Trial to put BP oil spill in perspective
Also will hold magnifying glass on key players
NEW ORLEANS — The stories soon to unfold in a federal courtroom here are just the beginning of one of the biggest environmental cases in U.S. history: the deadly 2010 Gulf of Mexico oil disaster and its multibillion-dollar impact on the Gulf Coast and its people.
With record-breaking penalties and the ecological and economic health of the Gulf on the line, the case is likely to take years to resolve. But experts say important lessons and decisions will be made that will put the unprecedented catastrophe into perspective.
The trial, which was to begin today, has been rescheduled until next Monday to allow both sides in the case another week to work out a potential settlement, according to a statement released Sunday by plaintiffs’ attorneys and BP, one of the main defendants in the case. It was unknown whether a settlement would postpone the trial indefinitely.
Experts and legal academics, along with national and international media in town to cover the trial, still anticipate one of the biggest, most important trials in U.S. history.
“This clearly eclipses any prior environment case we’ve ever seen,” says Blaine Lecesne, an associate professor at Loyola University New Orleans’ College of Law. “This will be the largest environmental tort case in history.”
Just as the Exxon Valdez disaster became a cornerstone of U.S. environmental history over 20 years ago, the BP oil trial will put a magnifying glass on the powerful companies behind the nation’s oil business — and how bad things can get when they make mistakes.
About 120,000 plaintiffs have filed a combined 535 lawsuits. The trial centers on the explosion and sinking of the Deepwater Horizon rig in the Gulf of Mexico on April 20, 2010, which killed 11 workers and unleashed the largest oil spill on U.S. waters.
Many of the fishermen and business owners hurt by the spill are betting their livelihoods on the proceedings. Before the spill, George Barisich, 56, a St. Bernard Parish shrimper and oyster farmer, would sell 5,000 to 8,000 sacks of fresh oysters a year. He’s sold only 300 sacks in the two years since the spill, he says. Freshwater diversions opened by state officials to repel the encroaching oil killed many of the oysters in his reefs. He’s earned only a fraction of the $500,000 he was projected to make in the two years since the spill, and his 400 acres of oyster reefs need about $400,000 worth of harvesting and fixing, he says.
Last year, administrators of the $20 billion compensation fund set up by BP offered Barisich a $25,000 final payment, and earlier payments by the fund weren’t enough, he says. He turned it down, called his lawyer and joined a lawsuit with 800 other Louisiana fishermen. He realizes the trial is a gamble but says he has little choice: “It’s a high-stakes, hard game, and my life’s on the line.”
BP, which owned the well; Transocean, the rig’s owner; and Halliburton, which provided cement services, all are named as defendants. A report last year by the National Oil Spill Commission spread blame among all three for not properly evaluating risk in the well design, not designing a better cement mixture for the well and not recognizing early signs of the underwater blowout that led to the explosion. Witnesses will include scientists, energy experts and high-level BP executives.
Trial could go to Supreme Court
Assuming the trial goes forward, the case is expected to stretch into next year and could reach the U.S. Supreme Court, Lecesne says. Separately, BP and its subcontractors have been in talks with the government to settle a bevy of regulatory and criminal fines.
U.S. District Judge Carl Barbier, who will preside over the non-jury trial, has consolidated the myriad spill cases into one case split into phases:
-Phase 1 would attempt to assess blame among defendants for the explosion and release of more than 170 million gallons of crude. It’s expected to run through the end of May.
-Phase 2 would look at the containment process and the nearly three-month effort to cap the spewing Macondo well.
-Phase 3 would examine cleanup efforts and the spread of the spill.
A key issue: whether officials at the companies were “grossly negligent” in decisions leading up to the explosion, which could pave the way for massive punitive damages. Unlike the 1989 Exxon Valdez spill, where the disaster was blamed on a drunken captain, the Deepwater Horizon incident focuses on decisions from high-level BP engineers, Lecesne says.
Plaintiffs’ attorneys argue that BP placed profit and speed over safety. Lawyers for BP counter that its officials weren’t the only ones at fault.
“The record developed in this proceeding leads directly to the conclusion that no single action, person or party was the sole cause of the blowout,” Mike Brock, an attorney for BP, says in a written statement. “BP did not engage in any gross negligence or willful misconduct.”
Transocean officials have said BP is contractually responsible for any incidents stemming from problems with the well. “We have a good contract in good faith with BP and we expect them to honor that,” says Lou Colasuonno, a Transocean spokesman. Halliburton says it won’t comment during the trial.
Federal maritime law says punitive damages shouldn’t exceed compensatory payouts to residents and businesses — except when bad decisions were motivated by profit, Lecesne says. The case could reach the Supreme Court to clarify the amount of punitive damages companies can be liable for, he says. Barbier has said he will entertain arguments for punitive damages.
“The big wild card in this litigation will be assessing gross negligence or not,” Lecesne says. “That’s really the central issue in the case.”
How much can BP be liable for? That’s unclear. Clean Water Act fines alone can reach $20 billion. Punitive penalties for the plaintiffs — shrimpers, hoteliers, restaurateurs and local governments — could be higher, if Barbier finds the companies acted with gross negligence or willful intent. “This case can very easily spiral beyond $100 billion in total exposure for BP,” Lecesne says.
But finding gross negligence will not be easy, says Eric Smith, associate director of the Tulane Energy Institute. Intangibles, such as BP’S contribution to the British and European economies, could be considered, making it difficult for Barbier to unleash unlimited punitive damages, he says.
“There is a psychological cap if not a numeric one,” Smith says. “The chances of finding gross negligence are vanishingly small.”
Another wild card may be the plaintiffs themselves. The $20 billion fund started by BP and administered by Kenneth Feinberg, known as the Gulf Coast Claims Facility, has paid out $6.5 billion to 225,000 claimants, all of whom signed agreements not to pursue legal action against BP.
Of 120,000 individuals and businesses listed in the lawsuit, 50,000 never filed a claim through the facility, as required under federal law, and 45,000 say they never signed up for the lawsuit even though they appear in court filings, according to facility records. And 14,000 took payouts through the fund and signed agreements not to sue.
“You’re always going to have to prove eligibility,” says Robert Wiygul, an Ocean Springs, Miss., environmental attorney whose firm represents about 1,000 plaintiffs. “No one believes for a minute that BP is just going to be handing out checks to anyone who says they were injured.”
Economic mess left behind
In Orange Beach, Ala., tourists usually flock to the city’s talcum beaches and hotels during the three-month summer stretch. The spill chased away about half its visitors in 2010, halted condo projects, lowered property values and nixed the proposed development of a 450-room hotel and conference center, Mayor Tony Kennon says.
The city has received about $30 million from BP for marketing and cleanup costs. That’s a fraction of what it lost in tourism revenue, usually $2.3 billion a year in Orange Beach and nearby Gulf Shores, he says. Orange Beach joined the lawsuit, seeking loss of revenue, damage and destruction of property value and cleanup costs.
“Make us whole. That’s what we want,” Kennon says. “We expect them to clean up their economic mess just as thoroughly as their ecological mess.”
Not everyone following the trial will expect a payout. Chris Jones, brother of Gordon Jones, a mud engineer killed aboard the rig, will be in the audience, along with his father, mother and Gordon’s widow, Michelle. The family settled separately and is not part of the lawsuit. But Chris Jones says the trial is important because it could reveal the truth about what happened leading up to the explosion that killed his brother.
“We need to see that the people and businesses that were responsible for this disaster are held accountable by our justice system,” he says. “A court of law is the best way we’re going to see that happen.”