BP 2013 Annual Report Download - page 262

On 20 April 2011, BP filed claims against Cameron International
Corporation (Cameron), Halliburton Energy Services, Inc. (Halliburton),
and Transocean in the DoJ Action, seeking contribution for any
assessments against BP under OPA 90 based on those entities’ fault. On
20 June 2011, Cameron and Halliburton moved to dismiss BP’s claims
against them in the DoJ Action. BP’s claim against Cameron has been
resolved pursuant to settlement (described below), but Halliburton’s
motion remains pending.
On 20 April 2011, BP asserted claims against Cameron, Halliburton and
Transocean in the Limitation Action. BP’s claims against Transocean
include breach of contract, unseaworthiness of the Deepwater Horizon
vessel, negligence (or gross negligence and/or gross fault as may be
established at trial based upon the evidence), contribution and
subrogation for costs (including those arising from litigation claims)
resulting from the Incident, as well as a declaratory claim that Transocean
is wholly or partly at fault for the Incident and responsible for its
proportionate share of the costs and damages. BP asserted claims
against Halliburton for fraud and fraudulent concealment based on
Halliburton’s misrepresentations to BP concerning, among other things,
the stability testing on the foamed cement used at the Macondo well; for
negligence (or, if established by the evidence at trial, gross negligence)
based on Halliburton’s performance of its professional services, including
cementing and mud logging services; and for contribution and
subrogation for amounts that BP has paid in responding to the Incident,
as well as in OPA 90 assessments and in payments to the plaintiffs. BP
filed a similar complaint against Halliburton in federal court in the
Southern District of Texas, Houston Division, and the action was
transferred to MDL 2179 on 4 May 2011.
On 20 April 2011, Halliburton filed claims in the Limitation Action seeking
indemnification from BP for claims brought against Halliburton in that
action. Halliburton also asserted a claim for negligence, gross negligence
and wilful misconduct against BP and others. On 30 November 2011,
Halliburton filed a motion for summary judgment in MDL 2179. On
21 December 2011, BP filed a cross-motion for partial summary
judgment seeking an order that BP has no contractual obligation to
indemnify Halliburton for fines, penalties or punitive damages resulting
from the Incident. On 31 January 2012, the judge ruled on BP’s and
Halliburton’s indemnity motions, holding that BP is required to indemnify
Halliburton for third-party claims for compensatory damages resulting
from pollution that did not originate from property or equipment of
Halliburton located above the surface of the land or water, regardless of
whether the claims result from Halliburton’s gross negligence. The court,
however, ruled that BP does not owe Halliburton indemnity to the extent
that Halliburton is held liable for punitive damages or for civil penalties
under the Clean Water Act. The court further held that BP’s obligation to
defend Halliburton for third-party claims does not require BP to fund
Halliburton’s defence of third-party claims at this time, nor does it include
Halliburton’s expenses in proving its right to indemnity. The court
deferred ruling on whether BP is required to indemnify Halliburton for any
penalties or fines under the Outer Continental Shelf Lands Act. It also
deferred ruling on whether Halliburton acted so as to invalidate the
indemnity by breaching its contract with BP, by committing fraud, or by
committing another act that materially increased the risk to BP or
prejudiced the rights of BP as an indemnitor.
On 30 May 2011, Transocean filed claims against BP in the DoJ Action
alleging that BP America Production Company had breached its contract
with Transocean Holdings LLC by not agreeing to indemnify Transocean
against liability related to the Incident. Transocean also asserted claims
against BP under state law, maritime law and OPA 90 for contribution.
On 1 November 2011, Transocean filed a motion for partial summary
judgment on certain claims filed in the Limitation Action and the DoJ
Action between BP and Transocean, seeking an order that would bar
BP’s contribution claims against Transocean and require BP to defend
and indemnify Transocean against all pollution claims, including those
resulting from any gross negligence, and from civil fines and penalties
sought by the government. On 7 December 2011, BP filed a cross-
motion for summary judgment seeking an order that BP is not required to
indemnify Transocean for any civil fines and penalties sought by the
government or for punitive damages. On 26 January 2012, the judge
ruled on BP’s and Transocean’s indemnity motions, holding that BP is
required to indemnify Transocean for third-party claims for compensatory
damages resulting from pollution originating beneath the surface of the
water, regardless of whether the claim results from Transocean’s strict
liability, negligence or gross negligence. The court, however, ruled that
BP does not owe Transocean indemnity for such claims to the extent
Transocean is held liable for punitive damages or for civil penalties under
the Clean Water Act, or if Transocean acted with intentional or wilful
misconduct in excess of gross negligence. The court further held that
BP’s obligation to defend Transocean for third-party claims does not
require BP to fund Transocean’s defence of third-party claims at this
time, nor does it include Transocean’s expenses in proving its right to
indemnity. The court deferred a final ruling on the question of whether
Transocean breached its drilling contract with BP so as to invalidate the
contract’s indemnity clause.
On 8 December 2011, the United States brought a motion for partial
summary judgment in the DoJ Action seeking, among other things, an
order finding that BPXP, Transocean and Anadarko are strictly liable for a
civil penalty under Section 311(b) (7)(A) of the Clean Water Act. On
22 February 2012, the judge ruled on motions filed in the DoJ Action by
the United States, Anadarko, and Transocean seeking early rulings
regarding the liability of BPXP, Anadarko and Transocean under OPA 90
and the Clean Water Act, but limited the order to addressing the
discharge of hydrocarbons occurring under the surface of the water.
Regarding OPA 90, the judge held that BPXP and Anadarko are
responsible parties under OPA 90 with regard to the subsurface
discharge. The judge ruled that BPXP and Anadarko have joint and
several liability under OPA 90 for removal costs and damages for such
discharge, but did not rule on whether such liability under OPA 90 is
unlimited. While the judge held that Transocean is not a responsible party
under OPA 90 for subsurface discharge, the judge left open the question
of whether Transocean may be liable under OPA 90 for removal costs for
such discharge as the owner/operator of the Deepwater Horizon.
Regarding the Clean Water Act, the judge held that the subsurface
discharge was from the Macondo well, rather than from the Deepwater
Horizon, and that BPXP and Anadarko are liable for civil penalties under
Section 311 of the Clean Water Act as owners of the well. Anadarko,
BPXP and the United States each appealed the 22 February 2012 ruling
to the US Court of Appeals for the Fifth Circuit (the Fifth Circuit), and the
appeals were consolidated. Briefing in this appeal is complete and oral
argument was heard on 4 December 2013, but no ruling has been
issued.
On 18 December 2012, Transocean filed a motion seeking an early ruling
that it is not liable in connection with claims for compensatory or punitive
damages, or claims for contribution, brought by private, state, or local
government entities and based on the subsurface discharge of oil.
Transocean’s motion has been fully briefed but remains pending.
On 18 December 2012, Transocean filed a motion seeking an early ruling
that it is not liable in connection with punitive damages claims brought by
members of the Economic and Property Damages Settlement Class (for
a description of the Economic and Property Damages Settlement
Agreement, see below). On 20 December 2012, Transocean filed a
motion seeking an early ruling that it is not liable in connection with BP’s
claims for reimbursement of payments made under the Economic and
Property Damages Settlement Agreement and BP’s separate claims for
spill-related damages, such as lost profits from the Macondo well, which
claims were assigned by BP to the Economic and Property Damages
Settlement Class. On 17 January 2013, Halliburton filed motions seeking
early rulings that it is not liable in connection with punitive damages
claims brought by members of the Economic and Property Damages
Settlement Class; that it is not liable in connection with any contribution
claim for punitive damages, whether asserted by BP or by the Economic
and Property Damages Settlement Class as BP’s assignee; and that it is
not liable in connection with claims assigned by BP to the Economic and
Property Damages Settlement Class. Transocean’s and Halliburton’s
motions have been fully briefed but remain pending.
On 11 January 2013, BP filed a motion in the DoJ Action for partial
summary judgment against the United States, seeking rulings that (1) BP
collected at least 810,000 barrels from the broken riser, from the top of
the blowout preventer and lower marine riser package, and from the
choke and kill lines of the blowout preventer, all before these barrels
reached the waters of the Gulf of Mexico, and (2) that these barrels may
not be counted toward the maximum penalty potentially to be assessed
258 BP Annual Report and Form 20-F 2013