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
5 April 2013

Judge rejects BP’s bid to block settlement payouts to businesses affected by Gulf oil spill [USA]

Author: Associated Press

A federal judge on Friday rejected BP’s request to block what could be billions of dollars in settlement payouts to businesses that claim the company’s 2010 oil spill in the Gulf of Mexico cost them money. Before the ruling, U.S. District Judge Carl Barbier already had upheld court-appointed claims administrator Patrick Juneau’s interpretation of settlement terms governing payments to businesses affected by the spill. Barbier said he saw no reason to change his March 5 ruling on the same matter and issue a preliminary injunction that would block Juneau from making payments to businesses. “We think it rewrites the contract. We think it rewards people who have no losses,” BP attorney…said…BP estimated a year ago that it would spend roughly $7.8 billion to resolve tens of thousands of claims by businesses and individuals covered by the settlement. The company now says it can’t give a reliable estimate for the total value of the deal.

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Article
4 April 2013

Cameron Dismissed From All Claims in BP Gulf Spill Case [USA]

Author: Allen Johnson Jr., Margaret Cronin Fisk & Jef Feeley, Bloomberg Business Week

Cameron International Corp. (CAM) won dismissal from all claims arising from BP Plc’s 2010 Gulf of Mexico oil spill after a judge said there was no evidence showing the company was at fault for the disaster. Cameron, which made the so-called blowout preventer designed to stop explosions in BP’s oil well, was named in multiple lawsuits claiming the equipment was defective. Witnesses testifying at a New Orleans trial over fault for the disaster have said the blowout preventer wasn’t properly maintained by the Transocean (RIG) Ltd. crew manning the drill rig. U.S. District Judge Carl Barbier in New Orleans had earlier ruled out punitive damages against Houston-based Cameron, finding no proof of gross negligence. He dismissed all remaining claims yesterday…[Also refers to Halliburton, M-I Swaco (part of Schulmberger), Transocean]

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Article
21 March 2013

BP asks judge to sanction its Deepwater Horizon cement contractor over missing samples [USA]

Author: Associated Press

In a late-night court filing, BP PLC lawyers cited Halliburton’s alleged destruction of cement samples as grounds for U.S. District Judge Carl Barbier to rule that the contractor’s cement design on the drilling project was unstable before the April 2010 blowout of BP’s Macondo well...BP says its inability to test the missing samples has harmed its ability to defend itself at the trial…Last week, Halliburton lawyer Donald Godwin said the company believes the newly discovered material has no bearing on the case…“Halliburton also admitted that the ‘Kodiak well cement’ had in fact been brought onshore from the Deepwater Horizon when the rig was at the Macondo well,” BP lawyers wrote. [P]laintiffs’ attorney…said the Kodiak cement contained an additive, a defoamer that “destabilizes and is incompatible with foam cement.”…

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Article
15 March 2013

BP seeks to block payment of business claims under Gulf spill settlement [USA]

Author: Associated Press

BP sued Friday to block what could be billions of dollars in settlement payouts to businesses over the 2010 Gulf of Mexico oil spill. The London-based oil giant accused the court-appointed administrator for the settlement, Patrick Juneau, of trying to rewrite the terms of the deal. BP said Juneau violated the settlement in the way he used a complex formula to determine the payments to businesses…Friday's court filing asked [Judge] Barbier to block payments to any businesses whose awards are part of the January decisions. As an alternative, BP asked to block payments to businesses in certain industries, including agriculture, construction, professional services, real estate, manufacturing and retail…"Objective formulas, the possibility of 'false positives,' and giving claimants flexibility to choose the most favorable time periods are all consequences BP accepted when it decided to buy peace through a global, class-wide resolution," Barbier wrote…

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Article
7 March 2013

BP faces escalating spill payouts after court ruling [USA]

Author: Andrew Callus, Reuters

BP must keep paying certain types of oil spill compensation in much larger amounts and to more parties than it was expecting, according to a court ruling which could add billions to its final bill….BP said it would appeal the ruling, which upheld the payout administrator's interpretation of the settlement, and which has resulted in more and larger payouts than BP had expected.… BP said even if it wins its appeal, its final bill for this type of compensation will be much higher, because claims not yet received or processed are not reflected in its current estimate, and because the average payments per claim determined so far are higher than anticipated. "If BP is not successful in its challenge to the court's ruling, a further significant increase to the total estimated cost of the Settlements will be required," it said...

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Article
1 March 2013

Long fight ahead in BP oil spill trial [USA]

Author: Ed Crooks, Financial Times

[In the first week of the trial,] [t]he plaintiffs aim to show that pressure from senior management to hold down costs led to BP staff cutting corners on the Macondo well, causing the fatal explosion on the Deepwater Horizon rig and the subsequent leak of an estimated 4m barrels of oil into the waters of the gulf…BP agreed a settlement a year ago for tens of thousands of private sector plaintiffs, which is now expected to cost $8.5bn. Transocean, owner and operator of the Deepwater Horizon rig, in January agreed a $1.4bn settlement of the civil and criminal charges against it from the US government…A settlement is still possible, although…that becomes less likely with every passing week…By fighting in court, BP sets itself up for a year or more of uncertainty over the final cost of the spill, which it could resolve quickly by agreeing a settlement…Michael Underhill, the lead lawyer for the [Department of Justice]…[argued] that he intended to prove “wilful misconduct”, a higher standard than gross negligence...which in turn is higher than the ordinary negligence that BP has admitted…It is still entirely possible that Judge Barbier will…rule that there was wilful misconduct, or try to split the difference between that and BP’s admission of ordinary negligence with a finding of gross negligence. Either of those two outcomes would expose BP to Clean Water Act penalties of up to $17.6bn, and many billions in punitive damages for the states and private sector.

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Article
26 February 2013

BP, contractors start trial for worst U.S. offshore spill

Author: Kristen Hays, Reuters

A long-awaited trial…began on Monday, with governments, businesses and individuals blaming BP Plc mostly for the 2010 disaster that killed 11 rig workers and spilled 4 million barrels of oil into the Gulf of Mexico. The trial is being held with no jury before Judge Carl Barbier at federal court in New Orleans…[L]iabilities could stretch into the tens of billions of dollars if Barbier determines BP or the other defendants were grossly negligent…Any punitive damages would come on top of billions in potential fines under the Clean Water Act. The payout by BP so far included a record $4.5 billion in penalties, and a guilty plea to 14 criminal counts to resolve charges from the Justice Department and civil claims from U.S. securities regulators…The second phase of the trial, expected to start in September, will focus on the flow rate of the oil that spewed from the well. The third phase in 2014 will consider damages...[Refers to Transocean, Halliburton]

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Article
20 February 2013

BP and oil-spill states prepare to fight [USA]

Author: Anna Fifield, Financial Times

The long-awaited trial to assess BP’s liability for civil penalties and environmental damages following the 2010 Deepwater Horizon disaster is set to start in New Orleans next week after a year-long delay. It comes after the oil group agreed in November to pay $4.5bn to settle criminal charges relating to the months-long spill, which claimed the lives of 11 men and became the US’s worst environmental disaster. But the civil trial will probably prove much more complicated, and not just because the court has to decide whether BP is liable for simple or gross negligence for its actions that caused the explosion on the Deepwater Horizon rig. The distinction makes the difference between a fine in the low single billions or one beyond $20bn…But the Gulf coast states and towns affected by the spill have claimed an additional $34bn in damages under the Oil Pollution Act, saying that they cannot know what the long-term effects of the spill will be on their coastline…BP is preparing to push back, with Rupert Bondy, the oil company’s general counsel, this week telling the FT that “in a way we are looking forward to the trial” so it can argue its case.

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Article
19 February 2013

BP ready for court battle over Gulf of Mexico oil disaster [USA]

Author: Telegraph [UK]

BP is prepared for a court fight with US authorities over civil penalties for its role in the Gulf of Mexico oil spill, arguing that the fine it should face should be less than a quarter of the $20bn...estimated by some analysts…BP’s overall provision for the spill includes $3.5bn for fines under the Clean Water Act, although this could be dwarfed by the total possible fine of $20bn. BP disputes the US authorities’ view of both how much oil was spilled and the level of negligence involved. It strenuously denies a charge of gross negligence, which carries a maximum penalty of $4,300 per barrel split… BP…said this month that claims by the states of Louisiana, Alabama, Mississippi and Florida of $34bn...for economic and property damage under the Oil Pollution Act were “overstated”. BP's total liability could now come to $90bn, BP revealed at its full-year results presentation this month, more than double the amount the British company has set aside for the accident…

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Article
19 February 2013

U.S. judge approves Transocean civil spill settlement

Author: Anna Driver, Reuters

A federal judge on Tuesday gave final approval to Transocean's $1 billion civil settlement related to BP Plc's massive Gulf of Mexico oil spill in 2010. U.S. District Judge Carl Barbier signed the agreement, according to the court document filed in federal court in New Orleans. Transocean, which employed nine of the 11 workers killed in the accident, reached a $1.4 billion agreement to settle criminal and civil charges with the U.S. government in January…Transocean must still seek a settlement with the plaintiffs committee representing more than 100,000 individuals and business owners claiming economic and medical damages, so the ultimate cost of Macondo to Transocean could end up being higher.

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