Story Summary

Oil in the Gulf

Photo by U.S. Coast Guard

In April 2010, an explosion on BP’s Deepwater Horizon rig killed 11 workers and fouled the Louisiana coastline and other parts of the Gulf with millions of barrels of oil. It was one of the worst oil spills in history.

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This story has 9 updates

A federal judge has accepted a plea agreement that calls for Halliburton to pay a $200,000 fine for destroying evidence after the BP oil spill.

Halliburton pleaded guilty Thursday to a misdemeanor charge.

The company was accused of deleting data during a post-spill review of the cement job on BP’s blown-out well.

BP oil claims administrator Patrick Juneau has just a couple of weeks left to respond to BP’s fraud allegations.

The company says it’s uncovered new cases of fraud and conflicts of interest in the settlement process.

But a federal judge refused to let BP stop making payments during the investigation.

The BBC reports that BP’s compensation fund for oil spill victims is running out of cash. Apparently the fund, which began with $20 billion, has just $300 million left.

BP says claims will have to come from future profits once the fund runs out and that could be as early as September.

That’s also when the oil giant is expected to go to trial on civil charges related to the spill.

The Feds say they’ve got a guilty plea from Halliburton in reference to its role in the BP oil disaster of 2010.

According to the Department of Justice, Halliburton hid evidence in the case by throwing out test results related to the leak. The tests focused on the cement casing in the well at the center of the disaster.

Halliburton, BP, and rig operator Transocean all have admitted some criminal wrongdoing in connection with the blowout that killed 11 rig workers and drenched the Gulf coast with oil.

How should BP pay to help the Gulf Coast recover? Cleaning up beaches is one thing, but should we be using BP money to bring Top Chef to New Orleans?

The city and state tourism folks paid Bravo $375,000 to have season 11 filmed here with $200,000 of that money coming from BP. Here’s the reaction we’re getting on our WGNO Facebook page:

Rob says, “Food job, Louisiana! You spent money appropriately and wisely.”

Jamie adds, “I love Top Chef, but we shouldn’t waste money this state needs on a TV show.”

And Jennifer says, “If they highlight Gulf seafood, then it’s cool.”

News with a Twist
04/08/13

The questionable politics of the Louisiana Seafood Board

The Louisiana Seafood Promotion and Marketing Board has just one job and one job only, to let the everyone know that we have arguably the worlds best seafood, Louisiana seafood.

The organization got a boost that many could only dream of: BP gave the board $30 million – or about $800,000 a month – to be spent on promoting Louisiana seafood.  Problem is where is the money going?   I don’t see much promotion of Louisiana seafood.

What’s worse is, is the board qualified to spend the money wisely?

Remember, the Louisiana Seafood Promotion and Marketing Board had a member who was selling shrimp labeled “Louisiana wild” when in truth they were actually shrimp from Mexico!   That’s right, the board that is entrusted to market and promote Louisiana seafood had a key, influential board member selling Mexican shrimp labeled “caught in Louisiana”.

Can we trust and organization that can’t trust itself?   Louisiana seafood is the best in the world.  With all this free BP money, don’t we deserve an organization to promote our seafood that is world class as well?

The Louisiana Seafood Board’s Communications Manager, Ashley Roth, sent this reply to Kaare’s commentary:

Mr. Johnson’s claims are not factual. The Louisiana seafood marketing campaign funded through the BP dollars aggressively promotes Louisiana seafood both in state and across the nation. In fact, we currently have a commercial running on WGNO announcing the Louisiana seafood certification program.  This program identifies seafood that is harvested in Louisiana with labels on packaging and menus so that consumers can be confident they are getting authentic Louisiana seafood. 

bptrial

It could be weeks before the judge in the civil BP trial makes any decisions.  But on the first day Monday, all of the companies involved wasted no time pointing fingers.

Some protestors waited outside the Hale Boggs Federal Building to make their points to all the parties involved about how the worse environmental disaster in American history affected their lives.

Inside the courtroom, attorneys for the companies began deflecting blame and assigning it where they could.

BP has received most of the public criticism for the massive oil leak because it oversaw drilling operations on the platform.

But BP is trying to place blame on Halliburton.

The company that made the blowout preventer  is already saying its device could only prevent a blowout, not stop one that was already underway.

“It’s like hitting the brakes on your car after the accident,” an attorney for the Cameron International Corporation told U.S. District Judge Carl Barbier.

The trial is expected to take weeks.  The companies could face billions of dollars in fines and penalties.

BP prepared to defend itself against claims by US Government, States and private plaintiffs in Deepwater Horizon civil liability trial in US District Court

(BP news release) – BP is preparing for the federal civil trial beginning next Monday in the Deepwater Horizon Multi-District Litigation pending in the US District Court for the Eastern District of Louisiana. This proceeding is the first of at least two phases the Court has set for the trial. The first phase will be focused on the causes of the Deepwater Horizon accident, who should be held responsible, and to what degree. Judge Carl J Barbier will preside over the trial.

“We have always been open to settlements on reasonable terms, failing which we have always been prepared to defend our case at trial. Faced with demands that are excessive and not based on reality or the merits of the case, we are going to trial,” said Rupert Bondy, Group General Counsel of BP. “We have confidence in our case and in the legal team representing the company and defending our interests.”

BP will vigorously defend against gross negligence allegations

The Court will ultimately determine the legal and factual issues at the heart of the case, including whether BP or any other party was grossly negligent.

“Gross negligence is a very high bar that BP believes cannot be met in this case,” said Mr Bondy. “This was a tragic accident, resulting from multiple causes and involving multiple parties. We firmly believe we were not grossly negligent.”

Inflated Government flow rate estimate will be subject of
phase two of trial set for September 2013

Oil flow rate and quantification of barrels of oil spilled are issues that will be addressed in the second phase of the trial, which is scheduled to begin in September 2013. As BP previously said, although there is inherent uncertainty in this quantification, the company believes that the government’s public estimate of 4.9 million barrels of oil released is at least 20 per cent overstated.

“These issues are extremely complicated as a technical matter, and there is still further analysis to do,” said Mr Bondy. “But 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.”

Whatever the final number of barrels released from the reservoir is proven to be, BP does not believe that the 810,000 barrels of oil that the company successfully captured from the Macondo reservoir without it entering the Gulf of Mexico waters should be considered in the Court’s future determination of Clean Water Act penalties. Under the Clean Water Act, civil penalties are assessed only on oil that has actually entered the environment and potentially caused harm. The US Department of Justice has indicated that it agrees with BP’s position on this issue. On the basis that the 4.9 million barrels figure includes an over-estimate of at least 20 per cent, and given that a further 810,000 barrels need to be deducted from the volume that flowed from the reservoir, BP believes that a figure of 3.1 million barrels should be the uppermost limit of the number of barrels spilled that should be used in calculating a Clean Water Act penalty.

BP will litigate penalties based on statute requiring analysis of eight different factors

Finally, the Court has broad discretion to assess a per-barrel Clean Water Act penalty between zero and the statutory maximum. In deciding on the per-barrel fine, the Court must consider not only the level of culpability, but also seven other statutory penalty factors. The intent behind the statute is to enable courts to account for the violating company’s conduct following the violation where public policy merits such treatment. In practice, courts have historically awarded only a fraction of the statutory maximum penalty, generally choosing penalties that are far closer to zero than to the statutory maximum.

“We believe that consideration of all eight legal factors together weighs in favour of a penalty that is lower than the statutory maximum,” continued Mr Bondy. “In determining the penalty, we believe the Court should consider, among other things, the fact that BP immediately stepped up and acknowledged our role in the accident. We waived the statutory cap on liability, and to date, we’ve spent more than $23 billion in response, clean-up, and payments on claims by individuals, businesses, and governments. No company has done more, faster, to meet its commitment to economic and environmental restoration efforts in the wake of an industrial accident, and although the Court will ultimately decide, we believe that both the statute and public policy more generally contemplate consideration of our efforts to do the right thing in determining an appropriate penalty.”

BP is engaged in a continuous effort to further enhance safety and risk management throughout its global operations and across the deepwater drilling industry. Immediately after the accident, the company launched an internal investigation. BP then publicly released the investigation’s results, and began the process of implementing all 26 of the investigation’s recommendations. The company has also, among other things, made key leadership changes, reorganized its upstream business, created a more robust centralized Safety and Operational Risk organization, and adopted new deepwater drilling standards in the Gulf of Mexico that exceed current regulatory requirements. BP has shared what it has learned with industry and regulators around the world.

“Our actions show that we have been willing to settle. We settled with our partners in the well and with some of our contractors. We began paying claims immediately after the accident and have settled with the PSC the substantial majority of all legitimate private economic loss and medical claims. In addition, we settled all of the federal government’s criminal and securities claims against the company,” said Mr Bondy. “There are remaining claims which we have been unable to settle on reasonable terms. Consequently, we are prepared to go to trial and present our case to Judge Barbier.”

BP will be represented at trial by Robert C (“Mike”) Brock of Covington & Burling LLP; Hariklia (“Carrie”) Karis, J Andrew (“Andy”) Langan and Matthew T Regan of Kirkland & Ellis LLP; and Don Haycraft of Liskow & Lewis.

(DEPARTMENT OF JUSTICE) -

Transocean Deepwater Inc. pleaded guilty today to a violation of the Clean Water Act (CWA) for its illegal conduct leading to the 2010 Deepwater Horizon disaster, and was sentenced to pay $400 million in criminal fines and penalties, Attorney General Holder announced today.

In total, the amount of fines and other criminal penalties imposed on Transocean are the second-largest environmental crime recovery in U.S. history – following the historic $4 billion criminal sentence imposed on BP Exploration and Production Inc. in connection with the same disaster.

“Transocean’s guilty plea and sentencing are the latest steps in the department’s ongoing efforts to seek justice on behalf of the victims of the Deepwater Horizon disaster,” said Attorney General Holder. “Most of the $400 million criminal recovery – one of the largest for an environmental crime in U.S. history – will go toward protecting, restoring and rebuilding the Gulf Coast region.”

“The Deepwater Horizon explosion was a senseless tragedy that could have been avoided,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.  “Eleven men died, and the Gulf’s waters, shorelines, communities and economies suffered enormous damage.  With today’s guilty plea, BP and Transocean have now both been held criminally accountable for their roles in this disaster.”

Transocean’s guilty plea was accepted, and the sentence was imposed, by U.S. District Judge Jane Triche Milazzo of the Eastern District of Louisiana.  During the guilty plea and sentencing proceeding, Judge Milazzo found, among other things, that the sentence appropriately reflects Transocean’s role in the offense conduct, and that the criminal payments directed to the National Academy of Sciences and National Fish and Wildlife Foundation are appropriately designed to help remedy the harm to the Gulf of Mexico caused by Transocean’s actions.  The judge also noted that the fines and five year probationary period provide just punishment and adequate deterrence.

Transocean pleaded guilty to an information, previously filed in federal court in New Orleans, charging the company with violating the CWA.  During the guilty plea proceeding today, Transocean admitted that members of its crew onboard the Deepwater Horizon, acting at the direction of BP’s well site leaders, known as “company men,” were negligent in failing to investigate fully clear indications that the Macondo well was not secure and that oil and gas were flowing into the well.

The criminal resolution is structured to directly benefit the Gulf region.  Under the order entered by the court pursuant to the plea agreement, $150 million of the $400 million criminal recovery is dedicated to acquiring, restoring, preserving and conserving – in consultation with appropriate state and other resource managers – the marine and coastal environments, ecosystems and bird and wildlife habitat in the Gulf of Mexico and bordering states harmed by the Deepwater Horizon oil spill.  This portion of the criminal recovery will also be directed to significant barrier island restoration and/or river diversion off the coast of Louisiana to further benefit and improve coastal wetlands affected by the spill.  An additional $150 million will be used to fund improved oil spill prevention and response efforts in the Gulf through research, development, education and training.

Transocean was also sentenced, according to the plea agreement, to five years of probation – the maximum term of probation permitted by law.

A separate proposed civil consent decree, which resolves the United States’ civil CWA penalty claims, imposes a record $1 billion civil Clean Water Act penalty, and requires significant measures to improve performance and prevent recurrence, is pending before U.S. District Judge Carl J. Barbier of the Eastern District of Louisiana.

The charges and allegations pending against individuals in related cases are merely accusations, and those individuals are considered innocent unless and until proven guilty.

The guilty plea and sentencing announced today are part of the ongoing criminal investigation by the Deepwater Horizon Task Force into matters related to the April 2010 Gulf oil spill.  The Deepwater Horizon Task Force, based in New Orleans, is supervised by Assistant Attorney General Breuer and led by Deputy Assistant Attorney General John D. Buretta, who serves as the director of the task force.  The task force includes prosecutors from the Criminal Division and the Environment and Natural Resources Division of the Department of Justice; the U.S. Attorney’s Office for the Eastern District of Louisiana, as well as other U.S. Attorneys’ Offices; and investigating agents from:  the FBI; Environmental Protection Agency, Criminal Investigative Division; Environmental Protection Agency, Office of Inspector General; Department of Interior, Office of Inspector General; National Oceanic and Atmospheric Administration, Office of Law Enforcement; U.S. Coast Guard; U.S. Fish and Wildlife Service; and the Louisiana Department of Environmental Quality.

This case was prosecuted by Deepwater Horizon Task Force Director John D. Buretta, Deputy Directors Derek A. Cohen and Avi Gesser, and task force prosecutors Richard R. Pickens II, Scott M. Cullen, Colin Black and Rohan Virginkar.

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