As Gulf of Mexico continues to suffer the effects of the 2010 oil spill, we ask if BP’s $4.5bn settlement is sufficient.
Nearly three years after a catastrophic oil spill in the Gulf of Mexico, a multi-billion dollar civil case against British Petroleum and the other companies involved is set to open in court.
As the case opens on Monday, US prosecutors are determined to prove that gross negligence caused the April 2010 blast that killed 11 workers and sank the BP-leased Deepwater Horizon rig, sending millions of barrels of oil gushing into the sea.
BP is equally determined to avoid such a finding, which would drastically increase fines against the company to as much as $17bn.
“Gross negligence is a very high bar that BP believes cannot be met in this case,” said Rupert Bondy, the firm’s general counsel.
“This was a tragic accident, resulting from multiple causes and involving multiple parties.”
Faulty cement job
BP also hopes to shift much of the blame, and cost, to rig operator Transocean and subcontractor Halliburton, which was responsible for a faulty cement job on board the offshore drilling platform.
It took 87 days to cap the runaway well, which blackened beaches in five states and crippled the region’s tourism and fishing industries in a tragedy that riveted the nation.
The first phase of the civil trial will determine the cause and apportion fault for the disaster.
The second phase, not expected to start for several months, will determine exactly how much oil was spilled in order to calculate environmental fines.
The US government on Tuesday agreed not to count the 810,000 barrels of oil BP siphoned out of the runaway well before it could spill into the sea.
But a complicated battle looms over the rest, as BP insists the government overestimated how much oil gushed out of the well by “at least 20 percent”.
The third phase will deal with environmental and economic damages.
BP spent more than $14bn on the response and cleanup and paid another $10bn to businesses, individuals and local governments that did not join the class action lawsuit.
It remains on the hook for billions in additional damages, including the cost of environmental rehabilitation.
The British energy giant has already had to resolved thousands of lawsuits linked to the deadly disaster out of court – including a record $4.5bn plea deal with the US government in which BP pleaded guilty to criminal charges and a $7.8bn settlement with people and businesses affected by the spill.
While the $7.8bn settlement reached last year resolved most of the economic and medical claims, scores more remain from insurers, racetracks, casinos, financial institutions and state and local governments.
Despite BP’s avowal to “vigorously” defend itself against the gross negligence charge, many experts believe it could still reach an out-of-court settlement with the US government over environmental fines.
Environmentalists and those affected by the spill hope that Judge Carl Barbier will assess the maximum penalties possible under the law.
“We would all like to avoid trial and get the money flowing to Gulf states, and we understand that a reduction of liability is necessary to reach a settlement,” said Brian Moore, legislative director for the National Audubon Society.
“But the Gulf Coast is still reeling, and people are still waiting for BP to be held accountable for the largest environmental disaster in our nation’s history. The people of the Gulf Coast don’t feel justice has been served. There is much work to be done.”