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Wednesday, May 22, 2024 | Back issues
Courthouse News Service Courthouse News Service

Hundreds of Billion in Fines Possible for Oil Spill, U.S. Says

NEW ORLEANS (CN) - A government attorney told the federal judge overseeing the Gulf of Mexico oil-spill litigation that BP, Anadarko and Transocean could be subject to hundreds of billions of dollars in punitive fines under the Clean Water Act.

"These are civil penalties - they're not intended to make the people whole. It's intended to punish," Department of Justice Senior Attorney Steven O'Rourke told U.S. District Judge Carl Barbier.

O'Rourke said the Clean Water Act is simple: "any person who is the owner, operator, or person in charge of any vessel ... or offshore facility from which oil is discharged" will face Clean Water Act fines.

O'Rourke said the company punished simply has to be owner of the vessel or platform that contributes to an oil spill. This would include BP, as part owner of the lease to the well and operator of the Deepwater Horizon rig; Anadarko, as part owner of the lease to the well, and rig owner Transocean.

"Each defendant admits that the oil came out of the well through the blowout preventer riser and was discharged into the Gulf of Mexico," O'Rourke said. "They've admitted they were owners and they've admitted the discharge from the well."

The government wants a declaration before the start of the first liability trial that the companies are each liable for more than 200 million barrels of spilled oil.

The first trial is scheduled to begin on Feb. 27

The base fine applicable under the Clean Water Act is $1,100 per barrel.

If Barbier finds that a party's gross negligence led to the April 20, 2010 spill, which killed 11 and caused the worst oil spill in U.S. history, he could raise the fine per barrel to as much as $4,300.

A $1,100 fine for each of 200 million barrels of oil would come to $220 billion.

A $4,300 fine per barrel would come to $860 billion.

There are 42 gallons in a barrel of oil.

O'Rourke told the court: "Transocean is saying it came from the well so BP and Anadarko are liable; Anadarko and BP are saying it came from the vessel so Transocean is liable. The government says all of them are correct. They're all liable."

O'Rourke said fines can apply jointly and severally under the Clean Water Act. The companies "all acted in separate ways so they're likely to all get different penalties," he said. "These are civil penalties - they're not intended to make the people whole. It's intended to punish."

O'Rourke said the fines will be subject to Barbier's "equitable discretion," meaning the judge can reduce fines for certain companies as he sees fit. But whether the fines apply is not in dispute.

"So in your view the oil was discharged both from an offshore facility and the well?" Barbier asked.

"Yes," said O'Rourke. "The fines are indisputable. Clean Water Act fines are a punishment. On the penalty side, you get to tailor the punishment to the activity."

The courthouse was full. The court strained to hear O'Rourke. In Barbier's words, the attorney is extremely "soft spoken."

Anadarko attorney David Salmons told the court that Anadarko as part-lease holder to the well cannot be held liable for the discharge of oil because the discharge happened on the Deepwater Horizon.

Anadarko was a partial owner of the well but had no ownership in the Deepwater Horizon and no control of the well, Salmons said.

Salmons said the discharge of oil had to have come from either the vessel or the well - but not both.

Later, BP attorney Andrew Langan told the judge BP agrees with Anadarko.

"We adopt Anadarko's point: It has to be one or the other and here we say it has to be the vessel," Langan said.

But Transocean attorney Kerry Miller disagreed

"Between April 20 when the incident occurred and July 15 when it stopped, if you were to look at who was trying to contain the leak, it was all of the parties," Miller said.

Transocean maintains it is liable only for any oil that made it to the surface of the Gulf of Mexico.

Citing the Oil Pollution Act, Miller told the judge that BP, as well lessee, is liable for all subsea oil.

O'Rourke reiterated liability under the Clean Water Act.

"Plain language of the statute: any person, any vessel, any entity," that discharges oil can be held liable, O'Rourke said.

Barbier did not say when he will rule on the issue.

The hearing followed the regular monthly status conference.

During the status conference, Barbier addressed several recently filed motions in limine and several motions in opposition.

Among motions filed this week is a U.S. oppositionto BP's request to keep particular company documents confidential.

Among BP's requestsfor confidentiality is a statement made by Sir William Castell, of BP's Safety, Ethics, and Environment Assurance Committee.

According to the opposition filed by the United States, BP has asked that the following statement be kept confidential under the pretext that it contains "highly sensitive information about the company's recruitment and promotion" efforts:

"1. Met with Paul Anderson [another BP senior non-executive director] at Sofitel Hotel 8 to 9 a.m. Paul felt that the company needed a fundamental change in culture and that it would need to move from doing things the BP way to the best way."

The United States opposed another BP motion in limine that seeks to exclude employee salary information.

The government said it suspects that BP paid a legal assistant with no legal training "an astounding $107,000 per month, which annualizes to a 'consulting fee' of $1,284,000," probably to keep the employee from cooperating at deposition.

"As a general matter, the United States has no interest in setting out the compensation of BP employees. However, there are instances where employee compensation is relevant to bias, credibility, or other issues, such as active efforts by BP - or certainly the appearance of such efforts - to hide evidence under the guise of faux privilege," the government document states.

Barbier said he will rule on as many of the motions in limine as he can before trial, but since it is not a jury trial he does not consider it crucial to rule on all beforehand.

The next status conference, which is also the pre-trial conference, is set for Feb. 3.

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