BP and the U.S. government, having shifted their positions several times about the amount of oil that flowed from a runaway Gulf of Mexico well in 2010, pivot back to court this week, with both sides hoping to convince a judge they now have the number right.
Big money is at stake as a civil trial over the worst offshore oil spill in American history resumes Monday. BP has pegged its overall spill tab at $42 billion, but that figure could grow significantly depending on the outcome in federal court in New Orleans.
For now, a settlement has been elusive, so the British oil giant is rolling the dice before U.S. District Judge Carl Barbier.
“The next four weeks, BP is going to take the hard knocks,” Tulane University law professor Edward Sherman said, using the parties’ estimates of the proceeding’s duration.
The trial’s second phase will focus on the volume of oil that entered the Gulf during the nearly three months it took London-based BP to cap its blown-out well a mile beneath the sea off the coast of Louisiana. Also at issue will be whether BP’s efforts to control the flow of oil — referred to in court papers as “source control” — were reasonable based on the information known at the time or unnecessarily extended the duration of the spill.
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Experts from around the world will be called by the parties and will testify about how they arrived at their conclusions.
Barbier will determine the spill total and then decide during a later proceeding how much BP, as operator of the well and its majority owner, should pay in fines under the Clean Water Act. Anadarko Petroleum, which had a minority stake in the well, also is a defendant in the second phase, though it has argued that it was a passive investor.
The Justice Department, which is seeking maximum fines for BP, said in court papers that BP’s latest calculations contradict evidence presented to Barbier in an earlier phase of the case.
In recent court filings, the government said it will argue that 5 million barrels of oil were discharged by the Macondo well and about 4.2 million barrels of oil entered the Gulf, slightly higher totals than it said in August 2010 when it announced the findings of a team of scientists gathered to calculate the flow rate. Earlier on, the government stated smaller amounts of oil were flowing from the well, but it has said it was relying for at least part of the time on information from BP.
BP will argue that 3.26 million barrels of oil were discharged by the well and about 2.45 million barrels entered the Gulf. Early on, BP stated much smaller amounts of oil were flowing, and it later pleaded guilty to misleading the government about the flow rate.
Both sides have stipulated that about 800,000 barrels of oil were collected at the wellhead before entering the Gulf, and the Justice Department has agreed not to seek fines on that oil.
The Clean Water Act allows fines of $1,100 to $4,300 per barrel of oil discharged into the sea, depending on whether a well operator was grossly negligent. The maximum fine would be $18.1 billion under the government’s spill estimate and $10.5 billion based on BP’s total. The judge has leeway to go lower than the range of fines allowed under the law.
BP argues in court papers that at the time of the disaster it was prepared to respond to a deep-water blowout, and that it “could not, and did not, execute source control procedures without federal government approval.”
BP and Anadarko say that calculating the flow of oil was no less challenging than the “innovative engineering approaches and unprecedented efforts” employed to stop the flow.
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Barbier has not yet decided how to apportion blame for the Deepwater Horizon rig explosion that killed 11 men and the oil spill that followed. He still must decide whether BP, rig owner Transocean and cement contractor Halliburton were grossly negligent, a key issue during the first phase of the trial that wrapped up in April.
A gross negligence finding, in addition to allowing for the potential of maximum fines for BP, would also open the door to punitive damages for BP and its partners on the well job. Plaintiffs’ lawyers suing the companies on behalf of spill victims will get a chance to further the case for punitive damages during the portion of the second phase of the trial that will deal with BP’s efforts to control the flow of oil.
Barbier is putting the lawyers in the case on short leashes.
He has ordered that on source control, the only relevant issue will be the efforts to collect, control or halt the flow of oil using subsea systems and technologies from April 20, 2010, the day of the well blowout, to Sept. 19, 2010, the day the well was declared permanently sealed.
Efforts to disperse the oil using chemicals or to contain the oil on the surface using booms or skimming devices have been deemed irrelevant.
Barbier said the issue of how much oil spilled will involve the amount actually released into the Gulf as a result of the incident from the time when the releases began until the Macondo well was capped on July 15, 2010. That stopped the oil flow, two months before BP permanently cemented the well shut.
Barbier has set aside the first four court days to address source control and then another 12 court days to quantify the spill. There will be no testimony on Fridays.
During the source control segment, plaintiffs’ lawyers will align themselves with Transocean, Halliburton and the states of Louisiana, Alabama, Texas, Mississippi and Florida. On the other side will be BP and Anadarko. During the quantification segment, the U.S. Justice Department will face BP and Anadarko.
The judge has set strict time limits for each side to present opening statements and their evidence.
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Blaine LeCesne, a law professor at Loyola University in New Orleans who has followed the case, said BP is risking little by proceeding with the trial if the Justice Department was unwilling to budge on its demand for the maximum fine. The plaintiffs and the Gulf states are also seeking big damage awards.
But if BP’s gamble fails, its spill tab could balloon to between $60 billion and $80 billion, he said.
LeCesne said a judicial finding of gross negligence “would not only substantially increase the Clean Water Act fines, but also serve as a predicate for the award of punitive damages down the line.”
On June 5, 2014, the Chemical Safety Board releases a two-volume report shedding new light on the cause of the Gulf oil spill. Agency investigators say the blowout preventer failed when a long drill pipe running from the rig down into the ocean floor buckled under high pressure coming up from the oil reservoir. In addition, the agency found U.S. regulations governing offshore safety -- even new rules set after the 2010 oil spill -- do not address many key safety devices.
Jacquelyn Martin / Associated Press
On May 21, 2014, BP announces that it will take the courtroom fight over its multibillion-dollar oil spill settlement to the Supreme Court. The London-based oil company argued that it has paid potentially hundreds of millions of dollars to claimants who were not affected by the 2010 Gulf of Mexico oil spill, violating its interpretation of the $9.2 billion settlement it reached with plaintiffs’ attorneys in 2012.
[Photo: People walk on the steps of the U.S. Supreme Court in Washington.]
On May 20, 2014, a federal judge rules that some BP investors can form a class to sue the company over allegations it misled shareholders on how much oil spilled into the Gulf of Mexico in 2010. The ruling followed the investors’ second bid to gain class certification needed for a securities lawsuit over allegations BP executives played down the amount of oil spewing from its blown-out Macondo well in early days of the 87-day disaster.
Seth Perlman / Associated Press
On April 21, 2014, a federal court sets Jan. 20, 2015 as the first day of the penalty phase of BP’s civil trial over the 2010 Gulf of Mexico oil spill. The penalty phase, during which U.S. District Judge Carl Barbier will listen to testimony from BP and government attorneys over the British oil company’s liabilities in the spill, will end around Feb. 5 next year, the court said.
Dave Martin / AP
On April 17, 2014, the Coast Guard cries foul over BP’s claim that active cleanup efforts to remove oil along the Gulf Coast shorelines have ended, saying the process is “far from over.”
[Photo: Mickal Vogt of Covington, La., uses a stick to place tar balls in a jar that washed up on the shore in Orange Beach, Ala., Saturday, June 12, 2010. ]
Tech. Sgt. Adrian Cadiz / AP
On April 15, 2014 -- nearly four years after the Gulf oil spill -- BP declares an end to cleanup operations that cost the company $14 billion and once covered 778 miles of shoreline on the Gulf Coast. The Coast Guard had finished its last patrols of the three remaining miles of beach that had been soaked in oil after a blowout at BP’s Macondo well blew out.
[Photo: In May 2010, ships move an oil boom into place near Cat Island off the Gulf Coast of Mississippi as part of Deepwater Horizon oil spill response.]
In March 2014, BP reaches a deal with the U.S. Environmental Protection Agency to end its 16-month suspension on doing business with the government. The deal allowed BP to bid on new drilling rights in the Gulf of Mexico for the first time in nearly two years.
[Photo: BP repairs its Mad Dog rig in the Gulf of Mexico in 2012.]
Jonathan Bachman / Associated Press
Kurt Mix, center, arrives at the Hale Boggs Federal Building in New Orleans. The former BP drilling engineer was convicted Dec. 18, 2013 of one charge that he deleted text messages from his cellphone to obstruct a federal investigation of the company’s massive 2010 oil spill in the Gulf of Mexico.
Gerald Herbert / Associated Press
Former FBI Director Louis Freeh leaves Federal Court after meeting with U.S. District Judge Carl Barbier, who appointed Freeh to investigate alleged misconduct by a lawyer who helped run BP's multibillion-dollar settlement fund for the Gulf oil spill. Freeh recommended Friday, Sept. 6, 2013, that the Justice Department investigate whether several lawyers plotted to corrupt the settlement program designed to compensate victims of BP's 2010 Gulf oil spill.
Gerald Herbert / Associated Press
Steve Newman, president and CEO of Swiss-based Trancocean Ltd., leaves Federal Court after testifying in New Orleans, Tuesday, March 19, 2013. Transocean was the owner of the rig Deepwater Horizon, which was being operated under contract to BP when BP's Macondo well blew out on April 20, 2010, setting into motion events that led to the nation's worst offshore oil spill. The Deepwater Horizon sank two days after the blow out.
Gerald Herbert / Associated Press
Lamar McKay, former president of BP America and current chief executive of BP's Upstream unit, leaves Federal Court after testifying in New Orleans, Monday, Feb. 25, 2013. McKay, who was president of BP America at the time of the Deepwater Horizon disaster, became the first BP executive to testify at the federal trial intended to identify the causes of BP's Macondo well blowout and assign percentages of blame to the companies involved.
Contributed Photo / Contributed Photo
A report by the National Wildlife Federation finds that the 3-year-old BP spill is still having a serious negative effect on the ecology of the Gulf of Mexico and its wildlife populations. Pictured: Smoke billows over a controlled oil fire off the coast of Venice, La., on May 5, 2010.
Sean Gardner/Getty Images
An activist holds a sign during a protest in front of the Hale Boggs Federal Building on the first day of the civil trial over the 2010 Gulf of Mexico oil rig spill on February 25, 2013 in New Orleans, Louisiana. Eleven men were killed during the accident and over 4 million barrels of oil spilled into the Gulf of Mexico in 2010.
Sean Gardner/Getty Images
Activists holds signs during a protest in front of the Hale Boggs Federal Building on the first day of the civil trial against BP in the 2010 Gulf of Mexico oil spill on Monday, Feb. 25, 2013.
Robert Kaluza, a BP well site leader from the Deepwater Horizon oil rig explosion, talks with his attorneys Shaun Clarke, left, and David Gerger, right, as they enter Federal Court before he is arraigned on manslaughter charges in New Orleans on Wednesday, Nov. 28, 2012.
Robert Kaluza, a BP well site leader from the Deepwater Horizon oil rig explosion, enters Federal Court before he is arraigned on manslaughter charges in New Orleans on Wednesday, Nov. 28, 2012.
David J. Phillip/AP
BP Senior Vice President Kent Wells rubs his eyes while testifying during the Deepwater Horizon joint investigation hearings Aug. 26, 2010. The hearings were held by the U.S. Coast Guard and the Interior Department's Bureau of Ocean Management, Regulation and Enforcement in Houston .
Demonstrators hold up signs on Capitol Hill in Washington on Monday, May 17, 2010, as BP America Chairman and President Lamar McKay, right, waits his turn to testify before the Senate Homeland Security and Governmental Affairs Committee hearing to assess the nation's response to BP PLC's Deepwater Horizon oil spill.
AP Photo/Haraz N. Ghanbari
A Capitol Hill police officer arrests Diane Wilson on Capitol Hill in Washington on June 17, 2010. BP CEO Tony Hayward was testifying before the Energy and Environment subcommittee on Oversight and Investigations hearing on the role of BP in the Deepwater Horizon explosion and oil spill.
Smiley N. Pool / Houston Chronicle
A protester's sign lies outside a meeting where residents were able to get face-to-face time with BP and government officials at one of a series of open houses in New Orleans on June 23, 2010.
John Moore/Getty Images
The letters BP, inscribed in sand and oil by a Greenpeace activist, are shown on a beach at the mouth of the Mississippi River on May 17, 2010 near Venice, La.
James Nielsen / Houston Chronicle
Melanie Driscoll, director of Bird Conservation for the Louisiana Coastal Initiative, holds up oil residue on April 8, 2011. The Louisiana Department of Wildlife & Fisheries gave a press tour to show the effects of the Deepwater Horizon oil spill in Port Sulphur, La.
Smiley N. Pool / Houston Chronicle
A cleanup worker, wearing a protective coverall and carrying a small scoop, punctuates an otherwise typical holiday beach scene as patrols the beach looking for tar balls on Independence Day 2010.Tourist business along the Gulf Coast all reported feeling the sting of lost income from a noticeable dip in tourism the summer following the Deepwater Horizon spill.
A member of Louisiana Gov. Bobby Jindal's staff reaches into thick oil on the surface of the northern regions of Barataria Bay in Plaquemines Parish, La. on June 15, 2010.
Crude oil from the Deepwater Horizon oil spill washes ashore in Orange Beach, Ala. on June 12, 2010. Large amounts of the oil battered the Alabama coast, leaving deposits of the slick mess some 4 inches to 6 inches thick on some parts of the beach.
Win McNamee/Getty Images
A brown pelican stained with oil takes flight while a bird rescue team tries to capture it for cleaning on June 5, 2010 in Grand Isle, Louisiana.
Patches of oil from the Deepwater Horizon spill are seen underwater in the Gulf of Mexico, south of Venice, La., on Monday, June 7, 2010.
Smiley N. Pool / Houston Chronicle
A boat is surrounded by oil near the site of the Deepwater Horizon explosion and oil spill on Tuesday, June 15, 2010.
A shrimp boat is used to collect oil with booms in the waters of Chandeleur Sound, La.
People gather near crosses for the 11 workers who died in the Deepwater Horizon oil rig explosion, during a vigil to mark the first anniversary of the BP oil spill on a beach in Grand Isle, La.. The large cross in the center is for the Gulf of Mexico.
Oil floats in the waters of Chandeleur Sound, La. two weeks after the explosion of the Deepwater Horizon oil rig in the Gulf of Mexico.
Oil from the Deepwater Horizon spill floats on the water as the sky is reflected in sheen on Barataria Bay, off the coast of Louisiana on June, 7, 2010.
The Deepwater Horizon oil rig burns in the Gulf of Mexico on April 21, 2010, more than 50 miles southeast of Venice on Louisiana's tip.
U.S. Coast Guard
Fire boat response crews battle the blazing remnants of the off shore oil rig Deepwater Horizon on April 21, 2010. The blowout in the Gulf of Mexico killed 11 people and sent 4.9 million barrels of oil gushing from the sea floor into the Gulf.