Posted on 27 Feb 2013 by Neilson
BP has finally begun to face off in court against an army of U.S. government prosecutors, lawyers and even its contract partners over the Gulf of Mexico oil spill three years ago, contending that it alone should not shoulder blame for the rig explosion that killed 11 workers and soiled beaches and marshes from Louisiana to Florida.
The British oil company's share of responsibility is not only the crux of the trial that opened Monday, but it also is at the heart of a last-minute settlement proposal offered by the U.S. Justice Department and the five affected gulf states - Alabama, Florida, Louisiana, Mississippi and Texas - that are demanding that BP pay $16 billion in spill-related fines and penalties.
But as the long-awaited trial began here, U.S. prosecutors and plaintiffs' lawyers made emotional appeals for the trial judge to find BP guilty of gross negligence, pointing to mounds of e-mails, documents and reports that had already been made public in the case. BP believes it should be held to a more lenient standard.
"Reckless actions were tolerated by BP, sometimes encouraged by BP," said Michael Underhill, the Justice Department's lead prosecutor. "These damages were caused by actions that cannot be seen as anything but inexcusable behavior."
Mr. Underhill discussed a phone call between Donald J. Vidrine, a BP supervisor on the rig who faces criminal charges, and Mark E. Hafle, an onshore engineer, in which Mr. Vidrine described problems with a critical test less than an hour before the explosion. Neither man took action to prevent the eventual blowout.
"They had a conversation that could have saved 11 lives, saved the gulf, saved the people of the gulf from catastrophe," Mr. Underhill said.
If U.S. and state officials are successful in proving gross negligence against BP in its handling of the spill, the fines against the company would be four times as high as under a lower standard of liability, negligence.
BP's lawyer, Robert C. Brock, defended the company's design of the well and denied that the company had been grossly negligent. He characterized the drilling of a well as a team effort in which the company and its contractors - Halliburton and Transocean, which also are defendants - all needed to take responsibility.
"Everyone on the rig is empowered to say, Stop the job," Mr. Brock said. "There were no dictators in this group."
The settlement proposal would cap the amount of fines that BP might pay for violations of the Clean Water Act at $6 billion, significantly less than it might face if the trial proceeds. The proposal would allow BP to pay an additional $9 billion to resolve environmental penalties related to the spill, an alternative that would reduce the impact on the company's tax liabilities. The environmental penalties, under separate laws, are tax deductible, while fines like those imposed under the Clean Water Act are not.
The remaining $1 billion would be put in a fund for unanticipated environmental damage from the spill.
One lawyer who was briefed on the settlement talks said Monday that discussions were still under way. Another lawyer, also briefed on the efforts, said that a number of people who were scheduled to appear as trial witnesses had been told that their testimony might not be needed.
The frequently intense opening arguments in court Monday, however, outlined an extravagance of errors.
Several referred to one Halliburton technician who missed important signs that the well was on the verge of blowing out when he took a 10-minute cigarette break during a safety test. In one of the e-mail exchanges between two BP workers discussing problems with the well, one of the two wrote that he had to leave for a dance class and would get back to the other worker.
Transocean employees came up with a theory they called "the bladder effect" to explain a failed 11th-hour test showing pressure building in a drill pipe that otherwise should have stopped all operations and averted the blowout.
But it was BP that was the central focus of the day's proceedings.
Lawyers for the Justice Department, two gulf states and private plaintiffs mounted scathing attacks on the company for ignoring multiple signs of problems on the rig in routine maintenance of safety tests and equipment.
In several hours of arguments, they noted numerous errors by BP in managing a high-pressure well. The company had decided to employ single-walled drill pipe, which provided inferior barriers to leaks, and it decided that it was not necessary to circulate drilling mud, a method intended to strengthen cement, before installing a seal on the well.
The plaintiffs reminded the court that BP had decided against conducting a cement bond test, which could have identified the gas that leached into the piping during the well-cementing process.
And finally, using information that has previously been described in numerous government and private reports since the accident, they said BP had ignored the results of a failed pressure test shortly before the well blew out.
Mr. Brock, representing BP, said the well design had followed industry standards.
"There were a number of mistakes and misjudgments that were made by BP, Transocean and Halliburton," he said. He argued that Transocean had been responsible for the maintenance and operations of the rig it owned, and that Halliburton had been responsible for designing and testing the cement to seal the well.
Lawyers for Transocean and Halliburton said that their companies had been following BP's lead, and that it was BP that was overwhelmingly responsible for the accident.
This is the first phase of a two-part trial. The second phase is intended to determine how much oil was actually spilled. The U.S. government estimates that more than four million barrels of oil spilled from the Macondo well, covering birds with crude and extending a slick across nearly 30,000 square miles, or 78,000 square kilometers, of the gulf.
BP says the government's estimate is at least 20 percent too high.
Last November, BP agreed to pay $4.5 billion in fines and other penalties and pleaded guilty to 14 criminal charges related to the accident. It has also paid out $9 billion in a partial settlement with businesses, individuals and local governments. The company has set aside $42 billion for payouts, largely by selling $38 billion of global oil and natural gas assets.
Four of its employees face criminal charges of manslaughter and obstruction of justice or are accused of making false statements related to how much oil was escaping the well.
The government and Transocean have already come to a $1 billion civil settlement, and the rig company will pay an additional $400 million criminal penalty. Halliburton has not settled yet and says that it has no liability under contracts signed with BP, but it may yet be held liable for punitive damages or civil penalties under the Clean Water Act.