The Gulf Oil Spill - Litigation
Most of the cases that have been filed against BP, Transocean and Halliburton to date have been consolidated as part of a multidistrict litigation in the Eastern District of Louisiana for purposes of pretrial discovery. In Re: Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico, on April 20, 2010, No. 10-2179 (E.D. La., consolidation ordered 8/24/10). There are approximately 300 cases that are part of this multidistrict litigation, which is being overseen by Judge Carl Barbier. The considerable majority of these are for economic damages allegedly caused by the spill. Plaintiffs in these cases typically include commercial fisherman, shrimpers, charter-boat operators, property owners, restaurants, and tour guide operators. Defendants have raised the argument that under the Oil Pollution Act, the plaintiffs in these cases must first present their claims to BP through the Gulf Coast Claims Facility and be denied before they may be considered by the court. Thus, it remains to be seen how many of these cases will remain as part of the multidistrict litigation.
Other cases consolidated as part of the multidistrict litigation include those under maritime law for wrongful death or personal injury caused by either the explosion of the Deepwater Horizon rig or the ensuing response and clean up efforts. These cases are seeking to recover damages, such as pain and suffering, in addition to lost wages. However, such damages at present are not recoverable under U.S. maritime laws. A bill has passed the House of Representatives to retroactively amend the law to allow the recovery of such damages as a result of the BP spill, but the Senate has not yet voted.
There are also a handful of environmental claims included as part of the multidistrict litigation brought by environmental groups against BP and the government. In particular, a citizen suit filed by the Center for Biological Diversity against BP and Transocean is seeking billions in penalties. In Re Deepwater Horizon, No. 10-2454 (E.D. La., filed 8/4/10); see also Center for Biological Diversity v. BP America, Inc., No. 10-1768 (E.D. La., filed 6/18/10). The principal claim in this case is under the Clean Water Act for the discharge of oil and hazardous substances into U.S. waters without a permit. Generally, an illegal discharge of oil is subject to a civil penalty of $1,100. The plaintiff in this case, however, is alleging that BP and others were grossly negligent and should pay $4,300 per barrel. See 33 U.S.C. 1321(b)(7)(A),(D); see also Fed. Reg. 75340 (Dec. 11, 2008) (civil monetary penalty inflation adjustment rule). The government has estimated that 4.9 million barrels of oil were discharged into the Gulf of Mexico as a result of the spill. At $4,300 per barrel, the potential penalty would be upwards of $20 billion. The federal government has not intervened in this suit, but has informed the court that it is currently investigating potential civil and criminal penalties against BP and Transocean and would like any government initiated litigation to proceed on a separate track.
Other environmental cases consolidated with the multidistrict litigation include two that were brought by the Gulf Restoration Network and the Sierra Club. These are directed at the Secretary of Interior and are aimed at changing the department’s policies and practices for oil and gas leasing in the Gulf of Mexico. See Gulf Restoration Network v. Salazar, No. 10-1497 (E.D. La., filed 5/18/10); Gulf Restoration Network v. Salazar, No. 10-1630 (E.D. La., filed 6/3/10). The State of Louisiana also has suits consolidated as part of the multidistrict litigation for natural resource damages against BP under state law for injury caused to the State’s wildlife. See State of Louisiana v. BP Exploration, Nos. 10-1757, 1758, 1760 (E.D. La., filed 6/17/10). Because Transocean has denied liability for the discharge of oil from the sea floor, Louisiana has also filed a separate suit against Transocean for declaratory judgment asking the court to designate it as a responsible party under the Oil Pollution Act. See State of Louisiana v. Triton Asset Leasing, GmBH, No. 10-3059 (E.D. La., filed 9/14/10).
The Center for Biological Diversity has also filed a case in the federal district court for the District of Columbia against the Secretary of the Interior for alleged violations under the National Environmental Policy Act (NEPA) and the Endangered Species Act (ESA). See Center for Biological Diversity v. Salazar, No. 10-816 (D.D.C., filed 7/26/10). Generally, the allegations are that the Department of Interior wrongfully exempted drilling plans in the Gulf from NEPA and that its prior reliance on conclusions by the Fish and Wildlife Service and the National Marine Fisheries Service that drilling in deep water in the Gulf was not likely to jeopardize threatened and endangered species was badly mistaken. A nearly identical suit was filed by the Defenders of Wildlife in the Southern District of Alabama. Defenders of Wildlife v. Salazar, No. 10-254 (S.D. Ala., filed 8/10/10).
The Alabama State Attorney General has also filed separate cases against BP and Transocean. These cases are for both economic damages, including lost tax revenue, and natural resource damages and have not been consolidated as part of the multidistrict litigation in Louisiana. See State of Alabama v. BP, Plc., No. 10-690 (M.D. Ala., filed 8/12/10); State of Alabama v. Transocean, Ltd., No. 10-691 (M.D. Ala., filed 8/12/10). The governor of Alabama has also filed a separate claim for $148 million for lost tax revenue and is concerned that the suit by the Attorney General is delaying resolution of that claim.
On a separate track from the multidistrict litigation in the Eastern District of Louisiana are two cases that the Interior Department is defending that seek to overturn its blanket moratorium on offshore drilling in the Gulf. See Ensco Offshore Co. v. Salazar, No. 10-1941 (E.D. La., filed 7/9/10); see also Hornbeck Offshore Services v. Salazar, No. 10-1663 (E.D. La., filed 6/7/10). The moratorium was lifted on October 12, 2010. It is likely that these claims will now be rendered moot.
Two insurance related cases are also pending in the U.S. District Court for the Southern District of Texas. Certain Underwriters at Lloyds’s, London v. BP plc, No. 10-1823 (S.D. Texas, filed 5/21/10); Ranger Insurance Ltd. v. BP plc, No. 10-2009 (S.D. Texas, filed 6/8/10). These cases are in response to claims made by BP that it is entitled to $750 million as an additional insured under Transocean’s insurance polices. The insurance companies are seeking a declaratory judgment that BP is not covered by the policies. A motion is pending to transfer the case to the multidistrict litigation in Louisiana.
A Freedom of Information Act suit has also been filed against the United States Geological Survey for allegedly failing to disclose documents relating to the spill. See Public Employees for Environmental Responsibility v. U.S. Dept. Interior, No. 10-1559 (D.D.C., filed 9/16/10).
More litigation is likely to follow in the coming months once the government completes its criminal and civil investigations of BP and Transocean.