Deepwater Horizon Oil Spill (US)

(Reuters) – (The Guardian)

BP returns to court to try to hold down fines that could hit $18 billion in a new phase of the Gulf of Mexico trial that will rule on how much oil it spilled in 2010. Starting today in New Orleans, this second of three trial phases, could – in the worst outcome – land the company with a bill five times greater than the $3.5 billion it has set aside for fines.

The outcome hinges on what the court decides about whether BP made every effort to cap the well, and what it decides about the dispute over how much oil escaped into the Gulf. The trial is being heard by US district judge Carl Barbier.

The first phase, which wound up in April, was to apportion blame for the events leading up to the fatal blowout of the well among BP and its partners, Transocean Ltd and Halliburton Co. The blowout killed 11 men and polluted large areas of ocean and beach and damaged wildlife and industry in five Gulf states.

Today, the government, joined now by BP’s former partners on the well, will argue that the company deliberately underestimated the size of the spill, and wasted time trying to plug the well with debris, when the flow was too strong. BP in pre-trial motions argues that the federal government reviewed and approved of its various plans to cap the well at every juncture, and that other oil companies also agreed with its strategy.

The US federal Clean Water Act (CWA) levies civil and criminal penalties on parties that violate its oil discharge prohibitions. Under the Clean Water Act, BP could be fined $1,100 for each barrel of oil that escaped into the Gulf, rising to $4,300 a barrel if the company is found to be guilty of gross negligence.

Even once those fines are set under the Clean Water Act, BP could still be hit with high bills for environmental restoration to the Gulf.

The Resources and Ecosystem Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States Act (known as the “RESTORE Act”) was developed to direct a portion of the Clean Water Act civil penalties from the Deepwater Horizon incident to Gulf restoration. President Obama signed the RESTORE Act into law on July 6, 2012. See here for the Environmental Law Institute (ELI) webpage on the RESTORE Act.

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