Deheng&DHH Convenes ＂Legal Seminar on the Issues Concerning ConocoPhillips China Re-production in the Bohai Area and Repudiation of Claims from Shandong Province＂
It has been a year and nine months since the Penglai 19-3 oil field spills happened in June 2011. This is one of the cooperation projects between China National Offshore Oil Corp. (CNOOC) and ConocoPhillips China Co., Ltd. ( ConocoPhillips China). Based on statistics published in the media, ConocoPhillips China and CNOOC paid approximately RMB 3 billion Yuan in total to compensate for the loss caused by the spills. This payment was presided over by the State Oceanic Administration and the Ministry of Agriculture of the People’s Republic of China, and about RMB1 billion Yuan from ConocoPhillips China was used as compensation for damages to the biological resources cultivated in some regions of Hebei and Liaoning Provinces and the natural fishing resources from the Bohai. However only losses incurred by fishermen from Liaoning and Hebei is covered by this compensation. The losses incurred by fishermen from Shandong are excluded from the compensation coverage, yet they also are residents living on the coast of the Bohai Sea.
According to the announcement from Beihai Bay of the State Oceanic Administration, the spills happened at a distance of 70km from Longkou, 60km from Changdao and 170km from Qinhuangdao. The eastern borderline of the pollution was 21km from Changdao, and the western borderline 53km from Jiangtang Port. The sea areas around Penglai 19-3 oil field and in the northwest were polluted seriously by the effects of wind and ocean currents. An accumulative total of 5,500 square kilometers of sea water was polluted, of which 870 square kilometers were ranked IV inferior. The average concentration of oil in the sea water around Penglai 19-3 oil field was 40.5 times the normal value and reached 86.4 times normal value.
In the case of the non-performance of compensation, as for the admission by the State Oceanic Administration for resuming operations of the involved oil field and ConocoPhillips China’s repudiation of claims from the fishermen on the coast of Shandong Province, who live nearest to the spill site and are in closest connection with this accident, lawyers Tang Huadong and Sun Peng, who practice in Beijing DHH (Shanghai) Law firm, have submitted an application to the State Oceanic Administration for the publication of documents relating to the admission.
On 28th February the “Legal Seminar on the Issues concerning ConocoPhillips China Resuming Operations in the Bohai Area and Repudiation of Claims from Shandong Preovince” was convened by DHH. The function of the Conference was to analyze the civil and criminal liabilities which should be undertaken by the parties.
Lawyer Liu Kejiang, Director of International Practice Department of DHH, holds the opinion that: the incident can be said to be the largest marine environment pollution accident in China’s history; ConocoPhillips China should take full responsibility fpr the Penglai Bohai 19-3 oil field spills.
As to the problem that farmers in Liaoning, Hebei and Shandong coastal claimed for losses arising from the spills, from a legal point of view the Chinese Ministry of Agriculture does not have the right to reach a settlement agreement with ConocoPhillips China and CNOOC on behalf of the farmers who suffered huge losses and even risked their lives. This settlement agreement shall not have legal effect. The farmers suffering losses still have the right to claim for damage regarding the Bohai Penglai 19-3 oil field spills through a variety of channels. China’s court shall, in accordance with Chinese law, accept the relevant cases regarding to Bohai Penglai 19-3 oil field spills including but not limited to the claim brought by the farmers, and solve the problem through legal channels rather than refusing to accept the case and hearing. Such a negative approach not only causes great damage to the credibility of the justice system but also leads to other negative effects.
Then there is the problem that the organ of state power imposed an administrative punishment regarding to Bohai Penglai 19-3 oil spills. From media reports, the State Oceanic Administrative Department made an administrative penalty decision of a fine of RMB 200,000 yuan on ConocoPhillips China, yet some government officials said that this had been the most serious ocean pollution with the highest penalties according to Chinese existing law. Such kind of punishment serves to abet rather than deter the perpetrators. After the oil spills occurred, Chinese Ocean and Environment Supervision Department spent a lot of human, material and financial resources on testing, monitoring and investigating for evidence. Such costs should be born by the perpetrators of oil spills instead of by Chinese taxpayers.
As to the question of an ocean ecology claim, according to Chinese laws regarding damage to the ocean, the Ocean Department shall, as a representative of national interests, claim for compensation against the perpetrators. The truth is that Ocean Department reached an agreement with the perpetrators without extensively asking for the views of the interested parties, and without judicial proceedings. ConocoPhillips China and CNOOC paid a total of RMB 1.683 billion yuan. ConocoPhillips China paid RMB 1.09 billion yuan to compensate for the losses on ocean ecology caused by the oil spills, and CNOOC and ConocoPhillips China paid RMB 480 million yuan and RMB 113 million yuan respectively to bear the social responsibility of protecting the environment of Bohai. The State Oceanic Administration said that these funds will be used for the ecological construction and environment protection of Bohai, the reduction of petroleum pollution into Bohai and the restoration of the amaged ocean habitat etc. To compensate for the ocean ecological damage caused by the oil spills such payments are obviously not enough.
Lawyer Li Gang, Director of Maritime Department of DHH, holds the opinion that: according to Article 66 of “Tort Liability Law”, where any dispute arises over environmental pollution, the polluter shall assume the burden to prove that it should not be liable, or its liability could be mitigated under certain circumstances as provided for by law or to prove that there is no causation between conduct and the harm. Faced with such a major ocean pollution incident, refusing to compensate Shandong fishermen solely on the basis of non-correspondence of the oil fingerprint seems too absolute and hasty. If ConocoPhillips China refused to compensate Shandong fishermen only on the grounds of so called non-correspondence of the oil fingerprint collected from polluted breeding foreshores. Howeve Shandong fishermen, depending on seasonal tides have always fishied in the sea area around the Jiaozhou Bay in Hebei and Liaoning. So on what basis have ConocoPhillips China and the so-called competent authorities refused to compensate Shandong fishermen?
Although the oil spills claim adopted the way of reconciliation, the basis of reconciliation should be legal fact investigation and laws. However, from the official news we know that ConocoPhillips China and CNOOC have not provided evidence to prove that they should not be liable or that their liability could be mitigated. Therefore, the way claims of Shandong fishermen has been handled is not proper.
American lawyer Mr. Ji-qing Liu, Counsel of International Practice of DHH, Tai Shan Scholar of Overseas Distinguished Expert, holds the opinion that: compared with the compensation paid by BP in the oil spill accident that happened in the U.S. Gulf of Mexico in April 2010, the compensation amount born by ConocoPhillips China is obviously too low.
After the occurrence of the oil spill in the Gulf of Mexico, under the direction of the US administration of Obama, BP set up a compensation fund of $20 billion (uncapped), and paid a fine of $40 billion to terminate the criminal investigation. The U.S. acquiring such a sky-high compensation depended on its comprehensive laws and system of environmental protection.
As for China’s national legislation for environment protection, lawyer Ji-qing Liu said “The legislation for oil leakage in China still needs improving. There is a gap between the structure, mechanism and law in the legal system of maritime environment protection being implemented in China. None of the following issues can be solved within the legal framework of environment protection, including the system and structure of enforcement, the funds needed in the process of enforcement and the economic policy beneficial to environment protection such as financing, taxation and insurance. On the one hand, the amount of law has been rapidly increased, which costs many human and material resources; on the other hand, it seems that the law and regulation developed for environment protection do not play an effective role. Therefore, it is a pressing task for China to actively promote and perfect the legislation for maritime environment protection by drawing on the advanced legislating experience of Europe and America.”
It is said that the fishermen from Shandong have filed a lawsuit against ConocoPhillips China in America, which was heard in January. ConocoPhillips China raised an objection against the jurisdiction, which has not been ruled by the court.
Lawyer Mao Hongtao, Director of Criminal-Law Department of DHH, holds the opinion that: According to the “Investigation Conclusion on the Cause of Penglai 19-3 Oil Field Spills Accident by Joint Investigation Team” issued by National Bureau of Oceanography, the matter of ConocoPhillips Bohai spills is a serious accident arising from negligence. According to the provisions of “Marine Environmental Protection of the People’s Republic of China”, “Criminal Law of the People’s Republic of China”, “Criminal Procedure Law of the People’s Republic of China”, “Environmental Protection Law of the People’s Republic of China”, the actions by the responsible persons of ConocoPhillips China constitutes a crime. Prosecution for criminal responsibility for the persons should be undertaken according to law.
Furthermore the Head Office of China National Offshore Oil Corporation, which is the partner of Oceanography Company, have the responsibility to supervise and manage the procedure of oil extraction. During the whole course of the ConocoPhillips Bohai Spills matter, the question is did the relevant persons at the Head Office of China National Offshore Oil Corporation fail to perform their duties? Did the liable persons in the Environmental Department, those responsible for environmental supervision, also fail to perform their duties?
Why does the State Oceanic Administration neglect the “The State Oceanic Administration Notice on Strengthening the Public Work of the Ocean Engineering Construction Project Environmental Impact Assessment?” This Notice was created by the Administration itself, yet it has failed to publish the environment-influence report, thereby allowing ConocoPhillips China to resume production? Do the action or inaction of liable persons of the aforesaid departments constitute malfeasance and is there a need to enforce responsibility ounder the law? In answer, we suggest that the Supreme People's Procuratorate should accept the case of the ConocoPhillips Bohai Spills matter and prosecute liable persons under criminal law.
Lawyer Mao Hongtao appealed that procuratorial organs should give the public a convincing answer instead of doing nothing about the matter. He said that he would submit a proposal to the Supreme People's Procuratorate and suggested that the procuratorial organs should investigate the truth and processed legal supervision in accordance with the law. Also the Supreme People's Procuratorate should demand the public security organ to accept and investigate the case and prosecuted liable persons under criminal law.
Lawyers Propose Criminal Liability Against Those Responsible for ConocoPhillips’s Bohai Oil Spill
According to the National Excellent Lawyer Mao Hongtao, the Conclusion from Joint Investigation Team concerning the Causes of Penglai 19-3 Oilfield’s Oil Spill Pollution of ConocoPhillips China suggests that the case of ConocoPhillips China’s oil Spill Pollution is a major accident. According to the Marine Environmental Protection Law of the P.R.C., Criminal Procedure Law of the P.R.C and Environmental Protection Law of the P.R.C., the responsible people in ConocoPhillips China who are suspected of a criminal offence should be held criminally liable.
CNOOC (China National Offshore Oil Corporation), ConocoPhillips China’s partner, is responsible for supervision and administration of ConocoPhillips’ oil drilling processes. In this event, did the relevant personnel of CNOOC fail to maintain responsible supervision and thus cause great property loss? As for the people of the Environmental Protection Agency who are responsible for environmental supervision, did they fail to maintain responsible supervision in this event?
Why did the State Oceanic Administration turn a deaf ear to the notice which itself issued and why did it not bring the Environmental Impact Assessment on ConocoPhillips Re-production to public Notice? Does the person in charge of this Administration have malpractice liability? For all of these questions the lawyers suggested the Supreme People’s Procuratorate promptly establish a case and hold relevant personnel criminally liable for the pollution.
Lawyer Xu Hongliang was indignant about this case, asserting that the relevant state departments’ failure to supervise and administer caused the Bohai oil spill pollution; it is beyond comprehension, he said, that the relevant state organs, including the public security organ, the procuratorial organ and the State Ocean Administration were so opposed to taking any action. It is really unfair and unreasonable that over the past one and a half years neither ConocoPhillips nor any departments have taken any responsibility, while many personnel or officials involved in other events which had incurred much smaller loss than this case have been investigated.
