Deepwater Horizon Trial Kicks Off with Finger Pointing
Federal Judge Carl Barbier heard opening statements today in the trial of BP, Transocean Ltd. and Halliburton Co. for their roles in the 2010 Deepwater Horizon oil rig explosion that killed 11 workers and dumped millions of barrels of oil into the Gulf of Mexico.
While prosecutors characterized the companies as preoccupied with savings and profits rather than safety and people, attorneys for BP, Transocean and Halliburton pointed fingers at one another.
Assistant U.S. Attorney Mike Underhill placed much of the blame with BP, which he said had the responsibility and opportunity to stop the ill-fated drilling operation nearly an hour before the blast.
“Eleven souls had 47 minutes to live the rest of their lives” because BP did not act, Underhill said.
An attorney for Transocean, which owned the rig and employed most of the workers on board, agreed that BP’s negligence was the driving factor behind the explosion and said their lawyers are “distorting what happened on the rig.”
“None of this had to happen,” Transocean lawyer Brad Brian said. “It happened because BP was behind schedule and rushing to get the job done.”
Brian also said that the court would learn about “incredible acts of heroism” by Transocean workers who risked their lives “in the midst of a literal apocalypse of explosions, smoke and fire.”
Halliburton attorney Don Godwin defended against accusations that the cement slurry the company used in the well was defective and a contributor to the explosion. He said the blame was shared by BP and Transocean, whose workers were “making it up as they went” while troubleshooting problems with the well.
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“Blowouts are caused by loss of well control, not by cement failure,” Godwin said.
BP attorney Mike Brock said that all three companies were to blame, but also insisted BP’s executives did not act with callous disregard for worker safety and the integrity of the well.
Brock said a Halliburton contractor gave BP bad advice when it recommended a cement slurry that proved to be unstable, claiming the “bad slurry is what caused this well initially to flow.”
Brock also blamed Transocean for failing to maintain the blowout preventers that should have prevented both the explosion and the ensuing oil spill. If Transocean had replaced a dead battery and fixed a miswired solenoid in the blowout preventer assembly, “we wouldn’t be sitting here today,” Brock said.
Phases of Justice
The trial will be held in phases, with the first phase designed to assess the defendants’ negligence and determine how much individual blame should be assigned to each of the companies. The second phase, expected to begin in September, will address the accuracy of the government’s estimates of the amount of oil leaked, which BP says are exaggerated. The penalty phase isn’t expected to begin until next year, though Barbier could issue partial rulings after each of the first two phases.
Of particular importance in the current phase is the question of whether BP acted with gross negligence or ordinary negligence. If BP is found to be grossly negligent, which is defined by a reckless disregard for human and environmental safety, it could face up to $17.6 billion in fines under the Clean Water Act. If BP is simply negligent, those fines would be closer to $4 billion.
Hours before today’s opening statements were scheduled to begin, the New York Times reported that a $16 billion settlement deal was in the works between BP and federal and state officials. According to the Times’ anonymous source, the settlement would include $6 billion in fines for Clean Water Act violations, $9 billion in penalties that would fund coastal restoration and $1 billion to be set aside for future environmental cleanup.
BP could avoid a significant tax liability with such a deal because most of its payout would be in the form of penalties rather than fines. Unlike fines, civil penalties are tax deductible.
BP Paying Billions
The trial is moving forward after Barbier delayed it for several months while BP negotiated a settlement with a group of Gulf Coast residents and business owners. Barbier approved that settlement in December, though the terms don’t specify how much BP will award for individual claims. BP says it expects to pay about $8.5 billion in the deal.
Shortly after that settlement was approved, a federal judge approved another settlement in the criminal probe of BP and Transocean, which included the single largest fine in U.S. history. In that settlement, BP agreed to pay more than $4 billion and Transocean agreed to pay $1.4 billion.
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