BP gulf spill trial begins with billions of dollars at stake

Maritime Law

Barbier will apply maritime law, which governs this phase of the litigation. A trial on efforts to contain the spill is set for September. One or more trials on damages will follow, barring any out-of-court settlements.

The judge will apportion fault for the explosion and spill among BP and its subcontractors. Halliburton and Transocean would only be responsible for punitive damages, based on Barbier’s ruling last year that the project contract required BP to indemnify them for compensatory damages.

BP is responsible for any compensatory damages awarded to plaintiffs who haven’t previously settled. Those plaintiffs, including businesses such as banks and casinos and those harmed by the deep-water drilling moratorium imposed by the U.S. after the spill, are also seeking punitive damages. BP has said it will fight these claims.

The trial, initially set to begin last March, was rescheduled after BP reached a settlement with most individual and other so-called private-party plaintiffs.

Uncapped Settlement

That settlement, which isn’t capped, is estimated at $8.5 billion by BP and excludes claims of financial institutions, casinos, private plaintiffs in parts of Florida and Texas, and residents and businesses alleging harm from the deep-water drilling moratorium.

It also didn’t cover federal government claims and those of Gulf Coast states Louisiana and Alabama, or lawsuits against co- defendants. Lawyers for the U.S. and the two states will be presenting evidence at the trial, along with attorneys for the private parties. BP has said the states are claiming at least $34 billion in damages.

Alabama Attorney General Luther Strange and his counterpart in Louisiana, Buddy Caldwell, were both in court today as the trial began.

The U.S. government sued BP and Transocean in 2010 for violations of the Clean Water Act and the Oil Pollution Act, seeking fines, cleanup costs and natural-resources damages.

The U.S. estimated that 4.9 million barrels gushed from the doomed Macondo well. BP and the government agreed last week that 810,000 barrels of oil that the company captured before they entered Gulf waters wouldn’t be included in Clean Water Act fine calculations. The agreement cut BP’s highest potential government fine by $3.4 billion.

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).

Bloomberg News

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