Mon November 19, 2012
BP Legal Troubles Persist Over Gulf Spill
Originally published on Tue November 20, 2012 9:38 am
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BP made headlines last week when it was hit with a record criminal fine over the oil platform Deepwater Horizon that exploded in the Gulf of Mexico. It also pleaded guilty to manslaughter in the deaths of 11 rig workers. But that was hardly the end of the oil company's legal troubles. BP still faces a civil trial that could see it once again fined, this time for each barrel of oil that gushed into Gulf waters for months. NPR's Carrie Johnson reports.
CARRIE JOHNSON, BYLINE: Let's start with the deadline. BP, the Justice Department and five Gulf Coast states have about two months to strike a deal before the huge civil trial starts in New Orleans. Attorney General Eric Holder.
ATTORNEY GENERAL ERIC HOLDER: I'll be very honest. We have been in negotiations with BP. We have not reached a number that I considered satisfactory.
JOHNSON: There are plenty of reasons the oil giant might want to resolve the case - about 21 billion of them. That's the high end of the price tag if the Justice Department can prove BP was grossly negligent under the standards of the Clean Water Act. Tony West is an associate attorney general who's playing a big role in the civil lawsuit.
TONY WEST: You have an $1,100 per barrel penalty, statutory penalties for negligence. That gets up to $4,400 per barrel for gross negligence. And the difference there, of course, the standard in the law, is the difference between violating a duty of care versus wanton and reckless conduct.
JOHNSON: Let's unpack that a bit. If a company behaves with negligence, it's on the hook for fines of about $1,000 per barrel of oil. But if the government can prove the company acted recklessly by disregarding red flags, that fine increases four-fold. California Democrat Henry Waxman, who helped investigate the spill in the U.S. House, says the Gulf disaster could have been avoided - the heart of the federal government's argument.
REPRESENTATIVE HENRY WAXMAN: The blowout was preventable. It happened because BP made a series of reckless decisions.
JOHNSON: For its part, BP has admitted negligence in misreading key tests on the Macondo well hours before the blowout the night of April 20, 2010. But the company is fighting the idea that it acted with gross negligence. And it's also contesting how much oil seeped into the Gulf, the basis for most environmental fines.
Chief executive Bob Dudley says BP is open to resolving the civil case but only on what he called reasonable terms. Jane Barrett is a law professor at the University of Maryland.
JANE BARRETT: I think that it will make it easier for the government to negotiate with BP now that the criminal case is behind them.
JOHNSON: But, Barrett says, there are still some big road blocks, especially the jockeying among five Gulf Coast states to get a piece of the action.
BARRETT: That's not to say it's going to be easy, because everyone, I think, feels like, you know, that their injuries are the worst and is going to want to make sure that they have enough money to make their states whole.
JOHNSON: The states are due to share 80 percent of the fines under the Clean Water Act. But there are three other kinds of claims on the table. First, there are natural resource damages under a separate law called the Oil Pollution Act. Then the costs of responding to the disaster. And finally, economic losses, like cancelled tourist reservations or tax revenues the states couldn't collect because of lost jobs and businesses. Former environmental crimes prosecutor David Uhlmann wonders about the other big players in the civil case.
DAVID UHLMANN: What will happen with Transocean and Halliburton?
JOHNSON: Transocean, the owner of the Deepwater Horizon rig, says it's already set aside $2 billion to cover the civil lawsuit. Halliburton, the company that lined the Macondo well, could be on the hook too. David Uhlmann.
UHLMANN: Trials generally drive settlement talks. So in all likelihood we won't see a civil settlement until we get much closer to the trial date.
JOHNSON: Which may be why Attorney General Holder and BP managers continue to insist they're getting ready for a courtroom standoff in February in New Orleans.
Carrie Johnson, NPR News, Washington. Transcript provided by NPR, Copyright National Public Radio.