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
8 December 2011

New lawsuit filed in Gulf oil spill [USA]

Author: Eric Heisig, HoumaToday.com [USA]

More than 100 people and businesses have filed a new lawsuit against BP, saying the company's Gulf oil spill damaged their livelihoods...The suit, which names BP, Transocean and Cameron International...as defendants, was filed on behalf of fishermen and business owners from Terrebonne, Lafourche and other parts of Louisiana, as well as Texas, California and Florida. It says the companies' negligence caused the oil rig in Venice to explode on April 2010. The suit says the companies “owed a duty to exercise reasonable care to plaintiffs in the design, construction, operation, management, use, maintenance and inspection of the Deepwater Horizon.”...Hutchinson said the lawsuit was filed because the amount of money the Claims Facility is offering does not take into account future loss of wages due to unforeseen environmental and economic problems that may yet result from the spill...Requests for comment made to BP and Transocean were not answered...

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Article
12 December 2011

Transocean Says It Doesn’t Owe Fines for Below-Surface Spill [USA]

Author: Margaret Cronin Fisk, Laurel Brubaker Calkins, Bloomberg

Transocean...said it can’t be forced to pay federal fines or penalties for oil spilled below the surface of the Gulf of Mexico in the Deepwater Horizon incident because of an indemnity contract with BP...Transocean asked a federal judge in New Orleans to find that the indemnity provision in the drilling contract requires BP to pay virtually all damages and cleanup costs. BP has argued that Transocean’s conduct voided the agreement. The indemnity provision doesn’t cover liabilities that resulted from willful misconduct, the U.S. Justice Department said...asking the court to delay ruling on the indemnity provision. Transocean isn’t asking to be held harmless for such misconduct, the company said in a court filing today...“The drilling contract does not provide for indemnity in the event of intentional or willful misconduct in excess of gross negligence,” Transocean’s lawyers said. The company’s claim for indemnity for Clean Water Act fines “arises only if Transocean is held liable” for “underwater discharge from the well,” the company said.

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Article
15 December 2011

Chevron, Transocean in $11 billion Brazil oil suit

Author: Reuters

Brazilian prosecutors sued Chevron Corp…and…Transocean Ltd for 20 billion reais ($10.6 billion) over their alleged roles in a November oil spill near Rio de Janeiro. The civil suit filed by federal prosecutors in Rio de Janeiro state also seeks to suspend the companies from operating in Brazil...Some legal experts said the action may be a politically motivated suit…The suit could also jeopardize oil companies' plans to step up their presence in Brazil after the discovery of huge offshore reserves…Chevron, which has said it takes full responsibility for the spill, said it has not received any formal notice of the suit and that the spill was staunched in four days with minimal or no damage to the environment. Transocean had similar comments…The document outlining the prosecutor's case…said the fine was to compensate for environmental and social damage. [also refers to Texaco (part of Chevron), Petrobras, Frade Japao, BG Group, Galp]

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Article
16 December 2011

BP announces Cameron settlement over Gulf oil spill [USA]

Author: BBC News

Oil giant BP has agreed a settlement with contractor Cameron International over the Gulf of Mexico oil spill. Cameron was the designer and manufacturer of the blow-out preventer on the Deep Water Horizon project, which failed during the spill. Under the agreement, which settles all claims between the firms, Cameron will pay BP $250m (£161.3m). The money will be put into the $20bn trust BP set up for victims of the disaster, in which 11 people died. The agreement is not an admission of liability by either Cameron or BP for last year's explosion, which led to the release of an estimated 780 million litres (206m gallons) of crude oil into the Gulf of Mexico. The firms say the blast was the result of "complex and interlinked causes" involving multiple companies. [also refers to MOEX, Andarko, Halliburton, Weatherford International]

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Article
3 January 2012

BP sues Halliburton for Deepwater Horizon oil spill clean-up costs [USA]

Author: Dominic Rushe, Guardian [UK]

BP has handed the bill for clearing up the disastrous 2010 Deepwater Horizon oil spill to Halliburton, the US contractor it claims botched the cement work on the failed rig. The oil group has filed a suit in New Orleans seeking "the amount of costs and expenses incurred by BP to clean up and remediate the oil spill, the lost profits from and/or diminution in value of the Macondo prospect, and all other costs and damages incurred by BP related to the Deepwater Horizon incident and resulting oil spill", according to the filing.BP did not specify the amount of damages it is seeking from Halliburton, which provided cement contracting services on the well in the Gulf of Mexico. But it previously estimated the clean-up will cost $42bn (£27bn). The oil firm wants Halliburton to pay damages "equal to, or in the alternative proportional to Halliburton's fault," to cover clean-up costs and any government fines BP may face. A Halliburton spokeswoman said: "Halliburton stands firm that we are indemnified by BP against losses resulting from the Macondo incident."[also refers to Cameron Intl., Anadarko, Weatherford, Transocean]

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Article
3 January 2012

Crucial year for BP in gulf spill legal fight [USA]

Author: Jeremy Lemer & Ed Crooks, Financial Times

For BP, 2012 will be a crucial year as the UK oil major defends itself against a barrage of civil lawsuits and the looming threat of criminal charges relating to the Deepwater Horizon disaster in the Gulf of Mexico in which 11 people died…The company is already a defendant in more than 600 private civil suits…All eyes will be on New Orleans where, on February 27, the US district court will begin to hear a consolidated amalgam of civil claims for damages…In an effort to unravel the tangle of competing claims and counter-claims, the trial is set to proceed in three phases covering blame for the disaster, the amount of oil spilt and the extent of the damage caused by the disaster…A wild card for BP and its employees in 2012 will be the criminal investigations that federal regulators launched in 2010…BP…declined to comment on the status of the criminal investigations. [also refers to Transocean, Anadarko Petroleum, Cameron Intl, Weatherford Intl, Halliburton]

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Article
4 January 2012

Kenneth Feinberg freezes payments from BP oil spill fund [USA]

Author: Rebecca Mowbray, Times-Picayune [USA]

The Gulf Coast Claims Facility has halted all payments for oil spill damage in the wake of a ruling by U.S. District Judge Carl Barbier...that 6 percent of all settlements reached after Nov. 7 be set aside to finance the work of plaintiff attorneys in the oil spill litigation in New Orleans. The move means that thousands of people and businesses waiting to be compensated outside of court for harm they endured when the Deepwater Horizon oil rig exploded and sank in April 2010 will have to wait longer for their money. Payments to about 9,000 people and businesses who have received final determination letters from the Gulf Coast Claims Facility, but have yet to sign the award, are now in play...Freezing payments also escalates a battle between the committee of plaintiff attorneys pressing the case in the trial scheduled to start Feb. 27, and other plaintiff attorneys outside the case, BP, Louisiana Attorney General Buddy Caldwell, and several local parishes, all of whom oppose earmarking money to pay for the plaintiff committee's fact-finding before any determinations of liability are made at trial.

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Article
9 January 2012

BP Makes Amends

Author: Joe Nocera, New York Times

As horrific as the Deepwater Horizon accident was in April 2010…BP has performed quite admirably in its aftermath. It has spared no expense in cleaning up the oil. It has set aside $1 billion to restore the environment and coastal ecosystem…BP also agreed to set up a $20 billion fund to compensate anyone who could show that they’d been economically harmed by the accident. Ken Feinberg…was put in charge of the Gulf Coast Claims Facility, as it was named. Feinberg has since paid out $6.3 billion to nearly 200,000 claimants…[T]he Gulf Coast Claims Facility has been a remarkably effective alternative to the cumbersome way damages are usually meted out after a corporate accident: through the tort system.

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Article
9 January 2012

Halliburton: Disqualify attorneys as well as BP experts [USA]

Author: Steve Korris, Southeast Texas Record [USA]

Disqualification of BP's cement experts from Deepwater Horizon litigation should extend to lawyers who gained information from the experts, Halliburton Energy Services pleaded in federal court...Halliburton asked Magistrate Judge Sally Shushan to disqualify all counsel involved with CSI Technologies of Houston, owner Fred Sabins and engineer Michael Viator. "The attorneys who worked with Sabins and CSI will inevitably taint the substitute expert," Donald Godwin of Dallas wrote. "BP's counsel necessarily discussed and analyzed Sabins' opinions with him in detail as he developed his expert reports, which were served after he employed Viator," he wrote. "Consequently, any counsel having direct contact with Sabins and CSI are equally tainted, and therefore constitute a potential source of contamination of the substitute expert," he wrote. Shushan disqualified Sabins and his firm on Dec. 8, writing that his decision to hire Viator was the sole cause for her decision. Viator had worked at Halliburton, developing software and strategy for its defense against BP's claims that the failure of its cement caused the explosion.

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Article
13 January 2012

Claimants challenge holdback in BP oil spill case [USA]

Author: Reuters

...[L]awyers for claimants before the $20 billion BP oil spill fund asked a federal judge to reconsider his December order requiring that six percent of future settlements be placed in a reserve account...On January 4, Barbier amended his order to clarify the order would only affect claimants who hadn't received a determination letter from the BP fund as of December 31. That clarification has not appeased lawyers for clients seeking compensation from the fund, known as the Gulf Coast Claims Facility, which is being administered by Kenneth Feinberg. At least seven motions were filed...asking Barbier to reconsider his order..."It would be ironic, as well as grossly unfair and contrary to prior pronouncements of this Court, for claimants whose only possible recovery for their economic damages is through OPA and the GCCF to have those recoveries reduced for work that even this Court has ruled cannot benefit them," he [Daniel Becnel, Jr., an attorney for Gulf Coast Claims Facility claimants] wrote in a filing...Lawyers for the U.S. Department of Justice, which is a party to the oil spill litigation, objected to Barbier's order as well.

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