Will Halliburton and Transocean Be Held Liable for Third Party Claims Arising from the BP Oil Spill?The explosion of the Deepwater Horizon in 2010, which killed 11 people and injured another 17, triggered the BP oil spill. The Horizon had been drilling on the Macondo Prospect, and, after the explosion, the wellhead began to gush oil at the rate of approximately 62,000 barrels per day. Although the rate gradually began to decrease, it took several months to stop the flow of oil and approximately 4.9 million barrels had emptied into the Gulf of Mexico by the time the disaster had finally abated.
“While not the largest disaster in terms of the amount of oil spilled, many consider the BP spill among the worst in history,” explained a California personal injury lawyer.
The spill caused significant damage to the shoreline, to the marine habitat, to local wildlife, and to the tourism and fishing industry in Louisiana and other areas surrounding the Gulf of Mexico. The loss of life was devastating and financial losses were huge, all of which led to extensive litigation.
According to an investigation conducted jointly by the U.S. Coast Guard and the Federal Bureau of Ocean Energy Management, Regulation and Enforcement, the spill occurred as a result of violations of federal safety regulations; poor risk management; inadequate well control and emergency bridge responses, insufficient training for those drilling or operating the Deepwater Horizon, plan changes, and failure to observe and respond to key indicators. Essentially, this meant that BP, Halliburton and Transocean all played a role, and all were negligent in a way that contributed to the spill.
Federal reports confirming that negligence and a failure to follow safety procedures led to the spill will be helpful to plaintiffs hoping to recover damages from the responsible parties in the spill, although BP, Transocean and Halliburton have all attempted to file motions to keep these investigations out of evidence in civil trials. Moreover, the companies have attempted to shift liability for compensatory damages onto each other. Indemnification contracts signed with Transocean and Halliburton are potential obstacles to BP’s efforts to avoid full liability.
When one party indemnifies another, he or she insulates that party from financial loss by agreeing to take responsibility if damages occur, explains a California personal injury lawyer. One of the simplest and most common examples of indemnification is an insurance policy: an insurer indemnifies the insured against loss and will thus pay the bills in a car accident, fire or flood, or medical emergency depending on the policy type.
The issues of whether BP would, in fact, have to indemnify Halliburton and Transocean were presented to a judge who, in late January of 2012, ruled that BP would be held to its contractual obligation. The Court order stated unequivocally that, "BP is required to indemnify Halliburton for third-party compensatory claims that arise from pollution or contamination that did not originate from the property or equipment of Halliburton located above the surface of the land or water, even if Halliburton's gross negligence caused the pollution."
While this provides a great deal of financial protection to Halliburton, it is unclear whether this ruling will protect Halliburton from liability for punitive damages or protect them from civil penalties under a piece of federal environmental legislation referred to as the Clean Water Act. BP argues that both Halliburton and Transocean should be responsible for their own financial obligations for both punitive damages and civil penalties, as they played a causal role in the accident and should be held accountable.