Penalty phase of BP oil spill trial set to begin (USA)

A trial is set to begin in New Orleans, Lousiana today, to determine how much BP will pay in Clean Water Act penalties for its role in the 2010 Deepwater Horizon disaster in the U.S. Gulf of Mexico.
United States District Court for the Eastern District of Louisiana last week said that for purposes of calculating the maximum possible civil penalty under the CWA it found that 3.19 million barrels of oil discharged into the Gulf of Mexico during the three months oil was flowing freely into the ocean from the Macondo well in 2010.

To remind the Macondo well was shut in on July 15, 2010, 86 days after the blowout began on April 20.

The amount of oil determined by the Court is smaller that the one claimed by the U.S. government but bigger that the one reported by BP.

The U.S. had claimed that 4.1 million barrels of oil was spilled into the Gulf of Mexico, with BP saying it was 2.45.

The court’s ruling last week was a relatively positive news for BP, as it now means that the company is facing a maximum penalty of $13.7 billion instead of $18 billion previously sought by the U.S. Government.

Calculation

The United States District Court for the Easter District of Louisiana in September last year ruled that the discharge of oil in the Deepwater Horizon case in 2010, was the result of BP’s “gross negligence” and “willful misconduct”.

As for the amount BP needs to pay for the spill, the court then said that in the absence of gross negligence or willful misconduct (i.e., if the defendant acted with ordinary negligence or was not negligent), the maximum amount of the CWA civil penalty is $1,100 per barrel of oil discharged.

However, the maximum amount per barrel is nearly quadrupled, at $4300 per barrel, when the discharge results from gross negligence or willful misconduct.

 

Fine to be reduced?

The trial is not expected to be completed before May, 2015. According to Bloomberg, BP is not expected to be fined with the full $13.7 billion penalty, and could see it down to $8 – 10 billion if a settlement is reached.

During the penalty proceedings, the Court is required to consider the application of eight statutory factors, including the violator’s efforts to minimize or mitigate the effects of the spill; the seriousness of the violation or violations; the nature, extent, and degree of success of any efforts of the violator to minimize or mitigate the effects of the discharge; the economic impact of the penalty on the violator; the economic benefit to the violator, if any, resulting from the violation; the degree of culpability involved; any other penalty for the same incident; any history of certain types of prior violations; and any other matters as justice may require.

In a statement issued last week BP said it believed that considering all the statutory penalty factors together weighs in favor of a penalty at the lower end of the statutory range.

 

The Gulf has waited long enough

In advance of the trial, Collin O’Mara, president and CEO of the National Wildlife Federation, the U.S. biggest conservation organization said:

“Now that the court has determined the volume of the spill and found that BP’s actions were grossly negligent, it is time that BP accept responsibility. The Gulf has waited long enough.

“Eleven men died, countless wildlife species are impacted and miles of coastal wetlands are degraded, all because the oil giant put profits ahead of safety. While it will likely be decades before we fully comprehend the extent of damage to wildlife, we do know that nearly five years after the explosion, dolphins are dying in high numbers, sea turtles are failing to nest, and oyster production remains low.”

“It is our obligation as a nation to hold BP accountable and ensure that the money from these fines is spent transparently on conservation projects that restore the ecological health of the Gulf of Mexico for people and wildlife.”

Offshore Energy Today Staff

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