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BP trial's last phase begins -- penalty for gulf oil spill will be determined

BP's fine for the gulf oil spill will be determined after a civil trial that began Tuesday

The slowly unwinding Deepwater Horizon oil spill trial began its final phase Tuesday as a judge in New Orleans considers the record fine that oil giant BP must pay for the well blowout five years ago that killed 11 men and spawned the worst environmental disaster in American history.

U.S. District Judge Carl Barbier heard arguments from government lawyers and BP, which is liable for fines of up to $13.7 billion for violating the federal Clean Water Act as a result of the April 20, 2010, explosion in the deep waters of the Gulf of Mexico.

The accident and BP’s efforts to mitigate its effects transfixed a worldwide audience, starting with fireboats, helicopters and an armada of civilian and military vessels mounting a frenzied effort to save a crippled drilling rig that eventually pumped millions of barrels of crude oil into the gulf.

Tar balls washed up on beaches in an arc from Texas to Florida, and Louisiana’s already fragile wetlands were devastated. Untold wildlife deaths were symbolized by photographs of oil-drenched pelicans. Commercial fishing, tourism and public health suffered — most of those costs have been laid at BP’s door.

The Britain-based energy company has aggressively challenged the federal government and often portrayed itself as being victimized by the legal aftermath, complaining that its deep pockets have been drained by false claims.

In other proceedings, BP reached a $4.5-billion criminal settlement with the Justice Department in 2012. That included $525 million paid to the Securities and Exchange Commission for charges the company lied to investors during the spill.

The trial taking place in an elegant federal courthouse is being tried under maritime law with no jury. The judge has wide latitude to structure the proceedings as he wishes. The hugely complex trial has played out in three phases over 2 1/2 years, with each phase focusing on a central issue.

The first phase determined who was to blame for the blowout. The second, highly technical phase attempted to quantify the amount of oil that billowed up from the well bore.

Edward F. Sherman, a law professor at Tulane University, called the spill trial “the most complex court case in modern history.”

From the start, Barbier has kept a tight rein on a case with dozens of moving parts. “The large number of different claimants, death and personal injury, widespread economic loss to whole industries, injuries to landowners — there a lot going on,” Sherman said. “He’s had a heavy thumb on the case and he’s done a terrific job.”

Over the course of the next three weeks, Barbier will consider a number of factors that apply to the Clean Water Act, including the severity of the spill, who was to blame, the amount of fines the company has already paid, BP’s safety history, and what mitigation efforts it undertook.

In pretrial filings, BP foreshadowed its approach, emphasizing the immensity of the $14-billion cleanup efforts, which included hiring thousands of boats to skim oil from the gulf and thousands more people to rake tar off beaches.

The company said it reserved $43 billion for spill-related costs, which covers an array of associated lawsuits.

Last week, Barbier ruled that 3.19 million barrels of oil poured out of the Macondo well, an estimate that was substantially lower than the government’s and somewhat more than BP claimed.

The figure is crucial to BP because it sets the formula for the fine, which carries a maximum of $4,300 per barrel.

Barbier had ruled that BP had acted with “gross negligence and willful misconduct” in its actions leading up to the explosion, making it liable for the maximum fine.

Whatever fine Barbier levies, it will be the largest environmental penalty ever, and perhaps the largest of any kind. The previous record was $1 billion paid in 2013 by Transocean Ltd., which owned the Deepwater Horizon.

Even though the court case is winding down, legal observers expect BP to appeal whatever decision emerges, likely tacking five more years to the proceedings.

The company still faces scores of claims from private parties and has yet to settle another federal environmental damage claim, which is still being assessed. 

julie.cart@latimes.com

Twitter: @julie_cart

Copyright © 2016, Los Angeles Times

UPDATES

5:41 p.m.: The story was updated throughout with new details.

10:27 a.m.: The story was updated with the start of proceedings.

The story was originally posted at 6:15 a.m.

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