I wrote on the global settlements with BP, with an emphasis on Alabama, in the first section of this issue. I will expand on the overall settlement here. BP Exploration & Production Inc.’s $18.7 billion global settlement last month came after a hotly contested five-year court battle over the deadly 2010 Deepwater Horizon explosion. More was said about the record-breaking settlement in the Capitol Comments Section of this issue. This settlement resolves claims by the federal government and five Gulf states – Alabama, Florida, Louisiana, Mississippi and Texas – as well as those by more than 400 local government entities. A timeline of activity in the case that ended in the largest environmental settlement in U.S. history is set out below for your edification.
• April 20, 2010: The Deepwater Horizon oil rig explodes, killing 11 workers and causing millions of barrels of oil to spew into the Gulf of Mexico, marking the worst offshore oil spill in U.S. history.
• Dec. 15, 2010: The U.S. Department of Justice sues energy companies associated with the rig, including BP Exploration, Anadarko, and Transocean Deepwater Inc., which owned the rig. The suit, filed in Louisiana federal court, accused the companies of causing the spill and sought damages and fines under the Oil Pollution Act (OPA) of 1990, Clean Water Act (CWA) and the Outer Continental Shelf Lands Act.
• Feb. 21, 2012: U.S. District Judge Carl Barbier finds that as co-owners of the Macondo well, BP PLC and Anadarko were liable for Clean Water Act violations arising from the spill. He finds they would be liable for as much as $1,100 in fines per barrel. His ruling paved the way for a three-phase civil trial over the spill.
• Nov. 15, 2012: BP agreed to pay a record $4.5 billion in federal penalties over the spill and BP plead guilty to 11 felony counts linked to seaman manslaughter charges and copped to lying to Congress, resolving all criminal and securities claims brought by the U.S. government over the disaster. In April that year, it had agreed to pay $1 billion toward environmental restoration after the oil spill.
• Feb. 25, 2013: The first phase of the civil trial over liability began, with lawyers for the Justice Department, state governments, private Plaintiffs and drilling contractors arguing that BP bears most of the blame for the accident.
• April 17, 2013: The first phase of the BP trial ended after Judge Barbier heard testimony from 60 witnesses – including 39 live witnesses and 23 video witnesses – and reviewed more than 1,000 exhibits.
• Sept. 30, 2013: The second phase of the BP trial began. The goal in that phase was to determine how much oil spilled and how quickly. BP argued that it did its best. But other parties in the suit, including Transocean and Halliburton, argued BP refused to spend any time or money preparing to stop an underwater blowout at its source despite decades of warnings.
• Oct. 9, 2013: The second phase of the trial ended with the U.S. government highlighting its reliance on BP’s own information and recommendations to support its estimate that 4.2 million barrels of oil were released into the Gulf of Mexico.
• June 5, 2014: The Fifth Circuit upheld Judge Barbier’s ruling that BP and Anadarko can be held liable for Clean Water Act violations over the disaster. The Macondo well’s cement failed, compromising the confinement of oil such that the oil entered navigable waters of the U.S. The companies didn’t dispute their ownership of the well.
• Sept. 4, 2014: Judge Barbier issued his ruling on the first phase of the trial, finding that BP acted with gross negligence and willful misconduct. His ruling placed 67 percent of the fault onto BP, 30 percent on Transocean and 3 percent on Halliburton, the cement contractor for the Macondo well that blew out beneath the rig.
• Nov. 5, 2014: The Fifth Circuit panel refused to reconsider its June decision upholding Judge Barbier’s ruling that BP and Anadarko can be held liable for Clean Water Act violations from the spill. The appeals court said it hadn’t made any legal or factual errors, and affirms the lower court’s finding that the Macondo well, which they co-owned, was the source of the spilled oil.
• Jan. 9, 2015: The Fifth Circuit in a 7-6 split to deny BP’s bid for an en banc panel to reconsider a three-judge Fifth Circuit panel’s ruling that BP and Anadarko can be held liable for Clean Water Act violations.
• Jan. 15, 2015: Judge Barbier found that BP had released 3.19 million barrels of oil into the Gulf of Mexico during the Deepwater Horizon disaster, rejecting the government’s calculation that 4.19 million barrels had spilled. This limited BP’s potential CWA fines to $13.7 billion from a potential $18 billion.
• March 13, 2015: The government indicated it will appeal the ruling capping the potential CWA fines to $13.7 billion. BP and the U.S. Department of Justice had presented competing scientific experts supporting their respective positions during trial proceedings. Judge Barbier, however, found neither party to be fully persuasive and settled on a figure in between the estimates.
• March 27, 2015: The federal government urged Judge Barbier to impose penalties against BP and Anadarko at the higher end of the maximum limit for both of them. BP sought a reduced penalty and Anadarko wanted no or low penalties. The government argued that neither company was entitled to a significant reduction in light of any of their mitigation activities after the accident. The government argued BP should pay near its possible $13.7 billion maximum, while Anadarko should pay less than a $3.5 billion maximum, but more than the $1 billion paid by Deepwater rig owner Transocean Ltd.
• April 9, 2015: BP filed a petition for writ of certiorari to the U.S. Supreme Court, arguing that it is being unfairly held liable for CWA violations over the disaster, and asked the high court to reconsider the Fifth Circuit’s rulings. BP argued the Fifth Circuit panel found it liable by invoking “four different, shifting interpretations” of the CWA’s phrase “from which oil or a hazardous substance is discharged.”
• June 2, 2015: BP took Judge Barbier’s “gross negligence” finding to the Fifth Circuit, claiming he was wrong to find that its “reckless” conduct led to the spill of millions of oil barrels in the Deepwater disaster. BP sought to push the blame onto rig contractors.
• June 12, 2015: BP requested the U.S. Supreme Court to hear its appeal, arguing the Supreme Court’s review is necessary because more than 90 percent of U.S. offshore drilling takes place in the Fifth Circuit’s jurisdiction, so its decision will effectively apply to the entire industry without the high court’s intervention.
• June 29, 2015: The U.S. Supreme Court denied BP’s petition for certification.
• July 1, 2015: The record global settlement is made public.
Even though it took five years, the road from massive oil spill in the gulf to settlement was relatively short. Because it dealt with a complex set of issues and a well-financed wrongdoer, it is important to note that this massive settlement came about in record time. Nobody anticipated that the litigation would be over in most part by mid-year of 2015, only 5 years post-spill. But it happened!
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