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How much oil spilled in the Gulf of Mexico after the 2010 oil well blowout is at the center of the second phase of the federal civil trial of BP and Anadarko Petroleum taking place this week in New Orleans.
The government is trying to prove that the companies lied when they reported how many barrels of oil spilled from the well.
A judge will make the final decision on the number and on whether BP acted with gross negligence. The resulting fine could cost BP billions of dollars.
JEREMY HOBSON, HOST:
This is HERE AND NOW. In New Orleans, there is a trial going on over the 2010 Gulf oil spill that could leave BP on the hook for another $18 billion. BP has already set up a $20 billion fund to pay victims and agreed to pay $4 billion in criminal penalties. At stake in this trial, which is now in its second phase, is how much BP will pay states and the federal government in fines.
Noah Hall is a professor at Wayne State University School of Law. He's been following the trial, and he joins us now. Professor Hall, welcome.
NOAH HALL: Thanks for having me.
HOBSON: So this is the second phase of the trial. Remind us what happened in the first phase and how this phase is different.
HALL: Well, in a civil penalty trial, there's basically two questions that a court needs to answer. The first question is: How bad was BP's conduct? BP is what's called strictly liable for their pollution. That means it doesn't matter whether they caused it by accident, by negligence, by gross misconduct or even criminal wrongdoing, BP is liable and much pay penalties based on the amount of oil that they spilled.
However, if they were grossly negligent or engaged in willful misconduct, which are legal terms of art that basically mean really bad behavior, then the penalties for BP quadruple, from $1,100 per barrel to $4,300 per barrel.
HOBSON: And therefore the amount of barrels that were spilled really matters. I saw that the maximum penalty, if it were BP's estimate, would be about $10 billion, $10.5 billion. The maximum penalty if it's the U.S. estimate of how many barrels were spilled, it would be $18 billion for BP.
HALL: Yeah, and so that brings up the second phase of the trial, which is how many barrels were spilled. So the first phase of the trial needs to determine the extent of BP's negligence, how bad their conduct is, which will tell you how much they're going to pay per dollar per barrel.
The second phase tells you how many barrels they spilled total. And it's not a simple measure of math. There's going to be questions of BP's negligence in responding to the spill, BP's negligence in containing the oil spill once it reached the deep ocean and BP's overall competence in containing the spill and preventing the damage from spreading up and down the Gulf Coast.
HOBSON: And why is there such a discrepancy about how much was spilled? We of course all saw that camera of the oil spewing out. Don't we know how much was spilled?
HALL: The short answer is no; we don't know with certainty how much oil came out. It was a massive well that ruptured, and the flow rate of the well, the pressure the well is under, the quantity of oil at depth that eventually would have made its way to the surface of the ocean bottom, are all major technical questions that are under dispute and debate.
What this part of the trial is going to come down to, really, is a battle of the experts. Scientists who will have different approaches to modeling and measuring the amount of oil that came into the ocean, they're using all kinds of technologies from simulating the dispersement of oil through the ocean to actually shooting lasers through portions of the oil spill to determine the density of oil in the water.
And these technical questions, as you mentioned, have a lot of money at stake with the answers.
HOBSON: Professor Hall, how much would $18 billion be for BP? Is that a slap on the wrist, or is that really going to hurt its bottom line?
HALL: Well, on its own, $18 billion would be a blow that BP could absorb. But keep in mind this civil trial right now and the $18 billion at stake is really the final piece of the puzzle for BP's overall liability. BP's already paid out tens of billions of dollars in damages and in criminal fines, and so the amount of money at stake here is really going to make the difference between whether or not BP emerges from this oil spill in relatively decent financial shape and able to move forward.
Or perhaps with an $18 billion civil penalty, BP will take a pretty big blow, and its financial position moving forward will be significantly weakened.
HOBSON: Who would the money go to?
HALL: Well, Congress passed a law this past year called the Restore Act, which says that 80 percent of the civil penalties recovered will be shared among the Gulf Coast states that were affected by the oil spill. So at least 80 percent of the money is going to go back to the states that were affected: Mississippi, Florida, Louisiana.
Some of the remainder of the money will be dispersed within the federal government. How the states divvy it up and what the states spend it on is a major question for the future.
HOBSON: We're speaking with Professor Noah Hall of Wayne State University School of Law, and you're listening to HERE AND NOW.
Of course the oil cannot be put back in the well, the spill cannot be undone. Part of this trial is about convincing other companies to take steps that obviously BP and the other companies involved here did not to prevent something like this happening in the first place.
Will whatever comes out of this trial do that?
HALL: Well, that's the big question for this trial. If they walk away from this civil trial with a penalty in the order of, say, $3 to $5 billion, I think they're going to get the message that it was a tough financial blow, but they can recover, move on and back to business as usual.
If they get hit with the $18 billion penalty, it's really going to change their business practices and likely the practices of the industry in drilling for oil in the future.
HOBSON: Now as we said, we're in phase two. There is a phase three, right?
HALL: Yeah, there's going to - this is an ongoing dispute and a long piece of litigation. The judge, Carl Barbier here, is not giving bench rulings on different phases of the trial as the trial progresses along. So for example we're not going to know whether BP was grossly negligent or just strictly liable as we're now in this phase of the trial that deals with the quantity of oil released.
And then the next part will be BP's conduct in responding to the oil spill, how well they contained the oil spill, how prepared they were to manage an oil spill of this magnitude in the deepwater environment.
HOBSON: And we'll of course all be watching to see what happens. We'll check back in with you. Noah Hall, environmental law expert and professor at Wayne State University School of Law in Detroit, Michigan, speaking with us about BP's trial over the Gulf oil spill, which is in phase two right now. Noah Hall, thanks so much for joining us.
HALL: Thanks for having me. Transcript provided by NPR, Copyright NPR.