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BP Back in Court

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BP once again must appear in court today as the final phase of the BP trial begins in New Orleans. This is the third phase of a multiyear trial to determine how much BP and other responsible parties should pay for their role in the BP Deepwater Horizon oil disaster in the Gulf of Mexico. Just last Thursday, the Judge issued another ruling, finding that 3.19 million barrels of oil were released into the Gulf. This means that the maximum fine BP will face is $13.7 billion. This final phase of the trial will focus on eight factors, as required by the Clean Water Act, including BP’s history of prior violations and the seriousness of this violation.

A key factor in court will be BP’s efforts to minimize the harm. In other words, did BP do enough in responding to the disaster to justify lowering their fine? Yes, BP took efforts to stop the flow from the well and the spread of oil, but BP also lied about the rate at which oil was spewing from the well.

The economic impact of the penalty on BP will be interesting to watch as well. The court will need to determine whether this inquiry focuses on BP (the parent company) as a whole or only on its subsidiary, BP Exploration & Production, known as BPXP. BP is expected to argue that the recent dip in oil prices should be factored into this inquiry. (This assertion, as you might expect, has been met with criticism.)

A third factor will be the issue of simple vs. gross negligence. That question was answered back in September when the court ruled that the oil disaster was the result of BP’s “gross negligence” and “willful misconduct,” Though this sounds like legalese, this ruling is extremely important; it means more funding will be available for restoring the Gulf. Funding for restoration projects via the RESTORE Act comes from Clean Water Act fines. And the finding of “gross negligence,” rather than ordinary negligence, means that fines can be as high as $4,300 per barrel of oil spilled, instead of $1,100. Eighty percent of the Clean Water Act fines will be used to repair and restore the Gulf of Mexico ecosystem and the communities and economies that depend on it.

These penalty factors will be hotly debated during the trial starting today, and arguments will help determine whether the judge leans toward the high end of $13.7 billion or the low end of $7 billion. We can expect BP to argue for sympathy and leniency (i.e., “we’ve been punished enough; we’ve learned our lesson.”) BP will likely call attention to the money it spent on cleanup and capping the well back in 2010 (which was required by law). The courtroom action will last two or three weeks, and then the parties will file briefs with the court until late April. But there is no established timeline for when the judge will issue a ruling. And, of course, there is always the possibility that the parties could agree on a settlement.

Regardless of how this trial ends, a successful resolution must include funding to monitor the Gulf ecosystem over the course of 25 years, restoration that includes the offshore environment where the oil disaster began, and a transparent decision-making process that allows the public to participate in a meaningful way.

Many questions still loom, but we know a few things for certain. We know the people of the Gulf Coast and the coastal and marine ecosystems of the Gulf will feel the effects of the BP oil disaster for years to come. But from this disaster comes an opportunity to restore and chart a new path for the Gulf. Restoration is already underway, and this final phase of the trial gets us one step closer to justice and a healthier future for the Gulf.

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