Gulf oil spill compensation trial begins

With billions of dollars at stake, the trial to figure out how much more BP and other companies should pay for the nation's worst offshore oil spill began Monday with the federal government saying the oil giant was mostly to blame for a disaster caused by putting profits ahead of safety.

Justice Department attorney Mike Underhill said BP PLC, which leased the rig and owned the blown-out Macondo well, said the disaster resulted from the London-based company's "culture of corporate recklessness."

"The evidence will show that BP put profits before people, profits before safety and profits before the environment," Underhill said during opening statements.

Eleven workers died when the rig exploded April 20, 2010, and millions of gallons of oil spilled into the Gulf of Mexico.

Unless a settlement is reached, the judge, not a jury, ultimately will decide months from now how much more money BP and other companies involved in the ill-fated drilling project owe for their roles in the environmental catastrophe.

"Despite BP's attempts to shift the blame to other parties," Underhill said, "by far the primary fault for this disaster belongs to BP."

'Repeatedly chose speed over safety'

Attorney Jim Roy, who represents individuals and businesses hurt by the spill, said BP executives applied "huge financial pressure" on its drilling managers to "cut costs and rush the job."

The project was more than $50 million US over budget and behind schedule at the time of the blowout, Roy said.

"BP repeatedly chose speed over safety," Roy said, quoting from a report by an expert who may testify later.

Lawyers for BP, Transocean and Halliburton, the cement contract, will outline their cases later Monday. Roy said the spill also resulted from rig owner Transocean Ltd.'s "woeful" safety culture.

He said the owner of the Deepwater Horizon rig failed to properly train its crew, calling it a "chronic problem allowed by Transocean management to go uncorrected."

"The workforce was not always aware of the hazards they were exposed to," Roy said.

"They don't know what they don't know." Roy also said Halliburton deserved some of the blame for providing BP with a product that was "poorly designed, not properly tested and was unstable."

Underhill heaped blame on BP executives and on-shore managers for cost-cutting decisions they made in the months and weeks leading up the disaster.

He said the primary "rig-based" cause of the blowout was a botched safety test in which two BP rig supervisors, Robert Kaluza and Donald Vidrine, disregarded abnormally high pressure readings that should have been glaring indications of trouble.

Underhill said Vidrine and Mark Hafle, a BP engineer in Houston, discussed the test results over the phone less than an hour before the explosion but failed to take steps that could have prevented the blast.

"Instead, both men, armed with knowledge that could have saved 11 lives and prevented the Gulf oil spill, did absolutely nothing," Underhill said. Kaluza and Vidrine have been indicted on federal manslaughter charges.

Hafle hasn't been charged with wrongdoing. BP has said it already has racked up more than $24 billion in spill-related expenses and has estimated it will pay a total of $42 billion to fully resolve its liability for the disaster.

But the trial attorneys for the federal government, Gulf states and attorneys for people and businesses hope to convince the judge that the company is liable for much more.

Hundreds of attorneys have worked on the case, generating roughly 90 million pages of documents, logging nearly 9,000 docket entries and taking more than 300 depositions of witnesses who could testify at trial.

"In terms of sheer dollar amounts and public attention, this is one of the most complex and massive disputes ever faced by the courts," said Fordham University law professor Howard Erichson, an expert in complex litigation.

Barbier has promised he won't let the case drag on for years as has the litigation over the 1989 Exxon Valdez spill, which still hasn't been completely resolved. He encouraged settlement talks that already have resolved billions of dollars in spill-related claims.

In December, Barbier gave final approval to a settlement between BP and Plaintiffs' Steering Committee lawyers representing Gulf Coast businesses and residents who claim the spill cost them money.

BP estimates it will pay roughly $8.5 billion to resolve tens of thousands of these claims, but the deal doesn't have a cap. BP resolved a Justice Department criminal probe by agreeing to plead guilty to manslaughter and other charges and pay $4 billion in criminal penalties.

Transocean reached a separate settlement with the federal government, pleading guilty to a misdemeanor charge and agreeing to pay $1.4 billion in criminal and civil penalties.

But there's plenty left for the lawyers to argue about at trial, given that the federal government and Gulf states haven't resolved civil claims against the company that could be worth more than $20 billion.

One of the biggest questions facing Barbier will be to determine if BP was guilty of gross negligence. Under the Clean Water Act, which is designed to punish companies and prevent future spills, a polluter pays a minimum of $1,100 per barrel of spilled oil; the fines nearly quadruple to about $4,300 a barrel for companies found guilty of grossly negligent behavior, meaning BP could be on the hook for nearly $18 billion.

BP says spill estimates inflated

BP, meanwhile, argues the federal government's estimate of how much oil spewed from the wellmore than 760 million litresis inflated by at least 20 per cent.

Clean Water Act penalties are based on how many barrels of oil spilled. Barbier plans to hold the trial in at least two phases and may issue partial rulings at the end of each.

The first phase, which could last three months, is designed to determine what caused the blowout and assign percentages of blame to the companies involved.

The second phase will address efforts to stop the flow of oil from the well and aims to determine how much crude spilled into the Gulf.

The Deepwater Horizon rig blew up 80 kilometers off Louisiana in an explosion that investigators blamed on time-saving, cost-cutting decisions by BP and its drilling partners in cementing the well shaft.

Following several failed attempts that introduced the American public to such industry terms as "top kill" and "junk shot," BP finally capped the well on the sea floor after more than 85 days.

By then, the well had spewed an estimated 650 million litres of crude into the Gulf, fouling marshes and beaches, killing wildlife and closing vast areas to fishing.

Scientists warn that the spill's full effect on the Gulf food chain may not be known for years.

But they have reported oil-coated coral reefs that were dying, and fish have been showing up in nets with lesions and illnesses that biologists fear could be oil-related. Oil churned up by storms could be washing up for years.