BP Plc (BP/) delayed efforts to cap its Macondo well in 2010 by misrepresenting how much oil was gushing into the Gulf of Mexico, lawyers for spill victims said, urging a judge to find the company grossly negligent.
BP was unprepared for a deep-water blowout and the company misled the government on its ability to respond, plaintiffs’ lawyers said in court papers filed yesterday in the second phase of a trial over the disaster.
“The phase two evidence, standing alone, establishes that BP was wanton and reckless in both its pre-spill lack of planning and in its post-spill lying to the government and others regarding the flow rate and source control,” victims’ lawyers told U.S. District Judge Carl Barbier in New Orleans.
The blowout of the Macondo well off the coast of Louisiana in April 2010 killed 11 people aboard the Deepwater Horizon drilling rig and set off the largest offshore oil spill in U.S. history. The accident sparked hundreds of lawsuits against BP, as well as Transocean Ltd. (RIG:US), owner of the rig that burned and sank, and Halliburton Co. (HAL:US), which provided cement services for the project.
Barbier has conducted two trial phases over the spill and response. The first, which ended in April, covered fault and whether BP and its co-defendants’ actions setting off the spill reached the level of gross negligence, which would trigger higher fines and punitive damages. Barbier hasn’t issued a decision on the first phase.
The second phase, which ended in October, covered the size of the spill and BP’s efforts to contain it. BP, its co-defendants, the U.S. and the plaintiffs all filed proposed findings yesterday on the second phase to Barbier.
Decisions by Barbier on this phase may be worth billions of dollars to the London-based company and its co-defendants.
A ruling by Barbier supporting BP’s assessment that the spill was 40 percent smaller than the government’s estimate might cut as much as $7.5 billion from the $18 billion in maximum fines the company faces under the U.S. Clean Water Act.
A finding that BP’s actions let the spill continue for longer than it might have could save Transocean and Halliburton as much as 70 percent of any judgments against them.
BP denied any negligence in preparation for a blowout or responding to the event. The company did nothing to extend the length of the spill, its lawyers said in yesterday’s filing.
“The notion that BP acted not only wrongfully but egregiously and maliciously to delay a resolution of the crisis defies not only law but common sense,” the lawyers said. The plaintiffs and contractors “cannot come close to establishing that they were injured by any wrongful -- much less egregious or malicious -- conduct by BP.”
BP also disputed the government’s estimate that 4.2 million barrels of oil flowed into the gulf. The U.S. has overstated the size of the spill, sticking with an early estimate despite newer evidence contradicting it, BP lawyers said yesterday in court papers.
“The government’s original estimate might have been acceptable for political or public relations purposes, but it falls well short of satisfying the burden of proof under the Clean Water Act,” the company told Barbier.
BP and its partner in the well Anadarko Petroleum Corp. (APC:US) have produced estimates that “are unreasonably low because they rely on incorrect inputs and unreliable methodologies,” U.S. Department of Justice lawyers said in their filing yesterday. BP has attempted to “dodge and evade its own analyses,” the U.S. said.
If BP is found by Barbier to have acted with gross negligence in causing the explosion or extending the spill, it faces a maximum penalty of $18 billion under the Clean Water Act, using the government estimate of 4.2 million barrels. Using the BP assessment of 2.45 million, the company would still face a penalty of as much as $10.5 billion.
The maximum fines, if Barbier rejects gross negligence, would be $2.7 billion under the BP assessment and $4.6 billion using the government numbers. The Clean Water Act allows the government to seek fines per barrel spilled of as much as $1,100 on a finding of strict liability to $4,300 for gross negligence.
The U.S. has claimed that Anadarko, as an owner of a 25 percent share of the well, is liable for Clean Water Act fines, though Barbier ruled it can’t be held responsible for the incident or the response.
Anadarko is facing a maximum fine of $4.6 billion under the law, the U.S. said yesterday.
Barbier will determine what the fines will be in a separate hearing, using multiple criteria, including the seriousness of the violation, the degree of the company’s culpability, other penalties imposed for the spill, previous violations and efforts to minimize the effects of the discharge.
Transocean and Halliburton, defendants in the first phase of the trial over fault for the blowout, were aligned in the second phase with the plaintiffs suing BP. They claimed BP delayed capping the well by misrepresenting the size of the spill and the chances of initial efforts to contain it.
“BP’s outright lies caused the oil to flow” for 87 days, plaintiffs’ attorney Brian Barr said Sept. 30 in his opening statement in phase two.
“The refusal to have any capping devices or other source control planning in place was not unique to the drilling of the Macondo well,” plaintiffs’ lawyers said in yesterday’s filing of proposed findings. “Rather, BP refused to invest any time or money in source control preparations for any or all deep-water wells, company-wide.”
Geoff Morrell, a BP spokesman, said yesterday in a statement that those claims are “completely at odds with the evidence -- and admissions -- that the government led the response efforts, performed its own analysis of source control options, and did not rely on BP’s flow rate estimates in how to move forward in responding to the spill.”
“The evidence presented during Phase 2 of the trial showed that no one wanted to cap the Macondo well more than BP,” Morrell said. “It is always possible, with the benefit of hindsight, to second-guess decisions made in the face of substantial uncertainty.”
Lawyers for Transocean and Halliburton said in court papers yesterday that “BP intentionally lied” about the rate of oil spewing from the well. The company’s misrepresentations resulted in a strategy to shut in the well that was “doomed to fail,” the contractors said.
The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, 10-md-02179, U.S. District Court, Eastern District of Louisiana (New Orleans).
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