New Activities in BP Litigation Over Mexican Gulf Oil Spill

On April 20, 2010, an oil rig operated on behalf of BP at the Gulf of Mexico erupted, causing the largest, most publicized oil spill in recorded history. The economic losses and envioronmental damages were felt in the gulf states and beyond. Some 350 lawsuits were filed, which were eventually consolidated into a multi-district litigation lawsuit (MDL No. 2179) before the Honorable Judge Carl J. Barbier in the United States District Court, for the Eastern District of Louisiana, Case number 2:10-md-02179-CJB-SS.

April 20, 2011, the anniversary of the incident, saw a large amount of litigation activity. Several pleadings were filed on April 20, 2011:

First, BP filed a Cross-Claim against Cameron International Corporation ("CIC"), the manufacturer and maintainer of the “blowout preventer” which was used at the oil rig in the Gulf of Mexico. Based on the allegations in the Cross-Claim, BP is a co-lessee of the Macondo Prospect. BP hired Transocean Inc. to drill an exploratory well for oil and gas. Transocean used the Deepwater Horizon drilling rig. CIC provided the "blowout preventer" unit and maintenance on it. The Cross-Claim alleges that CIC provided an unreasonably dangerous product, that CIC negligently maintained the blowout preventer, the CIC negligently modified the blowout preventer, for contribution, suborogation, and apportionment of liability.

Second, BP filed a Cross-Complaint against Transocean Ltd. and related entities. The Cross-Complaint alleges that Transocean was the owner and operator of Deepwater Horizon, a mobile offshore drilling unit, that on April 20, 2010 the unit exploded and caught fire and it sank two days later, causing an oil spill that continued till July 15, 2010. The Cross-Complaint alleges causes of action for breach of contract, unseaworthiness, negligence, contribution, suborgation, and declaratory judgment against Transocean.

Finally, BP filed an original Complaint against Halliburton Energy Services, Inc. This action is brought in admiralty, and is filed in the United States District Court for the Southern District of Texas, Houston Division, Case number 4:11-cv-1526. The complaint states that it is filed "as a protective companion action" to the two pleadings referenced above, and alleges fraudulent conduct, fraudulent concealment, negligence, contribution and suborgation causes of action.

The Oil Polution Act of 1990, legislated largely in response the the Exxon Valdez incident, provides certain liability limits for oil spill damages. Section 1004 of this Act provides:

"The liability for tank vessels larger than 3,000 gross tons is increased to $1,200 per gross ton or $10 million, whichever is greater. Responsible parties at onshore facilities and deepwater ports are liable for up to $350 millon per spill; holders of leases or permits for offshore facilities, except deepwater ports, are liable for up to $75 million per spill, plus removal costs. The Federal government has the authority to adjust, by regulation, the $350 million liability limit established for onshore facilities."

Plaintiffs' lawyers have been concerned that BP may rely on the above provision to limit its liabilities to only $75 million.

Robin Mashal is a California civil litigation attorney. He may be reached at (310) 286-2000.

Is British Petroleum (BP) Operating Responsibly in the United States?

On April 20, 2010, an offshore drilling rig operated by Transocean Ltd. on behalf of BP exploded in the Gulf of Mexico, killing 11 people and causing a large oil spill. The efforts last week to contain the spill using "top kill" method failed; authorities are now looking at a possible containment by August 2010. With nearly a month and half passing, the Deepwater Horizon oil spill continues to expand and and threaten the coasts of Louisiana, Texas, Mississippi, Alabama and Florida. In a news conference this week, Rear Adm. Mary E. Landry of the Coast Guard commented that oil is leaking at the rate of 5,000 barrels per day, which is five times the originally estmiated rate of 1,000 barrels per day. NASA satellites have been able to observe the spread of the oil from the space. The Deepwater Horizon disaster has now surpassed the Exxon-Valdez oil spill, to become the single largest oil spill in the U.S. history.

Rep. Ed Markey (D-Mass.) has charged that BP from the beginning understood the extent of the oil spill, but it attempted to cover up by "lowballing" the numbers. Markey said "without question" the oil spill in the Gulf of Mexico should be considered "criminal." In response, BP has committed up to $500 Million over the next ten years to study the impact of the oil spill in the Gulf of Mexico on the environment and the surrounding wildlife.

The Deepwater Horizon oil spill has not been BP's only legal issue in the recent past. In 2000, BP paid $6.5 Million in civil penalties for illegal disposal of hazardous waste and violating federal drinking water laws, paid $10 Milliion to resolve Clean Air Act case, and its subdiary was hit with a $500,000 criminal fine for failing to report the illegal disposal of hazardous waste in Alaska. In 2005, OSHA fined BP $21 Million for violating OSHA laws. These records caused BP to be placed on Mother Jones magazine's Ten Worst Corporations of 2000, and Multinational Monitor's Ten Worst Corporations of 2005.

BP evolved out of a British oil exploration in Iran. In May 1901, the Shah of Iran granted a concession to William Knox D'Arcy to search for oil. After oil was discovered, on April 14, 1909 the Anglo-Persian Oil Company, Limited was incorporated with an initial capital of Two Million Pounds Sterling. In 1935, the company changed its name to Anglo-Iranian Oil Company, Limited. In 1954 the company changed its name to The British Petroleum Company Limited. In 1980, the company was re-registered as a public company under the name The British Petroleum Company p.l.c. In 1998, the company merged with U.S. oil company Amoco and became BP Amoco p.l.c. In 2001 the company changed its named to BP p.l.c.

BP p.l.c. is currently United Kingdom's largest coporation; the company is listed on the London Stock Exchange (LSE: BP.) and on the New York Stock Exchange (NYSE: BP). It is globally the fourth largest company, and the third largest energy company (with operations in more than 80 countries). BP is one of the six "supermajors", which are "vertically integrated private sector oil exploration, natural gas, and petroleum product marketing companies." BP is the 100th largest contributor to political campaigns in the United States, and has contributed $5 Million in this regard since 1990. BP's retail operations in the United States include AMPM convenient stores and ARCO gas stations.

The materials for this blog were gathered from various sources including The Telegraph, The Washington Post, Politico, Wikipedia, and The New York Times. For more inforation, run a search on Google.

Robin Mashal is a Los Angeles business attorney, and a partner at the law firm of Hong & Mashal LLP. Mr. Mashal has been admitted to the bar of the United States Supreme Court. He can be reached by phone at (310) 286-2000.