs are “reviewing their options” for a response to the dismissal...BP spokesmen Daren Beaudo declined to comment.

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3 October 2011

The escalation of BP's liability [USA]

Author: Dahr Jamail, Al Jazeera

The Gulf Coast-based law firm Brent Coon and Associates (BCA) is considered one of the world's foremost experts on BP, and has successfully sued the oil giant in the past...BCA now represents more than 5,000 claimants from BP's Gulf disaster and has been appointed by the Plaintiff's Steering Committee to head several key sub-committees relating to discovery...Coon...argued that, "[u]nless you criminally prosecute these people and make them pay for their decisions, they do not have a sufficient deterrent for the way they do business..."...Lawyer Stuart Smith agrees...that the federal government report on the 2010 disaster...presents "incriminating new evidence" that "increases the likelihood that criminal charges will be brought" against the oil giant, and predicts the new findings will push BP to offer large settlements to spill victims, particularly commercial fishermen and charter boat captains.

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4 October 2011

Barbier: BP cleanup contractors are immune only if directed by government [USA]

Author: Steve Korris, Louisiana Record [USA]

BP contractors who cleaned up after the Deepwater Horizon explosion can't share the government's immunity from personal injury suits unless they prove they took direction from the government and not from BP, U.S. District Judge Carl Barbier ruled...He denied motions of contractors to dismiss claims that Corexit, a product they used to disperse oil, injured cleanup workers and Gulf Coast residents. Plaintiffs claim they suffered headaches, nausea, vomiting, respiratory problems, rashes, lesions, chemical burns and other effects. Barbier wrote that their master complaint alleges BP took control and directed all aspects of recovery and relief efforts...Cleanup defendants include Marine Spill Response Corporation, Airborne Support Inc., Lynden Air Cargo, Dynamic Aviation Group, International Air Reponse, Lane Aviation, National Response Corporation, O'Brien Response Management, The Modern Group, and DRC Emergency Services.

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6 October 2011

BP, MOEX, Halliburton sued over declining fish populations in the Gulf [USA]

Author: Glenna Herald, Ultimate Montrose [USA]

Numerous fisheries are suing Halliburton..., BP and MOEX...over claims the businesses lost profits as a result of the Deepwater Horizon explosion. Oak Island Seafood, Baytown Seafood Restaurant and many others, filed a lawsuit...in the Harris County District Court against BP, with an office in Memorial...citing negligence, gross negligence and products liability. The plaintiffs say that the Deepwater Horizon explosion on April 20, 2010, which caused the largest oil spill in U.S. history, prevented commercial fishing in the waters of the Gulf of Mexico, a once-abundant source of blue crab, shrimp, red snapper, grouper and more. The oil spill, caused by the defendants’ negligence, has negatively impacted the plaintiffs’ businesses, causing increased operating expenses and lost profits. The plaintiffs are seeking damages, punitive damages and court costs. [also refers to Transocean]

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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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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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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.

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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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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]

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