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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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Article
14 February 2013

Transocean Guilty Plea Over Gulf Spill Accepted by Judge [USA]

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

Transocean Ltd. and federal prosecutors won approval of the oil driller’s agreement to plead guilty to violating the U.S. Clean Water Act for its role in the April 2010 Gulf of Mexico oil spill. Transocean…agreed last month to pay a $400 million criminal fine and $1 billion in civil penalties to the U.S…U.S. District Judge Jane Triche Milazzo gave final approval of the plea at a hearing today…Transocean was the owner and operator of the Deepwater Horizon oil rig, which sank in the Gulf of Mexico after BP Plc’s Macondo well exploded, setting off the largest offshore oil spill in U.S. history. [also refers to Halliburton]

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Article
8 February 2013

[US Department of Justice] stresses BP’s role in Gulf oil spill

Author: Ed Crooks, Financial Times

BP employees were responsible for critical decisions that led to the Deepwater Horizon disaster in 2010, the US government has said in a court filing. Giving a preview of the case it will make against the company in the trial scheduled to start at the end of the month, the Department of Justice said in a joint court memorandum with Transocean, owner and operator of the Deepwater Horizon rig: “Transocean’s crew, while negligent, carried out drilling operations in general . . . under BP’s instruction and supervision.”…BP responded that the memo played down Transocean’s role in causing the accident, and that its assertions over responsibilities on the Macondo project would be argued over at trial. The trial is scheduled to begin on February 25 and is expected to last until the end of the year. Since its settlement last month of its civil and criminal claims against Transocean, worth $1.4bn in total, the US government has been solely focused on BP. It is pursuing the company for penalties under the Clean Water Act, which could reach up to $21bn if BP is found to have acted with gross negligence in causing the accident… However, BP has always denied gross negligence, a more serious claim requiring a higher level of proof.

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Article
5 February 2013

Claims may push BP’s spill bill to $90bn [USA]

Author: Guy Chazan & Ed Crooks, Financial Times

BP is facing damages demands of more than $34bn from US states and local government over the 2010 Deepwater Horizon disaster, a figure that could lead to significant upward revisions of its potential bill for the Gulf of Mexico spill…The newly-detailed claims would imply a total bill of more than $90bn…However, BP said it considered the methods used to calculate the states’ claims, which include punitive damages and other ratcheting factors, to be “seriously flawed” and called the demands “substantially overstated”…It also does not include penalties it is expected to face under the US Clean Water Act. These alone could reach $21bn, if BP is found to have acted with gross negligence…A civil trial over the Deepwater Horizon accident is due to start in New Orleans in less than three weeks’ time.

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Article
5 February 2013

[PDF] Corporate Legal Accountability Bulletin - Issue 8

Author: Business & Human Rights Resource Centre

[Full text of February 2013 issue of the Corporate Legal Accountability Quarterly Bulletin. Refers to lawsuits against Amesys (part of Bull), Anvil Mining (part of China Minmetals), BP, Chevron, Nestlé, Qosmos, Shell, Texaco (part of Chevron), Transocean]

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Article
4 February 2013

BP faces year-long wait for spill closure [USA]

Author: Ed Crooks & Anna Fifield, Financial Times

The plan set out by the New Orleans judge hearing the civil trial over the accident, set to start on February 25, means any decisions on civil penalties and environmental damages are not expected to come until next year…The companies include Transocean, the owner and operator of the Deepwater Horizon rig, and Halliburton, which provided the cement that was supposed to secure the well…The trial will be…looking at the causes of the explosion on the…drilling rig, and…assessing how much oil escaped from the Macondo well… Several settlements have been reached, including Transocean’s $1.4bn deal with the US Department of Justice over criminal and civil claims against it, and BP’s $4.5bn agreement covering only criminal charges…After the trial concludes, it will be followed by separate proceedings to assess penalties under the Clean Water Act…and damages under the Oil Pollution Act...BP has denied gross negligence, and is also contesting the US government’s estimate that 4.9m barrels of oil were spilled, arguing that the actual volume could be as little as a third of that…

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Article
29 January 2013

Judge approves $4 billion criminal plea over BP oil spill [USA]

Author: Ross Todd (Litigation Daily) in National Law Journal [USA]

A U.S. district judge in New Orleans has accepted a $4 billion criminal guilty plea by BP plc over its role in the catastrophic 2010 oil spill that fouled the Gulf of Mexico…In November BP entered guilty pleas for felony counts of obstruction of Congress and for "seaman's manslaughter" for the death of 11 workers, and also pleaded guilty to two misdemeanor counts of negligent conduct under the Clean Water Act and the Migratory Bird Treaty Act…Tuesday's $4 billion deal comes on top of BP's estimated $7.8 million agreement with plaintiffs who suffered economic loss and injuries related to the spill...[refers to Transocean, Halliburton]

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Article
3 January 2013

Corporations’ complicity in human rights abuses [Indonesia]

Author: Mimin Dwi Hartono, investigator at National Commission on Human Rights, in Jakarta Post

According to...reports of the National Commission on Human Rights (Komnas HAM), corporations were second in rank after the police as parties implicated in human rights abuses...The Guiding Principles emphasize the linkage between business and human rights in order to prevent and deal with the impact of companies’ activities on the enjoyment of human rights...In the context of Indonesia, normatively, regulations and policies that govern the behavior of third parties, including corporations, are quite complete, such as legislation on the environment, labor, plantation, mining, forestry...However, the implementation and enforcement are very weak and inconsistent.

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Article
3 January 2013

Transocean, Justice Department reach $1.4B settlement over rig owner’s role in Gulf oil spill

Author: Associated Press

The Justice Department reached a $1.4 billion settlement…with Transocean Ltd., the owner of the drilling rig that sank after an explosion killed 11 workers and spawned the massive 2010 oil spill in the Gulf of Mexico. The proposed settlement resolves the department’s civil and criminal probe of Transocean’s role in the Deepwater Horizon rig disaster. It requires the…company to pay $1 billion in civil penalties and $400 million in criminal penalties and plead guilty to a misdemeanor charge of violating the Clean Water Act…The deal, which is subject to a federal judge’s approval, also calls for Transocean to implement a series of operational safety and emergency response improvements on its rigs. [also refers to BP, Halliburton]

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Article
28 November 2012

BP hit by temporary ban on US contracts

Author: Guy Chazan, Financial Times

The US Environmental Protection Agency announced on Wednesday it had suspended [BP] from bidding for new contracts, citing “BP’s lack of business integrity” over the [Deepwater Horizon] explosion that killed 11 men and triggered the worst oil spill in US history...Any curbs on BP’s activities in the US...would be detrimental to the company...BP said the suspension will be lifted as soon as it can demonstrate “present responsibility” to conduct business with the US government. The company said it was in “regular dialogue” with the EPA and had already provided it with a statement of more than 100 pages as part of its efforts to prove it is responsible.

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Article
18 November 2012

Body Believed to Be Missing Worker Found Near Site of Oil Rig Blast [USA]

Author: Colleen Curry, Whitney Lloyd and Alyssa Newcomb, ABC News [USA]

A body believed to be one of the workers missing since an oil rig in the Gulf of Mexico exploded was recovered late last night in the water near the platform...John Hoffman, president and CEO of Black Elk Energy, which owns the platform, vowed to continue looking for the second worker...Black [Elk] Energy...said one of 22 contractors on board mistakenly grabbed a blow torch instead of a saw to cut a pipe line that had 28 gallons of oil inside, igniting the blast. Everyone on board was employed by Grand Isle Shipyard... Of the 11 injured workers who were air-lifted to safety, four had severe burns...The rig had been expected to begin oil production again later this month. Because the rig was offline, the Coast Guard said there is little risk of a major spill. [Also refers to BP]

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