BP Civil Trial Kicks Off

Source: USGS

By Nick Cunningham

The civil trial for BP kicked off yesterday for the role it played in the Deepwater Horizon incident in 2010.

To recap, on April 20, 2010, the Macondo well in the Gulf of Mexico experienced a blowout, resulting in the worst environmental catastrophe in U.S. history. The Deepwater Horizon oil rig suffered multiple explosions, killing 11 workers, and sunk in a fiery blaze after two days. Oil gushed into the Gulf of Mexico for 87 days, spewing 4.9 million barrels of oil before the well was sealed. (I wrote a longer paper on how lessons learned from the Deepwater Horizon incident raises red flags, and what that means for drilling in the Arctic. You can find the report at The American Security Project and The Arctic Institute).

BP already settled its criminal charges last November with the Department of Justice, agreeing to pay $4.5 billion. It has also paid out another $7.8 billion to businesses affected by the spill. The trial that began yesterday will weigh the civil charges.

At issue is whether or not BP (or its operators) were "grossly negligent," a finding that could force BP to pay another $17.6 billion. However, if it is found to have been merely "negligent," it will only have to pay one-fourth of that amount - $4.5 billion.

The federal government along with five coastal states have filed charges. The attorney speaking on behalf of the plantiffs at the trial stated that, "BP repeatedly chose speed over safety," and BP applied "huge financial pressure" on its operators to "cut costs and rush the job."

The causes of the blowout were multiple. For instance, regulation was lax from the former Minerals Management Service (MMS), with regulators having cozy relationship with offshore oil companies. So cozy, that several officials at MMS received gifts, bribes, free trips, as well as cocaine and sex with oil industry representatives. I'd say maybe there's a slight conflict of interest if the regulators are having cocaine and sex parties with the very industry it is supposed to regulate.

But, BP deserves much of the blame. The Macondo job was $50 million over budget. With rigs costing several hundred thousand dollars per day to rent, there was indeed "huge financial pressure" to cut costs, as the prosecution alleges.

BP, for its part, denies wrongdoing, and blames Transocean, the rig operator, and Halliburton, which was responsible for cementing the well. Immediately after the event, each of them pointed fingers at the other, and Transocean and Halliburton claim they were following BP's lead.

On top of the amounts mentioned above, BP will be forced to  pay out damages to affected businesses in the Gulf  under the Oil Pollution Act. The rich ecosystems of the Gulf provided ecosystem services (such as fisheries and tourism) that were the basis of people's livelihoods. The spill damaged those ecosystems and the benefits they provided to people. However,it can be difficult for some victims of the spill because the lost business must prove they have been 'directly' hurt by the oil spill, a high bar for businesses inland that are indirectly affected (say, a restaurant that used to serve workers in the fishing industry, but has suffered because of fisherman out of work).

From BP's point of view, they've paid enough. In fact, Bloomberg reported that BP may argue that local communities and governments may have actually benefited from the oil spill, because BP has paid out so much money that there has been a economic stimulus in the area. Such a claim would be hilarious if it wasn't so arrogant and reprehensible. For the largest environmental catastrophe in American history, it would be a travesty if BP did not pay the maximum penalty under the law.

However, even if it does pay, little has changed to prevent the next oil spill. Regulatory changes on safety have not been codified, and can easily be rolled back when a future oil-friendly President comes to office.

Also, the offshore oil industry still is incapable at dealing with a well blowout. Their drilling prowess is impressive, but their cleanup response is a joke - BP's spill response included using ineffective oil booms (floating tubes used to corral oil on the surface) and dousing the ocean with chemical dispersants, which arguably damaged ocean ecosystems more than the oil did. The inability to kill the wellhead for three months was pathetic, which included shooting trash and golf balls into the well to clog it. What happens when the next well blows out?

Yet, there is little appetite in Congress to address these issues. BP may pay big, but the drilling continues.