Bloomberg News

BP’s Top U.S. Officer Called to Testify at Gulf Oil Spill Trial

January 04, 2012

Dec. 28 (Bloomberg) -- BP Plc’s highest-ranking U.S. executive, BP America Inc. Chairman and President Lamar McKay, was subpoenaed to testify at the February trial that will determine liability for the 2010 Gulf of Mexico oil spill.

BP faces at least 350 lawsuits by thousands of coastal property owners and businesses claiming damages from the more than 4.1 million barrels of oil that gushed from the company’s well off the Louisiana coast last year.

The lawsuits were consolidated for pretrial processing by U.S. District Judge Carl Barbier in New Orleans. Also sued in the combined cases are Transocean Ltd., which owned the Deepwater Horizon drilling rig, and Halliburton Co., which provided cementing services to the well.

Barbier scheduled a nonjury trial to begin Feb. 27 to determine which companies share blame for the explosion. The judge has said he’ll use findings from that proceeding to guide decisions in later trial phases over damages caused by efforts to contain and clean up the historic spill, which killed 11 workers and caused the worst offshore oil spill in U.S. history.

In an unrelated case, a federal judge ruled yesterday that BP didn’t violate a plea agreement in a criminal case over a 2006 spill in Alaska’s Prudhoe Bay, rejecting a request by federal prosecutors to revoke the company’s probation.

Pleaded Guilty

BP, based in London, pleaded guilty in 2007 to violating the Clean Water Act by spilling 200,000 gallons of oil from its Prudhoe Bay field into water on Alaska’s North Slope in 2006. It paid a $12 million fine and $8 million for restitution and community service and was put on three years’ probation.

The government asked U.S. District Judge Ralph Beistline in Anchorage to revoke the probation, saying BP broke the agreement when it spilled about 13,500 gallons of oil near Prudhoe Bay in November 2009. Beistline rejected the U.S. request today and released the company from probation.

“The court certainly cannot fault the government for the position it has taken in this matter for there clearly were reasons for concern,” Beistline wrote in an order. “There can be no doubt that the government takes its responsibility seriously to monitor the industry and to ensure compliance with environmental laws.”

Because the U.S. sought to revoke probation just before it ended in 2010, prosecutors could have sought more money from the company if Beistline had found BP violated the terms.

Company Reaction

“We are pleased with the decision,” Steve Rinehart, BP spokesman, said in an e-mail. “We know that the privilege of working in Alaska comes with a responsibility to maintain high standards. We will continue our commitment to running safe and compliant operations.”

Wyn Hornbuckle, a Justice Department spokesman, didn’t immediately return an e-mail seeking comment.

BP asked the court to reject the U.S. claim and end probation completely. The company didn’t do anything to violate the plea agreement, BP lawyer Jeff Feldman said Dec. 7 in a hearing before Beistline.

“BP conformed to industry standards,” he said.

The 2009 spill occurred when a section of the company’s pipeline at its Lisburne Processing Center ruptured, “creating a two-foot hole in the pipe that allowed the contents to spill onto the tundra and surrounding wetlands,” the government said in a court filing.

Lisburne, a separate field, is part of BP’s greater Prudhoe Bay operation.

Ignored Alarms

The U.S. said BP ignored alarms that warned of the pipe’s eventual rupture and leak. The 2009 leak showed that BP hadn’t yet “addressed the management and environmental compliance problems that have plagued it for many years,” the government said in court papers.

BP accepted responsibility for the 2010 Gulf spill and set up a $20 billion fund to compensate victims for spill-related losses. BP sued Vernier, Switzerland-based Transocean and Houston-based Halliburton on claims its contractors share blame for the disaster and should share the costs.

Transocean and Halliburton have repeatedly denied any fault for the explosion or spill in court filings.

The case is In Re: Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

--With assistance from Amanda Coyne in Anchorage, Alaska.

--Editors: Peter Blumberg, Stephen Farr

To contact the reporter on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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