Monday, February 25, 2013

Will BP let us eat cake?

BP Cake

As much fun as it was to watch Ray Nagin walk into federal court, say "Not guilty" 21 times, and then turn around and leave last week, the courtroom action most relevant to Louisiana's future begins Monday.
The long-awaited civil trial against BP and its partners in the ill-fated Macondo oil well is slated to begin Monday in federal court in New Orleans, setting the stage for a three-month proceeding to assign liability potentially worth tens of billions of dollars for the explosion and collapse of the Deepwater Horizon rig in 2010, which killed 11 workers and caused one of the worst environmental disasters in U.S. history.

More importantly for BP and the other companies, the first phase of the complex court case will focus on whether their actions leading up to the accident constitute gross negligence or willful misconduct, which would result in a four-fold increase in the billions of dollars of Clean Water Act penalties expected to be levied.
The size of the Clean Water  Act fine is critical to the future of the Louisiana coast.  Under the terms of the RESTORE Act, this would be the money Louisiana would dedicate to implementing its 50 year coastal rebuilding master plan.  The scope of the dire emergency the state is facing may be even worse than what the authors of that plan anticipated as Bob Marshall explains in this recent Lens piece.
NOAA’s Tim Osborne, an 18-year veteran of Louisiana coastal surveys, and Steve Gill, senior scientist at the agency’s Center for Operational Oceanographic Products and Services, spelled out the grim reality in interviews with The Lens. When new data on the rate of coastal subsidence is married with updated projections of sea-level rise, the southeast corner of Louisiana looks likely to be under at least 4.3 feet of gulf water by the end of the century.

That rate could swamp projects in the state’s current coastal Master Plan, which incorporated worst-case scenarios for relative sea-level rise calculated two years ago— which the new figures now make out-of-date.
So that's not good.  But, in the meantime, it only underscores the importance of what's about to happen this week.  And that's where it gets confusing.  As late as Friday, we were still reading about 11th hour settlement talks.  Interestingly, though, the Restore Act may have rendered such a settlement too complicated to hammer out.
But the statute worsened what were already growing tensions among the states over how they could use any funds from BP, between environmental damage and economic losses. “Up until last year, all the states were rowing together,” said one lawyer who also spoke on the condition of anonymity. 

The split among the Gulf Coast states surfaced again in November when the Justice Department announced the $4.5 billion settlement of criminal charges against BP. At the time, federal and state officials were also seeking to resolve the civil damage claims. 

But those talks failed largely because of disagreements between Louisiana and other states on issues like the size of the settlement that BP was offering, said people briefed on the talks.
The issues coming out of the talks last fall were even more complicated than that, actually.  For a time, it seemed like Governor Jindal and Senator Vitter were in favor of ditching the Restore Act altogether, although their reasons never became clear to me.  I did make some guesses here, though.

Still if this thing does actually go to trial Monday, the key will be pinning the "gross negligence" charge on BP.  A week ago, their lead attorney seemed confident of wriggling out of that one.

Bondy argued that BP acted rapidly and with extraordinary efforts to attempt to plug the well and limit the effects of the oil spill on both the environment and the public.

On the public side, those efforts included the company's decision not to limit its liability under provisions of the Oil Pollution Act of 1990; to create a $20 billion trust fund within weeks of the accident to begin paying for damages; and to appoint Kenneth Feinberg to handle financial claims.

"And we went to pretty extraordinary lengths and efforts to seal the well" and limit the amount of oil reaching the surface, he said. "At one point, we had 48,000 people working on the response," with so many ships and airplanes involved that the fleets were larger than many nations' armed forces.

"I'm not telling you all this to tout our behavior because this was a tragic accident that took 11 lives and created devastating effects on the Gulf Coast," he said. "But when you look at the legal process to determine what the penalty should be for this spill, this is highly relevant and needs to be taken into account."
You might remember BP's series of "extraordinary efforts to plug the well." A series of stunts with colorful names, "Top Kill" "Junk Shot" etc. which many observers surmised were done specifically for the sake of limiting liability while the long process of drilling a relief well could proceed? Well you're about to see that card played from the top of BP's deck. 

Still at issue is exactly how many barrels of oil were released into the water during the spill. The 4.9 million barrels used in most accounts, based on government estimates, includes 820,000 barrels that BP recovered directly. That oil was sold, and the money collected was donated to Gulf Coast charities.

But Bondy said the remaining 4.1 million barrel estimate is at least 20 percent too high. That would drop the range for maximum fines to between $3.3 billion and $14.1 billion.

Federal prosecutors, on the other hand, say their evidence shows that BP officials lied to the Coast Guard and Congressional investigators in claiming soon after the accident that only 5,000 barrels of oil a day were being released from the well, when internal documents indicated the company's own experts believed as many as 100,000 barrels a day were pouring from under the sea floor.
Ah yes, the never-ending flow-rate dispute. Another case of no-surprise here. Thanks to BP's constant obfuscation and misinformation campaign, the estimates varied from as little as 1,000 barrels per day to greater than 62,000. And now we're going to court with tens of thousands of barrels worth of wiggle room.  Mission accomplished, I guess.

Meanwhile, just this weekend, Dambala toured the Wisner Trust land near Port Fourchon and shot some video.  Watch both videos he has posted there but pay special attention to the one where workers are still collecting tarballs along the beach.  According to Dambala's guide, the beach itself is already 75 yards further inland from where it was when oil first started washing up there.

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