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BP Lawyers Hunker Down for Big Oozy Trial as Settlement Forecast Dims

BP and the feds will settle the rest of the Big Oozy blame game in the court. The British oil giant is sending signals this week that they're ready to go to trial with the U.S. government, and let a judge decide how much the company will have to pay for the 2010 Gulf oil disaster. The meat of the trial, set to begin Monday in federal court in New Orleans, will determine whether BP was "grossly negligent" in its operating of the Deepwater Horizon oil rig.


The trial beginning Monday is the first part of a two-phase trial scheduled to take place intermittently over the remainder of the year. Judge Carl Barbier, who was put in charge of the lengthy and complicated legal proceedings following the disaster, will preside over the courtroom, and ultimately decide on how much BP has to pay.


The first phase of the trial will deal with the cause of the disaster itself, and whether BP's negligence was gross. In legal terms, gross negligence means an entity or person was consciously careless in causing a disaster. In statements that have gotten more in-your-face over the last year, the feds have indicated they will target BP's lax safety standards and willful ignorance of Macondo well problems leading up to the oil well's blowout. Aside from the rig itself, the feds will also target BP's "culture of corporate recklessness."


"The behavior, words, and actions of these BP executives would not be tolerated in a middling size company manufacturing dry goods for sale in a suburban mall," the feds stated in a key 2012 court filing. "Yet they were condoned in a corporation engaged in an activity that no less a witness than (CEO) Tony Hayward himself described as comparable to exploring outer space."


Language like that exhibited a growing animosity between the DOJ and BP. While the two sides reached a settlement on individual claims in March, 2012, and criminal penalties in November, 2012, they have been unable to reach a settlement on the civil penalties, which stem from the disaster's violation of the federal Clean Water Act. BP has been willing to settle, according to the statement, but has been unable to reach an agreement with the feds.


In a statement issued Tuesday, BP chief counsel Rupert Bondy called the government's settlement offers "excessive and not based on reality or the merits of the case."


The penalties assessed as a result of the two-phase trial could be the stiffest for BP yet. The Clean Water Act dictates that the company could be assessed a per-barrel penalty of up to $1,100 per barrel. The two sides dispute how much oil flowed from the broken riser pipe into the Gulf, leaving experts predicting anywhere between $13 billion and $21 billion in penalties.  The government is sticking to an estimate of 4.9 million barrels of oil, while BP says it is closer to 3.1 billion.


"...It is clear, based on our analysis so far, that the government’s public estimate is simply wrong and overstated by at least 20 per cent,” BP chief counsel Rupert Bondy said in a statement issued today. 


In its other two settlements BP faced a maximum of $12.3 billion in penalties. The amount of oil that flowed into the Gulf is set to be decided during the trial's second phase in September, 2013.


BP and a group of thousands of plaintiffs appeared poised to go to trial roughly one year ago to determine how much the oil giant would have to pay to Gulf Coast people and companies affected by the disaster who did not participate in the earlier claims process. But a trial was avoided when the two sides struck a settlement deal at the eleventh hour. With the shots fired across the bow this week, a similar agreement seems less likely.












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