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BP Should Pay Maximum Fines For Macondo, Says Justice Department

The U.S. Justice Department is calling expert witnesses to the stand in New Orleans this week to bolster its case that BP plc should pay the maximum penalty for its role as operator and owner of the Macondo well in the deepwater Gulf of Mexico, whose fatal explosion in April 2010 led to an environmental disaster that roiled the Gulf Coast.

The start of the trial for the third and final phase of the multi-district litigation overseen by U.S. District Judge Carl Barbier got underway on Tuesday. BP is facing up to $13.7 billion in penalties for violations of the Clean Water Act for the blowout following a ruling by Barbier earlier this month (see Daily GPIJan. 16).

After reviewing phase two of the three-part multidistrict litigation, which concerned BP's source control efforts following the blowout, Barbier in New Orleans decided on a middle ground to estimate how much oil was spilled over a nearly four-month period (In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, No. 10-2771). The well blowout and related explosion killed 11 men and destroyed Transocean Ltd.'s Deepwater Horizon drilling rig.

"We're not here to say BP did a bad job in the response action" because "they didn't," Justice Department attorney Steven O'Rourke said in opening statements Tuesday. He said the response effort in fact was similar in scale to that of the Sept. 11, 2001 terrorist attacks and Hurricane Katrina. However, the effort "wasn't necessarily the best response action ever."

In testimony for the prosecution also on Tuesday, U.S. Coast Guard Rear Admiral Meredith Austin said BP's spill responders deserved a grade of "B+" or "A." The massive oil spill impacted five states along the Gulf Coast. Given the size of the spill, "massive amounts of resources were required," she told the court. BP personnel had, however, inappropriately removed clean-up equipment before the well was killed in September 2010, Austin noted.

BP attorney Mike Brock asked Austin about emails she had sent to friends, complimenting BP's efforts to contain the spill. She urged friends, emails indicated, to not believe what they saw on TV in regards to the disparaging stories about BP's cleanup efforts. Media, she wrote, "keep showing the same small area of impacted shoreline/marsh because it's all they can show." Because marshes typically can recover after a year's time, she said there would be a time when "you can't even tell there was any oil."

Austin said she was "probably using hyperbole" because it was frustrating to see media stories that were not the same as the reality on the ground.

In this third phase, Barbier is to determine how much BP and 10% Macondo partner Anadarko Petroleum Corp. would have to pay in fines. The Justice Department is seeking the maximum penalty against BP. It has argued that Anadarko's penalty should be more than $1 billion.

BP is arguing for a much lesser fine, in part on the decline in oil prices, which its attorneys said have weakened its credit profile. Anadarko is arguing it bears no responsibility for the disaster and should pay nothing. Barbier indicated in court that installment payments, depending on the penalty, might be a consideration.

The trial is expected to last three weeks. Federal prosecutors said they hope to complete their portion of the trial as soon as Thursday.

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