Oil Spill

With billions at issue, trial begins to apportion fault for oil spill among BP, its subcontractors

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A federal judge in New Orleans began hearing opening statements Monday in a trial to determine how to apportion blame between BP Plc and its subcontractors for the massive oil spill that began April 20, 2010 with a blowout of an undersea well after the Deepwater Horizon oil rig exploded in the Gulf of Mexico, killing 11 workers.

Also at issue in the portion of the case being decided by U.S. District Judge Carl Barbier is whether the conduct of BP or its subcontractors, Transocean Ltd., a Swiss-based company that owned the rig, and Halliburton Co., which provided the material used to cap the well, constituted gross negligence, Bloombergreports.

The BBC News, the New York Times (reg. req.) and Reuters also have stories.

If BP is determined to have engaged in willful or wanton misconduct or acted with reckless indifference, the company would be liable for additional damages both to the U.S., which potentially could be paid a record $17.6 billion under the Clean Water Act, and to claimants not included in the $8.5 billion settlement BP reached last year, who are parties to the case now being tried. (The company also agreed to pay over $4 billion to settle criminal charges.)

For the two subcontractors, which are indemnified by BP for ordinary compensatory damages, a gross negligence finding would expose them to liability for punitive damages to all plaintiffs.

Lead lawyer Jim Roy, representing private plaintiffs in the case, opened with a scathing attack on BP, contending that the oil company ignored multiple signs of safety and maintenance issues and operational problems on the rig before the Macondo well blowout, the Times reports.

“BP made a series of decisions to save time and money that substantially increased risk,” Roy told a packed courtroom, saying that the company’s decision-making characterized “a culture of profit and production over safety.”

However, Roy also blamed Transocean for what he said was a failure to train employees adequately to handle emergencies and contended that Halliburton had failed to adequately mix and test its cement.

The U.S. Department of Justice and two Gulf states, Alabama and Lousiana, will also make presentations.

Even as the trial opens, state and federal regulators have offered a settlement plan worth $16 billion, the Times reports, relying on unidentified sources. The newspaper says the offer would limit BP’s fine under the Clean Water Act to $6 billion, also reducing the company’s tax liability. Another $9 billion in penalties would help cover the cost of restoring the damaged shoreline of affected states and $1 billion would be held in reserve to cover unanticipated damage that may still be discovered in the future.

Although only two states are participating in the trial, five would be covered by the settlement. They are Alabama, Florida, Louisiana, Mississippi and Texas. The newspaper says the expectation is that Louisiana, hardest-hit by the spill, would get a larger share than the other states.

Additional and related coverage:

ABA Journal: “Biloxi Blues: Legal-Cost Fears Have Victims of the Oil Spill Sliding out of the Middle Class”

ABAJournal.com: “Feds Blame BP Shortcuts for Gulf Oil Spill in New Report Released Today”

ABAJournal.com: “BP Says It Will Pay $4.5B to Resolve Federal Criminal and Securities Allegations”

ABAJournal.com: “Transocean to Pay $1.4B to Resolve DOJ Criminal Probe, Other Federal Claims re Gulf Oil Spill”

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