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
18 January 2012

Strange leaves door open to Gulf Coast oil spill settlement [USA]

Author: Montgomery Advertiser [USA]

There's less certainty on how much, if anything, the state could collect from the firms, and how the money would be split. The [Alabama] attorney general [General Luther Strange] also suggested the possibility of a trial being avoided entirely: Strange said a number of settlement discussions were ongoing between the parties. "I'm not opposed to a settlement," he said. "It will all depend on whether it's fair or not." Former Attorney General Troy King sued BP and other companies and contractors over the oil spill in August 2010, accusing the companies of damaging the state's economy and coastline through negligence...Attempts to obtain comment from BP were unsuccessful...Trial before U.S. District Judge Carl Barbier is set to begin Feb. 27. The trial will move in three phases: First, a phase that will determine the causes of the blowout; second, a phase that will focus on efforts to stop the oil leak from the floor and the Gulf; and finally a phase dealing with the oil spill cleanup.Liability for the incident among the companies would be determined on a percentage basis.

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Article
19 January 2012

BP may double oil spill pay-out [USA]

Author: Sylvia Pfeifer, Financial Times

BP may agree to pay up to $25bn to settle all charges, including possible criminal charges, with the US government over the devastating Gulf of Mexico spill, according to an analyst at Morgan Stanley, double the figure the company has set aside. Martijn Rats, head of European oil research at Morgan Stanley, predicted there was a 70-80 per cent possibility that BP would agree a deal on civil and criminal charges before the end of February, ahead of the start of the civil litigation over the accident. Bob Dudley, BP’s chief executive, has repeatedly said that BP would be willing to settle, but not at any price. Asked about the possibility of a settlement earlier this week in London, Mr Dudley declined to comment, saying it was too sensitive a time to talk about it. However, a person familiar with BP’s thinking said that the idea that the company was negotiating over a settlement worth about $25bn was “completely unfounded.” The person added: “There is no factual basis for the suggestion that there is discussion in that range.” Some other analysts also cast doubt on whether BP would be willing to agree to pay that amount of money before the trial had even begun.

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Article
20 January 2012

BP, Anadarko Should Be Held Liable Before Trial, U.S. Says [USA]

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

BP...Transocean...and Anadarko...should be found liable before trial for violations of federal pollution laws stemming from the April 2010 Gulf of Mexico oil spill, lawyers for the U.S. argued...The Justice Department is asking U.S. District Judge Carl Barbier to find the companies violated the Clean Water Act on the basis of so-called strict liability because they were operators of the doomed project. Barbier, who’s overseeing much of the spill litigation, has scheduled a nonjury trial for Feb. 27 to determine liability and apportion fault for the disaster.A ruling by Barbier against the companies would mean they couldn’t fight allegations of Clean Water Act violations at the trial and would allow the U.S. to seek fines of as much as $1,100 from each company per barrel of oil spilled. The government has also asked Barbier to find Anadarko and Transocean liable under the Oil Pollution Act, a separate environmental law, for cleanup costs and damages. BP already accepted responsibility for those costs...Even if Barbier does rule for the U.S. on its bid for a pretrial decision, the question of gross negligence...will be considered at trial.

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Article
20 January 2012

Judge denies BP request to penalize Halliburton [USA]

Author: Associated Press

A federal judge shot down BP's request to penalize Halliburton for allegedly destroying damaging evidence about the quality of its cement slurry that went into drilling the oil well that blew out last year and caused the nation's worst offshore oil spill. BP did not prove that it had been "prejudiced" by Halliburton's actions, U.S. Magistrate Judge Sally Shushan wrote in a ruling...But Shushan told Halliburton to turn over a computer that ran tests on the cement slurry. The judge ordered a third party to run forensics tests on the computer to see if data Halliburton says was lost can be retrieved...BP...and its two main contractors on the ill-fated well, Halliburton...and Transocean...have been sparring in advance of a trial that starts Feb. 27. U.S. District Judge Carl Barbier will decide fault for the spill in the first phase of the non-jury trial. BP accused Halliburton employees of doing an internal investigation and discarding and destroying early test results after the blowout that found problems with the cement slurry.

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Article
27 January 2012

BP blow in legal fight over gulf spill [USA]

Author: Ed Crooks, Financial Times

BP has suffered a setback in its attempt to make Transocean, the drilling contractor, pay for the full costs of the Deepwater Horizon disaster in the Gulf of Mexico in 2010. Judge Carl Barbier...ruled...that BP should have to pay damages for losses suffered as a result of oil spilt below the surface, even if Transocean were found to have been grossly negligent in the disaster. However, he said Transocean should still be liable for any civil penalties under the Clean Water Act and punitive damages under the Oil Pollution Act, which could potentially run into the tens of billions of dollars.The decision left both sides claiming they had been vindicated. “Today’s ruling makes clear that contractors will be held accountable for their actions under the law,” BP said...Transocean said: “This [ruling] confirms that BP is responsible for all economic damages caused by the oil that leaked from its Macondo well and discredits BP’s ongoing attempts to evade both its contractual and financial obligations.” [also refers to Anadarko]

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Article
7 February 2012

BP squares up for oil spill lawsuits [USA]

Author: Reuters

BP ratcheted up the rhetoric around multi-billion dollar claims from the Gulf oil spill by warning it would "vigorously" contest lawsuits over one of the world's worst environmental disasters. While reiterating BP's "bias for settling" at hearings scheduled later this month, CEO Bob Dudley said he would only do so "on fair and reasonable terms."...Dudley acknowledged the lawsuits were the biggest uncertainty facing the British oil major."We have many people who do say, we are interested in investing in BP but not until all this is behind you," he told a press conference. BP faces 600 civil lawsuits from people in states as far away as South Carolina and Kentucky, as well as litigation from the U.S. government. "We always have had this bias toward settling and moving on, and reducing uncertainty," Dudley said. But he added; "We are preparing vigorously for trial. We have confidence in our case."

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Article
10 February 2012

BP Wins Dismissal of Part of Investor Lawsuit Over Gulf Oil Spill

Author: Jonathan Stempel, Insurance Journal

A U.S. federal judge dismissed a large part of a nationwide lawsuit accusing BP...and top executives of fraud for misleading shareholders before and after the 2010 Gulf of Mexico oil spill about the oil company’s ability to respond to an accident. U.S. District Judge Keith Ellison in Houston dismissed claims by purchasers of ordinary BP shares...[Judge] nonetheless refused to dismiss claims by the ADS investors against BP, former Chief Executive Anthony Hayward and former Chief Operating Officer for Exploration and Production Douglas Suttles, saying they had adequately pleaded violations of U.S. securities law...BP spokesman Scott Dean declined to comment.

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Article
13 February 2012

Transocean Asks Judge to Force BP Manager to Testify in Trial [USA]

Author: Joe Schneider, Bloomberg

Transocean...owner of the rig that exploded before the worst offshore oil spill in U.S. history in 2010, sought to force a BP...manager to explain what occurred at the well prior to the blowout. Transocean asked the U.S. District Court in New Orleans to compel Donald Vidrine to testify. He was BP’s well site leader on the Deepwater Horizon rig when the Macondo well in the Gulf of Mexico exploded. Vidrine has cited medical-related problems for refusing to testify, in person or in writing, Transocean’s lawyers said in a court filing...Vidrine “is a key source of information regarding critical events and operations that occurred immediately prior to the blowout,” Transocean said. “Mr. Vidrine’s medical issues do not provide a legal basis for his refusal to testify.”

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Article
17 February 2012

DOJ Reaches $90M Settlement With Oil Company Unit In Deepwater Suit [USA]

Author: Mike Scarcella, BLT: The Blog of Legal Times [USA]

An investor in the Gulf of Mexico oil well that was the centerpiece of the country's largest spill has agreed to a $90 million settlement to resolve settle claims flowing from the April 2010 disaster. MOEX...a unit of Mitsui...will pay $70 million in civil penalties for violations of the Clean Water Act, the U.S. Justice Department said today...The company agreed to an additional $20 million to fund land acquisition projects to preserve habitat in several states along the Gulf of Mexico...DOJ [Department of Justice] said the MOEX settlement does not affect the potential liability or recoveries from the five other defendants in the case...An attorney for MOEX, Thomas Campbell...was not immediately reached for comment.[also refers to BP]

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Article
22 February 2012

BP, Transocean, Settle With Injured Deepwater Horizon Worker [USA]

Author: Joe Schneider, Bloomberg

BP...Transocean...and others involved in the operation of the Deepwater Horizon rig that exploded in the Gulf of Mexico in 2010, agreed to settle a lawsuit filed by a worker injured in the blast. Oleander Benton, the Deepwater Horizon worker, said in a filing...that all his claims have been “amicably settled” and asked U.S. District Judge Carl Barbier to dismiss his lawsuit. Benton’s was among at least 40 lawsuits filed by survivors or relatives of the 126-member crew that was aboard the rig when it exploded off the Louisiana coast in April 2010, killing 11 and resulting in the worst oil spill in U.S. history.[also refers to Anadarko, Moex (part of Mitsui), Cameron Intl.]

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