PENALTY PHASE OF BP TRIAL BEGINS

By TONI ELLINGTON

Trial between BP Exploration & Production, Inc. (“BPXP”) and the U.S. government began on January 20, 2015, in the U.S. District Court for the Eastern District of Louisiana over BP’s financial liability for penalties for the 2010 Deepwater Horizon oil spill.  In this phase of the oil spill litigation, U.S. District Judge Carl Barbier will determine the penalties for BP under the Clean Water Act for the spill.

BP has asked for a lower fine, citing low oil prices.  BP claims that it took extensive steps to mitigate the oil spill, and that BPXP, the BP entity on trial, cannot afford a big penalty. The company claims that BPXP has a current value of $5.1 billion. BP also contends that the Gulf of Mexico has recovered better than expected.

The government is seeking penalties between $11.7 billion and $13.7 billion.  The government has argued that the parent company and BPXP are effectively the same company.

Clean Water Act rules require the Court to consider BP’s ability to pay, the steps taken to clean up the spill, and its history of past violations when setting the amount of the penalties.  In 2005, 15 persons were killed at a BP refinery in Texas City, Texas.  In 2006, there was a spill from a BP pipeline break in Alaska.  In 2012, one person was killed and one injured at a BP natural gas plant in Colorado.  The Deepwater Horizon explosion and spill killed 11 men.

The trial over penalties is expected to last approximately three weeks.

  

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